EXHIBIT 2.1
RECAPITALIZATION AGREEMENT
BY AND AMONG
XXXX CAPITAL FUND V, X.X.
XXXX CAPITAL FUND V-B, L.P.
BCIP ASSOCIATES
BCIP TRUST ASSOCIATES, L.P.
COLLECTIVELY, PURCHASER,
TORAY INDUSTRIES, INC.
AND
TORAY INDUSTRIES (AMERICA), INC.
AND
SHIMADZU CORPORATION
COLLECTIVELY, SELLERS
AND
THERMA-WAVE, INC.
RELATING TO THE
CAPITAL STOCK OF
THERMA-WAVE, INC.
DATED DECEMBER 18, 1996
TABLE OF CONTENTS
Page
1. Definitions.............................................. 3
2. Sale of Shares; Purchase Price........................... 11
3. Representations and Warranties of Sellers................ 14
(a) Organization and Good Standing.................. 14
(b) Ownership of Shares and Execution of
Agreement............................................ 14
4. Representations and Warranties of Company................ 15
(a) Organization and Good Standing.................. 15
(b) Capitalization.................................. 16
(c) Subsidiaries.................................... 17
(d) Financial Statements............................ 19
(e) No Undisclosed Liabilities...................... 20
(f) No Material Adverse Change; No Dividends........ 21
(g) Taxes........................................... 22
(h) Patents, Trademarks and Copyrights.............. 25
(i) Real Property; Leases of Real Property.......... 27
(j) Permits; Compliance with Laws................... 28
(k) Insurance....................................... 29
(l) Material Contracts.............................. 29
(m) Title to Properties; Absence of Encumbrances.... 32
(n) Restrictions.................................... 33
(o) Litigation; Consents............................ 33
(p) Environmental Matters........................... 34
(q) Collective Bargaining Agreements and Labor...... 35
(r) ERISA........................................... 36
(s) Affiliate Transactions.......................... 37
(t) Closing Date.................................... 37
5. Representations and Warranties of Purchaser.............. 38
(a) Organization and Good Standing.................. 38
(b) Restrictions.................................... 38
(c) Litigation; Consents............................ 39
(d) Execution and Effect of Agreement............... 39
(e) Investment Representation....................... 39
(f) Sources of Information.......................... 40
(g) New Common Stock and Preferred Stock............ 40
(h) Xxxx-Xxxxx-Xxxxxx............................... 41
i
6. Covenants of Company and Sellers......................... 41
(a) Representations and Warranties.................. 41
(b) Access to Documents; Opportunity to Ask
Questions....................................... 42
(c) Maintenance of Insurance........................ 43
(d) Conduct of Business............................. 43
(e) Consents; Conditions Precedent.................. 45
(f) Japanese Ministry of Finance and
Xxxx-Xxxxx-Xxxxxx Filings....................... 45
(g) Exclusivity..................................... 46
(h) Seller Covenants................................ 47
7. Covenants of Purchaser................................... 47
(a) Representations and Warranties.................. 47
(b) Consents; Conditions Precedent.................. 48
(c) Payment of Bank Debt; Cancellation of
Guarantees...................................... 48
(d) Purchaser Directors............................. 49
(e) Xxxx-Xxxxx-Xxxxxx Filings....................... 49
8. Conditions Precedent to Purchaser's Obligation........... 49
9. Conditions Precedent to Sellers' Obligation.............. 52
10. Closing Date; Closing.................................... 54
11. No Brokers.............................................. 58
12. Survival of Representations and Warranties.............. 59
13. Indemnification of and by Purchaser and Limitation of
Liability............................................... 60
14. Tax Indemnification and Related Matters................. 67
15. Non-Competition; Non-Solicitation....................... 72
16. Specific Performance.................................... 76
17. Termination............................................. 77
18. Further Assurances...................................... 78
19. Confidentiality; Press Releases......................... 78
20. Notices................................................. 79
ii
21. Entire Agreement........................................ 80
22. Successors.............................................. 81
23. Section Headings........................................ 81
24. Applicable Law; Consent to Jurisdiction................. 81
25. Transfer Taxes.......................................... 82
26. Expenses................................................ 82
27. Waiver of Jury Trial.................................... 83
28. Severability............................................ 83
29. Toray America Shares.................................... 83
30. Waiver of Claims........................................ 83
31. Lease Amendment......................................... 83
32. Counterparts............................................ 84
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LIST OF SCHEDULES AND EXHIBITS
Schedules
1 Loan Agreements
4(b) Seller Agreements
4(c) Subsidiaries
4(d) No Undisclosed Liabilities
4(f) Dividends
4(g) Tax Matters
4(h) Patents, Trademarks and Copyrights
4(i) Real Property and Material Leases
4(k) Insurance Policies
4(l) Material Contracts
4(m) Encumbrances
4(n) Restrictions
4(o) Litigation
4(p) Environmental Matters
4(q) Collective Bargaining Agreements and Labor
4(r) ERISA
4(s) Affiliate Transactions
7(c) Guarantees
Exhibits
A-1 Form of Opinion of In-House Counsel of Toray
A-2 Form of Opinion of In-House Counsel to Shimadzu
A-3 Form of Opinion of Counsel to Sellers and Company
iv
B Form of Opinion of Counsel to Purchaser
C Form of Certificate of Amendment
D Form of Registration Agreement
E Form of Stockholders Agreement
v
RECAPITALIZATION AGREEMENT
--------------------------
AGREEMENT made this 18th day of December, 1996, by and among each of
the entities listed as a Purchaser on the signature pages hereof
(collectively, "Purchaser"), Toray Industries, Inc., a Japanese corporation
("Toray"), Toray Industries (America), Inc., a New York corporation ("Toray
America"), and Shimadzu Corporation, a Japanese corporation ("Shimadzu" and,
together with Toray and Toray America, "Sellers"), and Therma-Wave, Inc., a
Delaware corporation ("Company").
W I T N E S S E T H:
WHEREAS, (i) Toray is the owner of 30,046,687 shares of Common
Stock, par value $0.001 per share (the "Common Stock"), of Company, (ii) Toray
America, a wholly-owned subsidiary of Toray, is the owner of 5,737,182 shares
of Common Stock, and (iii) Shimadzu is the owner of 9,731,470 shares of Common
Stock (the shares of Common Stock owned by Sellers are referred to
collectively as the "Seller Shares"), which Seller Shares, as of the date
hereof, constitute all of the issued and outstanding shares of capital stock
of Company; and
WHEREAS, Company desires to issue and sell to Purchaser or its
designees, and Purchaser desires to purchase from Company, 8,135,003 shares of
the Common Stock
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(the "Purchaser Shares"), for the purchase price and upon the terms and
conditions hereinafter set forth; and
WHEREAS, Company desires to purchase from the Sellers, and the
Sellers desire to sell to Company, 39,414,087 Seller Shares for the purchase
price and upon the terms and conditions hereinafter set forth; and
WHEREAS, immediately following the transactions referred to above
(i) Purchaser and its designees shall deliver to Company the Purchaser Shares,
and Company shall issue to Purchaser and its designees in exchange therefor
8,490,567 shares of newly authorized and issued voting common-A stock of
Company (the "Common-A Stock") and 943,396 shares of newly authorized and
issued voting common-L Stock of Company (the "Common-L Stock" collectively
with the Common-A Stock, the "New Common Stock"), and (ii) Sellers shall
deliver to Company 6,101,252 shares of the Seller Shares, and Company shall
issue to the Sellers in exchange therefor 509,433 shares of Common-A Stock,
56,604 shares of Common-L Stock and 750,000 shares of Preferred Stock (as
hereinafter defined) upon the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and mutual
covenants hereinafter contained, the parties hereto agree as follows:
2
1. Definitions. (a) As used in this Agreement, the following
terms shall have the indicated meanings, which meanings shall be applicable,
except to the extent otherwise indicated in a definition of a particular term,
both to the singular and plural forms of such terms.
"Affiliate" of any particular Person shall mean any other Person
controlling, controlled by or under common control with such particular
Person, where "control" means the possession, directly or indirectly, of the
power to direct the management and policies of a Person whether through the
ownership of voting securities, contract or otherwise.
"Balance Sheet" shall mean the audited consolidated Balance Sheet of
Company and its Subsidiaries as at March 31, 1996.
"Balance Sheet Date" shall mean March 31, 1996.
"Bank Debt" shall mean the loan agreements set forth on Schedule 1
hereto.
"Best Efforts" shall mean commercially reasonable good faith efforts
but shall in no event require the commencement of litigation against any third
party or the payment of any fees or any other consideration to any third
party.
3
"Business Day" shall mean any weekday on which commercial banks in
New York City are open. Any action, notice or right which is to be exercised
or lapses on or by a given date which is not a Business Day may be taken,
given or exercised, and shall not lapse, until the end of the next Business
Day.
"Certificate of Amendment" shall mean the Certificate of Amendment
of Company's Certificate of Incorporation setting forth the terms of the New
Common Stock and the Preferred Stock in the form of Exhibit C hereto.
"Closing" has the meaning specified in Section 10(a) of this
Agreement.
"Closing Date" has the meaning specified in Section 10(a) of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common-A Stock" has the meaning specified in the recitals of this
Agreement.
"Common-L Stock" has the meaning specified in the recitals of this
Agreement.
"Common Stock" has the meaning specified in the first recital of
this Agreement.
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"Company" has the meaning specified in the first paragraph of this
Agreement.
"Company Plans" has the meaning specified in Section 4(r)(i) of this
Agreement.
"Confidentiality Agreement" shall mean that certain letter agreement
dated as of April 18, 1996 between Company and Xxxx Capital, Inc. with respect
to, among other things, the treatment of confidential information regarding
Company.
"Encumbrances" shall mean any lien, security interest, mortgage,
pledge, hypothecation, easement, conditional sale or other title retention
agreement, restrictive covenant, right of use or occupancy of any party other
than Company, option or other charge of any kind.
"Environmental Laws" shall mean any federal, state, or local law or
any common law, ordinance, regulation, order, permit or other legal
requirements pertaining to the environment, natural resources or work place or
public health or safety.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended.
"Financial Statements" shall mean (1) the audited consolidated
balance sheets of Company and its Subsidiaries as at March 31, 1996 and April
2, 1995 and March 27, 1994 and the related audited consolidated Statements of
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Operations and Cash Flows of Company and its Subsidiaries for the years ended
March 31, 1996, April 2, 1995 and March 27, 1994, certified by Ernst & Young
LLP and (2) the Latest Financial Statements.
"Governmental Authority" means any government or governmental or
regulatory body thereof, or political subdivision thereof, whether federal,
state, local or foreign, or any agency, instrumentality or authority thereof,
or any court or arbitrator (public or private).
"Xxxx-Xxxxx-Xxxxxx Act" has the meaning specified in Section 5(h) of
this Agreement.
"Hazardous Materials" shall mean hazardous wastes as presently
defined by the Resource Conservation and Recovery Act of 1976, 42 U.S.C.
§609 et. seq., as amended, and regulations promulgated thereunder,
hazardous substances as presently defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, 42 U.S.C. §9601 et.
seq., as amended ("CERCLA" or "Superfund") and regulations promulgated
thereunder and any other material substance or waste with respect to which
liability or standards of conduct are imposed under any Environmental Laws.
"HSR Notice" has the meaning specified in Section 5(h) of this
Agreement.
6
"Indebtedness" shall mean all obligations which arise from borrowed
money or the deferred purchase price of property or services (other than
accounts payable arising in the ordinary course of business).
"Latest Balance Sheet" means the unaudited consolidated balance
sheet of Company and its Subsidiaries as at September 30, 1996.
"Latest Financial Statements" means the Latest Balance Sheet and the
related unaudited consolidated statements of operations and cash flows of
Company and its Subsidiaries for the six months then ended.
"Lease" or "Leases" has the meaning specified in Section 4(i) of
this Agreement.
"Material Adverse Effect" shall mean a material adverse effect on
the business, operations, assets or financial condition of Company and its
Subsidiaries taken as a whole.
"Multiemployer Plan" has the meaning specified in Section 4(r)(i) of
this Agreement.
"New Common Stock" has the meaning specified in the recitals of this
Agreement.
"Permitted Encumbrance" shall mean (a) Encumbrances imposed by any
Governmental Authority for Taxes not yet due and payable or which are being
contested in good faith and
7
by appropriate proceedings if adequate reserves with respect thereto are
maintained on the books of Company or its Subsidiaries in accordance with
generally accepted accounting principles; (b) carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Encumbrances arising in
the ordinary course of business which are not overdue for a period of more
than 30 days or which are being contested in good faith and by appropriate
proceedings, if adequate reserves with respect thereto are maintained on the
books of Company or its Subsidiaries in accordance with generally accepted
accounting principles; (c) pledges or deposits in connection with worker's
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of any or all of the following: bids,
trade contracts (other than for borrowed money), leases, statutory
obligations, surety and appeal bonds, performance bonds and other obligations
of a like nature incurred in the ordinary course of business; (e) easements,
rights-of-way, restrictions and other similar encumbrances on real property
incurred in the ordinary course of business and encroachments (whether or not
in the ordinary course of business) which, in the aggregate, are not
substantial in amount, and which do not in any case materially detract from
the value of the property subject
8
thereto or materially interfere with the ordinary conduct of the business
thereon; and (f) all the exceptions to title reflected in Schedule 4(m).
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Stock" means the 6% voting convertible preferred stock of
Company having a mandatory redemption date of ten years plus one day from the
date of issuance and having the terms set forth in the Certificate of
Amendment.
"Purchaser" has the meaning specified in the first paragraph of this
Agreement.
"Purchaser Shares" has the meaning specified in the recitals of this
Agreement.
"Registration Agreement" means the Registration Agreement,
substantially in the form of Exhibit D hereto, to be entered into on the
Closing Date among the Purchaser, each Seller and Company.
"Seller New Common Stock" has the meaning specified in Section 2(c)
of this Agreement.
"Seller Purchase Price" has the meaning specified in Section 2(b) of
this Agreement.
9
"Seller Shares" has the meaning specified in the recitals of this
Agreement.
"Sellers" has the meaning specified in the first paragraph of this
Agreement.
"Shimadzu" has the meaning specified in the first paragraph of this
Agreement.
"Sobrato Lease" means the Lease, dated May 26, 1995, between Sobrato
Interests, as landlord, and Company, as tenant.
"Stockholders Agreement" means the Stockholders Agreement,
substantially in the form of Exhibit E hereto, to be entered into on the
Closing Date among the Purchaser, each Seller and Company.
"Subsidiary" shall mean each corporation; partnership or other
entity, fifty percent (50%) or more of the outstanding voting shares of which
or other voting interests or equity interests in the case of a partnership are
owned or controlled directly or indirectly by Company.
"Tax" or "Taxes" means all taxes, charges, fees, imposts, levies or
other assessments, including, without limitation, all net income, franchise,
profits, gross receipts, capital, sales, use, ad valorem, value added,
transfer, transfer gains, inventory, capital stock, license, withholding,
payroll, employment, social security, unemploy-
10
ment, excise, severance, stamp, occupation, real or personal property, and
estimated taxes, water, rent and sewer service charges, customs duties, fees,
assessments and charges of any kind whatsoever, together with any interest and
any penalties, fines, additions to tax or additional amounts thereon, imposed by
any taxing authority (federal, state, local or foreign) and shall include any
transferee liability in respect of Taxes.
"Tax Return" means all returns, declarations, reports, estimates,
information returns and statements required to be filed in respect of any
Taxes.
"Toray" has the meaning specified in the first paragraph of this
Agreement.
"Toray America" has the meaning specified in the first paragraph of
this Agreement.
"WARN" shall mean the Workers Adjustment and Retraining Act of 1988
and any similar state or local plant closing law.
The term "to Company's knowledge" shall mean to the actual
knowledge of Xxxxx Xxxxxxxxxx or Xxxxxxx X. Xxx.
2. Sale of Shares; Purchase Price. (a) On the terms and subject
to the conditions set forth in this Agreement, at the Closing, Company hereby
agrees to issue, sell and deliver to Purchaser and its designees, and
11
Purchaser hereby agrees to purchase (or to cause its designees to purchase)
from Company, the Purchaser Shares (to be allocated among Purchasers and their
designees as they may agree) for $20,000,000 (the "Company Purchase Price"),
which amount shall be payable in U.S. dollars in immediately available funds,
to the account specified in writing to Purchaser by Company on or prior to the
Closing Date.
(b) On the terms and subject to the conditions set forth in this
Agreement, at the Closing, Company hereby agrees to purchase from Sellers, and
Sellers hereby agree to sell to Company, 39,414,087 Seller Shares, for a total
purchase price of $96,900,000 (the "Seller Purchase Price"), which amount
shall be allocated $63,967,973 to Toray, $12,214,189 to Toray America and
$20,717,838 to Shimadzu and shall be payable in U.S. dollars in immediately
available funds, to the accounts specified by Sellers in writing to Company on
or prior to the Closing Date.
(c) Immediately following the transactions referred to in
Sections 2(a) and (b) above, (i) Purchaser and its designees shall deliver to
Company the Purchaser Shares, and Company shall issue to Purchaser in exchange
therefor 8,490,567 shares of Common-A Stock and 943,396 shares of Common-L
Stock (to be allocated among Purchasers
12
and their designees as they may agree), which shares shall represent, upon
consummation of the transactions contemplated by this Agreement, approximately
63% of the fully-diluted New Common Stock (including any warrants, options, or
other equity securities convertible into New Common Stock), and (ii) Sellers
shall deliver to Company 6,101,252 Seller Shares, and Company shall issue to
Sellers in exchange therefor 509,433 shares of Common-A Stock and 56,604 shares
of Common-L Stock ("Seller New Common Stock"), which shares shall represent,
upon consummation of the transactions contemplated by this Agreement,
approximately 3.79% of the fully-diluted New Common Stock (including any
warrants, options or other equity securities convertible or exchangeable into
New Common Stock) and shall have an initial aggregate valuation of $1,200,000,
and 750,000 shares of the Preferred Stock, which shall have an aggregate
liquidation and redemption value of $13,800,000 and be convertible into
approximately 5% of the fully-diluted New Common Stock (including any warrants,
options or other equity securities convertible or exchangeable into New Common
Stock). Such Common-A Stock, Common-L Stock and Preferred Stock shall be
allocated 336,299, 37,367 and 495,108 to Toray, 64,214, 7,135 and 94,537 to
Toray America and 108,920, 12,102 and 160,355 to Shimadzu, respectively,
13
and shall be duly registered in the names specified by Sellers to Company in
writing prior to the Closing Date.
3. Representations and Warranties of Sellers. Each Seller hereby
severally represents and warrants to Purchaser as to itself only as follows:
(a) Organization and Good Standing. Such Seller (other than
Toray America) is a corporation duly incorporated, validly existing and in
good standing under the laws of Japan. Toray America is a corporation duly
incorporated, validly existing and in good standing under the laws of the
State of New York.
(b) Ownership of Shares and Execution of Agreement. Each of
Toray, Toray America and Shimadzu is the record and beneficial owner of
30,046,687, 5,737,182 and 9,731,470 shares of Common Stock, respectively, free
and clear of any and all Encumbrances. Subject to the approval of its Board
of Directors, such Seller has the corporate power and authority to enter into
this Agreement and to sell, transfer, assign and deliver the Seller Shares
owned by it as provided in this Agreement. Subject to the approval of its
Board of Directors, the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of such
14
Seller. Subject to the approval of its Board of Directors, this Agreement has
been duly executed and delivered by such Seller and constitutes the legal,
valid and binding obligation of such Seller, enforceable against it in
accordance with its terms.
4. Representations and Warranties of Company. Company hereby
represents and warrants to Purchaser as follows (it being understood that the
inclusion of any item on a schedule hereto shall not be deemed an
acknowledgement that such item is (i) material, (ii) would be reasonably
likely to result in a Material Adverse Effect, or (iii) is required to be
disclosed under this Agreement and any information disclosed on any schedule
shall be deemed disclosed for the purpose of all schedules hereto):
(a) Organization and Good Standing. Company is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of Delaware, and has full corporate power and authority to own its
properties and carry on its business as it is now being conducted. Company is
duly qualified as a foreign corporation and is in good standing under the laws
of (i) each jurisdiction in which it owns real property and (ii) each other
jurisdiction in which the conduct of its business or the ownership of its
assets requires such qualification and where a failure to be so
15
qualified would have a Material Adverse Effect. The copies of Company's
Certificate of Incorporation and By-Laws (together with all amendments
thereto) which have been previously delivered or made available to Purchaser
are complete and correct.
(b) Capitalization. (i) The authorized capital stock of
Company consists of 50,000,000 shares of Common Stock, of which 45,515,339
shares are outstanding as of the date hereof. All of the outstanding shares
of Common Stock of Company have been validly issued and are fully paid and
non-assessable. No shares of capital stock are held by Company as treasury
stock. Other than as provided in this Agreement, there is no option, warrant,
call, commitment or other security or agreement of any kind to which Company
is a party requiring, there is no agreement to grant or issue any option,
warrant or other security to which Company is a party requiring, and there are
no convertible or exchangeable securities of Company outstanding which upon
conversion or exchange would require, the issuance of any shares of capital
stock of Company or other securities convertible or exchangeable into shares
of capital stock or any debt or equity security of Company of any kind or
containing any profit participation features.
16
(ii) Company has no stock appreciation rights or phantom
stock plans. Other than as provided in this Agreement, Company has no
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any shares of its capital stock or warrants, options or other rights to
acquire its capital stock. There are no statutory or, to the knowledge of
Company, contractual stockholders preemptive rights or rights of first refusal
with respect to the issuance of Company's stock. There are no agreements
other than as disclosed on Schedule 4(b) hereto among or by any Seller with
respect to the voting or transfer of Company's capital stock or with respect
to any other aspect of Company's affairs. Except as listed on Schedule 4(c)
hereto, Company does not own or hold the right to acquire any shares of stock
or any other security or interest in any other Person.
(c) Subsidiaries. Company has no Subsidiaries, except as
listed on Schedule 4(c) hereto. The authorized and outstanding capital stock
or equity interests of each Subsidiary is as set forth on Schedule 4(c)
hereto. All of such outstanding shares or equity interests have been validly
issued and are fully paid, non-assessable and, except as set forth on Schedule
4(c), owned by Company or its Subsidiaries as indicated thereon, free and
clear of any
17
and all Encumbrances. No shares of capital stock are held by any Subsidiary
as treasury stock. There is no option, warrant, call, commitment or other
security or agreement of any kind to which any Subsidiary is a party
requiring, there is no agreement to issue any option, warrant, or other
security to which any Subsidiary is a party requiring, and there are no
convertible or exchangeable securities of any Subsidiary outstanding which
upon conversion or exchange would require, the issuance of any shares of
capital stock or equity interests of any Subsidiary or other securities
convertible or exchangeable into shares of capital stock or any other debt or
equity security of any kind of any Subsidiary or containing any profit
participation features. No Subsidiary of Company has any stock appreciation
rights or phantom stock plans. No Subsidiary of Company has any obligation
(contingent or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital stock or warrants, options or other rights to acquire
its capital stock. There are no statutory or, to the knowledge of Company,
contractual stockholders preemptive rights or rights of first refusal with
respect to the issuance of such Subsidiary's stock. There are no agreements
among or by any stockholder of any Subsidiary of Company with respect to the
voting or transfer of such Subsidiary's capital stock or
18
with respect to any other aspect of such Subsidiary's affairs. No Subsidiary
of Company owns or holds the right to acquire any shares of stock or any other
security or interest in any other Person. Each Subsidiary is a corporation
duly incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation, and has full corporate power and
authority to own its properties and carry on its business as now being
conducted. Each Subsidiary is duly qualified as a foreign corporation and is
in good standing under the laws of (i) each jurisdiction in which it owns real
property and (ii) each other jurisdiction in which the conduct of its business
or the ownership of its assets requires such qualification and where a failure
to be so qualified would have a Material Adverse Effect. The copies of each
Subsidiary's Certificate or Articles of Incorporation and By-Laws (together
with all amendments thereto) which have previously been delivered or made
available to Purchaser are complete and correct.
(d) Financial Statements. Company has delivered to Purchaser
copies of the Financial Statements. Each of the Financial Statements is in
accordance with the books and records of Company and its Subsidiaries, as of
the dates and for the periods indicated, has been prepared in accordance
19
with generally accepted accounting principles and in conformity with the
practices consistently applied by Company in the immediately preceding fiscal
periods, and presents fairly in all material respects the consolidated
financial position, results of operations and cash flows of Company and its
Subsidiaries as at the dates and for the periods indicated and, subject, in
the case of the Latest Financial Statements, to normal year-end audit
adjustments and the absence of footnotes. Reference is made however to
Schedule 4(d) hereto.
(e) No Undisclosed Liabilities. None of Company or its
Subsidiaries has any liabilities or obligations (whether accrued, contingent,
known or unknown, unliquidated or otherwise) arising out of or related to
transactions entered into or action or inaction on the part of Company or its
Subsidiaries on or prior to the date hereof (regardless of when any such
liability or obligation is asserted), except (a) liabilities and obligations
described on any schedule to this Agreement (to the extent that the relevance
of such liability or obligation is reasonably apparent in the schedule in
which such liability or obligation is disclosed), (b) liabilities and
obligations to the extent specifically reflected and reserved against in the
Balance Sheet or the Latest Balance Sheet, (c) liabilities and
20
obligations which have arisen after September 30, 1996, in the ordinary course
of business or otherwise in accordance with the terms of this Agreement and
(d) liabilities and obligations that are specifically addressed by any other
representation and warranty of Company in this Agreement and which are not
required to be disclosed pursuant to the terms thereof.
(f) No Material Adverse Change; No Dividends. (i) Except as
set forth on Schedule 4(f) hereto, since the Balance Sheet Date there has been
no material adverse change in the business, operations, assets or financial
condition of Company and its Subsidiaries taken as a whole. For purposes of
this Section 4(f), no change shall be considered such a "material adverse
change" if such change results from or arises out of circumstances affecting
the semi-conductor capital equipment industry of Company and its Subsidiaries
generally;
(ii) Since the Balance Sheet Date (a) no dividends or
distributions have been declared or paid on or made with respect to the shares
of capital stock of Company nor have any such shares been repurchased or
redeemed by Company, and (b) except as set forth on Schedule 4(f) hereto, no
officer, director, stockholder or Affiliate of Company or any of its
Subsidiaries or any individual related
21
by blood, marriage or adoption to any such individual or any Affiliate of any
such Person has entered into any agreement or commitment or been a party to
any transaction with Company or any of its Subsidiaries pursuant to which such
Person or individual has received or is entitled to receive any payments
(whether in the form of compensation or otherwise) other than normal
compensation paid to officers in the ordinary course of business of Company
and its Subsidiaries in accordance with their past custom and practice.
(g) Taxes. (i) Except as set forth on Schedule 4(g)
hereto, all Tax Returns required to be filed by or on behalf of Company or the
Subsidiaries have been filed with the appropriate Governmental Authorities in
all jurisdictions in which such Tax Returns are required to be filed and all
such Tax Returns are true, correct and complete in all material respects. All
Taxes owed by Company or the Subsidiaries, either directly, as part of a
consolidated Tax Return, or otherwise, for all periods ended on or before the
Balance Sheet Date, have been fully and timely paid or are adequately provided
for on the Balance Sheet.
(ii) Except as set forth on Schedule 4(g) hereto, (A) all
deficiencies asserted in writing or
22
assessments made as a result of any examinations by the Internal Revenue
Service or any other Governmental Authority of the Tax Returns of or covering
Company or the Subsidiaries have been fully paid, and there are no unpaid
deficiencies asserted in writing or assessments made by any taxing authority
against Company or the Subsidiaries and (B) except for taxable periods for
which the statutes of limitation have already expired, no waivers of statutes
of limitations have been given or requested with respect to Company or the
Subsidiaries in connection with any Tax Returns covering Company or the
Subsidiaries.
(iii) Except as set forth on Schedule 4(g) hereto, neither
Company nor the Subsidiaries has filed a consent pursuant to Section 341(f) of
the Code or agreed to have Section 341(f)(2) of the Code apply to any
disposition of a subsection (f) asset (as such term is defined in Section
341(f)(4) of the Code) owned by Company or the Subsidiaries.
(iv) Company is not and has not been a United States real
property holding corporation within the meaning of Section 897(c)(2) of the
Code during the applicable period specified in Section 897(c)(1)(A)(ii).
(v) Except as set forth on Schedule 4(g) hereto, no
property owned by Company or the Subsidiaries (A) is
23
property required to be treated as being owned by another person pursuant to
the provisions of Section 168(f)(8) of the Internal Revenue Code of 1954, as
amended and in effect immediately prior to the enactment of the Tax Reform Act
of 1986, (B) constitutes "tax-exempt use property" within the meaning of
Section 168(h)(1) of the Code or (C) is tax-exempt bond financed property
within the meaning of Section 168(g) of the Code.
(vi) Except as either set forth on Schedule 4(g) hereto,
neither Company nor any of the Subsidiaries has ever been a member of an
"affiliated group" within the meaning of Section 1504 of the Code or of any
analogous combined, consolidated or unitary group defined under state, local
or foreign law of which Company has not been the parent.
(vii) Except as set forth on Schedule 4(g) hereto, no claim
has ever been made in writing by a Governmental Authority in a jurisdiction
where either Company or a Subsidiary does not file Tax Returns that such
entity is or may be subject to Taxes assessed by such jurisdiction.
(viii) Except as set forth on Schedule 4(g) hereto, neither
Company nor any of the Subsidiaries have made any payments, or are or shall
become obligated (under any contract entered into on or before the Closing
Date) to
24
make any payments, that shall be non-deductible under Section 280G of
the Code (or any corresponding provision of state, local or foreign income Tax
law).
(ix) Except as set forth on Schedule 4(g) hereto, neither
Company nor any of the Subsidiaries will be required (A) as a result of a
change in method of accounting for a taxable year ending on or prior to the
Closing Date previously agreed to with the Internal Revenue Service or any
other Governmental Authority, to include any adjustment in taxable income for
any taxable year or portion thereof beginning after the Closing Date, (B) as a
result of any "closing agreement," as described in Section 7121 of the Code
(or any corresponding provision of state, local or foreign income Tax law), to
include any item of income in, or exclude any item of deduction from, taxable
income for any taxable year or portion thereof beginning after the Closing
Date, or (C) as a result of any deferred intercompany gain described in
Treasury Regulation Section 1.1502-13 or any excess loss account described in
Treasury Regulation Section 1.1502-19 (or any corresponding or similar
provision or administrative rule of federal, state, local or foreign income
tax law), to include any item of income in taxable income for any taxable year
or portion thereof beginning after the Closing Date.
25
(h) Patents, Trademarks and Copyrights. Schedule 4(h)
hereto contains a complete and correct list of software (other than software
generally available with an annual license fee for less than $5,000), patents
and patent applications; copyright applications and registrations and material
unregistered copyrights; trademarks, trade names, service marks, internet
domain names and registrations and applications for any of the foregoing owned
or used by Company or a Subsidiary and each license or other agreement
relating thereto. Except as set forth on Schedule 4(h) hereto, all right,
title and interest in and to each of the foregoing is owned by the party shown
on such Schedule as owning the same, free and clear of all Encumbrances, other
than Permitted Encumbrances. Except as set forth on Schedule 4(h) hereto,
Company and each Subsidiary owns all right, title and interest in and to, or
has a valid and enforceable license with respect to, free and clear of all
Encumbrances, other than Permitted Encumbrances, all patents, patent
applications, trademarks, trade names, service marks, copyrights, mask works,
and registrations, applications and renewals for any of the foregoing, trade
secrets and confidential information (including, but not limited to know-how
and formulas), computer software and other intellectual property rights
necessary for the conduct
26
of their respective businesses as now being conducted (collectively, the
"Intellectual Property"). Except as set forth on Schedule 4(h) hereto, none
of the Intellectual Property is invalid, unenforceable, misappropriates or
conflicts with the rights of others, or, to Company's knowledge, has been
infringed, misused or misappropriated by others. Except as set forth on
Schedule 4(h) hereto, since January 1, 1993, neither Company nor any
Subsidiary has received any notices of and is not aware of any facts which
indicate a likelihood of any infringement or misappropriation by or conflict
with any third party with respect to any Intellectual Property. Except as
set forth on Schedule 4(h) hereto, neither Company nor any Subsidiary has
infringed, misappropriated or otherwise conflicted with any intellectual
property rights of any third party nor received any notices that indicate a
likelihood of the foregoing. There were no intentional misrepresentations or
misstatements made or intentional failures to disclose material information
during the prosecution of any Intellectual Property before the relevant
intellectual property offices. The consummation of the transactions
contemplated by this Agreement will not adversely affect Company's or any
Subsidiary's right, title and interest in and to Intellectual Property.
27
(i) Real Property; Leases of Real Property. Neither Company
nor its Subsidiaries owns any real property. Schedule 4(i) hereto contains a
complete and correct list of all leases, subleases, license agreements or
other rights of possession or occupancy of real property to which Company or
any Subsidiary is a party (as tenant, occupier or possessor) (each such lease
or agreement, a "Lease" and collectively the "Leases"). All of the Leases are
in full force and effect. Complete and correct copies of each Lease have been
furnished or made available to Purchaser. Except as disclosed on Schedule
4(i) hereto, no consent is required of any landlord or other third party to
any Lease to consummate the transactions contemplated hereby, and upon
consummation of the transactions contemplated hereby, each Lease will continue
to entitle Company or its Subsidiaries, as the case may be, to the use and
possession of the real property specified in such Leases and for the purposes
for which such real property is now being used by Company or its Subsidiaries,
respectively. Except as set forth in such Schedule, neither (a) Company nor
its Subsidiaries nor (b) to Company's knowledge, any landlord or other third
party to any Lease, is in default beyond any applicable notice or grace period
or has received written notice of default still outstanding on the date hereof
under any Lease.
28
(j) Permits; Compliance with Laws. Company and its
Subsidiaries have all necessary permits, licenses and governmental
authorizations required for the ownership or occupancy of their respective
properties and assets and the carrying on of their respective business, except
where the failure to have any such permit, license or governmental
authorization would not be reasonably likely to result in a Material Adverse
Effect. Company and its Subsidiaries are in compliance with all laws, except
where such non-compliance would not be reasonably likely to result in a
Material Adverse Effect.
(k) Insurance. Schedule 4(k) hereto contains a complete and
correct list of all policies of insurance of any kind or nature covering
Company or its Subsidiaries, including, without limitation, policies of life,
fire, theft, employee fidelity and other casualty and liability insurance, and
such policies are in full force and effect. Complete and correct copies of
each such policy have been furnished or made available to Purchaser.
(l) Material Contracts. Except as listed in Schedule 4(l)
hereto or any other schedule hereto, neither Company nor any Subsidiary is a
party to any (i) contract not made in the ordinary course of business
involving a payment to or by Company in excess of $50,000,
29
(ii) severance agreement or stay bonus or similar payment or other agreement
with any employee of Company or any of its Subsidiaries entered into in
contemplation of the transactions contemplated hereby; (iii) contract for the
employment of any officer or employee; (iv) franchise, distributorship or
sales agency agreement; (v) contract for the future purchase of materials,
supplies, services, merchandise or equipment not capable of being fully
performed or not terminable within a period of one year from the date hereof
or in excess of normal operating requirements; (vi) agreement for the sale or
lease of any of its assets other than in the ordinary course of business;
(vii) contract or commitment for capital expenditures; (viii) mortgage,
pledge, conditional sales contract, security agreement, factoring agreement,
or other similar agreement with respect to any of its real or personal
property; (ix) lease of machinery or equipment involving annual payments in
excess of $25,000; (x) agreement with a labor union or labor association; (xi)
loan agreement, promissory note issued by it, guarantee, subordination or
similar type of agreement; (xii) stock option, retirement, severance, pension,
bonus, profit sharing, group insurance, medical or other fringe benefit plan
or program providing employee benefits; (xiii) consulting agreement; (xiv)
30
municipal or other governmental franchise agreements; (xv) agreement with a
term of more than six (6) months which is not terminable by Company or any of
its Subsidiaries upon more than thirty (30) days notice without penalty, (xvi)
take or pay contracts; (xvii) warranty agreement with respect to its services
rendered or its products sold or leased, other than those entered into in the
ordinary course of business; (xviii) contract or group of related contracts
(including customer orders) with the same party or group of affiliated parties
the performance of which involves consideration in excess of $50,000 or, in
the case of ordinary course customer orders, in excess of $250,000; or (xix)
contract or agreement prohibiting it from freely engaging in any business or
competing anywhere in the world. Except as set forth in Schedule 4(l) hereto,
Company and its Subsidiaries have performed all of the obligations required to
be performed by them to date and are not in default, nor, to Company's
knowledge, is any third party in default, under any of the agreements, leases,
contracts or other documents to which they, or such third party, are a party
listed on Schedule 4(l). Except as described in Schedule 4(l) hereto, no
material supplier of Company or any Subsidiary has stated that it shall stop, or
materially decrease the rate of, supplying materials, products or services to
Company or any
31
Subsidiary. Except as described in Schedule 4(l) hereto, no material customer
has stated that it shall cancel or defer any material orders or commitments for
the purchase of materials, products or services, or materially decrease the rate
of buying materials products or services from Company or any Subsidiary. A true
and correct copy of each of the written instruments, plans, contracts and
agreements and an accurate description of each of the oral agreements, contracts
and agreements which are required to be disclosed on Schedule 4(l) hereto
together with all amendments, waivers or other changes thereto have been
furnished or made available to Purchaser or its counsel.
(m) Title to Properties; Absence of Encumbrances. Company and
its Subsidiaries have good and marketable title to or have a valid enforceable
right to use all of their respective properties and assets used by them in the
operation of the business of Company and its Subsidiaries as presently
conducted by Company and its Subsidiaries, free and clear of any and all
Encumbrances, except as set forth in Schedule 4(m) hereto and except for
Permitted Encumbrances. Company and each of its Subsidiaries own, or have a
valid agreement to use, all the assets necessary for the conduct of their
respective businesses as presently conducted. There are no transitional
services which are
32
required from any Seller to operate the business of Company and its
Subsidiaries as it is currently conducted.
(n) Restrictions. Except as set forth in Schedules 4(i) or
4(n) hereto, neither the execution or delivery of this Agreement nor the
consummation of the transactions contemplated hereby, will conflict with or
result in a breach of, or give rise to a right of termination of, or
accelerate the performance required by, any terms of any (i) Lease or (ii)
agreement required to be listed on Schedule 4(l) hereto, or, in either case,
constitute a default thereunder, nor will it violate any of the provisions of
their respective Certificates or Articles of Incorporation or By-Laws, or
violate any judgment or decree by which they or Sellers are bound.
(o) Litigation; Consents. Except as disclosed in Schedule
4(o) hereto, there is no action, suit, proceeding, formal governmental inquiry
or investigation pending or, to Company's knowledge, threatened against or
affecting Sellers, Company or its Subsidiaries which seeks to restrain or
prohibit or otherwise challenges the consummation, legality or validity of the
transactions contemplated hereby. Except as disclosed in Schedule 4(o)
hereto, there is no action, suit, proceeding, formal governmental inquiry or
investigation pending or, to Company's knowledge,
33
threatened against or affecting Company or the Subsidiaries or pending or
threatened by Company or any Subsidiaries against any third party. Except as
set forth in Section 6(f) hereof, and except with respect to local
governmental permits or licenses, no consent, approval or authorization of any
Governmental Authority on the part of Sellers, Company or the Subsidiaries is
required in connection with the execution and delivery of this Agreement or
the consummation of any of the transactions contemplated hereby.
(p) Environmental Matters. Except as disclosed in Schedule
4(p) hereto, (i) the operations of Company and its Subsidiaries have complied
and are in compliance with applicable Environmental Laws, (ii) neither Company
nor its Subsidiaries is subject to any judicial or administrative
investigation, claim, demand or proceeding relating to any violation of or
liability under, any Environmental Law, (iii) neither Company nor its
Subsidiaries has received any written notice from any Governmental Authority
that it is or may be a potentially responsible party at any Superfund site,
and (iv) neither Company nor any Subsidiary, since January 1, 1993, has
treated, stored, disposed of, arranged for or permitted the disposal of,
transported, handled, or released any Hazardous Materials or owned or operated
any property or facility (and no such property or facility is
34
contaminated by any such substance) in a manner that has given or would give
rise to liabilities under any Environmental Laws.
(q) Collective Bargaining Agreements and Labor. (i) Except
as set forth on Schedule 4(q), none of Company or the Subsidiaries is a party
to any labor or collective bargaining agreement, and there are no labor or
collective bargaining agreements which pertain to employees of Company or the
Subsidiaries.
(ii) Except as set forth on Schedule 4(q), there are no pending
strikes, work stoppages, slowdowns, lockouts, arbitrations or other labor
disputes against Company or the Subsidiaries.
(iii) Except as set forth on Schedule 4(q), there are no pending
or, to Company's knowledge, threatened complaints, charges or claims against
Company or the Subsidiaries filed with any public or Governmental Authority,
arbitrator or court based upon the employment or termination of employment by
Company or the Subsidiaries of any individual.
(iv) Except as set forth on Schedule 4(q), Company and the
Subsidiaries are in compliance with all laws, regulations and orders relating
to the employment of labor, including all such laws, regulations and orders
relating to
35
wages, hours, WARN, collective bargaining, discrimination, civil
rights, safety and health, workers' compensation and the collection and
payment of withholding and/or social security taxes and any similar tax.
(r) ERISA. (i) Schedule 4(r) sets forth all material
"employee benefit plans", as defined in Section 3(3) of ERISA, maintained by
Company and the Subsidiaries or to which Company and the Subsidiaries
contributed or are obligated to contribute thereunder for current or former
employees of Company and the Subsidiaries, including all plans covering
employees outside of the United States (the "Company Plans"). Schedule 4(r)
separately identifies each Company Plan which is a multiemployer plan, as
defined in Section 3(37) of ERISA ("Multiemployer Plan").
(ii) True, correct and complete copies of the following documents,
with respect to each of Company Plans (other than the Multiemployer Plans),
have been made available or delivered to Purchaser by Company: (A) any plans
and related trust documents, and amendments thereto; (B) the most recent Forms
5500; (C) the last IRS determination letter, if applicable; and (D) summary
plan descriptions.
(iii) Company Plans intended to qualify under Section 401 of the
Code are so qualified and the trusts maintained pursuant thereto are exempt
from federal income
36
taxation under Section 501 of the Code, and nothing has occurred with respect
to the operation of Company Plans which could cause the loss of such
qualification or exemption or the imposition of any liability, penalty or tax
under ERISA or the Code.
(iv) Company Plans have been maintained in accordance with their
terms and with all provisions of the Code and ERISA (including rules and
regulations thereunder) and other applicable federal, state and foreign laws
and regulations.
(s) Affiliate Transactions. Except as set forth on Schedule
4(s), no officer, director, stockholder or Affiliate of Company or any of its
Subsidiaries or any individual related by blood, marriage or adoption to any
such individual or any Affiliate of any such Person is a party to any
agreement, commitment or transaction with Company or any of its Subsidiaries
or has any interest in any property used by Company or any of its
Subsidiaries.
(t) Closing Date. The representations and warranties of Company
and its Subsidiaries contained in this Section 4 shall be true and correct in
all material respects on the date of the Closing as though then made, except
(i) for those given as of a particular date, which shall be true and correct
in all material respects as of such date, (ii)
37
for changes therein permitted or contemplated hereby or (iii) as disclosed in
writing to Purchaser by Company prior to the Closing.
5. Representations and Warranties of Purchaser. Each Purchaser,
jointly and severally, hereby represents and warrants to Sellers and Company
as follows:
(a) Organization and Good Standing. Each Purchaser is a
limited partnership or general partnership duly organized, validly existing
and in good standing under the laws of the jurisdiction of its organization,
as set forth beneath its name on the signature pages hereof, and has full
partnership power and authority to own its properties and carry on its
business as it is now being conducted.
(b) Restrictions. The execution and delivery of this
Agreement and the consummation of the transactions contemplated hereby will
not conflict with or result in a breach of any terms of any agreement to which
each Purchaser is a party, except for such conflicts and breaches that in the
aggregate would not have a material adverse effect on Purchaser's ability to
consummate the transactions contemplated by this Agreement, nor will it
violate any of the provisions of such Purchaser's partnership agreement or, if
applicable, certificate of limited partnership.
38
(c) Litigation; Consents. There is no action, suit,
proceeding or, to such Purchaser's knowledge, formal governmental inquiry or
investigation pending against Purchaser which seeks to restrain or prohibit or
otherwise challenges the consummation, legality or validity of the
transactions contemplated hereby, and, except as set forth in Section 7(c)
hereof, no consent, approval or authorization of any Governmental Authority on
the part of Purchaser is required in connection with the execution and
delivery of this Agreement or the consummation of any of the transactions
contemplated hereby.
(d) Execution and Effect of Agreement. Each Purchaser has the
corporate power and authority to enter into this Agreement, and the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary partnership
action on the part of each Purchaser. This Agreement has been duly executed
and delivered by each Purchaser and constitutes the legal, valid and binding
obligation of each Purchaser, enforceable against it in accordance with its
terms.
(e) Investment Representation. Each Purchaser possesses such
knowledge and experience in financial and business matters that it is capable
of evaluating the merits
39
and risks of its investment hereunder. Each Purchaser is acquiring the
Purchaser Shares and the New Common Stock for its own account, for investment
purposes only and not with a view to the distribution thereof. Each Purchaser
is an "accredited investor" as defined in Regulation D under the Securities
Act of 1933, as amended.
(f) Sources of Information. Each Purchaser acknowledges that
it has conducted its own investigation of the business and affairs of Company
and the Subsidiaries, that the Purchaser Shares and the New Common Stock have
not been registered under the Securities Act of 1933, as amended, or any state
securities or "Blue Sky" laws; and that it has received all the information
that it requested from Sellers and Company concerning Company and the
Subsidiaries.
(g) New Common Stock and Preferred Stock. Assuming the
accuracy of the representations and warranties of Sellers and Company
contained herein, (i) at Closing, Company will not have outstanding any equity
securities (or rights to acquire equity securities) other than the New Common
Stock and Preferred Stock (or options or warrants to acquire the New Common
Stock), (ii) all of the Seller New Common Stock and Preferred Stock, when
issued, shall be duly authorized, validly issued, fully paid and
nonassessable,
40
and (iii) the issuance and delivery to Sellers of the Seller New Common Stock
and Preferred Stock as provided in this Agreement will convey to Sellers good
and marketable title to such Seller New Common Stock and Preferred Stock, free
and clear of any and all Encumbrances.
(h) Xxxx-Xxxxx-Xxxxxx. Unless Purchaser gives written
notice (the "HSR Notice") to Sellers prior to the Closing that Purchaser
intends to make all required filings with the Federal Trade Commission and the
U.S. Department of Justice-Antitrust Division pursuant to the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976 (the "Xxxx-Xxxxx-Xxxxxx
Act"), after giving effect to the transactions contemplated by this Agreement,
no individual Purchaser, together with all entities controlling, controlled by
or under common control with such Purchaser (as "control" is defined by 16 CFR
Section 801.1(b)), will hold (as "hold" is defined by 16 CFR Section 801.1(c))
either voting securities of Company valued in excess of $15,000,000 or 50% or
more of the voting securities of Company.
6. Covenants of Company, Sellers and Toray. Company hereby
covenants and agrees (except for subsections (f) and (h) below), and Sellers
hereby covenant and agree with respect to subsections (e), (f), (g) and (h)
below, and
41
Toray hereby covenants and agrees with respect to subsection (i) below, that:
(a) Representations and Warranties. From and after the
date hereof and until the Closing Date, Company will not and will not permit
its Subsidiaries to take any action which would cause any of the
representations and warranties made by it in this Agreement not to be true and
correct in all material respects on and as of the Closing Date with the same
force and effect as if such representations and warranties had been made on
and as of the Closing Date, except for changes permitted or contemplated
hereby.
(b) Access to Documents; Opportunity to Ask Questions. From
and after the date hereof and until the Closing Date, Company and the
Subsidiaries shall make available for inspection by Purchaser or its
representatives, upon reasonable advance notice and during normal business
hours, Company's and the Subsidiaries' corporate records, books of account,
contracts and all other documents reasonably requested by Purchaser, its
managerial employees, counsel and auditors in order to permit Purchaser and
such representatives to make reasonable inspection and examination of the
business and affairs of Company and the Subsidiaries. Company shall further
cause the managerial employees, counsel and regular independent certified
public
42
accountants of Company and the Subsidiaries to be available upon reasonable
advance notice to answer questions of Purchaser's representatives concerning
the business and affairs of Company and the Subsidiaries and shall further
cause them to make available all relevant books and records in connection with
such inspection and examination.
(c) Maintenance of Insurance. From and after the date hereof
and until the Closing Date, Company shall, and shall cause its Subsidiaries
to, use their Best Efforts to maintain in full force and effect all of their
presently existing insurance coverage, or insurance comparable to such
existing coverage.
(d) Conduct of Business. From and after the date hereof and
until the Closing Date, Company shall conduct its business and cause the
business of its Subsidiaries to be conducted in the ordinary course,
consistent with the present conduct of their business. During such period of
time, except upon the prior written consent of Purchaser, Company or the
Subsidiaries shall not: (i) amend its Certificate or Articles of
Incorporation or By-Laws, except as contemplated hereby, including the filing
of the Certificate of Amendment with the Secretary of State of Delaware, (ii)
issue any additional shares of capital stock or issue, sell or grant any
option or right to acquire or
43
otherwise dispose of or commit to dispose of any of its authorized but
unissued capital stock, (iii) declare or pay any dividends or make any other
distribution in cash or property on Company's capital stock, (iv) repurchase
or redeem any shares of Company's capital stock, (v) enter into any employment
agreement or become liable for any bonus, profit-sharing or incentive payment
to any of its officers or directors, except pursuant to presently existing
plans, arrangements or agreements disclosed herein or in a schedule hereto or
in the ordinary course of business, (vi) mortgage, pledge, or otherwise
encumber any part of its assets, tangible or intangible, except Permitted
Encumbrances, (vii) sell, transfer or acquire any properties or assets,
tangible or intangible, other than in the ordinary course of business, (viii)
make any material changes in its customary method of operations, including
marketing and pricing policies and maintenance of business premises, fixtures,
furniture and equipment, (ix) modify, amend or cancel any of its existing
leases or cancel any indebtedness or waive any claims or rights or enter into
any contracts, agreements, leases or understandings, other than in the
ordinary course, or enter into any loan agreements or incur or assume any
liabilities or obligations or guarantee such liabilities or obligations or
incur indebtedness for borrowed money or
44
guarantee any such indebtedness other than in the ordinary course of business,
(x) enter into any collective bargaining agreement, (xi) merge or consolidate
with any corporation, acquire control of, or acquire any capital stock or
other securities of, any other corporation or business entity, (xii) enter
into any agreement or commitment or become party to any transaction with any
officer, director, employee, stockholder or Affiliate of Company or any of its
Subsidiaries or any individual related by blood, marriage or adoption to any
such individual or any Affiliate of such Person other than normal compensation
paid to officers and employees in the ordinary course of business of Company
and its Subsidiaries in accordance with their past custom and practice, (xiii)
enter into any agreement which would be required to be disclosed on Schedule
4(l) or take any steps incident to or in furtherance of any such actions
whether by entering into an agreement providing therefor or otherwise.
(e) Consents; Conditions Precedent. From and after the date
hereof and until the Closing Date, Company shall use its Best Efforts to
obtain the consents of those parties indicated on Schedules 4(i) and 4(n) in
connection with the transactions contemplated hereby and to cause the
conditions precedent to the consummation of the transactions contemplated
hereby to be satisfied.
45
(f) Japanese Ministry of Finance and Xxxx-Xxxxx-Xxxxxx
Filings. Toray and Shimadzu shall make all required filings as promptly as
possible with the Japanese Ministry of Finance in connection with the
consummation of the transactions contemplated hereby. If Purchaser delivers
to Sellers the HSR Notice, Toray and Company shall make all required filings
as promptly as possible with the Federal Trade Commission and the U.S.
Department of Justice - Antitrust Division pursuant to the Xxxx-Xxxxx-Xxxxxx
Act, and shall cooperate with Purchaser in connection with such filings.
(g) Exclusivity. None of Company, Sellers or any of their
respective Subsidiaries, Affiliates, representatives, officers, employees,
directors or agents shall, directly or indirectly, (i) submit, solicit,
initiate or encourage any proposal or offer from any person or enter into any
agreement or accept any offer relating to any (a) reorganization, liquidation,
dissolution or recapitalization of Company or any of its Subsidiaries, (b)
merger or consolidation involving Company or any of its Subsidiaries, (c)
purchase or sale of any assets or capital stock (other than a purchase or sale
of inventory and related items in the ordinary course of business consistent
with past custom and practice) of Company or any of its
46
Subsidiaries or (d) similar transaction or business combination involving
Company or any of its Subsidiaries or the assets of any of them (each of the
foregoing described in clauses (a) through (d), a "Company Transaction") or
(ii) furnish any information with respect to, assist or participate in or
facilitate in any other manner any effort or attempt by any person to do or
seek to do any of the foregoing. Company and each Seller agree to notify
Purchaser promptly if any Person makes any proposal, offer, inquiry or contact
with respect to a Company Transaction.
(h) Seller Covenants. Sellers shall cause the members of
Company's Board of Directors to resign (or be removed) effective as of the
Closing Date and shall cause Purchaser's nominees for director to be elected
to Company's Board of Directors effective as of the Closing Date. Sellers
shall cause the Certificate of Amendment to be filed with the Secretary of
State of Delaware.
(i) Toray Covenant. Toray shall pay $1,000,000 to Company
on the Closing Date if the conditions set forth in Section 9(c) hereof
relating to the Sobrato Lease have been satisfied; provided that Company has
not terminated the option under the Sobrato Lease referred to in Section 7(c)
hereof prior to the closing hereunder.
48
7. Covenants of Purchaser. Purchaser hereby covenants and agrees
that:
(a) Representations and Warranties. From and after the date
hereof and until the Closing Date, Purchaser will not take any action which
would cause any of the representations and warranties made by it in this
Agreement not to be true and correct in all material respects on and as of the
Closing Date with the same force and effect as if such representations and
warranties had been made on and as of the Closing Date.
(b) Consents; Conditions Precedent. From and after the date
hereof and until the Closing Date, Purchaser shall use its Best Efforts to
cause the conditions precedent to the consummation of the transactions
contemplated hereby to be satisfied.
(c) Payment of Bank Debt; Cancellation of Guarantees.
Subject to satisfaction of Section 8(g) hereof, Purchaser shall,
simultaneously with the Closing, cause Company to pay all amounts owing under
its Bank Debt on the Closing Date and terminate all agreements in connection
therewith pursuant to which any Seller has any obligations or liability,
including, without limitation, any guarantees thereof. Subject to
satisfaction of Section 8(g) hereof, Purchaser shall (i) arrange for a letter
of credit in the
48
amount of $2,500,000 (as to which Company is the account party) to be
delivered on the Closing Date to the landlord under the Sobrato Lease (the
"Sobrato Landlord") as security for Company's obligations thereunder and (ii)
cause Company to agree to amend the Sobrato Lease (x) to increase from $6,000
to $12,000 per month the additional rent paid to the Sobrato Landlord to
preserve the option to lease an additional building pursuant to Section 1 of
Exhibit D of the Sobrato Lease (the "Option Payments"), (y) to provide that
Company shall begin making the Option Payments as of the Closing, and (z) to
provide that the Monthly Base Rent pursuant to the Option Building Lease (each
as defined in the Sobrato Lease) will be based on fair market value determined
at the time the option is exercised.
(d) Purchaser Directors. Purchaser shall, on the Closing
Date, designate three or more individuals to become members of the Board of
Directors of Company, and cause such designees, upon their election or
appointment as directors, effective as of the Closing Date, to authorize
Company to purchase the Seller Shares and issue the Seller New Common Stock
and Preferred Stock as set forth in this Agreement.
(e) Xxxx-Xxxxx-Xxxxxx Filings. If Purchaser delivers to
Sellers the HSR Notice, Purchaser shall make all required filings as promptly
as possible with the Federal
49
Trade Commission and the U.S. Department of Justice - Antitrust Division
pursuant to the Xxxx-Xxxxx-Xxxxxx Act, and it shall cooperate with Sell ers
and Company in connection with such filings.
8. Conditions Precedent to Purchaser's Obligation. The obligation
of Purchaser to consummate the transactions contemplated hereby on the Closing
Date is, at the option of Purchaser, subject to the satisfaction of the
following conditions:
(a) Subject to Section 29 hereof, each of the representations
and warranties of Sellers contained in Section 3 hereof and Company contained
in Section 4 hereof qualified as to materiality or Material Adverse Effect
shall be true and correct and the representations and warranties of Sellers
contained in Section 3 hereof and Company contained in Section 4 hereof not so
qualified shall be true and correct in all material respects as of the Closing
Date with the same force and effect as though the same had been made on and as
of the Closing Date, except for those given as of a particular date, which for
those so qualified shall be true and correct and for those not so qualified
shall be true and correct in all material respects (which for purposes hereof
shall mean in a manner which would not constitute a Material Adverse Effect)
as of such date, and
50
except for changes therein permitted or contemplated hereby; it being
understood that as to representations and warranties requiring a list of
contracts, contracts entered into after the date hereof without violating
Article 6 hereof shall be deemed a permitted change.
(b) Sellers and Company shall have performed and complied in
all material respects with the covenants and provisions in this Agreement
required herein to be performed or complied with by them between the date
hereof and the Closing Date.
(c) No action or proceeding shall have been instituted against
Purchaser, Sellers, Company or any Subsidiary before any court or other
governmental body, seeking to restrain or prohibit the consummation of the
transactions contemplated hereby or to make the consummation of the
transactions contemplated hereby illegal, which in the reasonable opinion of
Purchaser makes it inadvisable to consummate such transactions.
(d) Purchaser shall have received opinions of counsel for
Toray and Shimadzu and of Weil, Gotshal & Xxxxxx LLP, counsel for Sellers and
Company, each dated the Closing Date and each in form and substance reasonably
satisfactory to Purchaser and its counsel, to the effect set forth in Exhibits
X-0, X-0 and A-3 hereto, respectively.
51
(e) Purchaser shall have received a certificate to the effect
set forth in subsections (a) and (b) above, dated the Closing Date, signed by
a duly authorized officer of each Seller and Company as to each such party's
own representations, warranties and covenants.
(f) Purchaser shall have received a certificate of a duly
authorized officer of each Seller, dated the Closing Date, setting forth
resolutions of the Board of Directors of each Seller authorizing the signing
of this Agreement and certifying that such resolutions were duly adopted and
have not been rescinded or amended as of the Closing Date.
(g) Company shall have received the proceeds from its
financing sources on terms satisfactory to Purchaser in an amount sufficient
to consummate the transactions contemplated by this Agreement and to fund the
continuing operations of Company and its Subsidiaries, it being understood
that Company shall not obtain such financing pursuant to any offering of
securities registered with the Securities and Exchange Commission, nor shall
such financing be consummated prior to the Closing Date.
(h) If Purchaser delivers to Sellers the HSR Notice, the
waiting periods under the Xxxx-Xxxxx-Xxxxxx Act shall have expired.
52
9. Conditions Precedent to Sellers' Obligation. The obligation of
Sellers to consummate the transactions contemplated hereby on the Closing Date
is, at the option of Sellers, subject to the satisfaction of the following
conditions:
(a) Each of the representations and warranties of Purchaser
contained in Section 5 hereof shall be true and correct in all material
respects as of the Closing Date with the same force and effect as though the
same had been made on and as of the Closing Date, except for changes therein
permitted or contemplated hereby.
(b) Purchaser shall have performed and complied in all
material respects with the covenants and provisions in this Agreement required
herein to be performed or complied with by Purchaser between the date hereof
and the Closing Date, including, without limitation, the full payment of the
Bank Debt and termination of guarantees thereof by Sellers.
(c) The cancellation of (i) the guaranty of the Sobrato Lease
listed on Schedule 7(c) hereof and (ii) the existing $750,000 letter of credit
securing the Sobrato Lease.
(d) No action or proceeding shall have been instituted against
Purchaser, Sellers, Company or any
53
Subsidiary before any court or other governmental body, seeking to restrain or
prohibit the consummation of the transactions contemplated hereby or to make
the consummation of the transactions contemplated hereby illegal, which in the
reasonable opinion of Sellers makes it inadvisable to consummate such
transactions.
(e) Sellers shall have received an opinion of Xxxxxxxx &
Xxxxx, counsel for Purchaser, dated the Closing Date, in form and substance
reasonably satisfactory to Sellers and their counsel, to the effect set forth
in Exhibit B hereto.
(f) Sellers shall have received a certificate to the effect
set forth in subsections (a) and (b) above, dated the Closing Date, signed by
a duly authorized partner of Purchaser.
(g) Sellers shall have received a certificate of a duly
authorized partner of Purchaser, dated the Closing Date, setting forth the
required consent of the partners of Purchaser authorizing the execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby, and certifying that such consent was duly adopted and has
not been rescinded or amended as of the Closing Date.
54
(h) Sellers shall have received a solvency opinion and a
valuation opinion, each in form and substance and from an independent firm or
firms satisfactory to Sellers, stating that, after giving effect to the
transactions contemplated by this Agreement, Company shall be solvent (as
defined in applicable fraudulent conveyance statutes) and that the fair market
value of the assets of Company exceeds its liabilities, respectively.
(i) The requisite approval of the Japanese Ministry of Finance
shall have been obtained and if Purchaser delivers to Sellers the HSR Notice,
the waiting periods under the Xxxx-Xxxxx-Xxxxxx Act shall have expired.
(j) Sellers shall have received the approval of their
respective Boards of Directors of this Agreement and the transactions
contemplated hereby; provided that if no Seller terminates this Agreement by
December 27, 1996 pursuant to Section 17(c) hereof, this condition shall be
deemed waived by Sellers.
10. Closing Date; Closing. (a) Except as hereinafter provided,
the closing hereunder (herein called the "Closing") shall take place at the
offices of Weil, Gotshal & Xxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, X.X. 00000
at 10:00 A.M. on the date that is five (5) Business Days after each of the
conditions precedent to the Closing shall
55
have been satisfied or waived, but not later than May 31, 1997, unless
otherwise mutually agreed to in writing by Purchaser and Sellers. The date of
the Closing is referred to in this Agreement as the "Closing Date".
(b) All proceedings to be taken and all documents to be
executed and delivered by Sellers in connection with the consummation of the
transactions contemplated hereby shall be reasonably satisfactory in form and
substance to Purchaser and its counsel. All proceedings to be taken and all
documents to be executed and delivered by Purchaser in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory in form and substance to Sellers and their counsel. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed to have been taken and executed
simultaneously, and no proceedings shall be deemed taken nor any documents
executed or delivered until all have been taken, executed and delivered.
(c) At the Closing, or immediately thereafter, as applicable,
Sellers shall deliver, or shall cause to be delivered, to Purchaser (other
than with respect to clause (i) below which shall be delivered to Company) the
following:
56
(i) Certificates representing the Seller
Shares, which certificates shall be duly endorsed in blank or, in lieu
thereof, shall have affixed thereto stock powers executed in blank, and in
proper form for transfer.
(ii) Certificates representing the Purchaser
Shares duly registered in the names of each Purchaser as Purchaser shall
designate to Company and Sellers prior to the Closing.
(iii) Opinions of counsel for Sellers and
Company, each dated the Closing Date, setting forth the matters required
pursuant to Section 8(d) hereof.
(iv) The certificates signed by Sellers and
Company as referred to in Section 8(e) hereof.
(v) The certified resolutions of the Boards of
Directors of Sellers referred to in Section 8(f) hereof.
(vi) An incumbency certificate setting forth
the names of officers of each Seller who are authorized to execute this
Agreement and all documents executed by Sellers pursuant hereto, together with
their respective signatures, signed by a duly authorized officer of each
Seller.
(vii) A duly executed counterpart signature
page to the Registration Agreement.
(viii) A duly executed counterpart signature page
to the Stockholders Agreement.
57
(d) At the Closing Toray shall deliver to Company, by wire
transfer of funds, $1,000,000, as provided in Section 6(i) hereof, if required
thereby.
(e) At the Closing, or immediately thereafter, as applicable,
Purchaser shall deliver, or cause to be delivered, to Sellers (other than with
respect to clause (i) below which shall be delivered to Company) the
following:
(i) A wire transfer of funds, in the aggregate
amount of Company Purchase Price, as provided in Section 2 hereof.
(ii) A wire transfer of funds, in the aggregate
amount of the Seller Purchase Price, as provided in Section 2 hereof.
(iii) An opinion of counsel for Purchaser,
dated the Closing Date, setting forth the matters required pursuant to Section
9(e) hereof.
(iv) The certificate signed by a duly
authorized partner of Purchaser referred to in Section 9(f) hereof.
(v) The certified consent of the partners of
Purchaser referred to in Section 9(g) hereof.
(vi) An incumbency certificate setting forth the
names of partners of Purchaser who are authorized to execute this Agreement
and all documents executed by
58
Purchaser pursuant hereto, together with their respective signatures, signed
by a duly authorized partner of Purchaser.
(vii) Evidence to the Sellers' satisfaction
that the Bank Debt has been fully repaid and any guaranties thereof by Sellers
have been terminated.
(viii) Certificates representing the Seller New
Common Stock and the Preferred Stock, duly registered in the names of each
Seller.
(ix) A duly executed counterpart signature page
to the Registration Agreement.
(x) A duly executed counterpart signature page
to the Stockholders Agreement.
(xi) The solvency and valuation opinions
referred to in Section 9(h) hereof.
11. No Brokers. Sellers, Company and Purchaser represent to each
other that they respectively have had no dealings with any broker or finder in
connection with the transactions contemplated by this Agreement, other than,
in the case of Sellers, Xxxxxxx Xxxxx & Co and, in the case of Company,
Antares International Partners, Inc. Sellers agree to indemnify and hold
Purchaser harmless from and against any and all liability to which Purchaser
may be subjected by reason of any broker's, finder's or similar fee with
respect
59
to the transactions contemplated by this Agreement to the extent such
fee is attributable to any action undertaken by or on behalf of Sellers,
except that the fees of Antares International Partners, Inc. in an amount not
to exceed $800,000 shall be paid by Company. Purchaser agrees to indemnify
and hold Sellers and Company harmless from and against any and all liability
to which Sellers or Company may be subjected by reason of any broker's,
finder's or similar fee with respect to the transactions contemplated by this
Agreement to the extent such fee is attributable to any action undertaken by
or on behalf of Purchaser.
12. Survival of Representations and Warranties. The parties hereto
agree that the representations and warranties contained in this Agreement or
in any certificate, document or instrument delivered in connection herewith,
shall survive the execution and delivery of this Agreement, and the Closing
hereunder, regardless of any investigation made by the parties hereto;
provided, however, that any claims or actions with respect thereto (other than
with respect to representations and warranties made pursuant to Sections 3(b),
4(b)(i), the first, third and fourth (as to transfer of stock) sentences of
4(b)(ii) and 4(f)(ii), which shall survive forever) shall terminate unless,
within 18 months after the Closing Date (or, (A) in the case of any
60
representation and warranty made pursuant to Section 4(g) which shall survive
for the applicable statute of limitations, (B) in the case of any
representation and warranty made pursuant to Section 4(h), which shall survive
until the second anniversary of the Closing Date, (C) in the case of any
representation and warranty made pursuant to Section 4(p), which shall survive
until the third anniversary of the Closing Date and (D) in the case of the
representation and warranty made pursuant to Section 4(t) where the subject
matter of the breach is addressed by one of the representations and warranties
referred to in (A), (B) or (C) above, the time limitation set forth in the
relevant item of clause (A), (B) or (C) above shall control the survival of
such representation), written notice of such claims is given to (i) Toray, in
the case of its and Toray America's representations and warranties contained
in Section 3 hereof, (ii) Shimadzu, in the case of its representations and
warranties contained in Section 3 hereof, or (iii) Sellers in case of the
representations and warranties contained in Sections 4 and 11 hereof, or such
actions are commenced.
61
13. Indemnification of and by Purchaser and Limitation of
Liability. (a) Subject to the Closing hereunder and to the survival
provisions set forth in Section 12 above and the limitations and requirements
hereinafter contained in this Section 13, Toray and Shimadzu jointly agree to
indemnify and hold Purchaser harmless from and against any and all
liabilities, obligations, damages, deficiencies, judgments, costs and
expenses, including reasonable attorney's fees incidental to the foregoing
(collectively, the "Losses") resulting from any misrepresentation or breach of
warranty by them (or in the case of Toray, Toray America) or Company (it being
understood that neither Toray nor Shimadzu is indemnifying Purchaser hereunder
for a breach of any representation or warranty by the other, but Toray is
indemnifying for any such breach by Toray America) contained in this Agreement
or any certificate delivered by it (or in the case of Toray, Toray America) or
Company pursuant hereto or breach of any agreement or covenant on the part of
itself (or in the case of Toray, Toray America) or Company under the terms of
this Agreement (it being agreed that for purposes of the indemnity provided in
this Section 13, the representations and warranties contained in Section 4(j)
shall be read without regard to any standard of materiality). Notwithstanding
the foregoing, the
62
indemnification in this Section 13(a) shall not apply to breaches of
representations or warranties contained in Section 4(g) or otherwise relating
to a Loss with respect to Taxes, which shall be governed by Section 14 hereof.
(b) From and after the Closing, Company agrees to indemnify
and hold Sellers harmless from and against any and all Losses arising out of
(i) any Company Plan, except those which arise as a result of a breach of the
representations contained in Sections 4(q) or (r) or to the extent caused by
the actions of any Seller, and (ii) the severance of any employee of Company
or the Subsidiaries on or after the Closing Date (including without any
limitation any liabilities under or with respect to WARN). Company shall
indemnify and hold Sellers harmless from and against any and all payments that
any of them may have to make under any guaranty listed on Schedule 7(c) hereto
which, for any reason, is not cancelled as of the Closing Date.
(c) From and after the Closing, Company agrees to indemnify
and hold Sellers harmless from and against any and all Losses arising under
Environmental Laws now or hereafter in effect, and relating to, resulting from
or based upon anything related to the property presently or formerly owned,
leased or operated by Company or its Subsidiaries or any of their predecessors
or the facilities or operations
63
thereof, except for items constituting a breach of the representation
contained in Section 4(p) hereof (collectively "Environmental Losses"). Except
for any indemnity right under this Agreement, each of Sellers or Purchaser and
Company waives any right (including, without limitation, any statutory right
to recovery or contribution) it has or may have in the future against Sellers
or Purchaser, as the case may be, in connection with any and all matters
arising under Environmental Laws.
(d) Anything to the contrary herein notwithstanding, the
indemnifications by Sellers contained in subsections (a) above of this Section
13 and any and all liabilities and obligations of and causes of action against
Sellers (or any one of them), and any recovery in respect thereof, arising out
of or relating to this Agreement and the transactions contemplated hereby
shall be effective only if, and to the extent that, the aggregate of such
Losses indemnified against shall exceed $2,000,000, in which event such
indemnification shall be effective with respect to all such Losses in excess
of such amount, and shall be limited to an aggregate payment of no more than
$30,000,000. Notwithstanding the foregoing, the provisions of this Section
13(d) shall not apply to Sellers' representations and warranties set forth in
Section 3(b), Section 4(b)(i),
64
the first, third and fourth (as to the transfer of stock) sentences of Section
4(b)(ii), Section 4(f)(ii), Section 14 (other than Section 14(a)(i)(y) as
provided therein) or to Sellers' covenants contained in Section 15.
(e) In the event that any legal proceedings shall be
instituted or that any claim or demand shall be asserted by any person in
respect of which payment may be sought by Purchaser from either Seller or by
either Seller from Company under the provisions of this Section 13, regardless
of the $2,000,000 minimum referred to in subsection (d) above, Purchaser or
Sellers shall promptly cause written notice of the assertion of any claim of
which it has knowledge which is covered by this indemnity to be forwarded to
the indemnifying party, which notice in the case of Sellers shall be forwarded
to both Sellers, and subject to the following sentence the indemnifying party
shall have the right, at its option and at its own expense, to be represented
by counsel of its choice and to defend against, negotiate, settle or otherwise
deal with any proceeding, claim or demand which relates to any Loss
indemnified against hereunder; provided, however, that no settlement shall be
made without the prior written consent of the indemnified party, which consent
shall not be unreasonably withheld or delayed; and provided further, that the
indem-
65
nified party may participate in any such proceeding with counsel of its choice
and at its expense; it being understood that, subject to paragraph (d) above,
the indemnifying party shall be responsible for fees and expense of the
indemnified party during any period where the indemnifying party has failed to
assume control of the defense. Notwithstanding the foregoing, in the event that
any proceeding shall be initiated or any claim or demand shall be asserted
against Purchaser other than a proceeding, claim or demand solely for money
damages, Purchaser shall have the right, at its option and at Sellers' sole
expense, to be represented by counsel of its choice and to control, defend
against, negotiate, settle or otherwise deal with such proceeding, claim or
demand; provided, however, that no settlement shall be made by Purchaser in
respect of such proceeding, claim or demand without the prior written consent of
Sellers, which consent shall not be unreasonably withheld or delayed. The
parties hereto agree to cooperate fully with each other in connection with the
defense, negotiation or settlement of any such legal proceeding, claim or
demand. The defense and control of any indemnification claim against Sellers
shall be, as between Sellers, handled and controlled mutually by them.
66
After any final judgment or award shall have been rendered by a
court, arbitration board or administrative agency of competent jurisdiction
and the expiration of the time in which to appeal therefrom, or a settlement
shall have been consummated, or Purchaser and Sellers or if applicable,
Company, shall have arrived at a mutually binding agreement with respect to
each separate matter indemnified by Sellers or Company hereunder, as the case
may be, the indemnified party shall forward to the indemnifying party notice
of any sums due and owing by it pursuant to this Agreement with respect to
such matter, and the indemnifying party shall be required to pay all of the
sums so owing to the indemnified party within ten (10) days after the date of
such notice. It is expressly agreed that Sellers may satisfy any payment
obligations they may have pursuant to the terms of this Section 13, at their
option, by the delivery to an indemnified party of any combination of cash,
shares of Preferred Stock (each such share to be valued at its liquidation
value plus any accrued and unpaid dividends thereon) and shares of Seller New
Common Stock (with each share of Common-L Stock to be valued at $19.080 and
each share of Common-A Stock to be valued at $0.2356).
(f) Notwithstanding anything contained herein to the contrary,
the indemnities provided for in Section 13(a)
67
hereof shall exist with respect to any Loss whether or not the actual amount
of which shall have been ascertained prior to the conclusion of the applicable
survival period following the Closing Date referred to in Section 12 hereof,
so long as written notice shall have been given to Sellers by Purchaser prior
to the conclusion of said applicable period of the matter as to which
indemnification has been asserted.
(g) Any indemnity payments otherwise due and payable under
Sections 11, 13 and 14 hereof shall be decreased to the extent of any
reduction of Tax liability realized by an indemnified party (which, in the
case of Purchaser, includes Company) by reason of payment of an indemnifiable
Loss as and when such reduction in Tax liability is realized.
(h) Any payments under Sections 11, 13 and 14 hereof shall be
treated by the parties hereto for federal, state, local and foreign income Tax
purposes as a purchase price adjustment, except to the extent that another
treatment is required by law.
14. Tax Indemnification and Related Matters. (a) (i)
Toray and Shimadzu jointly agree to indemnify and hold harmless Company and
Purchaser from and against any and all Losses with respect to (x) Taxes for
all taxable periods
68
(or portions thereof) of the Company and its Subsidiaries ending on or prior
to the Balance Sheet Date and (y) any breach of any representation or warranty
contained in Section 4(g), in each case in excess of the reserves for Taxes on
the Balance Sheet. The indemnity contained in clause (y) hereof shall be
subject to the provisions of Section 13(d).
(ii) Company agrees to indemnify and hold Sellers harmless
from and against any and all Losses with respect to (x) Taxes for all taxable
periods (or portions thereof) of Company and its Subsidiaries up to and
including the Balance Sheet Date to the extent of the reserves for Taxes for
such periods on the Balance Sheet and (y) Taxes for all taxable periods (or
portions thereof) of Company and its Subsidiaries beginning after the Balance
Sheet Date (except to the extent of a breach of any representation or warranty
contained in Section 4(g) hereof).
(c) Company agrees to assign and promptly remit (and to cause
its Subsidiaries to assign and promptly remit) to Toray and Shimadzu all
refunds (including interest thereon) received by Purchaser, Company, any
Subsidiary or any affiliate thereof of any Taxes for which Toray and Shimadzu
are responsible pursuant to this Agreement. Company agrees that, upon the
request of Toray and Shimadzu,
69
Purchaser shall file, or cause Company or its Subsidiaries to file, a claim
for refund for which Toray and Shimadzu are responsible pursuant to this
Agreement.
(d) (i) Company shall be responsible for filing or causing to be
filed all Tax Returns required to be filed by or on behalf of Company or its
Subsidiaries and/or their operations and assets after the Closing Date (taking
into account applicable extensions) and shall pay or cause to be paid any
Taxes shown to be due thereon.
(ii) With respect to any Tax Return of Company or its
Subsidiaries required to be filed by Company for a taxable period of Company
or its Subsidiaries ending on or prior to the Balance Sheet Date, Company
shall prepare such Tax Return in a manner consistent with past practices and
shall provide copies of such Tax Returns (and supporting documentation) to
Toray and Shimadzu at least thirty (30) Business Days prior to filing, along
with a statement setting forth the amount of Tax shown on such Tax Return for
which Toray and Shimadzu are responsible pursuant to Section 14(a)(i)(x)
hereof (the "Statement"). Toray and Shimadzu shall have the right to review
such Tax Return and the Statement prior to, and consent to, the filing of such
Tax Return. Toray and Shimadzu (on the one hand) and Company (on the other
hand) agree to cooperate and resolve in good
70
faith any issue arising as a result of the review of such Tax Return and the
Statement and to mutually consent to the filing as promptly as possible of
such Tax Return. In the event the parties are unable to resolve any dispute
within ten days following the delivery of such Tax Return and the Statement,
the parties shall jointly select a firm of independent accountants of
nationally recognized standing (who shall not have any material relationship
with Toray, Shimadzu, Company or Purchaser) mutually acceptable to Toray,
Shimadzu and Company to resolve such dispute as promptly as possible. If the
independent accountants are unable to make a determination with respect to a
disputed issue within five (5) business days prior to the due date (including
extensions) for the filing of such Tax Return, then Company may file such Tax
Return on the due date (including extensions) therefor, without such
determination having been made. Notwithstanding the filing of such Tax Return,
the independent accountants shall make a determination with respect to any
remaining disputed issue, and the amount of Taxes for which Toray and Shimadzu
are responsible pursuant to Section 14(a)(i)(x) hereof shall be based upon the
lower of (1) the Taxes shown on the Statement and (2) the determination of the
independent accountants. The fees and expenses of such independent
accountants shall
71
be borne one-half by Company and one-half by Toray and Shimadzu. Not later
than (x) five days before the due date for the payment of Taxes with respect
to such Tax Return or (y) in the event of a dispute, five days after notice to
Toray and Shimadzu of the resolution thereof, Toray and Shimadzu shall pay to
Company an amount equal to the Taxes shown on the Statement or as otherwise
agreed by Toray, Shimadzu and Company as being the responsibility of Toray and
Shimadzu under Section 14(a)(i)(x) hereof, or in such notice, as the case may
be.
(e) Company shall promptly notify Toray and Shimadzu upon receipt
by Company or its Subsidiaries or any affiliate thereof of written notice of
any Tax audits or proposed assessments against Company or its Subsidiaries for
taxable periods of Company or its Subsidiaries ending on or prior to the
Balance Sheet Date or with respect to any Taxes for which Toray and Shimadzu
are responsible hereunder. Toray and Shimadzu shall have the sole right to
represent Company's or its Subsidiaries' interests in any Tax audit or
administrative or court proceeding (1) relating to taxable periods of Company
or its Subsidiaries ending on or prior to the Balance Sheet Date and (2) if
and to the extent that such Tax audit or administrative or court proceeding
involves Taxes for which Toray and Shimadzu are responsible
72
hereunder and to employ counsel of its choice at its expense and to negotiate,
settle or otherwise deal with the matters raised in such audit or proceeding;
provided that Toray and Shimadzu shall not settle any claim without the prior
written consent of Company, which consent will not be unreasonably withheld,
if such settlement would have a material impact on Company for taxable periods
beginning after the Balance Sheet Date. Company will cooperate fully with
Toray and Shimadzu and its counsel in the defense against or compromise of any
claim in any said audit or proceeding.
(f) Any claim for indemnity hereunder must be made prior to thirty
(30) days after the expiration of the applicable Tax statute of limitations
with respect to the relevant taxable period (including extensions).
(g) All tax-sharing agreements or similar agreements with respect
to or involving Company or the Subsidiaries shall be terminated as of the
Closing Date and, after the Closing Date, Company and the Subsidiaries shall
not be bound thereby or have any liability thereunder.
15. Non-Competition; Non-Solicitation. As a condition precedent to
Purchaser's obligation to enter into and perform its obligations under this
Agreement, each Seller, on behalf of itself and its Affiliates, agrees that:
73
(i) For a period of three (3) years after the Closing Date
(the "Non-Competition Period"), neither such Seller nor its Affiliates shall,
directly or indirectly, either for itself or for any other person,
"participate", anywhere where Company and its Subsidiaries conduct business on
the Closing Date, in the business of manufacturing, marketing or selling (x)
measuring quipment used for material characterization (such as ion
implantation monitoring or measurements on metal films) which is competitive
with the products manufactured, marketed or sold by Company, (y) thin film
measurement equipment which is competitive with the products manufactured,
marketed or sold by Company, or (z) equipment which utilizes the Intellectual
Property listed in Schedule 4(h) (the "Business"). Notwithstanding the
foregoing, neither (A) the products manufactured or marketed by Toray and
Shimadzu (1) pursuant to the Development License Agreement among them, Company
and Therma-Wave (Japan) KK (the "Development License Agreement") or (2)
pursuant to any other agreement between Toray or Shimadzu (on the one hand)
and Company or any of its Subsidiaries (on the other hand) (including any New
Development Agreements (as defined in the Development License Agreement)), (B)
any products manufactured, marketed, sold or manufactured and marketed or sold
by Toray
74
or Shimadzu on the date hereof which do not utilize the Intellectual Property
listed on Schedule 4(h), nor (C) any thin film measurement equipment now or
hereafter marketed, sold or manufactured by Toray or Shimadzu which neither
utilizes the Intellectual Property listed on Schedule 4(h) nor which are used
in applications as to which Company's thin film measurement equipment is
currently applied, shall be deemed part of the Business. For purposes of this
Agreement, the term "participate" includes any direct or indirect interest in
any enterprise, whether as an officer, director, employee, partner, sole
proprietor, independent contractor, consultant, franchisor, franchisee,
licensor, creditor, owner or otherwise; provided, that the term "participate"
shall not include ownership of less than 5% of the stock of a publicly-held
corporation whose stock is traded on a national securities exchange or in the
over-the-counter market. Notwithstanding the foregoing, the Sellers and their
Affiliates may use the Intellectual Property listed in Schedule 4(h) to the
extent it is or becomes part of the public domain other than through breach of
this Agreement or through the fault of such Seller or any of its Affiliates,
and is used in products which are not competitive with products now
manufactured by Company and
75
does not constitute an infringement or misappropriation of Company's
proprietary intellectual property rights.
(ii) During the Non-Competition Period each Seller will not,
and will not permit its Affiliates to, disclose, divulge or appropriate for
their own use, or for the use of any third party, any secret or confidential
information or knowledge obtained by such Seller or any of its Affiliates
concerning the Business. This obligation of secrecy shall not apply to
information that (i) is or becomes part of the public domain other than
through breach of this Agreement or through the fault of such Seller or any of
its Affiliates, (ii) is obtained from an unaffiliated source, which source has
no obligation of secrecy to Purchaser, (iii) is required to be disclosed by
law or government or order (but only to the extent so required) or (iv) is
used as of the date of this Agreement by such Seller or any of its Affiliates
in any other lines of business, other than the Business (but only to the
extent so used).
(iii) During the two-year period following the Closing Date,
each Seller will not, and will not permit its Affiliates to, solicit the
employment (in any capacity) of any employee of Company who is so employed on
the Closing Date, other than Katsahiko Okada, without the prior written
consent of Purchaser.
76
(iv) If, at any time of enforcement of this Section 15, a
court holds that the duration, scope, geographic area or other restrictions
stated herein are unreasonable under circumstances then existing, the parties
agree that the maximum duration, scope, geographic area or other restrictions
deemed reasonable under such circumstances by such court shall be substituted
for the stated duration, scope, geographic area or other restrictions.
(v) Each Seller, on behalf of itself and its Affiliates,
recognizes and affirms that in the event of breach of any of the provisions of
this Section 15, money damages would be inadequate and Purchaser and its
Affiliates would have no adequate remedy at law. Accordingly, each Seller, on
behalf of itself and its Affiliates, agrees that Purchaser shall have the
right, in addition to any other rights and remedies existing in its favor, to
enforce its rights and such Seller's obligations under this Section 15 not
only by an action or actions for damages, but also by an action or actions for
specific performance, injunctive and/or other equitable relief in order to
enforce or prevent any violations (whether anticipatory, continuing or future)
of the provisions of Section 15 (including without limitation, the extension
of the Non-Competition Period by a period equal to (i) the length of the
violation of this
77
Section 15 plus (ii) the length of any court proceedings necessary to stop
such violation). In the event of a breach or violation by any Seller of any
of the provisions of this Section 15 the running of the Non-Competition Period
(but not of such Seller's obligations under this Section 15) shall be tolled
with respect to such Seller during the continuance of any actual breach or
violation.
16. Specific Performance. The parties hereto acknowledge that
irreparable damage would result if this Agreement is not specifically
enforced. Therefore, the rights and obligations of the parties under the
Agreement, including, without limitation, their respective rights and
obligations to sell and to purchase the Shares, shall be enforceable by a
decree of specific performance issued by any court of competent jurisdiction,
and appropriate injunctive relief may be applied for and granted in connection
therewith. Such remedies shall, however, be cumulative and not exclusive and
shall be in addition to any other remedies which any party may have under this
Agreement or otherwise.
17. Termination. Anything contained in this Agreement to the
contrary notwithstanding, this Agreement may be terminated:
79
(a) At any time on or prior to the Closing Date, by the mutual
consent in writing of Purchaser and Sellers; or
(b) By either Purchaser or Sellers if the Closing shall not
have occurred on or before May 31, 1997 (or such later date as may be agreed
upon in writing by the parties hereto).
(c) By any Seller on or prior to December 27, 1996 if the
Board of Directors of each Seller has not approved this Agreement and the
transactions contemplated hereby by such date.
In the event that this Agreement shall be terminated pursuant to
this Section 17, all further obligations of the parties under this Agreement
(other than Sections 11, 19 and 26) shall terminate without further liability
of any party to the other, provided that nothing herein shall relieve any
party from liability for its breach of this Agreement.
18. Further Assurances. The parties hereto each agree to execute
such other documents or agreements as may be necessary or desirable for the
implementation of this Agreement and the consummation of the transactions
contemplated hereby.
19. Confidentiality; Press Releases. (a) As more specifically set
forth in the Confidentiality Agreement,
79
Purchaser agrees to keep proprietary information regarding Sellers and, prior
to the Closing, Company and the Subsidiaries confidential and agrees that it
will only use such information in connection with the transactions
contemplated by this Agreement and not disclose any of such information other
than (i) to Purchaser's directors, officers, employees, lenders,
representatives, and agents who are or may be involved with the transactions
contemplated by this Agreement, (ii) to the extent such information presently
is or hereafter becomes available, on a non-confidential basis, from a source
other than Sellers or Company and (iii) to the extent disclosure is required
by law, regulation or judicial order by any Governmental Authority.
(b) Prior to any disclosure required by law, regulation or
judicial order Purchaser shall advise Sellers and Company of such requirement
so that they may seek a protective order.
(c) Prior to Closing or thereafter, neither Purchaser nor
Sellers shall make any press release or public announcement in connection with
the transactions contemplated hereby without the prior written consent of the
other party or, if required by law, without prior consultation with the other
party.
80
20. Notices. Any notices or other communications required or
permitted hereunder, shall be sufficiently given if in writing and personally
delivered or sent by registered or certified mail, postage prepaid, return
receipt requested, or sent by facsimile, addressed as follows or to such other
address as the parties shall have given notice of pursuant hereto:
In the case of Purchaser:
c/o Bain Capital, Inc.
Xxx Xxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxx
Xxxxx Xxxxxxx
Telecopy: (000) 000-0000
With a copy to:
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxxxx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxx X. Xxxxxxx, Esq.
Telecopy: (000) 000-0000
In the case of Toray, Toray America or Company:
Toray Industries, Inc.
0-0, Xxxxxx 0-xxxxx
Xxxxxxx, Xxxxx 000, Xxxxx
Attention: Xxxxxx Xxxxxxxx
Telecopy: (0473)50-6043
With a copy to Shimadzu and to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxx X. Xxxxxxx, Esq.
Telecopy: 000-000-0000
81
In the case of Shimadzu:
Shimadzu Corporation
0, Xxxxxxxxxx-Xxxxxxxxxxx
Xxxxxxx-xx, Xxxxx 000, Xxxxx
Attention: Soju Onose
Telecopy: (075)823-1115
With a copy to Toray and Weil, Gotshal & Xxxxxx LLP.
21. Entire Agreement. This Agreement and the Confidentiality
Agreement represent the entire understanding and agreement among the parties
hereto with respect to the subject matter hereof and can be amended,
supplemented or changed, and any provision hereof can be waived, only by
written instrument making specific reference to this Agreement signed by the
party against whom enforcement of any such amendment, supplement, modification
or waiver is sought.
22. Successors. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that this Agreement and all rights and obligations
hereunder may not be assigned or transferred without the prior written consent
of the other parties hereto, except that Purchaser may assign this Agreement
or any of its rights hereunder (i) to any of its Affiliates (provided
Purchaser shall not be released from any of its obligations hereunder) or (ii)
as collateral security to any of
82
Purchaser's or Company's financing sources which financing is incurred in
connection with the transactions contemplated hereby. Sellers may transfer a
portion of the Sellers' New Common Stock and Preferred Stock to be received by
them hereunder to certain management employees of Company and Purchaser agrees
to cooperate with Sellers in effectuating such transfer.
23. Section Headings. The section headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
24. Applicable Law; Consent to Jurisdiction. This Agreement shall
be governed by, construed and enforced in accordance with the laws of the
State of New York, without regard to the principles thereof relating to
conflict of laws. The parties hereto agree to submit to personal jurisdiction
and to waive any objection as to venue in the federal and state courts located
in the County of New York, State of New York. Service of process on any party
hereto in any action arising out of or relating to this Agreement shall be
effective if mailed to such party at the address listed in Section 19 hereof.
Nothing herein shall preclude any party from bringing suit or taking other
legal action in any other jurisdiction.
83
25. Transfer Taxes. Purchaser shall be liable for and shall pay
all excise, sales, use, transfer (including real property transfer or gains),
stamp, documentary, filing, recordation and other similar taxes which may be
imposed in connection with the transactions contemplated by this Agreement,
together with any interest, additions or penalties with respect thereto. Each
party hereto hereby agrees to file all necessary documentation (including, but
not limited to, all Tax Returns) with respect to all such amounts in a timely
manner.
26. Expenses. Whether or not the transactions contemplated hereby
are consummated, the parties hereto shall pay their own respective expenses in
connection with the fulfillment of their obligations hereunder or otherwise,
except that Company shall pay the expenses of Purchaser if the transactions
contemplated hereby are consummated.
27. Waiver of Jury Trial. The parties hereto waive all right to
trial by jury in any action or proceeding to enforce or defend any rights
under this Agreement.
28. Severability. If at any time subsequent to the date hereof,
any provision of this Agreement shall be held by any court of competent
jurisdiction to be illegal, void or unenforceable, such provision shall be of
no force and effect, but the illegality or unenforceability of such
84
provision shall have no effect upon and shall not impair the enforceability of
any other provision of this Agreement.
29. Toray America Shares. Prior to the Closing Date, Toray may
acquire the shares of Common Stock owned by Toray America; provided that Toray
transfers such shares to Company on the Closing Date in accordance with the
terms of this Agreement.
30. Waiver of Claims. If the Closing does not occur for any reason
whatsoever, Purchaser acknowledges and agrees that Purchaser shall have no
right to, and shall not, assert any claim against Company or Sellers for
breach of any representations or warranties contained in this Agreement.
31. Lease Amendment. Company covenants and agrees that for so long
as Toray has any obligations under the guarantee of the Sobrato Lease listed
on Schedule 7(c), it shall not assign or, in any manner that would adversely
impact Toray or increase its exposure under such guarantee, extend the term
of, or otherwise amend or modify the Sobrato Lease.
32. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
85
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
PURCHASER:
----------
XXXX CAPITAL FUND V, L.P., A DELAWARE
LIMITED PARTNERSHIP
By: Xxxx Capital Partners V, L.P.
Its: General Partner
By: Xxxx Capital Investors V, Inc.
Its: General Partner
By: /s/ XXXX XXXXXX
---------------------------------
Its: MANAGING DIRECTOR
---------------------------------
XXXX CAPITAL FUND V-B, L.P., A DELAWARE
LIMITED PARTNERSHIP
By: Xxxx Capital Partners V, L.P.
Its: General Partner
By: Xxxx Capital Investors V, Inc.
Its: General Partner
By: /s/ XXXX XXXXXX
---------------------------------
Its: MANAGING DIRECTOR
---------------------------------
BCIP ASSOCIATES, A DELAWARE GENERAL
PARTNERSHIP
By: /s/ XXXX XXXXXX
---------------------------------
A General Partner
86
BCIP TRUST ASSOCIATES, L.P., A DELAWARE
LIMITED PARTNERSHIP
By: /s/ XXXX XXXXXX
---------------------------------
A General Partner
TORAY INDUSTRIES, INC.
By: /s/ XXXXXX XXXXXXXX
---------------------------------
Its: DIRECTOR
---------------------------------
TORAY INDUSTRIES (AMERICA), INC.
By: /s/ [signature illegible]
---------------------------------
Its: PRESIDENT
---------------------------------
SHIMADZU CORPORATION
By: /s/ [signature illegible]
---------------------------------
Its: DIRECTOR
---------------------------------
THERMA-WAVE, INC.
By: /s/ XXXXX XXXXXXXXXX
---------------------------------
Its: PRESIDENT AND CHIEF EXECUTIVE OFFICER
-------------------------------------
87
Exhibit A-1
____________ __ , 1996
FORM OF OPINION OF
COUNSEL OF TORAY
----------------
Gentlemen:
I am counsel to Toray Industries, Inc., a Japanese corporation
("Toray"), and have acted in that capacity in connection with the preparation,
authorization, execution and delivery of, and the consummation of the
transactions contemplated by, the Recapitalization Agreement by and among the
entities listed therein as Purchaser (collectively, "Purchaser"), Toray, Toray
Industries (America), Inc., Shimadzu Corporation and Therma-Wave, Inc.
("Company") relating to the capital stock of Company, dated _______, 1996 (the
"Agreement"). Terms defined in the Agreement and not otherwise defined herein
are used herein with the meanings as so defined.
In so acting, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Agreement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable
1
documents of public officials and of officers and representatives of Toray,
and have made such inquiries of such officers and representatives as I have
deemed relevant and necessary as a basis for the opinions hereinafter set
forth.
In such examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents
of documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
I have relied upon certificates or comparable documents of officers and
representatives of Toray and upon the representations and warranties of Toray
contained in the Agreement.
Based on the foregoing, and subject to the qualifications stated
herein, I am of the opinion that:
1. Toray is a corporation duly incorporated, validly existing
and in good standing under the laws of Japan.
2. Toray has the requisite corporate power and authority to
enter into the Agreement and to perform its obligations thereunder. The
execution and delivery of the Agreement and the consummation of the
transactions contem-
A-1-2
plated thereby have been duly authorized by all necessary corporate action on
the part of Toray, and does not violate any of the provisions of Toray's
Certificate of Incorporation or By-Laws or any judgment or decree to which Toray
is bound of which I am aware.
3. The Agreement has been duly executed and delivered by
Toray.
4. To my knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against Toray that
relates to any of the transactions contemplated by the Agreement.
The opinions expressed herein are limited to the laws of Japan, and
I express no opinion as to the effect on the matters covered by this letter of
the laws of any other jurisdiction.
The opinions expressed herein and rendered solely for your benefit
in connection with the transactions described herein. Those opinions may not
be used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without my prior written consent.
Very truly yours,
X-0-0
Xxxxxxx X-0
____________ __ , 1996
FORM OF OPINION OF
COUNSEL OF SHIMADZU
-------------------
Gentlemen:
I am counsel to Shimadzu Corporation, a Japanese corporation
("Shimadzu"), and have acted in that capacity in connection with the
preparation, authorization, execution and delivery of, and the consummation of
the transactions contemplated by, the Recapitalization Agreement by and among
the entities listed therein as Purchaser (collectively, "Purchaser"), Toray
Industries, Inc., Toray Industries (America), Inc., Shimadzu and Therma-Wave,
Inc.("Company") relating to the capital stock of Company, dated _______, 1996
(the "Agreement"). Terms defined in the Agreement and not otherwise defined
herein are used herein with the meanings as so defined.
In so acting, I have examined originals or copies, certified or
otherwise identified to my satisfaction, of the Agreement and such corporate
records, agreements, documents and other instruments, and such certificates or
comparable documents of public officials and of officers and representatives
of Shimadzu, and have made such inquiries of such
A-2-1
officers and representatives as I have deemed relevant and necessary as a
basis for the opinions hereinafter set forth.
In such examination, I have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to me as originals, the conformity to original documents
of documents submitted to me as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
I have relied upon certificates or comparable documents of officers and
representatives of Shimadzu and upon the representations and warranties of
Shimadzu contained in the Agreement.
Based on the foregoing, and subject to the qualifications stated
herein, I am of the opinion that:
1. Shimadzu is a corporation duly incorporated, validly existing
and in good standing under the laws of Japan.
2. Shimadzu has the requisite corporate power and authority to
enter into the Agreement and to perform its obligations thereunder. The
execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby have been duly authorized by all necessary
corporate action on the part of Shimadzu, and does not
A-2-2
violate any of the provisions of Shimadzu's Certificate of Incorporation or
By-Laws or any judgment or decree to which Shimadzu is bound of which I am
aware.
3. The Agreement has been duly executed and delivered by
Shimadzu.
4. To my knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against Shimadzu that
relates to any of the transactions contemplated by the Agreement.
The opinions expressed herein are limited to the laws of Japan, and
I express no opinion as to the effect on the matters covered by this letter of
the laws of any other jurisdiction.
The opinions expressed herein and rendered solely for your benefit
in connection with the transactions described herein. Those opinions may not
be used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a governmental agency,
quoted, cited or otherwise referred to without my prior written consent.
Very truly yours,
X-0-0
Xxxxxxxx X-0
____________ __, 1996
FORM OF OPINION OF COUNSEL TO SELLER
AND COMPANY
-----------
Gentlemen:
We have acted as counsel to Toray Industries, Inc., a Japanese
corporation ("Toray"), Toray Industries (America), Inc., a New York
corporation ("Toray America"), Shimadzu Corporation, a Japanese corporation
("Shimadzu"), and Therma-Wave, Inc., a Delaware corporation ("Company"), in
connection with the preparation, authorization, execution and delivery of, and
the consummation of the transactions contemplated by, the Recapitalization
Agreement by and among the entities listed therein as Purchaser (collectively,
"Purchaser"), Toray, Toray America, Shimadzu and Company relating to the
capital stock of Company, dated __________, 1996 (the "Agreement"). Terms
defined in the Agreement and not otherwise defined herein are used herein with
the meanings as so defined.
In so acting, we have examined originals or copies, certified or
otherwise identified to our satisfaction, of the Agreement and such corporate
records, agreements, documents and other instruments, and such certificates or
A-3-1
comparable documents of public officials and of officers and representatives
of Sellers and Company, and have made such inquiries of such officers and
representatives as we have deemed relevant and necessary as a basis for the
opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all
signatures, the legal capacity of natural persons, the authenticity of all
documents submitted to us as originals, the conformity to original documents
of documents submitted to us as certified or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions
of fact material to this opinion that have not been independently established,
we have relied upon certificates or comparable documents of officers and
representatives of Sellers and Company and upon the representations and
warranties of Sellers and Company contained in the Agreement. We have also
assumed (i) the due incorporation and valid existence of Toray and Shimadzu,
(ii) that each of Toray and Shimadzu has the requisite corporate power and
authority to enter into and perform its obligations under the Agreement and
(iii) the due authorization, execution and delivery of the Agreement by Toray,
Shimadzu and Purchaser.
A-3-2
Based on the foregoing, and subject to the qualifications stated
herein, we are of the opinion that:
1. Each of Toray America and Company is a corporation duly
incorporated, validly existing and in good standing under the laws of the
states of New York and Delaware, respectively. Each of Toray America and
Company has the requisite corporate power and authority to own, lease and
operate its properties and carry on its business as now being conducted.
2. Each of Toray America and Company has the requisite corporate
power and authority to enter into the Agreement and to perform its obligations
thereunder. The execution and delivery of the Agreement and the consummation
of the transactions contemplated thereby (i) have been duly authorized by all
necessary corporate action on the part of Company; (ii) does not violate any
of the provisions of Company's Certificate of Incorporation or By-Laws or any
judgment or decree to which Company is bound of which we are aware; (iii) will
not violate any New York, Delaware corporate or United States federal law or
regulation (other than federal and state securities or blue sky laws, as to
which we express no opinion) and (iv) do not require the consent or approval
of or any filing with any New York, Delaware corporate or United States
federal governmental
A-3-3
authority (other than the filing of the Certificate of Amendment with the
Delaware Secretary of State and other than pursuant to the Xxxx-Xxxxx-Xxxxxx
Act and federal and state securities or blue sky laws, as to which we express
no opinion).
3. The Agreement constitutes the legal, valid and binding
obligation of Sellers and Company, enforceable against them in accordance with
its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity), except no opinion is given as to the
non-competition provisions thereof.
4. Prior to the filing of the Certificate of Amendment, the
authorized capital stock of Company consists of (i) 50,000,000 shares of
Common Stock, of which 45,515,339 shares are outstanding. All of such
outstanding shares of Common Stock of Company have been validly issued and are
fully paid and non-assessable, and no shares of capital stock are held by
Company as treasury stock.
A-3-4
5. Toray is the record owner of 30,046,687 Shares, Toray America is
the record owner of 5,737,182 Shares, and Shimadzu is the record owner of
9,731,470 Shares.
6. Delivery of the Shares to Company in accordance with the terms
of the Agreement will convey to Company good title to the Shares, free and
clear of any and all Encumbrances, assuming that Company acquires the Shares
without notice of any adverse claim, as that term is used in Section 8-302 of
the New York Uniform Commercial Code.
7. To our knowledge, there is no litigation or proceeding or
governmental investigation pending or overtly threatened against Sellers or
Company that relates to any of the transactions contemplated by the Agreement.
The opinions expressed herein are limited to the laws of the State
of New York, the corporate laws of the State of Delaware and United States
federal laws, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction. Notwithstanding
anything to the contrary contained herein, we express no opinion as to whether
the acquisition of the Shares by Company or the issuance of any shares of
capital stock by Company pursuant to the Agreement has been duly authorized or
complies with Delaware corporate law.
A-3-5
The opinions expressed herein and rendered solely for your benefit
in connection with the transactions described herein. Those opinions may not
be used or relied upon by any other person, nor may this letter or any copies
thereof be furnished to a third party, filed with a govern-mental agency,
quoted, cited or otherwise referred to without our prior written consent.
Very truly yours,
A-3-6
Exhibit B
FORM OF OPINION OF COUNSEL TO PURCHASER
---------------------------------------
1. Purchaser is a limited partnership or general partnership
duly organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, and has the requisite partnership power and
authority to own, lease and operate its properties and carry on its business
as now being conducted.
2. Purchaser has the requisite partnership power and authority
to enter into the Agreement and to perform its obligations thereunder. The
execution and delivery of the Agreement and the consummation of the
transactions contemplated thereby (i) have been duly authorized by all
necessary partnership action on the part of Purchaser; (ii) does not violate
any of the provisions of Purchaser's partnership agreement or, if applicable,
certificate of limited partnership or any judgment or decree to which
Purchaser is bound of which we are aware; (iii) will not violate any ________
or ________
B-1
partnership law or United Stated federal law or regulation (other
than as to federal and state securities and blue sky laws, as to which we
express no opinion); and (iv) do not require the consent or approval of or any
filing with any ________ or ________ partnership or United States federal
governmental authority (other than pursuant to the Xxxx-Xxxxx-Xxxxxx Act and
federal and state securities and blue sky laws, as to which we express no
opinion).
3. The Agreement has been duly executed and delivered by
Purchaser and constitutes the legal, valid and binding obligation of
Purchaser, enforceable against it in accordance with its terms, subject to
applicable bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and subject, as to enforceability, to general principles of equity,
including principles of commercial reasonableness, good faith and fair dealing
(regardless of whether enforcement is sought in a proceeding at law or in
equity).
4. To our knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against Purchaser
that relates to any of the transactions contemplated by the Agreement.
B-2
Exhibit C
See Exhibit 2.1
Exhibit D
See Exhibit 10.21
Exhibit E
See Exhibit 10.11
Schedules to Exhibit 2.1
1 Loan Agreements
1. Term Loan Agreement, dated as of April 27, 1992, between Therma-Wave,
Inc. and The Long-Term Credit Bank of Japan, Ltd.
2. Loan Agreement, dated as of April 27, 1992, between Therma-Wave, Inc.
and The Sakura Bank, Limited.
3. Term Loan Agreement, dated as of April 30, 1992, between Therma-Wave,
Inc. and Union Bank.
4. Loan Agreement, dated as of April 30, 1992, between Therma-Wave, Inc.
and The Mitsubishi Bank, Ltd.
5. The Company also has a Line of Credit with each of the above four
banks in the aggregate amount of $6,200,000.
4(b) Agreement by or Among Sellers
- Development License Agreement, dated June 16, 1992,
among Therma-Wave, Inc. ("TWI"), Therma-Wave K.K.
("TWKK"), Toray Industries, Inc. ("Toray") and Shimadzu
Corporation ("Shimadzu").
- New Development Agreement, dated December 22, 1995,
between TWI and Toray.
- Toray and Shimadzu have provided guarantees for the
loans to the Company listed on Schedule 1.
- Toray has provided a guarantee to the landlord of the
Company's principal executive offices in Fremont,
California.
- Agreement dated as of January 25, 1996 among Toray, TWI,
Xx. Xxxxx Xxxxxxxxxx, Xxxxx X. Xxxxxxxxxx, Xxx Xxxxx,
Xxxxxxx X. Xxx, Xxx Xxxxx and Xxxx Xxxxxxx.
- See also Section (ix) of Schedule 4(l)
4(c) Subsidiaries
Shares Shares
Name Authorized Outstanding
---- ---------- -----------
Therma-Wave Domestic
International Sales Corp. 100,000 3,500
Therma-Wave, Ltd. 100 100
Therma-Wave, (Japan) K.K. 120 30
Therma-Wave Foreign Sales Corp. 100 100
4(d) No Undisclosed Liabilities
The Company's financial statements have been prepared in accordance
with generally accepted accounting principles and in conformity with the
practices consistently applied by the Company. The Company understands that
the Purchaser may restate the goodwill and related accumulated amortization to
comply with SEC financial reporting requirements, insofar as the SEC does not
recognize "partial push-down accounting" nor normally accept goodwill
amortization in excess of 7 years.
4(f) No Material Adverse Change; No Dividends
The Company's backlog has decreased from a backlog of $56.9 million
as of March 31, 1996 to $35.6 million as of October 31, 1996. The Company's
backlog consists of only those orders that are scheduled to ship in the
subsequent 6-month period. Recognition of any order with a shipment date
outside of this 6-month window is deferred until the respective shipment date
falls within the 6-month window. Any order in backlog that is rescheduled to
ship outside of this 6-month window is debooked from backlog and its
recognition is deferred until the new shipment date falls within the 6-month
window.
In the ordinary course of business, officers receive payments other than
normal compensation as follows:
annual bonus payments, approved by the Board of Directors
expense reimbursements
expense advances
long-term disability insurance reimbursement for Xxxxx
Xxxxxxxxxx
Income tax services reimbursement for Xxxxx Xxxxxxxxxx
loans for the following employees in Korea & Taiwan
Employee Name Amount ($)
------------- ----------
BAE, Joo-Eun 3,896
JANG, Won-Chel 5,000
XXXX, Xxxxxx-Jin (1) 12,623
XXXX, Xxxxxx-Jin (2) 8,000
XXXX, Xxxxxx-Jin (3) 7,500
XXXX, Xxx-Sang 5,000
XXX, Xxx-Oh 20,000
XXX, Xxx Woogn 12,000
XXX, Jang-Seok (1) 12,623
XXX, Jang-Seok (2) 8,000
XXX, Xxxx-Moon 18,000
XXX, Xxx-Hun (1) 3,896
XXX, Xxx-Hun (2) 5,000
XXX, Xxxx-Xxxx 3,896
XXX, Xxxx-Youl 3,896
PARK, Xxxx-Xxxx 3,896
PARK, Xxxxx 35,455
YOON, Xxxx Xx 35,455
YOON, Young-Duck 27,500
--------
$231,636
========
See also Schedule 4(l).
4(g) Taxes
The State Board of Equalization has conducted their routine sales tax audit
for the period January 1993 to March 1996. The Company provided a waiver of
limitations consenting to an extension through October 31, 1996 for the audit
of the period January to June, 1993, only.
Extensions have been filed as appropriate for the tax year ended March 31,
1996, and the tax returns have not been completed and filed.
4(h) Patents, Trademarks and Copyrights
Patent Litigation
In July of 1994, the Company instituted a patent infringement action
against Jenoptik AG, a Germany company, in the Federal District Court in
Northern California. Jenoptik has begun manufacturing a device for inspecting
materials using thermal wave technology which is similar in many respects to
the Therma-Probe device sold by the Company. The principal market application
for the two devices is the same, namely, the non-destructive monitoring of ion
implant dosage levels in semiconductors.
The Company believes that although the device sold by Jenopitik is not
identical to the Therma-Probe, it nonetheless falls within the scope of some
of the basic patents owned by the Company. The suit was initiated and is
being prosecuted because the unrestricted sale of what are believed to be
infringing products would likely have an impact on the market share enjoyed by
the Company. If the suit is successful, the Company should be able to prevent
Jenoptik from importing its device into the United States.
As a defensive tactic, Jenoptik has countersued the Company alleging
violations of the antitrust regulations.
In February 1996, the Company initiated a patent infringement action
against Jenoptik in Germany based on a corresponding German patent owned by
the Company. If the infringement suit was successful in Germany, it is
possible that Jenoptik would be prevented from manufacturing in Germany.
As a defensive tactic, Jenoptik has filed a "nullity" action in
Germany alleging that the German patent owned by the Company is not valid.
The Company is contesting the nullity action.
The above described litigation has been brought by the Company to
enforce its proprietary rights against
Jenoptik. Therefore, the risk of loss to the Company is principally
limited to Jenoptik's having unrestricted access to the market. It is
conceivable that a settlement could be reached in the future which would
allow Jenoptik to sell its devices in exchange for some form on royalty
payments to the Company.
In the course of preparing for the commercial release of the
Opti-Probe, the Company reviewed a competitor's patent covering a format
for displaying data on a screen which might be asserted as the basis for
a claim or threatened claim against the Company. Although the Company
does not believe that its screen display infringes the patent, it is the
Company's position that the business of the Company would not be
materially affected since the patent does not relate to the underlying
technology of the Opti-Probe, but only relates to a particular screen
format which could be easily changed.
Nanometrics
-----------
On October 31, 1996, the Company received a letter from Xx. Xxxxxxx X. Xxxxxx
of Nanometrics offering to license its U.S. Patent No. Re. 34,783 for a Method
for Determining Absolute Reflectance of a Material in the Ultraviolet Range.
The Company first became aware of the original parent patent relating to RE
34,783 in June of 1994 based on a letter from Xx. Xxxxxx.
In July of 1995, the Company announced the development of a version of the
Optiprobe with UV capability. Xx. Xxxxxx sent a follow up letter to the
Company. The Company did not respond.
Sometime in the beginning of 1996, the Company began deliveries of Optiprobe
models with UV capability. Roughly 20 units with this capability have been
delivered to date.
Tencor
------
In the process of reviewing the above identified Nanometrics patent, a Tencor
patent, No. 4,899,055, came to the attention of the Company. This patent
includes claims related to the evaluation of thin films using UV light.
Lemelson
--------
In 1989, Xxxxxx Xxxxxxxx (and his Licensee, Technivision Corporation), began
seeking licenses from manufacturers for his "machine vision" patents,
including Texas Instruments ("TI"), a customer of the Company.
The Company was notified by TI that Xx. Xxxxxxxx was asserting patent rights
with respect to "machine vision". TI brought the issue to the attention of
the Company to protect TI's rights of indemnification under TI's purchase
agreement with the Company. In response thereto, the Company obtained an
opinion from outside patent counsel that the Lemelson patents were invalid and
unenforceable. Since that time, the Company was also contacted by Mictron and
Motorola, two other customers of the Company, which received similar licensing
offers from Xx. Xxxxxxxx.
Ford Motor Company was also contacted by Lemelson and, in response thereto,
Ford Motor Company filed a declaratory judgement action in Reno, Nevada. In
June of 1995, the Court in Reno held that the Lemelson machine patents were
unenforceable because of Lemelson's undue delay in filing claims in his
pending applications.
Xxxxxxx Reissue
---------------
On August 27, 1991, Therma-Wave obtained U.S. Patent No. 5,042,951, relating
to a high resolution ellipsometric apparatus. This patent covers a concept
which has not yet been incorporated in any of the devices of the Company. The
patented concept may be incorporated in a device in the future.
On November 24, 1992, U.S. Patent No. 5,166,752, was issued to Xxxxxxx
Research Corporation. This patent claims subject matter similar to that
disclosed in Therma-Wave's '951 patent. The filing date of the Xxxxxxx patent
was four months after the filing date of the Therma-Wave '951 patent.
In order to obtain the claims in the Xxxxxxx patent, Therma-Wave filed a
reissue patent application on August 16, 1993. This reissue patent
application "copied" the claims from the
Xxxxxxx patent. The reissue application also included a request to
provoke an interference with the Xxxxxxx patent.
In a telephone conference with the Patent Examiner in 1995, the Examiner
indicated that the Company's reissue application was acceptable and that it
had been passed on to the Board of Patent Interferences.
4(i) Real Property and Leases
Lease with: For:
----------- ----
Sobrato Interests (Landlord), dated as Headquarters facility at
of May 26, 1995 0000 Xxxxxxxx Xxx, Xxxxxxx, XX
Mitsui Fudosan Co. (Landlord) Japan office at Atsugi
IF Building, 3-9-15- Nakacho,
Atsugi-shi, Kanagawa, 000 Xxxxx
Mr. Chirg-Hsung Deu (Landlord) Taiwan office at 3F-1 Xx. 00,
Xxxxx-Xxxx Xxxx, Xxxx-Xxx Xxxx,
Xxxxxx R.O.C.
Ho-Xxxxx Xxx (Landlord) Korean office on the 6th floor
of the Xxxx-X Xxxxxxxx, 0000-00
Xxxxx-Xxxx, Xxxxxx-Xx, Suwon,
442-070 Korea
Frog Hollow Realty (Lessor), Massachusetts office in
dated as of March 1, 0000 Xxxxxxxxxx, XX
RMI-Palm Plaza (Landlord), Arizona office in Chandler, AZ
dated as
of September 20, 1995
(Requires Consent of Landlord)*
Telephone Real Estate Equity Texas office in Austin, TX
Trust (Landlord), dated as of
November 10, 1994
Xxxxxx Xxxxxxx (Landlord), Florida office in Orlando, FL
dated as of February 2, 1996
(Requires Consent of Landlord)*
*Require consent of the landlord
4(k) Insurance Policies
Description Policy # Insurer
----------- -------- -------
Business Package MP 3012 48035 00 USF&G/Fidelity & Guaranty
Foreign Package QD800 140-00 Xxxxxx/Lumber-
mans Mutual
Transit/Ocean Cargo R37701 Mitsui Marine & Fire
Insurance Co.
Fiduciary Liability 81220455B Federal Insurance
Key Man - X. Xxxxxxxxxx 40961849 (1/3) Transamerica
Occidental
Key Man - Xxx Xxxxx 1689143 First Colony
Life
Key Man - X. Xxxxxxxxxx 1691389 First Colony
Life
Medical Insurance 19262-0000 Xxxxxx
Medical Insurance (PPO) 63565 Prudential
Medical Insurance (HMO) 63565 Prudential
Long-Term Disability 0504024/001 UNUM
401(k) Trust GA-47141 CG Trust
Flexible Benefit Plan Family Matters
Dental Insurance 7785-5555 Delta Dental
Vision Coverage 12-044724-001-001 VSP
(2044725A)
Life Insurance & AD&D 0504024/001 XXXX
Xxxxxxx' Xxxxxxxxxxxx XX0000000000 Xxxxxxxxxx (XX)
Casualty
Workers' Compensation 3CE95189800 American (TX)
Manufacturers
Mutual
Workers' Compensation 3CE95135704 American (NM)
Manufacturers
Mutual
Workers' Compensation 3CE95135705 American
(AZ,MA,PA,VT,FL,CO,OR) Manufacturers
Mutual
Additional Coverages:
Flexible Benefit Plan Family Matters
Short Term Disability Various state,
or self
4(l) Material Contracts
(i) Contracts not made in the ordinary course of business involving in
excess of $50,000:
- Employment Agreement, dated October 30, 1991, between
Therma-Wave, Inc. and Xx. Xxxxx Xxxxxxxxxx.
- Employment Agreement, dated October 30, 1991, between
Therma-Wave, Inc. and Xxxxx X. Xxxxxxxxxx.
- Employment Agreement, dated October 30, 1991, between
Therma-Wave, Inc. and Xxx Xxxxx.
- Employment Agreement, dated October 30, 1991, between
Therma-Wave, Inc. and Xxx Xxxxx.
- Employment Agreement, dated October 30, 1991, between
Therma-Wave, Inc. and Xxxxxxx X. Xxx.
- Agreement, dated as of January 25, 1996, among Toray
Industries, Inc., Therma-Wave, Inc., Xx. Xxxxx Xxxxxxxxxx,
Xxxxx X. Xxxxxxxxxx, Xxx Xxxxx, Xxxxxxx X. Xxx, Xxx Xxxxx and
Xxxx Xxxxxxx.
- Development License Agreement, dated June 16, 1992, among
Therma-Wave, Inc., Therma-Wave K.K., Toray Industries,Inc. and
Shimadzu Corporation.
- New Development Agreement, dated December 22, 1995, between
Therma-Wave, Inc. and Toray Industries, Inc.
- Patent Technology Trademark License dated June 30, 1992
between TWI and TWKK.
- Master Software License Agreement between TWI and any
purchaser of its basic software packages to operate the
Company's process control and inspection systems.
- The Company has an investment advisory agreement with Antares
International Partners, Inc ("Antares") pursuant to which
Antares will receive a fee in connection with the closing of
the transactions contemplated by the Recapitalization
Agreement.
See also Schedule 4(i).
See also Schedule 4(b)(ii).
(ii) severance agreement or stay bonus or similar payment or other
agreement with any employee of Company or any of its
Subsidiaries entered into in
contemplation of the transactions contemplated by the Agreement
- none.
(iii) contract for the employment of any officer or employee:
See (i) above.
Letter Agreement dated January 14, 1993 between the Company and Xxxxx
Xxxxxxxx.
(iv) franchise, distributorship or sales agency agreements:
Sales Representatives Location
--------------------- --------
Domestic:
DF Technology Altadena, CA
Xxxx Xxxxxxxx Associates Longmont, CO
Durham Technology Group Austin, TX (1)
Xxxxxxxx Xxxxxxxxx Xxxx Xxxx, XX
XXX Xxxxxxxxx, XX
Xxxxx & Associates Tonka Bay, MN
Spectra Tech. Group, Inc. Portsmouth, NH
THT Sales Company, Inc. Dallas, TX
International:
Aneric Enterprise PTE, Ltd. Singapore/Malaysia/Thailand
Dage Precision Ind., Ltd. England/Wales/Scotland/Scandinavia
Innotech Corporation Japan (1)
Intraco Asia Taiwan Taiwan
Silicon International Ltd. Hong Kong/China
SEKI Technitron Japan
Teltec France France
Teltec GmbH Germany
Teltec SA Switzerland/Italy
CNT International Poland & Czech Republic
-------------------
(1) The Company has provided notice of contract termination.
(v) contract for the future purchase of materials, supplies,
services, merchandise or equipment not capable of being fully
performed or not
terminable within a period of one year from the date hereof or in
excess of normal operating requirements:
The Company has ordered parts for the manufacture of its products
from the following vendors with specific delivery dates more than
one year out:
Vendor Part
------ ----
Asyst Technologies Indexers
Equipe Technologies Robot modules
Mikroprecision Instruments Stage Assemblies
(vi) agreement for the sale or lease of any of its assets other than
in the ordinary course of business - none
(vii) contract or commitment for capital expenditures:
Vendor Product P.O. Number Value ($000)
------ ------- ----------- ------------
Norfab Engineering Hoist System 85190M $1.3
Data Net Next workstation 85913M 5.9
Data Net T1 laptop 85912M 3.7
Gateway Notebook computer 85913M-1 4.2
Gateway Notebook computer to be assigned 4.2
(viii) mortgage, pledge, conditional sales contract, security agreement,
factoring agreement, or other similar agreement with respect to
any of its real or personal property - see schedule 4(m)
(ix) lease of machinery or equipment involving annual payments in
excess of $25,000:
Metropolitan Life, dated as Capital equipment lease
of August 23, 1990
Hewlett-Packard, dated as Computer equipment lease
of February 3, 1992
AT&T, dated as of November Phone equipment leases for
27, 1995 and February 29, 1996 Orlando and Fremont facilities,
respectively
Xxxxx Business, dated as of Bursting equipment lease
March 19, 1996
Pitney Xxxxx, dated as of Postage meter equipment lease
May 4, 1995
Leases between TWKK and Toray Agency, Inc. (see list attached to this
Schedule).
(x) agreement with a labor union or labor association - none
(xi) loan agreement, promissory note, guarantee, subordination or
similar type of agreement issued by it:
The Company has guaranteed a 500,000,000 Yen revolving line of
credit with Sakura Bank for its Japanese subsidiary through March
31, 1997.
See also Schedule 1.
(xii) stock option, retirement, severance, pension, bonus, profit
sharing, group insurance, medical or other fringe benefit plan or
program providing employee benefits - see "Therma-Wave Benefits
Summary" on next 3 pages.
(xiii) consulting agreement
The Company engages various consultants who are generally paid an
hourly rate. The following is a list of the current consultants:
Xxx Xxxxxx/General Lasertronics
Tzuchiang Xxxxxx Xxxxx
Xxxxxxxxx Xxxxxxx
Xxxxx Journey/TaraLaur Consultants
Xxx Xxxxxxxx/Colorado Designs
Xxxxx Xxxxxx/Intellitron
Xxxxxxx Cole1``1`
Xxxxx Xxxxxx
Xxxxx XxXxx
Optima Technologies
Xxxx Land
Xxxxxxx X. Xxxxx
In addition, the Company utilizes temporary help from
temporary agencies.
(xiv) municipal or other governmental franchise agreements - none
(xv) non-terminable agreements with terms greater than 6 months:
see Schedule 4(l) and Schedule 4(i).
(xvi) take or pay contracts - none
(xvii) warranty agreement other than those entered into in the
ordinary course of business - none
(xviii) contract or group of related contracts with the same party or
group of affiliated parties the performance of which involves
consideration in excess of $50,000, or in the case of ordinary
course customer orders, in excess of $250,000
P.O.
Vendor Commitments
------ -----------
SBMC $414,998
Pacific Precision Labs $483,286
Asyst $704,184
Mikroprecision $780,360
Coynex Corp. $1,121,770
Equipe Technologies $1,812,030
TWI has entered into volume purchase agreements with three
customers that contain confidentiality provisions which
prohibit TWI from disclosing the terms of the agreements
without the prior written consent of the customer. The
revenues derived from sales of products to these customers
during the fiscal year ended March 31, 1996 (Fiscal 1996)
represented approximately 24% of TWI's aggregate revenues
during Fiscal 1996; the revenues derived from sales of
products to these
customers during the first 6 months of Fiscal 1997 ended on
September 30, 1996 represented approximately 10% of TWI's
aggregate revenues during that 6-month period. The volume
purchase agreements provide for an average discount of
approximately 3% to 6% from TWI's list price. However, the
comparison to list price is somewhat imprecise because special
options and features requested by these customers are not
always subject to discount pricing.
See (xi) above.
See Schedule 4(i).
See Schedule 4(m).
See Schedule 4(l)(v).
(xix) contact or agreement prohibiting it from freely engaging in
any business or competing anywhere in the world:
Development License Agreement dated June 16, 1992 by and among
TWI, TWKK, Toray and Shimadzu.
New Development Agreement dated December 22, 1995 between TWI
and Toray.
The Company's suppliers, from time to time and in the ordinary course
of business, advise the Company that they are discontinuing products
that are purchased by the Company. In such instances, the Company has
been able to find another supplier of the product or has been able to
make an engineering change to incorporate a substitute part or parts.
Also see the discussion in Schedule 4(f) regarding semiconductor
industry slowdown.
4(m) Encumbrances
Assets Purchased under capital lease obligations - see Schedule 4(l)(ix).
4(n) Restrictions
None
4(o) Litigation
Reference is made to the matters described in Schedule 4(h) for pending
litigation and one matter that involves possible infringement of patents.
4(p) Environmental
Reference is made to the Phase 1 Environmental Site Assessment Report, dated
September 13, 1993, prepared by Environmental Engineering Consultants and the
Phase 1 Environmental Assessment Report, dated October 8, 1996, prepared by
Environ Corporation.
4(q)Collective Bargaining Agreements and Labor
None
4(r) ERISA
Group Life and Medical
Group Ltd. Life and AD&D Plan
125 Plan
Dependent Care Reimbursement
None of the Company's Plans are multiemployer plans.
4(s) Affiliate Transactions
Reference is made to the agreements and transactions set forth in
Schedules 4(b)(ii), 4(l)(i), 4(l)(iii), 4(l)(ix) and 4(l)(xii) above.
7(c) Other Guaranties
Guaranty of Lease, dated May 26, 1995, by Toray Industries, Inc. in favor of
Sobrato Interests.
AMENDMENT NO. 1 AND SUPPLEMENT
TO RECAPITALIZATION AGREEMENT
-----------------------------
Amendment No. 1 and Supplement to Recapitalization Agreement (this
"Amendment") is made and entered into as of May 16, 1997 by and among Therma-
Wave, Inc., a Delaware corporation, Toray Industries, Inc., a Japanese
corporation, Toray Industries (America), Inc., a New York corporation, Shimadzu
Corporation, a Japanese corporation, and Xxxx Capital Fund V, L.P., Xxxx Capital
Fund V-B, L.P., BCIP Associates and BCIP Trust Associates, L.P.
WHEREAS, the parties hereto entered into the Recapitalization
Agreement on December 18, 1996 (the "Recapitalization Agreement") pursuant to
which the Company will undergo a recapitalization which will result in, among
other things, the Purchasers, the Sellers and certain members of the Company's
management owning all of the outstanding capital stock of the Company.
WHEREAS, the parties each desire to amend the Recapitalization
Agreement on the terms and in the manner set forth in this Amendment.
NOW, THEREFORE, for themselves and their respective successors and
permitted assigns, the parties hereto agree as follows:
Section 1. Definitions, Etc. Terms defined (directly or indirectly by
reference) in the Recapitalization Agreement and used without other definition
herein shall have the respective meanings herein assigned to such terms in the
Recapitalization Agreement. The rules of interpretation set forth in the
Recapitalization Agreement shall likewise govern this Amendment.
Section 2. Amendment to Preamble.
(a) The second "whereas" clause in the Preamble to the Agreement is
amended hereby by replacing the reference to "8,135,003 shares of the Common
Stock" in the third line of such clause with the phrase "6,960,035.3446 shares
of the Common Stock".
(b) The fourth "whereas" clause in the Preamble of the Agreement is
amended hereby as follows:
(i) by replacing the reference to "8,490,567 shares" in the fifth line
of such clause with "7,264,236 shares",
(ii) by replacing the reference to "943,396 shares" in the sixth and
seventh lines of such clause with "807,138 shares",
(iii) by deleting the word "and" set forth in the ninth line of such
clause immediately prior to "(ii) Sellers", and
(iv) by inserting the following language into the last line of such
clause immediately following the words "hereinafter set forth": "and (iii)
Company will issue to certain of its executive employees an aggregate of
1,226,331 shares of Common-A Stock and 136,258 shares of Common-L Stock for
an aggregate purchase price of $2,888,671.72."
Section 3. Amendment to Section 2(a). Section 2(a) is amended hereby by
replacing "$20,000,000" in the eighth line of such subsection with
"$17,111,328.28."
Section 4. Amendment to Section 2(c). Section 2(c) is amended hereby as
follows by replacing the references to "8,490,567 shares" and "943,396 shares"
in the fifth line of such subsection to "7,264,236 shares" and "807,138 shares",
respectively.
Section 5. Amendment to Section 7(c). Section 7(c) is hereby amended by
replacing the reference to $2,500,000" in clause (i) of the second sentence
thereof with "$3,500,000" and by adding the following immediately prior to the
clause (x) of clause (ii) of such sentence: "(w) to provide that Company shall
make a $500,000 payment to Sobrato as a prepayment of rent upon the
effectiveness of such amendment."
Section 6. Acknowledgment Regarding Termination of Subscription
Obligation. The parties hereto hereby acknowledge and agree that any obligation
which Toray might have had to pay approximately $1,425,000 or any other amount
to Company to acquire shares of stock of Company or for any other purpose
pursuant to the Key Employee Stock Agreement dated October 30, 1991 among Toray,
Company and certain Key Employees of Company or pursuant to any other agreement
in connection with Company's repurchase of shares from Xxxxxxx Xxxxxxx was
cancelled and terminated pursuant to the terms of the Agreement dated January
25, 1996 among Toray, Company and certain Key Employees of Company. It is
further agreed that Sellers shall have no obligation whatsoever to Purchasers or
Company pursuant to the Recapitalization Agreement with regard to any
representations or warranties contained therein relating to any such purported
obligation of Toray to make any such payments to Company.
Section 7. Acknowledgment Regarding Additional Investor Parties. The
parties hereto hereby acknowledge that each of the parties set forth on Schedule
A attached hereto is a designee of the Purchasers under the Recapitalization
Agreement and as such, at the closing of the Recapitalization Agreement, shall
purchase from the Company Purchaser Shares in the amount and for that portion of
the Company Purchase Price set forth in Schedule A hereto, and thereafter shall
deliver to the Company such Purchaser Shares and receive in exchange therefor
New Common Stock in the amounts set forth on Schedule A, and otherwise shall be
entitled to all other rights and be subject to all other obligations of the
Purchasers under the Recapitalization Agreement.
Section 8. Acknowledgment Regarding Location of Closing. Notwithstanding
the provisions of Section 10(a) of the Recapitalization Agreement, the parties
acknowledge that the
-2-
Closing will take place at 10:00 A.M. on May 16, 1997 at the offices of White &
Case, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx, Xxx Xxxx, 00000.
Section 9. Subsequent Transaction. Subsequent to the completion of the
sale and exchange of shares contemplated by Section 2 of the Recapitalization
Agreement, at the Closing, Company shall issue and deliver to Sellers 9,853
shares of Common-A Stock and 1,095 shares of Common-L Stock in exchange for
1,261 shares of Preferred Stock. The number of shares of Common-A Stock, Common-
L Stock and Preferred Stock to be transferred pursuant to this Section shall be
allocated 6,504, 723 and 833 to Toray, 1,242, 138 and 159 to Toray America and
2,107, 234 and 269 to Shimadzu, respectively. Company and Purchaser agree that
all the relevant provisions in the Stockholders Agreement and the Company's
Restated Certificate of Incorporation which prohibit the transfer of those
shares shall be waived for the purpose of this particular transaction.
Section 10. Conditions to Effectiveness. This Amendment shall take effect
on a date (the "Amendment Effective Date") when each of the parties has executed
a duly executed original counterpart of this Amendment.
Section 11. Ratification, Etc. Except as expressly modified or waived
hereby, each term and provision of the Recapitalization Agreement and the other
agreements executed in connection therewith is hereby ratified and confirmed and
shall continue in full force and effect. From and after the Amendment Effective
Date, all references to the Recapitalization Agreement shall be deemed to be
references to the Recapitalization Agreement as amended by this Amendment.
Section 12. Representations and Warranties of the Company. Each of the
Company, each Seller and each Purchaser hereby represents and warrants that (a)
it has the requisite corporate or partnership power and authority, as the case
may be, and is duly authorized, to enter into this Amendment and (b) after
giving effect to this Amendment, the Recapitalization Agreement and the other
documents contemplated thereby shall continue to be the valid and binding
obligations of such person, enforceable against such person in accordance with
their respective terms.
Section 13. Governing Law. This Amendment shall be governed by, construed
and enforced in accordance with the laws of the State of New York, without
regard to the principles thereof relating to conflict of laws.
Section 14. Counterparts. This Amendment may be executed in any number of
counterparts, which shall together constitute but one and the same instrument.
Section 15. Successors and Assigns. This Amendment shall be binding upon,
and inure to the benefit of, the parties hereto and their respective successors
and assigns.
* * *
-3-
IN WITNESS WHEREOF, each of the parties hereto has caused this
Amendment to be executed to take effect as of the date first hereinabove
written.
PURCHASER
---------
XXXX CAPITAL FUND V, L.P., a Delaware
limited partnership
By: Xxxx Capital Partners V, L.P.
Its: General Partner
By: Xxxx Capital Investors V, Inc.
Its: General Partner
By: ______________________________
Its: ______________________________
XXXX CAPITAL FUND V-B, L.P., a Delaware
limited partnership
By: Xxxx Capital Partners V, L.P.
Its: General Partner
By: Xxxx Capital Investors V, Inc.
Its: General Partner
By: ______________________________
Its: ______________________________
BCIP ASSOCIATES, a Delaware general
partnership
By: ______________________________
A General Partner
BCIP TRUST ASSOCIATES, L.P., a Delaware
limited partnership
By: ______________________________
A General Partner
TORAY INDUSTRIES, INC.
By: ______________________________
Its: ______________________________
TORAY INDUSTRIES (AMERICA), INC.
By: ______________________________
Its: ______________________________
SHIMADZU CORPORATION
By: ______________________________
Its: ______________________________
THERMA-WAVE, INC.
By: ______________________________
Its: ______________________________
SCHEDULE A
----------
Purchaser
Investment Shares Class A Class L
------------- ------------ --------- -------
Xxxxxxxx Street Partners $ 200,000.00 81,350.42 84,906 9,434
Xxxxxx Hill Ventures,
a California limited partnership $2,901,557.56 1,180,214.59 1,231,787 136,866
Xxxxxx Xxxx Associates, L.P. $ 392,453.45 159,631.26 264,303 17,309
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
Xxxx X. Xxxxxx $ 54,983.89 22,364.81 --- 2,881
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
Xxxxx X. Xxxxxxxx $ 181,708.29 73,910.23 --- 9,521
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
G. Xxxxxxx Xxxxx, Xx. $ 181,708.29 73,910.23 --- 9,521
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
Xxxxxxx X. Xxxxxxx, Xx. $ 20,865.18 8,486.96 88,788 ---
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
Xxxxx Xxxx $ 132,946.15 54,076.12 56,443 6,271
Xxxxx Fargo Bank, Trustee
SHV M/P/T FBO
Xxxxxxx X. Xxxxxxx $ 2,501.36 1,017.43 1,061 118
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