EXHIBIT 10.14
CONFIDENTIAL
MASTER DIVESTMENT AGREEMENT
This master divestment agreement is made the 28th day of October, 1999
BY AND BETWEEN
FEI Company, having its registered office at 0000 XX Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxx, 00000-0000, XXX ("FEI"), on the one hand,
and
Koninklijke Philips Electronics NV, having its registered office at
Xxxxxxxxxxxxxxx 0, Xxxxxxxxx, Xxx Xxxxxxxxxxx, acting also to the benefit of its
worldwide subsidiaries ("Philips"), on the other hand.
WHEREAS in October 1996 Philips Electron Optics BV ("PEO") and Philips
Industrial Electronics International BV ("PIE") entered into a Heads of
Agreement for the future distribution by PIE of PEO's products; subsequently FEI
and Philips entered into various agreements on the basis of which (i) FEI
acquired certain electron optics business from Philips and (ii) ultimately
Philips Industrial Electronics International BV acquired the majority of shares
in FEI;
WHEREAS subsequently PIE changed its corporate name into Philips Business
Electronics International B.V. (PBE).
WHEREAS FEI acquired the sales and service activities in certain countries but
the parties agreed that in certain other countries, other companies within the
Philips group of companies ("Philips Group") would continue to act as
distributor for FEI's product range;
WHEREAS the parties hereto have now agreed to transfer all sales and service
activities carried on by the Philips Group at the date of this Agreement in all
remaining countries to FEI and terminate any and all Philips distributorships
and sell such sales and service activities as a going concern on the terms and
conditions set out in this Agreement.
NOW IT IS AGREED
ARTICLE 1
DEFINITIONS
In this Agreement the following expressions have the following meanings:
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1.01 "AGREED FORM": a document in a form agreed between the parties prior
to the entering into of this Agreement, the list of such documents
being set forth in Article 4.02;
1.02 "AGREEMENT": the contract made herein between the parties including
the Schedules and the Agreed Form documents;
1.03 "ASSETS": all assets and associated liabilities directly belonging to
the Business, including trade accounts receivable, Books, Fixed
Assets, Inventories, Contracts and Assigned IP;
1.04 "ASSIGNED IP": the technical information and commercial know-how which
is used at the date hereof in the Business and which, for the
avoidance of doubt, excludes any patents or patent applications and
trademarks but includes all customers' lists, vendor lists, telephone
numbers, technical know how, trade secrets, tradenames and copyrights
in relation to the Business together with the exclusive right for FEI
and any assignee to represent itself as carrying on the Business in
succession to Philips;
1.05 "BOOKS": the books, records, documents of title, Employee Records and
other documents which Philips uses exclusively in the Business as at
the date hereof;
1.06 "BUSINESS": the marketing, sale and servicing of FEI products, as
carried out at the date of this Agreement by various Local Philips
Companies on the basis of distribution agreements;
1.07 "CLOSING": the completion of the transactions contemplated hereunder,
as described in Article 4 on the respective Closing Dates;
1.08 "CLOSING ACCOUNTS" the accounts of the Business for the accounting
reference period beginning on April 4, 1999 and ending on the
respective Closing Date (comprising a NOC statement);
1.09 "CLOSING AMOUNT": the amount indicated in Article 3.02 to be paid by
FEI to Philips on the respective Closing Date, in accordance with
Article 4;
1.10 "CLOSING DATE": 5.00 p.m. on the date on which the respective Closing
takes place;
1.11 "CONSISTENTLY APPLIED" means the consistent application of Philips
Accounting Policies by the individual business organizations within
the Business in the national sales organizations ("NSO's"). Such
application shall be measured on the basis of the application of
Philips Accounting Policies by such individual business organizations
in their financial statements for the financial year 1998, as
consolidated in the audited financial statements of Koninklijke
Philips Electronics N.V. for the financial year 1998. Should any of
such individual business organizations have applied different methods
for the same item, but both such methods are acceptable under Philips
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Accounting Policies, then the only criterion for measuring whether or
not Philips Accounting Policies have been consistently applied shall
be whether each of the individual business organizations in question
has applied those accounting policies consistently with those used in
its own financial figures which were consolidated in the Annual Report
1998 of Philips.
1.12 "CONTRACTS": all contracts (except employment agreements) to which a
Local Philips Company is a party relating solely to the Business;
1.13 "COUNTRY AGREEMENT": the respective contract to be entered into prior
to the Closing Date for the agreed upon transfer of the Local
Activities from the Local Philips Company to the Local FEI Company,
substantially in the form set forth in Schedule 1.13;
1.14 "CREDITORS": amounts owed by the Philips Group as at Closing solely in
relation to the Business;
1.15 "DEBTORS": amounts owed to the Philips Group as at Closing solely in
relation to the Business;
1.16 "DISCLOSURE LETTER": the letter (together with any schedules thereto)
of even date making certain disclosures against the Warranties
addressed by Philips to FEI for the purposes of Article 13.02;
1.18 "EMPLOYEES": those persons employed in each of the Local Philips
Companies as per October 25, 1999 and listed on Schedule 1.18 who
devote at least 50% of their working hours to the Business;
1.19 "EMPLOYEE RECORDS": all records in respect of the Employees;
1.20 "FIXED ASSETS": all service tools, furniture and other equipment used
exclusively by the Philips Group for the purposes of the Business as
at Closing (as the same are listed at Schedule 1.20);
1.21 "IFO" income from operation, excluding interest, taxation and
extraordinary items as defined in the 1998 Annual Report of Philips;
1.22 "INVENTORIES": all inventories of materials and work-in-progress,
packaging, consumables, service parts and other stock-in-trade held by
the Philips Group for the purposes of the Business as at Closing;
1.23 "LIABILITIES": all liabilities solely relating to the Business
including the Contracts but excluding real property leases and any
tort liability arising from the actions of the Philips Group prior to
or after the Closing and any breach of contract claim arising out of
the actions of the Philips Group (unless due to the products purchased
from
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the FEI Group) or a third party claiming damages solely because
the Local Philips Company is selling the Business;
1.24 "LOCAL ACTIVITIES": the Assets, Business and Liabilities in a
particular country which are to be transferred by a Local Philips
Company to the respective Local FEI Company;
1.25 "LOCAL FEI COMPANY": a legal entity indicated by FEI in the respective
country to which all Local Activities are to be transferred (whether
it be a FEI subsidiary or a third party);
1.26 "LOCAL PHILIPS COMPANY": a (direct or indirect) subsidiary of Philips
which has entered into a distributor/agency agreement with FEI or a
subsidiary thereof, and which is to terminate such distributorship and
to transfer the Local Activities on the basis of this Agreement (a
list of countries is attached as Schedule 2.03);
1.27 "NOC" shall have the meaning in accordance with the definition as
mentioned in the 1998 Annual Report of Philips: (in)tangible fixed
assets, provisions, current assets (excluding cash and cash
equivalents), current liabilities (excluding deferred tax positions,
pension liabilities and interest bearing debt).
1.28 "PENSIONS SCHEDULE": the agreement relating to the pensions of those
Employees who are members of a Pension Scheme at Closing;
1.29 "PENSION SCHEME": a local Philips pension fund arrangement, if any,
for the benefit of Employees of the respective Philips entities.
1.30 "PHILIPS ACCOUNTING POLICIES" as set out in the Annual Report 1998 of
Philips, and as applied by the Local Philips Companies;
1.31 "PRINCIPAL CLOSING AMOUNT" means the amount to be paid for the
Businesses to be transferred on the Principal Closing Date;
1.32 "PRINCIPAL CLOSING DATE" means the date referenced in Article 4.01;
1.33 "PURCHASE PRICE": the total purchase price for the Business, being the
Principal Closing Amount and the Second Closing Amount, as may be
adjusted pursuant to Article 5.1;
1.34 "REFERENCE ACCOUNTS" the unaudited accounts of the Business for the
accounting reference period which ended on the April 4, 1999
(comprising a NOC statement), annexed hereto as Schedule 1.34;
1.35 "SECOND CLOSING AMOUNT" means the amount to be paid for the Businesses
to be transferred on the Second Closing Date;
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1.36 "SECOND CLOSING DATE" means November 26, 1999;
1.37 "SIGNING DATE": means the date on which this Agreement is signed.
1.38 "SITE AND OTHER SERVICES AGREEMENT": the agreement relating to the
provision of site and other services by a Local Philips Company to a
Local FEI Company;
1.39 "WARRANTIES": the warranties and representations contained in Schedule
1.39.
In this Agreement words importing the singular include the plural and vice versa
and words importing gender include any other gender.
The headings of Articles are for ease of reference and shall not affect the
construction of this Agreement.
References in this Agreement to Articles or Schedules are references to clauses
of or schedules to this Agreement. The Schedules form part of this Agreement and
shall have the same force and effect as if expressly set out in the body of this
Agreement.
ARTICLE 2
AGREEMENT FOR SALE AND TRANSFER
2.01 On the terms and subject to the conditions of this Agreement, Philips
hereby sells and FEI hereby purchases and assumes the Business as a
going concern and comprising the Assets and Liabilities.
2.02 Each acquisition of any Local Activity shall be made on substantially
the terms set out in the form of the model Country Agreement, subject
to such modifications and amendments as may be necessary in the case
of the respective countries, including any which may be necessary to
take account of any legal requirements in a country in which the
respective Business is conducted. Philips and FEI agree and warrant to
procure
2.02.1 (in the case of the Philips Group) that its respective Local
Philips Companies owning the respective Businesses will
comply with the respective Country Agreement and become a
signatory to such agreement prior to or on the respective
Closing Date;
2.02.2 (in the case of FEI) that its respective Local FEI Companies
or appointed third parties through which FEI will acquire
the respective Businesses will comply with the respective
Country Agreement and become a signatory to such agreement
prior to or on the respective Closing Date.
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2.03 The list of countries to be transferred on the Principal Closing Date
and the Second Closing Date respectively is attached hereto as
Schedule 2.03. The Local Philips Companies in these 27 countries will
abstain from distributing electron miscroscopes in their respective
territory for a period of three years as from the respective Closing
Date.
ARTICLE 3
PURCHASE PRICE
3.01 In consideration for the purchase of the Business, FEI shall pay to
Philips the Purchase Price.
3.02 On the Principal Closing Date , no payment shall take place and on the
Second Closing Date, FEI shall pay the sum of the Principal Closing
Amount (being EUR -142,000; minus one hundred and forty two thousand,
excluding VAT) and the Second Closing Amount (being EUR 1,764,000; one
million, seven hundred and sixty four thousand EURO's; excluding VAT;
totalling 1,622,000 EURO) to Philips by electronic funds transfer in
immediately available funds, to the credit of such account of Philips
with a Dutch clearing bank as Philips shall notify in writing to FEI
not less than five business days prior to each Closing. The allocation
of the Purchase Price to the respective Local Activities is defined in
Schedule 3.02.
ARTICLE 4
CLOSING AND COVENANTS TO CLOSING DATE
4.01 The parties undertake commercial best endeavours to sign all Country
Agreements by the end of business on October 28 and have the Principal
Closing occur by no later than October 31, 1999 and the Second Closing
by November 26, 1999. In case of a delay in a either South Africa or
Brasil, Philips will continue as FEI's distributor in these countries
through December 31, 1999. In case a Country Agreement for South
Africa or Brasil is not signed as per December 31, 1999, the
pertaining Local Activities will be terminated at the sole risk and
expense of FEI and the Business will be deemed transferred as from
December 31, 1999. In case of a delay in the other countries after the
agreed Closing Date, Philips will continue to act for the sole risk
and account of FEI, under sole managerial decision-making of FEI
appointed personnel; Philips will cause such Business to continue
operation in a normal, business like fashion in accordance with past
practice and will not cause or permit its Businesses to enter into any
transaction outside the ordinary course of business. However, in case
within five working days from November 26 next, in any country a
Closing can still take place, Philips will waive its rights as regards
acting for the sole risk and
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account of FEI and the Closing will take place (with retroactive
effect) as of November 26. In case a certain Country Agreement is not
signed as per December 31, 1999, the pertaining Local Activities will
be terminated at the sole risk and expense of FEI and the Business
will be deemed transferred as from the respective Closing Date.
4.02 On Closing, each party shall cause to be delivered to the other the
following documents in the Agreed Form (with changes agreed to by the
parties):
*all applicable signed Country Agreements (facsimile copies thereof).
*the list of Employees and if applicable, a Pensions Schedule
*such other documents as are material to the Business and necessary to
effect the transactions contemplated under this Agreement and each
Country Agreement.
4.03 Philips hereby agrees and declares that it will execute and deliver
and procure the execution and delivery of any other documents and take
any other steps as shall reasonably be required by FEI to vest the
Local Activities in FEI or the Local FEI Company and transfer the
Assigned IP. FEI hereby agrees and declares that it will execute and
deliver and procure the execution and delivery of any other documents
and take any other steps as shall reasonably be required by Philips to
vest the Local Activities in FEI or the Local FEI Company. If and to
the extent the Local Philips Company has provided its customers with a
prepayment/ bankguarantee, then the Local FEI Company shall undertake
to replace same by a similar prepayment/bankguarantee acceptable to
the customer, or, in case customer refuses, provide same as a
guarantee to the Local Philips Company.
4.04 This agreement becomes effective and binding upon the parties as from
the Signing Date. The Parties agree as follows with respect to the
period between the Signing Date and the respective Closing Date:
a. Each Party will file (and each Party will cause its Group Companies
to file) any notification and report forms and related material that
each Party or its Group Company may be required to file with any
governmental authority, will use its best commercial efforts to obtain
the expiration or early termination of the applicable waiting period
(or any extension thereof) for any required pre-acquisition or
pre-merger notice to such authority, and will make any further
filings, including the submission of any additional information or
documentary material, pursuant thereto that may be necessary.
b. Philips will cause its Businesses to continue operation in a
normal, business like fashion in accordance with past practice and
will not cause or permit its Businesses to enter into any transaction
outside the ordinary course of business.
ARTICLE 5
REFERENCE ACCOUNTS AND CLOSING ACCOUNTS
5.01 REFERENCE ACCOUNTS
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Philips has delivered to FEI the Reference Accounts of the Business as
of April 4, 1999, attached hereto as Schedule 1.32. The financial
statements referred in this Article 5.1 have been prepared by Philips.
Since the Business has not been accounted for separately within
Philips, FEI understands that these financial statements have required
allocations in which Philips utilized its reasonable judgement.
Philips represents that the Reference Accounts have been prepared in
accordance with the Philips Accounting Policies Consistently Applied.
5.02 CLOSING ACCOUNTS
Philips shall prepare the Closing Accounts using the Philips
Accounting Policies Consistently Applied. Such Closing Accounts shall
be delivered to FEI by Philips as soon as possible and in any event no
later than sixty (60) days after the respective Closing Date.
FEI shall be entitled to review the Closing Accounts in order to
establish that the agreed accounting policies (the Philips Accounting
Policies) have indeed been Consistently Applied.
In case of such audit, FEI shall provide a copy of its full report to
Philips within 60 days after receipt by FEI of the Closing Accounts.
Unless FEI within twenty (20) days after delivery of said report,
notifies Philips in writing that it disputes the Closing Accounts or
any portion thereof and specifies the basis for its dispute, the
Closing Accounts shall become final and binding on the parties for the
purpose of determining the corrective payment as referred to in
Article 5.3 hereof.
5.03 PROCEDURE FOR DISPUTE AND THE CLOSING ACCOUNTS
In the event FEI notifies Philips in accordance with Article 5.2, that
a dispute does exist in respect of the Closing Accounts and if FEI and
Philips are unable to resolve such dispute within thirty (30) business
days after any such notification has been given, the dispute shall be
submitted to a jointly appointed independent auditor, ("Arbitrator")
or in case of disagreement a request for the appointment shall be
submitted to the President of the Dutch Accounting Federation. Should
FEI notify Philips that a dispute does exist in respect of the Closing
Accounts, then Philips shall be entitled to bring into the dispute any
other items whether or not those items have been valued. A final
settlement shall fully take these positions into account in
determining the amount of the settlement or the award, as the case may
be. Philips and FEI shall provide full cooperation to the Arbitrator
and the Arbitrator shall be asked to make a final and binding
determination as to the matter or matters in dispute within sixty (60)
days after the dispute is presented to him (unless the Arbitrator and
both parties agree that a longer period is appropriate) after its
appointment. The Arbitrator shall use the Philips Accounting Policies,
Consistently Applied as the basis for its determination, unless same
have been explicitly deviated from in the main body of this Agreement.
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The Arbitrator shall confine himself only to unresolved adjustments.
The Arbitrator, in reaching a decision, shall provide a written
explanation of his conclusions to each Party, and his determination
shall be conclusive and binding upon the Parties. The Arbitrator will
allocate between claimant and defendant his fees and expenses.
5.04 CLOSING ACCOUNTS AND SETTLEMENT FOR THE PERIOD BETWEEN APRIL 4, 1999
AND CLOSING DATE
FEI shall be entitled to all of the Assets and shall assume all of the
Liabilities pertaining to each of the respective Business as of the
respective Closing Date. In addition, the Parties will settle the NOC;
the respective settlement shall be determined on the basis of the
Reference Accounts and the Closing Accounts as set forth hereinafter.
5.05 Once the respective Closing Accounts have been determined in
accordance with the above, any differences in the NOC resulting from a
comparison of the Reference Accounts and the respective Closing
Accounts will give rise to an adjustment, pursuant to which:
(i) Philips shall pay the difference to FEI in the event the NOC in
the Closing Accounts is lower than the NOC in the Reference Accounts,
such payment on an after tax basis only if Philips is obliged to pay
the related taxes and the payment is not tax deductible;
(ii) FEI shall pay the difference to Philips in the event the NOC in
the Closing Accounts is higher than the NOC in the Reference Accounts,
such payment on an after tax basis if Philips is obliged to pay the
related taxes and the payment is not tax deductible.
Any payment to be made hereunder is subject to an interest charge at
EURIBOR (3 months rate at Closing) + 2% calculated as from the Closing
Date until the day payment is actually received.
ARTICLE 6
CONTRACTS
6.01 As further consideration for the sale and purchase hereunder and
subject as hereinafter mentioned, FEI undertakes with Philips:
6.01.1 that it will with effect from the Closing Date carry out,
perform and complete all obligations and liabilities created
by or arising under the Contracts; and
6.01.2 that it will indemnify Philips and any other member of the
Philips Group fully at all times from and against any and
all actions,
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proceedings, costs, claims, demands, expenses and
liabilities which may be suffered or incurred by them as a
result of (a) any failure by FEI so to do, (b) any tort or
breach of contract claim due to the acts or omissions of the
Local FEI Company, including but not limited to any breach
of any representation, warranty or covenant set out herein.
And Philips undertakes with FEI:
6.01.3 that it will indemnify FEI and any other member of the FEI
Group fully at all times from and against any and all
actions, proceedings, costs, claims, demands, expenses and
liabilities which may be suffered or incurred by them as a
result of any tort or breach of contract claim due to
Philips or the Local Philips Company including but not
limited to any breach of any representation, warranty or
covenant set out herein.
6.02 If any claim shall be made by any third party (i) against Philips (or
a Philips Company) in respect of which Philips (for the purpose of
this Article deemed to include a Philips Company, as the case may be)
seeks to be indemnified under Article 6.01 or (ii) against FEI (or an
FEI Company) in respect of which FEI (for the purpose of this Article
deemed to include an FEI Company, as the case may be) seeks to be
indemnified under Article 6.01 (hereinafter the party seeking to be
indemnified being "the Indemnitee", and the party requested to
indemnify "the Indemnitor"), then the Indemnitee shall promptly inform
the Indemnitor and:
6.02.1 the Indemnitor shall have the right upon written notice to
the Indemnitee to have the conduct of all litigation or
other proceedings ("proceedings") in respect thereof and in
that connection the Indemnitee shall give or cause to be
given to the Indemnitor all such assistance as the
Indemnitor may reasonably require in disputing any such
claim and conducting proceedings and shall instruct such
solicitors or other professional advisers as the Indemnitor
may nominate (and to whom the Indemnitee shall have no
reasonable objection) to act on behalf of the Indemnitee but
in accordance with the instructions of the Indemnitor;
6.02.2 the Indemnitor shall keep the Indemnitee fully and promptly
informed of the conduct of any proceedings of which it has
conduct, shall consult the Indemnitee on any matter which is
or is likely to be material in relation thereto and shall
take account of all reasonable requirements of the
Indemnitee in relation thereto;
6.02.3 neither the Indemnitee (where the Indemnitee is responsible
for the conduct of any proceedings) nor the Indemnitor
(where such proceedings are delegated to it in accordance
with 6.02.1 above) shall
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make any settlement or compromise of the claim which is the
subject of proceedings nor agree to any matter in the
conduct of proceedings which may affect the amount of the
liability in connection with such claim without the prior
approval of the Indemnitor or, as the case may be, the
Indemnitee , such approval not to be unreasonably withheld
or delayed;
6.02.4 where the Indemnitor takes over the conduct of any
proceedings pursuant to the provisions of 6.02.1 above, the
Indemnitor shall indemnify and keep the Indemnitee
indemnified in respect of all liabilities and out-of-pocket
costs, charges and expenses properly incurred by the
Indemnitee as a consequence of such proceedings, save to the
extent that such costs, charges or expenses are recovered
from another party to the proceedings.
6.03 Insofar as the benefit or burden of any Contracts or the benefit of
any other Asset, or component of Liability cannot effectively be
assigned by Philips to FEI or assumed by FEI except by an agreement of
novation with the agreement or consent of any other party thereto or
of any third party and, even though the Local FEI Company has
requested the Local Philips Company to procure same, such novation,
agreement or consent shall not have taken place or have been obtained
prior to Closing (each be a "Nonassigned Right"):
6.03.1 Philips shall use all reasonable endeavours in assisting FEI
to procure that agreement or consent as aforesaid is
obtained, wherever FEI requests same;
6.03.2 unless and until the said Nonassigned Rights shall be
novated or assigned as aforesaid Philips shall:
6.03.2.1 hold the same in trust for FEI and FEI shall (if
sub-contracting is permissible and lawful under
the Contract(s) in question) perform all the
obligations of Philips thereunder as Philips'
sub-contractor; and
6.03.2.2 (so far as it lawfully may) give to FEI the
benefit and burden to the same extent as if the
same had been novated, act under the reasonable
direction of FEI and account to and be indemnified
by FEI accordingly;
6.03.3 if any of the Nonassigned Rights does not permit
sub-contracting the parties will make such other
arrangements between themselves as may be permissible to
implement as far as possible the effective transfer of the
benefits and obligations of such Nonassigned Right to FEI;
and
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6.03.4 unless and until the Nonassigned Rights shall be novated or
assigned Philips will (so far as it lawfully may) give all
reasonable assistance to FEI to enable FEI to enforce
Philips' rights thereunder.
6.04 As from the Closing Date, each party will afford the other and their
affiliates with all reasonable assistance in connection with the
administration of and collection of sums owing (subject to
reimbursement of all out-of-pocket expenses but otherwise free of
charge) to the other party. Provided, further, that the assisting
party shall give to the claiming party an accounting of all amounts
but in no event shall the assisting party assume any liability for any
outstanding obligation owed, except to the extent it does not comply
with the provisions of this section. This section will not be
construed as obligating the Local FEI Company to continue any Business
or Local Activity for any period subsequent to the Closing.
6.05 All notices, correspondence, information, orders or inquiries relating
to the Contracts or Business which are received by Philips or a Local
Philips Company on or after Closing shall (to the extent to which they
relate to the Business) promptly be passed to FEI or the respective
Local FEI Company.
6.06 For a short period and on conditions set forth in Schedule 6.06, the
Local FEI Companies (those remaining part of the FEI Group of
Companies) are authorized to continue using the Local Philips
Company's name and letterhead in order to execute a smooth and
efficient transition to the new company.
ARTICLE 7
EMPLOYEES
7.01 It is the intention of the parties that the Businesses are transferred
on a `going concern' basis and henceforth that the Employees are
transferred to the Local FEI Company by means of the Country
Agreements. If and to the extent such transfer can not take place by
means of executing a Country Agreement, FEI undertakes that it and/or
the Local FEI Company will timely offer all the Employees employment.
It is understood that said Employees shall no longer have resort under
any individual employment agreement and any Philips' Collective Labor
Agreements or similar agreements after the respective Closing Date,
unless agreed otherwise. Accordingly, the Local Philips Company's
rights, powers, duties, liabilities and obligations in respect of any
contract of employment with the Employees in force immediately before
Closing shall be automatically transferred to the Local FEI Company by
operation of law (wherever possible).
It is agreed that salary rights (including bonus, accrued vacation
rights, etc) accrued by the Employees until the Closing Date shall
automatically transfer to the Local FEI Company, unless and to the
extent same exceed the Local Philips Company's policies at Closing
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7.02 FEI shall be responsible for and shall at all times from the Closing
Date indemnify and hold Philips fully and effectively indemnified from
and against all costs, claims, demands, proceedings and expenses
incurred or suffered in connection with claims by all or any of the
Employees in respect of any period of employment from and after the
Closing Date or the termination of the employment of all or any of the
Employees by FEI or the Local FEI Company other than (a) as a result
of a tort, any negligent act or omission of Philips prior to Closing,
or (b) as set forth in Schedule 4.6 to a Country Agreement in case it
pertains to a `shared' Employee listed therein. Philips shall at all
times hereafter indemnify and hold FEI fully and effectively
indemnified from and against all costs, claims, demands, proceedings
and expenses incurred or suffered in connection with claims by all or
any of the Employees in respect of any period of employment up to the
Closing Date.
7.03 The parties anticipate that certain Local Companies will wish to
ensure the continuation of the services of (a) certain Philips
employees who will not be transferred and (b) certain Employees who
should continue to serve Philips Analytical.
In such cases, the Country Agreement will contain a consultancy or
local services agreement arranging for such continuation of service
provision to the other, which shall be substantially in the form as
the model attached hereto as Schedule 7.03.
ARTICLE 8
PENSIONS
8.01 Entitlements to pension benefits, termination benefits, severance
indemnities and retiree medical benefits as accrued with occupational
plans of Philips by the employees concerned up to the Closing Date are
as to their funding either funded with a company pension fund,
insured, book reserved plan or financed otherwise. Depending on the
funding made the following will apply:
A) FUNDING EFFECTUATED BY WAY OF A PENSION SCHEME:
With respect to the pensionable service of the employees concerned up
to the Closing Date the employees participating in the Philips'
Pension Scheme will become entitled to a deferred pension (also known
as a paid-up policy) in accordance with the rules and regulations of
the particular Pension Scheme. If requested by FEI, Philips will make
reasonable endeavours to have the liabilities (and associated assets)
transferred by such Pension Scheme to a funding vehicle to be
indicated by FEI, subject to the necessary approvals being obtained,
and in accordance with the rules and regulations of the relevant
Pension Scheme.
B) FUNDING EFFECTUATED BY WAY OF AN INSURANCE:
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In case the entitlements have been insured Philips will make
reasonable efforts, if requested by FEI, to have the liabilities
accrued up to the Closing Date transferred to a funding vehicle to be
indicated by FEI, subject to the necessary approvals being obtained
and in accordance with applicable legislation.
C) FUNDING EFFECTUATED BY WAY OF A BOOK RESERVE WITH PHILIPS:
In those cases where entitlements have been taken care of by way of a
book reserve Philips shall include a provision in the Reference
Accounts of the local Business which is equal to the actuarial present
value of rights accrued up to Closing Date as calculated by Philips
under the relevant local book reserve system.
D) FUNDING OTHERWISE:
If entitlements have not been funded according to A, B or C above, a
comparison will be made between the liability value of the rights as
accrued up to the Closing Date and the present value of the accrued
amounts included in the Reference Accounts; the difference between the
two will be taken into consideration as a price adjustment.
8.02 In principle the Parties hereto will undertake all reasonable
commercial endeavours to try to obtain the necessary approvals in
order to support a temporary continuation of the affiliation to the
plans as indicated under A and B (note: under C and D, is excluded),
subject to local (statutory and Pension Scheme) rules and regulations.
ARTICLE 9
INTELLECTUAL PROPERTY RIGHTS
9.01 All Assigned IP shall transfer at Closing. Except for Assigned IP, no
other intellectual property rights are transferred or licensed by
means of this Agreement.
ARTICLE 10
SITE AND OTHER SERVICES
10.01 A Local Philips Company may provide to the Local FEI Company such site
and other services, if any, in accordance with the provisions of the
respective Local Agreement.
ARTICLE 11
DISCONTINUATION OF DISTRIBUTORSHIPS
11.01 By signing a Country Agreement, each existing distribution or agency
agreement between the Local Philips Company and FEI or any of its
affiliates is terminated as from the respective Closing Date.
15
ARTICLE 12
TAXATION
12.01 The Country Agreements will contain one of the clauses set forth below
(depending on whether they are located within or outside the European
Union):
{{FOR THE EU COUNTRIES:}}
Parties agree that the transaction as set forth herein in principle
qualifies as a totality of assets as mentioned in article 6 - 8 of the
Sixth Directive. This implies that in principle no VAT is due. If
however article 6-8 of the Sixth Directive is not applicable or the
tax authorities would at any moment judge that article 6-8 is not
applicable, Philips will be allowed to charge VAT to the Local FEI
Company, which will as then immediately be paid by the Local FEI
Company to Philips.
{{FOR THE NON EU COUNTRIES:}}
All prices are excluding any VAT, sales tax, import tax, customs duty
or any other kind of similar tax (hereinafter referred to as "Turnover
Tax").
If any payment to be made by Local FEI Company to Philips is
subject to a Turnover Tax, Philips will invoice this Turnover Tax to
Local FEI Company on the original invoice. If to the contrary any
invoice by Philips to Local FEI Company has been made in error without
any such Turnover Tax, Philips shall promptly notify Local FEI Company
of such event and may at any time issue a separate invoice for such
Turnover Tax which invoice shall be paid by Local FEI Company.
12.02 FEI will indemnify and hold harmless a Local Philips Company on an
after tax basis if and to the extent such Local Philips Company is
obliged by local tax authorities to make payments directly related to
FEI's transfer pricing practiced prior to the Closing Date.
ARTICLE 13
WARRANTIES
13.01 This Agreement has been entered into by FEI in reliance upon the
Warranties to the intent that each of the Warranties shall be
construed as a separate and independent Warranty so that FEI shall
have a separate claim and right of action in respect of every breach
of each Warranty.
13.02 No claim shall be made by FEI for breach of any of the Warranties or
other provisions of this Agreement if the fact, omission, circumstance
or occurrence giving rise to or forming the basis of the claim has
been fairly disclosed to FEI in the Disclosure Letter delivered at
least five days prior to Closing (but updated by Philips prior to
Closing) or was otherwise known prior to the date hereof.
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13.03 No claim shall be made by FEI for breach: (i) of the covenants in
Section 5.02 that the Closing Accounts will be prepared in accordance
with Philips Accounting Policies Consistently Applied (the "NOC
Financial Covenant"), unless such claim is in repsect of one single
matter and it is for an amount in excess of 5% of the asset component
of the applicable NOC for the Local Activity transferred and (ii) of
any of the other Warranties or other provisions of this Agreement
unless such claim is in respect of one single matter and it is for an
amount in excess of EUR 25,000.
13.04 No claim shall be made by FEI for breach of any of the Warranties or
other provisions of this Agreement unless the aggregate loss or damage
(in respect of one or more matters) exceeds EUR 125,000 in which event
a claim in respect of the excess over EUR 25,000 may be made;
provided, however that this limitation shall not apply to breaches of
the NOC Financial Covenant.
13.05 The liability of Philips in respect of the aggregate of all the claims
made by FEI for breach of any of the Warranties or other provisions of
this Agreement shall not exceed the Purchase Price.
13.06 No claim may be brought by FEI for breach of any of the Warranties or
other provisions of this Agreement unless written notice thereof shall
have been given to Philips accompanied by reasonable particulars of
the claim including the amount of the claim within 15 months of the
Principal Closing Date.
13.07 No claim shall be made by FEI for breach of any of the Warranties or
other provisions of this Agreement in respect of any matter to the
extent that the subject matter of the claim shall be tax deductible,
and/or can be recovered in whole or in part by FEI under a policy of
insurance
13.08 If any claim for breach of any of the Warranties is based upon a
liability of FEI which is contingent only, Philips shall not be liable
hereunder to make any payment to FEI unless and until such contingent
liability becomes an actual liability and is discharged.
13.09 Where any claim is made by a third party against FEI in relation to
which it appears that Philips is or may be liable hereunder and FEI
claims indemnification from Philips under this Article 13, FEI shall
as soon as practicable give notice thereof to Philips and transfer to
Philips' sole control the defense of such claim and FEI shall take
such action as Philips may reasonably require to avoid, dispute,
resist, appeal against, compromise or defend the claim and any
adjudication in respect thereof and FEI shall render to Philips all
such assistance as it may reasonably request in relation to such claim
including instructing such professional advisers as Philips may
nominate to the intent that the conduct of such claim shall be
delegated to Philips entirely.
13.10 Where any third party is liable to FEI in relation to any matter which
has given rise to a liability on the part of Philips hereunder, FEI
shall procure that all reasonable
17
endeavours are used to recover any amounts due from any such third
party and shall forthwith upon such recovery reimburse Philips an
amount equal to any sum paid by it in respect of such liability
subject to a deduction of the net (i.e. out of pocket) expenses
incurred by FEI.
13.11 Any sum recovered from Philips pursuant to any claim under the
Warranties will be deemed to be a reduction of the Purchase Price and
shall be deemed to reduce the amount apportioned to the Asset(s) to
which it most closely relates.
13.12 Philips shall not be liable hereunder and no claim or claims shall be
made against it in relation to any breach or non-fulfillment of any of
the Warranties which occurs as a result of or is otherwise
attributable to:
- any matter provided for under the terms of this Agreement or
carried out in the implementation hereof;
- any voluntary act of FEI carried out after the date hereof;
- any act, matter or thing done or omitted to be done by or at
the written request or with the written approval of FEI; or
- any legislation not in force at the date hereof or any
change of law or administrative practice which takes effect
retroactively.
ARTICLE 14
ACCESS TO INFORMATION
14.01 Each Party shall give the other access to (and the opportunity to make
copies of) all data and information, including all updates and
amendments thereof existing at the Closing Date, which form part of or
relate to any item, matter or part thereof transferred pursuant to
this Agreement and will provide all reasonable assistance to the other
to enable it to execute financial reporting and finalize tax returns
for all periods prior to the Closing Date.
ARTICLE 15
CONFIDENTIALITY
15.01 The parties agree that the contents of this Agreement and all
information disclosed by either party to the other relating to the
business of either party (including the Business) shall remain
confidential and, save as required by any applicable rules of any Stock
Exchange or other government department or similar authority or court
or tribunal of competent jurisdiction (in which event the party
required to make a disclosure shall give prior written notice to the
other of such required disclosure),
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shall not be used or communicated to any other person whatsoever
except professional advisers in confidence without the prior written
agreement of the parties and then only to such extent as may be
reasonably necessary to enable the parties to carry out their
obligations or enforce their rights under this Agreement. Save as
aforesaid, no announcement or publicity relating thereto shall be made
or issued at any time by either party without the prior written
consent of the other. The parties further agree that the obligations
in this Article shall survive Closing of this Agreement for so long as
such information is not (otherwise than by breach of any obligation of
confidentiality) in the public domain.
ARTICLE 16
COSTS
16.01 Save as otherwise agreed all expenses incurred by or on behalf of the
parties, including all fees of agents, solicitors, accountants and
actuaries employed by either of the parties in connection with the
negotiation, preparation and execution of this Agreement and related
agreements shall be borne solely by the party which incurred them.
ARTICLE 17
NOTICES
17.01 All notices, requests and other communications hereunder shall be in
writing and shall be deemed to have been duly given if addressed, and
delivered by hand, with recorded delivery, or sent by registered mail,
with postage pre-paid, or sent by facsimile and confirmed by
registered mail, with postage pre-paid, to the addresses set forth in
Article 17.03 (or to such other address as may be given by written
notice).
17.02 Any such communication shall be deemed to have been made to the other
party two days from the date of posting (if by letter) and if by
facsimile transmission on the day of such transmission.
17.03 If to Philips, addressed to:
Koninklijke Philips Electronics NV
Xxxxxxxxxxxxxxx 0
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
marked for the attention of Corp. Legal Dept.
If to FEI, addressed to:
FEI Company
19
0000 XX Xxxxxxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxxx, 00000-0000
XXX
marked for the attention of the General Counsel
ARTICLE 18
CONDITIONS TO CLOSING
18.01 CONDITIONS TO THE OBLIGATIONS OF PHILIPS AND FEI
The obligations of the parties hereto to effect the Closing are
subject to the satisfaction (or waiver) prior to the respective
Closing of the following conditions:
(a) BOARD APPROVALS. At the Board Meeting of FEI, the Board Members of
FEI shall have voted to approve (i) the Agreement and the intended
transaction, and (ii) any further actions necessary to consummate the
transaction. At the Board of Management Meeting of Philips, the Board
Members shall have voted to approve (i) the Agreement and the intended
transaction and (ii) any further actions necessary to consummate the
transaction.
(b) NO INJUNCTIONS. There shall not (i) be in effect any statute,
regulation, order, decree or judgment of any governmental entity which
makes illegal or which enjoins, prevents in any material respect or
imposes any burdensome condition or restriction as a consequence of
the consummation of the transactions contemplated by this Agreement or
(ii) have been commenced or threatened in writing, and shall be
continuing, any action or proceeding by any governmental entity which
seeks to prevent, enjoin in any material respect or imposes any
burdensome condition or restriction as a consequence of the
transactions contemplated by this Agreement;
(c) WORKERS COUNCIL. All required employee consultation procedures
shall have been pursued to the extent that they can no longer lead to
a substantial change or delay in the transactions contemplated hereby.
18.02 CONDITIONS TO THE OBLIGATIONS OF FEI
The obligation of FEI to effect the Closing is subject to the
satisfaction (or waiver by FEI) prior to the respective Closing, of
the following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of Philips contained herein that is qualified by
materiality shall be true and correct, and each of the representations
and warranties of Philips that is not so qualified shall be true and
correct in all material respects, in each case as if made as of the
Closing (except that representations and warranties that are made as
of a specific date need be true or true in all material respects, as
the case may be, only as of such date), and FEI shall have received a
certificate to such effect dated the Closing Date and executed by a
duly authorized officer of Philips;
(b) COVENANTS. The covenants and agreements of Philips to be performed
on or prior to the Closing shall have been duly performed in all
material respects, and FEI shall have received a certificate to such
effect dated the Closing Date and executed by a duly authorized
officer of Philips;
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18.03 CONDITIONS TO THE OBLIGATIONS OF PHILIPS
The obligation of Philips to effect the Closing is subject to the
satisfaction (or waiver) prior to the respective Closing of the
following conditions:
(a) REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of FEI contained herein that is qualified by materiality
shall be true and correct, and each of the representations and
warranties of FEI that is not so qualified shall be true and correct
in all material respects, in each case as if made as of the Closing
(except that representations and warranties that are made as of a
specific date need be true or true in all material respects, as the
case may be, only as of such date), and Philips shall have received a
certificate to such effect dated the Closing Date and executed by a
duly authorized officer of FEI;
(b) COVENANTS. The covenants and agreements of FEI to be performed on
or prior to the Closing shall have been duly performed in all material
respects, and Philips shall have received a certificate to such effect
dated the Closing Date and executed by a duly authorized officer of
FEI.
ARTICLE 19
MISCELLANEOUS
19.01 Failure by either party to exercise or enforce any right conferred by
this Agreement shall not be deemed to be a waiver of any such right
nor operate so as to bar the exercise or enforcement thereof or of any
other right on any other occasion.
19.02 This Agreement represents the entire understanding between the parties
in relation to the subject matter hereof and supersedes all agreements
and representations made by either party, whether oral or written and
this Agreement may only be modified if such modification is in writing
and signed by a duly authorized representative of each party. This
Agreement shall prevail over any inconsistent terms and conditions in
any other agreement between the parties or referred to in
correspondence or elsewhere (including Country Agreements) and any
conditions or stipulations to the contrary are hereby excluded and
extinguished.
19.03 The parties shall, and shall use all reasonable endeavours
respectively to procure that any necessary third party shall, do
execute and perform all such further deeds, documents, assurances,
acts and things as either party hereto may reasonably require by
notice in writing to the other party to carry the provision of this
Agreement into full force and effect.
19.04 This Agreement shall be governed by and construed and interpreted in
accordance with the law of THE NETHERLANDS, and the parties hereby
agree that all matters arising out of or in connection with this
Agreement shall be subject to UNCITRAL Arbitration which shall take
place in Amsterdam.
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IN WITNESS WHEREOF the parties or their authorized representatives have set
their hands the day and year first above written.
KONINKLIJKE PHILIPS ELECTRONICS FEI COMPANY
N.V.
______________________________________ _________________________
Name: Name:
Title: Title:
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LIST OF SCHEDULES:
Schedule 1.13: Model Country Agreement
Schedule 1.18: List of Employees as per October 25, 1999
Schedule 1.20: List of all Fixed Assets
Schedule 1.34: Reference Accounts
Schedule 1.39: Warranties and Representations
Schedule 2.03: List of countries for Principal and Second Closing respectively
Schedule 3.02: The allocation of the Purchase Price to the respective Local Activities
Schedule 6.06: Terms and Conditions for using the Local Philips Company name
Schedule 7.03: Employee continuation arrangements
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SCHEDULE 7.03 (TO THE MASTER AGREEMENT)
ADDITIONAL (OPTIONAL) LOCAL ARRANGEMENT ON SHARED EMPLOYEES
The general ruling applicable within Philips also applies here: an employee will
be on the payroll of a party which makes use of 50% or more of the time of the
employee involved ("Hiring Party"). No cherry picking.
In most countries such Local Arrangements are required between the Local FEI
Company and the local Philips Analytical organisation for the services of
identified Sales and Customer Support employees to be provided to the other
party ("Receiving Party").
The Local Arrangement will be made for a period of one year (the first ending
December 31, 2000) and is automatically annually extended; termination is only
possible by giving a six (6) months' written notice prior to the expiration date
(so each year before July 1).
The Local Arrangement will be based on a fixed percentage of the time and cost
of the identified employees as estimated per year. It is assumed that this
percentage also applies for each month. The sharing ratio may vary from year to
year only by plus or minus 20%, unless otherwise agreed (e.g. in case of a
`60-40' sharing in year one, a `68-32' in year two is allowed, an `80-20'
sharing not).
The employees involved must register their time spending per business. This
register will be made available to both parties per month. By determining the
priority of time allocation per month beyond the contracted percentage of time,
the Hiring Party will decide on the priority after consultation with the
Receiving Party. Any time spent in addition to the contracted time will be
invoiced per quarterly period by the Hiring Party to the Receiving Party.
On termination of the Local Arrangement for whatsoever reason, the terminating
party will pay an equal percentage of the redundancy cost of the employee
involved as the allocation in time and cost, based on the average of the last 2
full years, provided (a) the person involved receives notice of termination
within 9 months as from receipt of the terminating party's intention to stop
using the respective person's services, and (b) the total amount spent by the
party incurring redundancy costs is above 200,000 euro (at which point the
amounts above said threshold are subject to this paragraph).
List of `shared' employees:
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NAME: BIRTHDATE: EMPLOYED BY: % XXX; %FEI
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