EXHIBIT 2.1
Combination Agreement
CONFORMED COPY
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COMBINATION AGREEMENT
between
PHILIPS INDUSTRIAL ELECTRONICS INTERNATIONAL B.V.
and
FEI COMPANY
Dated as of November 15, 1996
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TABLE OF CONTENTS
Page
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions.........................................2
Section 1.2 Other Terms.................................................12
Section 1.3 Other Definitional Provisions...............................12
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock...........................12
Section 2.2 Closing; Delivery and Payment...............................13
Section 2.3 Net Operating Capital.......................................13
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FEI
Section 3.1 Organization, Good Standing and Qualification...............15
Section 3.2 Corporate Authority; Approval and Fairness..................15
Section 3.3 Governmental Filings; No
Violations...............................................16
Section 3.4 Capital Structure...........................................17
Section 3.5 FEI Reports; Financial Statements...........................18
Section 3.6 Employee Benefits...........................................18
Section 3.7 Absence of Certain Changes..................................20
Section 3.8 Litigation and Liabilities..................................21
Section 3.9 Compliance with Laws; Permits...............................21
Section 3.10 Environmental Matters.......................................22
Section 3.11 Labor Matters...............................................22
Section 3.12 Insurance...................................................23
Section 3.13 Takeover Statutes...........................................23
Section 3.14 Taxes.......................................................23
Section 3.15 Intellectual Property.......................................24
Section 3.16 Contracts...................................................26
Section 3.17 Brokers and Finders.........................................26
Section 3.18 Customers and Suppliers.....................................26
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Page
Section 3.19 Voting Agreement............................................26
Section 3.20 Press Releases..............................................27
Section 3.21 Industrial Security Clearances..............................27
Section 3.22 Other Information...........................................27
Section 3.23 No Other Representations or
Warranties...............................................27
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PIE
Section 4.1 Organization, Good Standing and Qualification...............27
Section 4.2 Corporate Authority and Approval............................28
Section 4.3 Governmental Filings; No
Violations...............................................28
Section 4.4 Capital Stock...............................................29
Section 4.5 PEO Financial Statements....................................30
Section 4.6 Employee Benefits...........................................30
Section 4.7 Absence of Certain Changes..................................32
Section 4.8 Litigation and PEO Liabilities..............................32
Section 4.9 Compliance with Laws; Permits...............................32
Section 4.10 Environmental Matters.......................................33
Section 4.11 Labor Matters...............................................34
Section 4.12 Insurance...................................................34
Section 4.13 Takeover Statutes...........................................34
Section 4.14 Taxes.......................................................34
Section 4.15 Intellectual Property.......................................35
Section 4.16 Contracts...................................................36
Section 4.17 Brokers and Finders.........................................37
Section 4.18 Customers and Suppliers.....................................37
Section 4.19 PEO Assets and PEO Liabilities..............................37
Section 4.20 Shared Assets; Title to and
Condition of Property....................................37
Section 4.21 Securities Act..............................................39
Section 4.22 Press Releases..............................................39
Section 4.23 Industrial Security Clearances..............................39
Section 4.24 Other Information...........................................40
Section 4.25 No Other Representations or
Warranties...............................................40
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Page
ARTICLE V
COVENANTS
Section 5.1 Interim Operations..........................................40
Section 5.2 Acquisition Proposals.......................................42
Section 5.3 Information Supplied........................................43
Section 5.4 Shareholders Meeting........................................44
Section 5.5 Filings; Other Actions;
Notification.............................................45
Section 5.6 Access......................................................46
Section 5.7 Publicity...................................................47
Section 5.8 U.S. Transferred Employees..................................47
Section 5.9 Other Employees.............................................49
Section 5.10 Expenses....................................................50
Section 5.11 Takeover Statute............................................50
Section 5.12 Insurance of PEO Business...................................50
Section 5.13 Distribution and Other Agreements...........................51
Section 5.14 Secondary Offering..........................................52
Section 5.15 Acht Property...............................................52
Section 5.16 Intellectual Property.......................................53
Section 5.17 Right to Maintain Percentage
Interest.................................................56
Section 5.18 Issuance of Additional Shares...............................56
Section 5.19 Independent Directors.......................................57
Section 5.20 List of PEO Assets..........................................57
Section 5.21 Notice of Deconsolidation...................................57
Section 5.22 Limitation on Equity Position...............................57
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations
of FEI and PIE...........................................58
Section 6.2 Conditions to the Obligations
of PIE...................................................59
Section 6.3 Conditions to the Obligations
of FEI...................................................60
ARTICLE VII
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Page
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival....................................................61
Section 7.2 Indemnification by PIE......................................61
Section 7.3 Indemnification by FEI......................................62
Section 7.4 Indemnification Procedures..................................62
Section 7.5 Indemnification Net of Taxes................................64
ARTICLE VIII
TERMINATION
Section 8.1 Termination.................................................65
Section 8.2 Effect of Termination.......................................66
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices.....................................................67
Section 9.2 Amendment; Waiver...........................................68
Section 9.3 Assignment..................................................68
Section 9.4 Entire Agreement............................................68
Section 9.5 Fulfillment of Obligations..................................69
Section 9.6 Parties in Interest.........................................69
Section 9.7 Public Disclosure...........................................69
Section 9.8 Expenses....................................................69
Section 9.9 Disclosure Schedules........................................69
Section 9.10 Governing Law; Mediation and
Arbitration..............................................70
Section 9.11 Counterparts................................................70
Section 9.12 Headings....................................................71
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ANNEXES
Annex 1.1a - Knowledge of FEI
Annex 1.1b - Knowledge of PIE
Annex 3.19(a) - Certain Shareholders of FEI
Annex 3.19(b) - Form of Voting Agreement
Annex 5.2 - Confidentiality Agreement
Annex 5.13(a) - Form of Distribution Agreement
Annex 5.13(d) - Form of Service Agreement
Annex 5.14 - Selling Shareholders
Annex 6.2(c) - Opinion of Stoel Rives LLP
Annex 6.2(f)(i) - Directors of FEI
Annex 6.2(f)(ii) - Officers of FEI
Annex 6.3(c) - Opinions of PIE's Counsel
Annex 6.3(e) - Form of Employment Agreement
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COMBINATION AGREEMENT, dated as of November 15, 1996, between FEI
COMPANY, an Oregon corporation ("FEI") and PHILIPS INDUSTRIAL ELECTRONICS
INTERNATIONAL B.V., a Netherlands corporation ("PIE").
W I T N E S S E T H :
WHEREAS, PIE desires to acquire common stock (the "Common Stock"), of
FEI, constituting 55% of the Outstanding Common Stock (as defined herein),
upon the terms and conditions set forth herein;
WHEREAS, FEI desires that PIE transfer to FEI in payment for such
Common Stock, among other things, 100% of the issued and outstanding
capital stock of PEO Holdings (as defined herein) and PEO-US (as defined
herein);
WHEREAS, Philips, the parent corporation of PIE, is willing to make
certain representations and warranties and to agree to certain covenants
for the benefit of FEI;
NOW, THEREFORE, in consideration of the mutual covenants and
undertakings contained herein, and subject to and on the terms and
conditions herein set forth, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 Specific Definitions. As used in this Agreement, the
following terms shall have the meanings set forth or as referenced below:
"Acht Property" shall mean the real estate in Acht used by the PEO
Business, located at Xxxxxxxxx Xxxxx 0, 0000XX Xxxxxxxxx, Xxx Xxxxxxxxxxx
and the improvements thereon, known as building AAE and registered in the
register of the municipality of Eindhoven under the entry "Woensel, Sectie
A, nummer 4106 gedeeltelijk".
"Acquisition Proposal" shall have the meaning set forth in Section 5.2.
"Additional Shares" shall have the meaning set forth in Section 2.1.
"Affiliate" shall mean, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with, such
other Person at any time during the period for which the determination of
affiliation is being made.
"Agreement" shall mean this Agreement, as the same may be amended or supple
mented from time to time in accordance with the terms hereof.
"Audit Date" shall have the meaning set forth in Section 3.5.
"board of directors" shall mean any board of directors or other body of
persons, including all committees thereof, performing functions equivalent
or similar to those performed by a board of directors of a corporation
incorporated in one of the states of the United States of America.
"Books and Records" shall mean all books, ledgers, files, reports, plans
and operating records of, or maintained by, the PEO Business (it being
understood that, pursuant to the Restructuring, originals of certain of
such items maintained by, but not primarily related to, the PEO Business
may not be transferred to PEO Holdings, in which case, Books and Records
shall refer to copies of such items).
"Claim" shall have the meaning set forth in Section 7.4.
"Claim Notice" shall have the meaning set forth in Section 7.4.
"Closing" shall mean the closing of the transactions contemplated by this
Agreement.
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"Closing Date" shall have the meaning set forth in Section 2.2(a).
"Closing Net Operating Capital" shall have the meaning set forth in Section
2.3(a).
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Common Stock" shall have the meaning set forth in the recitals.
"Compensation and Benefit Plans" shall have the meaning set forth in
Section 3.6(a).
"Competition Laws" shall mean statutes, rules, regulations, orders,
decrees, administrative and judicial doctrines, and other laws that are
designed or intended to prohibit, restrict or regulate actions having the
purpose or effect of monopolization or restraint of trade.
"Confidentiality Agreement" shall mean the Confidentiality Agreement, dated
April 5, 1996, between FEI and Philips International B.V.
"Continuation Coverage" shall have the meaning set forth in Section 5.8(b).
"Contracts" shall mean any agreements, contracts, mortgages, bonds, notes,
indentures, leases, purchase orders, arrangements, commitments and
licenses, whether written or oral.
"Control" with respect to any Person shall mean ownership (directly or
indirectly) of a majority of total voting power of such Person's voting
securities or interests.
"CPA Firm" shall have the meaning set forth in Section 2.3(a).
"Definite Shares" shall have the meaning set forth in Section 2.1.
"Disclosure Schedule" shall mean the disclosure schedule accompanying this
Agreement. The Disclosure Schedule shall be deemed to include the FEI
Reports filed prior to the date hereof, which are hereby incorporated
therein by reference.
"Electro-Scan Purchase Agreement" shall mean the Asset Purchase Agreement,
dated May 3, 1996, by and between Electro-Scan Corporation and PENAC and
all related agreements executed in connection with or contemplated by such
Asset Purchase Agreement.
"Employees" shall mean all current employees employed in the PEO Business
and all former employees of PIE, its predecessors and their respective
subsidiaries who,
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immediately prior to the time they ceased to be employees of any such
entity, were employed in the PEO Business.
"Encumbrances" shall mean liens (including any liens for Taxes), charges,
encumbrances, security interests, options, or any other restrictions or
third party rights.
"Environmental Law" shall mean any applicable law, statute, ordinance,
rule, regulation, code, order, judgment, decree or injunction (other than
any Tax Laws) relating to the protection of the environment (including,
without limitation, air, water vapor, surface water, groundwater, drinking
water supply, surface or subsurface land), or the exposure to, or the use,
storage, recycling, treatment, generation, transportation, processing,
handling, labelling, protection, release or disposal of, radioactive
materials or hazardous or toxic substances or wastes.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended.
"ERISA Affiliate" shall have the meaning set forth in Section 3.6(c).
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Business" shall mean (i) the sales and service organizations
related to the PEO Business in countries other than the United States,
Canada, Japan, The Netherlands, Germany, France, Italy and the United
Kingdom as listed on Section 5.13(a) of the Disclosure Schedule, (ii) the
Acht Property, (iii) the cash reserve of NLG 400,000 and any corresponding
liability relating to the Zeiss Claim and (iv) the accounts receivable
payable to PIE from the Ministry of Finance of Russia or any successor
Governmental Entity thereto, and any associated financial accrual related
thereto.
"Exon-Xxxxxx Amendment" shall mean the Exon-Xxxxxx Amendment to the 1988
Omnibus Trade and Competitiveness Act, 50 USCA Section 2170.
"FEI" shall have the meaning set forth in the recitals.
"FEI Compensation and Benefit Plans" shall have the meaning set forth in
Section 3.6(a).
"FEI Indemnified Parties" shall have the meaning set forth in Section
7.2.(a)
"FEI Intellectual Property" shall have the meaning set forth in Section
3.15(b).
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"FEI Material Adverse Effect" means a material adverse effect on the
financial condition, properties, prospects, business or results of
operations of FEI and its Subsidiaries, taken as a whole.
"FEI Option" shall have the meaning set forth in Section 3.4.
"FEI Reports" shall have the meaning set forth in Section 3.5.
"FEI Requisite Vote" shall have the meaning set forth in Section 3.2(a).
"FEI's Business" shall mean the business of FEI as conducted or
contemplated to be conducted as of the date hereof.
"FEI's Objection" shall have the meaning set forth in Section 2.3(a).
"GAAP" shall have the meaning set forth in Section 3.5.
"Governmental Authorizations" shall mean all licenses, permits,
certificates and other authorizations and approvals required to carry on
the PEO Business or, with respect to PIE, to perform its obligations under
this Agreement, as the case may be, under the applicable laws, ordinances
or regulations of any Governmental Entity.
"Governmental Entity" shall have the meaning set forth in Section 3.3(a).
"Hazardous Substance" means any substance that is listed, classified or
regulated as such pursuant to any Environmental Law.
"HSR Act" shall mean the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended.
"Indemnified Parties" shall have the meaning set forth in Section 7.3(a).
"Indemnifying Party" shall have the meaning set forth in Section 7.4.
"Intellectual Property" shall mean trademarks, service marks, brand names,
certifi cation marks, trade dress, assumed names, trade names and other
indications of origin, the goodwill associated with the foregoing and
registrations in any jurisdiction of, and applications in any jurisdiction
to register, the foregoing, including any extension, modification or
renewal of any such registration or application; inventions, discoveries
and ideas, whether patentable or not in any jurisdiction; patents,
applications for patents (including, without limitation, divisions,
continuations, continuations in-part and renewal applications), and any
renewals, extensions or reissues thereof, or
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supplementary patent certificates derived therefrom, in any juris diction;
model and design rights; non-public information, trade secrets and
confidential information and rights in any jurisdiction to limit the use or
disclosure thereof by any Person; copyrights and writings and other works,
whether copyrightable or not in any jurisdiction; registrations or
applications for registration of copyrights in any jurisdiction, and any
renewals or extensions thereof; maskworks; any similar intellectual
property or proprietary rights.
"ISRA" shall mean the Industrial Site Recovery Act of New Jersey, NJSA
13:1K-6 et seq.
"Knowledge of FEI" or any similar phrase means the actual or constructive
knowledge of the individuals listed on Annex 1.1(a) hereto. A person is
deemed to have constructive knowledge for the purpose of this definition
only if he or she would have actual knowledge by reason of a reasonable
investigation within the scope of his or her employment.
"Knowledge of Philips" shall mean the Knowledge of PIE plus the actual or
constructive knowledge of the senior management of Philips' Corporate
Patents and Trademarks department. A person is deemed to have constructive
knowledge for the purpose of this definition only if he or she would have
actual knowledge by reason of a reasonable investigation within the scope
of his or her employment.
"Knowledge of PIE" or any similar phrase means the actual or constructive
knowledge of the individuals listed on Annex 1.1(b) hereto. A person is
deemed to have constructive knowledge for the purpose of this definition
only if he or she would have actual knowledge by reason of a reasonable
investigation within the scope of his or her employment.
"Laws" shall have the meaning set forth in Section 3.9.
"Leased Real Property" shall mean all real property used in the PEO
Business leased by PIE or any of its Affiliates, including any buildings,
facilities, fixed assets, structures and improvements thereon or
appurtenances thereto.
"Letter of Intent" shall mean the letter of intent, dated September 4,
1996, between FEI and PIE.
"Losses" shall have the meaning set forth in Section 7.2(a).
"NASDAQ" shall mean the National Association of Securities Dealers
Automated Quotation System.
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"Net Operating Capital" shall mean the net operating capital of the PEO
Business as of the Closing Date calculated, in accordance with Philips
internal accounting principles, by adding (a) fixed assets, (b) net
inventories, (c) trade accounts receivable, and (d) other assets and
subtracting (e) non-interest bearing liabilities.
"Non-U.S. Employees" shall have the meaning set forth in Section 5.9(a).
"Notice Period" shall have the meaning set forth in Section 7.4.
"Outstanding Common Stock" shall mean at any time the sum of (i) the number
of shares of Common Stock issued and outstanding immediately prior to the
Closing, (ii) any shares of Common Stock obtained by any Person upon
exercise or conversion of any options, warrants, convertible securities or
other rights to acquire shares of Common Stock, outstanding at Closing or
issuable without further action of FEI's board of directors subsequent to
the Closing ("Rights Outstanding at Closing") and (iii) the Shares (as such
number is increased from time to time due the increase of Additional Shares
due to any conversions or exercise pursuant to (ii) above).
"PENAC" shall mean Philips Electronics North America Corporation.
"Pension Plan" shall have the meaning set forth in Section 3.6(b).
"PEO Assets" shall have the meaning set forth in Section 4.19.
"PEO Business" shall mean the worldwide activities (including the
intellectual property rights (subject to Section 5.16) and the related
personnel) related to the electron optics business conducted or
contemplated to be conducted by PIE and its Affiliates as of the date
hereof, other than the Excluded Business.
"PEO Compensation and Benefit Plans" shall have the meaning set forth in
Section 4.6(a).
"PEO Financial Statements" shall have the meaning set forth in Section 4.5.
"PEO Group" shall mean PEO-US, PEO Holdings and all of their Subsidiaries.
"PEO Holdings" shall mean Philips Electron Optics International B.V., a
Netherlands corporation.
"PEO Intellectual Property" shall have the meaning set forth in Section
4.15(b)(ii).
"PEO Liabilities" shall have the meaning set forth in Section 4.19.
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"PEO Material Adverse Effect" shall mean a material adverse effect on the
financial condition, properties, prospects, business or results of
operations of the PEO Business, taken as a whole.
"PEO Stock" shall have the meaning set forth in Section 2.2(b).
"PEO-US" shall mean Philips Electron Optics, Inc., a Delaware corporation,
which holds the PEO Assets located in the United States.
"PEO-US Certificates" shall have the meaning set forth in Section 2.2(b).
"Permitted Encumbrances" shall have the meaning set forth in Section 4.20(b).
"Person" shall mean an individual, a corporation, a partnership, an
association, a trust or other entity or organization.
"Philips" shall mean Philips Electronics N.V.
"Philips Group" shall mean Philips and all of its Affiliates, whether
consolidated or not.
"PIE" shall have the meaning set forth in the recitals.
"PIE Indemnified Parties" shall have the meaning set forth in Section
7.3(a).
"PIE Information" shall have the meaning set forth in Section 5.3(b).
"PIE Loan" shall mean the current account agreement, dated January 1, 1996,
between Philips Electron Optics B.V. and Nederlandse Philips Bedrijven B.V.
in such amount as shall be outstanding thereunder as of January 1, 1997.
"Proceedings" shall have the meaning set forth in Section 3.8.
"Proxy Statement" shall have the meaning set forth in Section 5.3(a).
"Representatives" shall have the meaning set forth in Section 5.6.
"Required Approvals" shall mean all authorizations, consents, orders or
approvals of, permits or licenses from, or declarations or filings with any
Governmental Entity, and all third party consents, in each case necessary
to effect the transactions contemplated by this Agreement in all material
respects and to conduct the PEO Business as previously conducted in all
material respects.
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"Restructuring" shall mean the process whereby the PEO Assets and PEO
Liabilities are transferred, to the extent necessary, from certain Persons
in the Philips Group into the PEO Group and by which the assets and
liabilities of any corporation in the PEO Group that are not PEO Assets and
PEO Liabilities, respectively, are transferred out of the PEO Group prior
to Closing.
"Rights Outstanding at Closing" shall have the meaning set forth in the
definition of Outstanding Common Stock.
"SEC" shall mean the Securities and Exchange Commission, including any
successor Governmental Entity thereto.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Shareholders" shall have the meaning set forth in Section 5.14.
"Shareholders Meeting" shall have the meaning set forth in Section 5.4.
"Shares" shall have the meaning set forth in Section 2.1.
"Stock Option Plan" shall mean the 1984 Stock Incentive Plan, the 1995
Stock Incentive Plan and the 1995 Supplemental Stock Incentive Plan of FEI.
"Stock Right" means any options, warrants, convertible securities or other
rights to acquire shares of Common Stock, including without limitation any
options issued under the Stock Option Plan.
"Subsidiary" means any entity, whether incorporated or unincorporated, of
which at least a majority of the securities or ownership interests having
by their terms ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions is directly or
indirectly owned or controlled by such party or by one or more of its
respective Subsidiaries or by such party and any one or more of its
respective Subsidiaries, and, with respect to FEI, includes, without
limitation, FEI Asia, Inc., FEI Europe, Ltd., a United Kingdom corporation,
FEI Europe GmbH, a German limited liability company, and FEI FSC, Ltd, a
United States Virgin Islands corporation.
"Superior Proposal" shall have the meaning set forth in Section 5.2.
"Takeover Statute" shall have the meaning set forth in Section 3.13.
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"Taxes" shall mean all U.S. federal, state or local, or foreign, taxes,
charges, fees, imports and levies including, but not limited to, income,
gross receipts, capital stock, inventory, windfall profits, alternative
minimum, ad valorem, value added, severance, property, production, sales,
use, license, excise, stamp, occupation, franchise, payroll, social
security, employment, withholding or similar taxes, and estimated taxes,
customs duties, fees, assessments and charges of any kind whatsoever
together with any interest, additions or penalties with respect thereto and
any interest in respect of such additions or penalties.
"Tax Law" shall mean any Law relating to Taxes.
"Tax Returns" includes all returns and reports (including elections,
declarations, disclosures, schedules, estimates and information returns)
required to be supplied to a Tax authority relating to Taxes.
"Third-Party Intellectual Property" shall have the meaning set forth in
Section 3.15(b)(i).
"Transaction" shall mean the issuance of the Definite Shares and Additional
Shares by FEI to PIE in exchange for 100% of the outstanding capital stock
of PEO Holdings and PEO-US and the assignment to FEI of the rights
currently held by Nederlandse Philips Bedrijven B.V. under the PIE Loan
upon the terms and conditions set forth herein.
"Transitional Services" shall have the meaning set forth in Section
5.13(d).
"U.S. PEO Compensation and Benefit Plans" shall have the meaning set forth
in Section 4.6(c).
"U.S. Transferred Employees" shall have the meaning set forth in Section
5.8(a).
"Voting Debt" shall have the meaning set forth in Section 3.4.
"WARN" shall mean the Worker Adjustment and Retraining Notification Act.
"Welfare Plans" shall have the meaning set forth in Section 5.8(b).
"Zeiss Claim" shall mean any present or future claims asserted by Xxxx
Zeiss GmbH of Oberkochen, Germany against the PEO Business relating to the
alleged infringement of U.S. Patent Number 4,713,543, European Patent
Number 0180723B1 and Japanese Patent Number JP-A-49,364/86.
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Section 1.2 Other Terms. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such
meaning throughout this Agreement.
Section 1.3 Other Definitional Provisions.
(a) The words "hereof", "herein", and "hereunder" and words of
similar import, when used in this Agreement, shall refer to this Agreement
as a whole and not to any particular provision of this Agreement.
(b) The terms defined in the singular shall have a comparable
meaning when used in the plural, and vice versa.
(c) The terms "dollars" and "$" shall mean United States dollars.
(d) The terms "guilders" and "NLG" shall mean the lawful currency
of The Netherlands.
ARTICLE II
PURCHASE OF COMMON STOCK
Section 2.1 Purchase and Sale of Common Stock. On the terms and
subject to the conditions set forth herein, (i) at the Closing, FEI agrees
to issue to PIE such number of shares of Common Stock (the "Definite
Shares") as shall constitute, when issued, 55% of the then issued and
outstanding shares of FEI's Common Stock and (ii) FEI agrees to issue to
PIE from time to time such number of additional shares of Common Stock (the
total number of such shares issued as at any time being herein referred to
as "Additional Shares", and together with the Definite Shares, the
"Shares") such that the Shares shall at all times constitute, when issued,
55% of the Outstanding Common Stock. In consideration therefor, at the
Closing and on the terms and subject to the conditions set forth herein (A)
PIE agrees to transfer to FEI 100% of the outstanding capital stock of PEO
Holdings and to assign to FEI the rights currently held by Nederlandse
Philips Bedrijven B.V. under the PIE Loan and (B) PIE shall transfer to FEI
100% of the outstanding capital stock of PEO-US.
Section 2.2 Closing; Delivery and Payment.
(a) The Closing shall take place at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 at 10:00 A.M. New York
City time, no later than two business days after all of the conditions
precedent specified in Article VI
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have been satisfied or waived (or at such other time and place as the
parties hereto may mutually agree). The date on which the Closing occurs is
referred to herein as the "Closing Date".
(b) On the Closing Date, (i) FEI shall deliver to PIE
certificates representing the Definite Shares duly issued to PIE and
registered in the name of PIE or its designee, (ii) PIE shall deliver to
FEI a duly executed instrument assigning to FEI the rights currently held
by Nederlandse Philips Bedrijven B.V. under the PIE Loan, (iii) PIE shall
convey to FEI all right, title and interest in and to the shares of common
stock (the "PEO Stock") representing 100% of the outstanding capital stock
of PEO Holdings and such conveyance shall be accomplished by the due
execution of a notarial deed of transfer in accordance with Netherlands law
and (iv) PIE shall deliver or have delivered to FEI certificates
representing 100% of the outstanding capital stock of PEO-US (the "PEO-US
Certificates"), duly endorsed and in form for transfer to FEI.
Section 2.3 Net Operating Capital.
(a) Within 30 days following the Closing Date, KPMG Accountants
shall determine the Net Operating Capital and provide to FEI and its
accountants the calculations and supporting evidence for such calculation
of Net Operating Capital. FEI's accountants shall have 30 days to review
and respond to KPMG Accountants' calculation. If FEI's accountants do not
agree with KPMG's calculation then FEI shall inform PIE in writing ("FEI's
Objection") setting forth a description in reasonable detail of the basis
for such disagreement and the adjustments FEI believes should be made to
the Net Operating Capital, on or before the last day of such 30-day period.
PIE shall then have 30 days to review and respond to FEI's Objection and
PIE shall not be limited to addressing FEI's Objection, but shall have the
right to raise any aspects of the Net Operating Capital calculation that
PIE believes are relevant to understanding such calculation. If FEI and PIE
are unable to resolve all of their disagreements with respect to FEI's
Objection within 10 days following the completion of PIE's review of FEI's
Objection, they shall refer their remaining differences to a "Big Six" or
other internationally recognized firm of independent public accountants as
to which FEI and PIE mutually agree (the "CPA Firm"), who shall determine,
only by resolving the remaining differences so submitted, including any
aspects of the Net Operating Capital calculation raised by PIE in response
to FEI's Objection, the Net Operating Capital. FEI and PIE shall instruct
the CPA Firm to deliver its written determination to FEI and PIE no later
than the twentieth day after the remaining differences underlying FEI's
Objection are referred to the CPA Firm. The CPA Firm's determination shall
be conclusive and binding upon FEI and PIE. The fees and disbursements of
the CPA Firm shall be shared equally by FEI and PIE. PIE agrees to make
available to the CPA Firm all relevant Books and Records and any work
papers (including those of KPMG Accountants) relating to the Net Operating
Capital and all other items reasonably
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requested by the CPA Firm. The "Closing Net Operating Capital" shall be (i)
the Net Operating Capital, as calculated by KPMG Accountants, in the event
that (x) no FEI's Objection is delivered to PIE during the 30-day period
specified above, or (y) FEI and PIE so agree, (ii) the Net Operating
Capital, as calculated by KPMG Accountants, adjusted in accordance with the
FEI's Objection in the event that PIE does not respond to FEI's Objection
within the 30-day period following receipt by PIE of FEI's Objection or
agrees with FEI's Objection, or (iii) the Net Operating Capital, as
calculated by KPMG Accountants, as adjusted by either (x) the agreement of
FEI and PIE or (y) the CPA Firm.
(b) If the Closing Net Operating Capital less NLG 78.1 million is
greater than zero but less than NLG 3 million, PEO Holdings shall, promptly
after determination of the Closing Net Operating Capital, execute a note,
in form acceptable to PIE, dated as of the Closing Date, payable to PIE,
for a principal amount equal to such difference which will bear simple
interest at the rate of 7 3/8%, payable monthly in arrears. The full
principal amount specified in the note and all outstanding interest thereon
shall be due and payable one year from the Closing Date.
(c) If the Closing Net Operating Capital less NLG 78.1 million is
greater than NLG 3 million, PEO Holdings shall, promptly after
determination of the Closing Net Operating Capital, execute two notes, each
in form acceptable to PIE, each dated as of the Closing Date, with the full
principal amount specified in each note and all outstanding interest
thereon to be due and payable to PIE one year from the Closing Date. The
first note shall be in the principal amount of NLG 3 million and shall bear
simple interest at the rate of 7 3/8%, payable monthly in arrears. The
second note shall be for a principal amount equal to the difference between
the Closing Net Operating Capital and NLG 81.1 million and shall bear
simple interest at the rate of 4%, payable monthly in arrears; provided,
however, that the principal amount of such second note shall be no greater
than NLG 3 million.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF FEI
FEI hereby represents and warrants that:
Section 3.1 Organization, Good Standing and Qualification. Each of FEI
and its Subsidiaries is a corporation duly organized, validly existing and
in good standing, to the extent such concept or analogous concepts exist in
the applicable jurisdiction, under the laws of its respective jurisdiction
of organization and has all requisite corporate or similar power and
authority to own and operate its properties and assets and to carry on
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its business as presently conducted and is qualified to do business and is
in good standing as a foreign corporation in each jurisdiction where the
ownership or operation of its properties or conduct of its business
requires such qualification, except where the failure to be so qualified or
in good standing, when taken together with all other such failures, is not
reasonably likely to have an FEI Material Adverse Effect. FEI has made
available to PIE a complete and correct copy of FEI's and its Subsidiaries'
certificates of incorporation and by-laws, each as amended to date. FEI's
and its Subsidiaries' certificates of incorporation and by-laws so
delivered are in full force and effect. Section 3.1 of the Disclosure
Schedule contains a correct and complete list of each jurisdiction where
FEI and each of its Subsidiaries is organized and qualified to do business.
Section 3.2 Corporate Authority; Approval and Fairness.
(a) FEI has all requisite corporate power and authority and has
taken all corporate action necessary in order to execute, deliver and
perform its obligations under this Agreement and, subject only to approval
of this Agreement by the holders of the outstanding shares of FEI (the "FEI
Requisite Vote"), to consummate the Transaction. This Agreement is a valid
and legally binding obligation of FEI enforceable against FEI in accordance
with its terms.
(b) The board of directors of FEI (i) has duly approved this
Agreement and the Transaction contemplated hereby and (ii) has received the
opinion of its financial advisors, Xxxxxxx & Company, Inc., to the effect
that the Transaction is fair to FEI and its shareholders from a financial
standpoint.
Section 3.3 Governmental Filings; No Violations.
(a) Other than the filings and/or notices (i) under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), (ii) the proxy solicitation requirements of the Exchange Act, and
(iii) to comply with state securities or "blue-sky" laws, no notices,
reports or other filings are required to be made by FEI with, nor are any
consents, registrations, approvals, permits or authorizations required to
be obtained by FEI from, any governmental or regulatory authority, agency,
commission, body or other governmental entity of any federal, state or
foreign government ("Governmental Entity"), in connection with the
execution and delivery of this Agreement by FEI and the consummation by FEI
of the Transaction contemplated hereby, except those that the failure to
make or obtain are not, individually or in the aggregate, reasonably likely
to have an FEI Material Adverse Effect or prevent, materially delay or
materially impair the ability of FEI to consummate the Transaction
contemplated by this Agreement.
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(b) The execution, delivery and performance of this Agreement by
FEI do not, and the consummation by FEI of the Transaction contemplated
hereby will not, constitute or result in (i) a breach or violation of, or a
default under, the certificate of incorporation or by-laws of FEI or the
comparable governing instruments of any of its Subsidiaries, (ii) a breach
or violation of, or a default under, the acceleration of any obligations or
the creation of any Encumbrance on the assets of FEI or any of its
Subsidiaries (with or without notice, lapse of time or both) pursuant to,
any Contracts binding upon FEI or any of its Subsidiaries or any Laws or
governmental or non-governmental permit or license to which FEI or any of
its Subsidiaries is subject or (iii) any change in the rights or
obligations of any party under any Contracts binding upon FEI or any of its
Subsidiaries, except, in the case of clause (ii) or (iii) above, for any
breach, violation, default, acceleration, creation or change that,
individually or in the aggregate, is not reasonably likely to have a FEI
Material Adverse Effect or prevent, materially delay or materially impair
the ability of FEI to consummate the Transaction contemplated by this
Agreement. Section 3.3(b) of the Disclosure Sc hedule sets forth a correct
and complete list of Contracts of FEI and its Subsidiaries pursuant to
which consents or waivers are or may be required prior to consummation of
the transactions contemplated by this Agreement.
Section 3.4 Capital Structure. The authorized capital stock of FEI
consists of 500,000 shares of preferred stock, none of which have been
issued at any time, and 15,000,000 shares of Common Stock, of which
7,956,933 shares were outstanding as of the close of business on October
31, 1996. All of the outstanding Common Stock has been duly authorized and
is validly issued, fully paid and nonassessable. Prior to the Closing Date,
upon obtaining the shareholder approval contemplated by Section 5.4 hereof,
the Definite Shares and Additional Shares will be duly authorized and, when
issued, will be validly issued, fully paid and non-assessable. Prior to the
Closing Date, FEI will have duly authorized and reserved for issuance at
least 1,580,492 shares of Common Stock, sufficient for the issuance of the
maximum number of Additional Shares issuable to PIE pursuant to this
Agreement. Other than 1,293,130 shares reserved for issuance for the
conversion or exercise of any Stock Right, and the 1,580,492 shares to be
reserved prior to the Closing for the issuance of Additional Shares, FEI
has no shares of Common Stock reserved for issuance. The Disclosure
Schedule contains a correct and complete list of each outstanding right to
acquire shares of Common Stock pursuant to any Stock Right (each an "FEI
Option"), including the holder, date of grant, exercise price and period
and number of shares of Common Stock subject thereto and no additional
Stock Rights are issuable by FEI without approval of FEI's board of
directors. Each of the outstanding shares of capital stock or other
securities of each of FEI's Subsidiaries is duly authorized, validly
issued, fully paid and nonassessable and owned by FEI or by a direct or
indirect wholly-owned subsidiary of FEI, free and clear of all
Encumbrances. Except as set forth above, there are no preemptive or other
outstanding rights, options, warrants, conversion rights, stock
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appreciation rights, redemption rights, repurchase rights, agreements,
arrangements or commitments to issue or sell any shares of capital stock or
other securities of FEI or any of its Subsidiaries or any securities or
obliga tions convertible or exchangeable into or exercisable for, or giving
any Person a right to subscribe for or acquire, any securities of FEI or
any of its Subsidiaries, and no securities or obligations evidencing such
rights are authorized, issued or outstanding. FEI does not have outstanding
any bonds, debentures, notes or other obligations the holders of which have
the right to vote (or convertible into or exercisable for securities having
the right to vote) with the shareholders of FEI on any matter ("Voting
Debt"). Neither the Transaction or any other transaction contemplated by
this Agreement shall result in any adjustment, either as a result of the
exercise of the discretion of FEI's board of directors or otherwise, to the
number of shares of Common Stock issuable pursuant to any Stock Right,
including without limitation, pursuant to Section 10 of the 1984 Stock
Incentive Plan, Section 13 of the 1995 Stock Incentive Plan and Section 8
of the 1995 Supplemental Stock Incentive Plan.
Section 3.5 FEI Reports; Financial Statements. FEI has delivered to
PIE each registration statement, report, proxy statement or information
statement prepared by it since December 31, 1995 (the "Audit Date"),
including, without limitation, (i) FEI's Annual Report on Form 10-K for the
year ended December 31, 1995, (ii) FEI's Quarterly Reports on Form 10-Q for
the periods ended March 31, 1996, June 30, 1996 and September 30, 1996,
each in the form (including exhibits, annexes and any amendments thereto)
filed with the Securities and Exchange Commission (the "SEC")
(collectively, including any reports filed with the SEC subsequent to the
date hereof and prior to the Closing Date, the "FEI Reports"). As of their
respective dates, the FEI Reports did not, and any FEI Reports filed with
the SEC subsequent to the date hereof and prior to the Closing Date will
not, contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances in which they were
made, not misleading. Each of the consolidated balance sheets included in
or incorporated by reference into the FEI Reports (including the related
notes and schedules) fairly presents, or will fairly present, the
consolidated financial position of FEI and its Subsidiaries as of its date
and each of the consolidated statements of operations, cash flows and
stockholders' equity included in or incorporated by reference into the FEI
Reports (including any related notes and schedules) fairly presents, or
will fairly present, the results of operations, changes in cash flows and
stockholders' equity as the case may be, of FEI and its Subsidiaries for
the periods set forth therein (subject, in the case of unaudited
statements, to notes and normal year- end audit adjustments that will not
be material in amount or effect), in each case in accordance with United
States generally accepted accounting principles and all related SEC rules
and regulations ("GAAP") consistently applied during the periods involved,
except as may be noted therein.
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Section 3.6 Employee Benefits.
(a) A copy of each bonus, deferred compensation, pension,
retirement, profit-sharing, thrift, savings, employee stock ownership,
stock bonus, stock purchase, restricted stock, stock option, employment,
termination, severance, compensation, medical, health or other plan,
agreement, policy or arrangement ("Compensation and Benefit Plans") that
covers employees, directors, former employees or former directors of FEI
and its Subsidiaries (the "FEI Compensation and Benefit Plans") and any
trust agreement or insurance contract forming a part of the FEI
Compensation and Benefit Plans has been made available to PIE prior to the
date hereof. FEI Compensation and Benefit Plans are listed in Section
3.6(a) of the Disclosure Schedule and any "change of control" or similar
provisions therein are specifically identified in Section 3.6(a) of the
Disclosure Schedule.
(b) All FEI Compensation and Benefit Plans are in substantial
compliance with all applicable law, including the Code and ERISA. Each FEI
Compensation and Benefit Plan that is an "employee pension benefit plan"
within the meaning of Section 3(2) of ERISA (a "Pension Plan") and that is
intended to be qualified under Section 401(a) of the Code has received a
favorable determination letter from the Internal Revenue Service, and to
the Knowledge of FEI, there are no circumstances likely to result in
revocation of any such favorable determination letter. As of the date
hereof, there is no pending or, to the Knowledge of FEI, threatened
material litigation relating to the FEI Compensation and Benefit Plans.
Neither FEI nor any Subsidiary has engaged in a transaction with respect to
any FEI Compensation and Benefit Plan that, assuming the taxable period of
such transaction expired as of the date hereof, would subject FEI or any of
its Subsidiaries to a material tax or penalty imposed by either Section
4975 of the Code or Section 502 of ERISA.
(c) Neither FEI nor any entity which is considered one employer
with FEI under Section 4001 of ERISA or Section 414 of the Code (an "ERISA
Affiliate") has adopted, maintains or contributes to any "single employer"
plan within the meaning of Section 4001(a)(15) of ERISA or a "multiemployer
plan" within the meaning of Section 4001(a)(13) of ERISA or adopted,
maintained or contributed to any such plan within the last five years.
(d) All contributions required to be made under the terms of any
FEI Compensation and Benefit Plan as of the date hereof have been timely
made or have been reflected on the most recent consolidated balance sheet
filed or incorporated by reference in the FEI Reports prior to the date
hereof.
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(e) Neither FEI nor its Subsidiaries have any obligations for
retiree health and life benefits under any FEI Compensation and Benefit
Plan, except as set forth in the Disclosure Schedule. FEI or its
Subsidiaries may amend or terminate any such plan under the terms of such
plan at any time without incurring any material liability thereunder.
(f) The consummation of the Transaction contemplated by this
Agreement will not (i) entitle any employees of FEI or its Subsidiaries to
severance pay, (ii) accelerate the time of payment or vesting or trigger
any payment of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of the FEI
Compensation or Benefit Plans as in effect as of the date hereof, except as
contemplated by Section 5.8(a) hereof, or (iii) result in any breach or
violation of, or a default under, any of the FEI Compensation and Benefit
Plans.
(g) All FEI Compensation and Benefit Plans covering current or
former non-U.S. employees or former employees of FEI and its Subsidiaries
comply in all material respects with applicable local law. FEI and its
Subsidiaries have no material unfunded liabilities with respect to any
Pension Plan that covers such non-U.S. employees.
Section 3.7 Absence of Certain Changes. Except as disclosed in Section
3.7 of the Disclosure Schedule, since the Audit Date FEI and its
Subsidiaries have conducted their respective businesses only in, and have
not engaged in any material transaction other than according to, the
ordinary and usual course of such businesses and there has not been (a) any
change in the financial condition, properties, prospects, business or
results of operations of FEI and its Subsidiaries or any development or
combination of developments affecting FEI, to the Knowledge of FEI, except
those changes, developments or combinations of developments that,
individually or in the aggregate, are not reasonably likely to have an FEI
Material Adverse Effect and other than changes resulting from the public
announcement on September 5, 1996 of the signing of the Letter of Intent
with respect to this Transaction; (b) any material damage, destruction or
other casualty loss with respect to any material asset or property owned,
leased or otherwise used by FEI or any of its Subsidiaries, whether or not
covered by insurance; (c) any declaration, setting aside or payment of any
dividend or other distribution in respect of the capital stock of FEI,
except for dividends or other distributions on its capital stock publicly
announced prior to the date hereof; or (d) any change by FEI in accounting
principles, practices or methods. Since the Audit Date, except as provided
for herein or as disclosed in Section 3.7 of the Disclosure Schedule, (i)
there has not been any increase in the compensation payable or that could
become payable by FEI or any of its Subsidiaries to officers or key
employees or any amendment of any of the FEI Compensation and Benefit Plans
other than increases or amendments in the ordinary course in accordance
with established past practice and
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(ii) no employment agreements with any employees or officers of FEI or its
Subsidiaries have been entered into by FEI or its Subsidiaries.
Section 3.8 Litigation and Liabilities. Except as disclosed in Section
3.8 of the Disclosure Schedule, there are no (a) civil, criminal or
administrative actions, suits, claims, hearings, investigations or
proceedings (collectively "Proceedings") pending or, to the Knowledge of
FEI, threatened against or affecting FEI or any of its Affiliates or (b)
obligations or liabilities, whether or not accrued, contingent or otherwise
and whether or not required to be disclosed, including those relating to
matters involving any Environmental Law, environmental and occupational
safety and health matters, or any other facts or circumstances, to the
Knowledge of FEI, that could result in any claims against, or obligations
or liabilities of, FEI or any of its Affiliates, except for those that are
not, individually or in the aggregate, reasonably likely to have an FEI
Material Adverse Effect or prevent or materially burden or materially
impair the ability of FEI to consummate the Transaction contemplated by
this Agreement.
Section 3.9 Compliance with Laws; Permits. Except as disclosed in
Section 3.9 of the Disclosure Schedule, the businesses of each of FEI and
its Subsidiaries have not been, and are not being, conducted in violation
of any applicable law, ordinance, regulation, judgment, order, decree,
arbitration award, license or permit of any Governmental Entity
(collectively, "Laws") except for any such violations which have not had
and are not reasonably likely, individually or in the aggregate, to have an
FEI Material Adverse Effect. Except as set forth in the FEI Reports filed
prior to the date hereof, no investigation or review by any Governmental
Entity with respect to FEI or any of its Subsidiaries is pending or, to the
Knowledge of FEI, threatened, nor has any Governmental Entity indicated an
intention to conduct the same. To the Knowledge of FEI, no material change
is required in FEI's or any of its Subsidiaries' processes, properties or
procedures in connection with any such Laws, and FEI has not received any
notice or communication of any material noncompliance with any such Laws
that has not been cured as of the date hereof. FEI and its Subsidiaries
each has all material permits, licenses, trademarks, service marks,
franchises, variances, exemptions, orders and other governmental
authorizations, consents and approvals necessary to conduct its business as
currently conducted.
Section 3.10 Environmental Matters. Except as disclosed in Section
3.10 of the Disclosure Schedule and except for such matters that, alone or
in the aggregate, are not reasonably likely to have an FEI Material Adverse
Effect and except with respect to any portion of the FEI Business conducted
on properties owned by Philips or its Affiliates, excluding FEI and its
Subsidiaries: (i) to the Knowledge of FEI, FEI and its Subsidiaries have
complied with all applicable Environmental Laws; (ii) to the Knowledge of
FEI, the properties currently owned or operated by FEI (including soils,
groundwater, surface water, buildings or other structures) are not
contaminated with
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any Hazardous Substances requiring remediation under applicable
Environmental Laws; (iii) to the Knowledge of FEI, the properties formerly
owned or operated by FEI or any of its Subsidiaries (or former
subsidiaries) were not contaminated with Hazardous Substances by FEI during
the period of ownership or operation by FEI or any of its Subsidiaries (or
former subsidiaries) requiring remediation under applicable Environmental
Laws; (iv) to the Knowledge of FEI, neither FEI nor its Subsidiaries are
subject to liability for any Hazardous Substance disposal or contamination
on any third party property; (v) neither FEI nor any of its Subsidiaries
has received any notice, demand, letter, claim or request for information
alleging that FEI or any of its Subsidiaries may be in violation of or
liable under any Environmental Law; (vi) neither FEI nor any of its
Subsidiaries is subject to any orders, decrees, injunctions or other
arrangements with any Governmental Entity relating to liability under any
Environmental Law or relating to Hazardous Substances; and (vii) to the
Knowledge of FEI, there are no circumstances or conditions involving FEI or
any of its Subsidiaries that could reasonably be expected to result in any
claims, liability, investigations, costs or restrictions on the ownership,
use, or transfer of any property of FEI pursuant to any Environmental Law.
Section 3.11 Labor Matters. Neither FEI nor any of its Subsidiaries is
a party to or otherwise bound by any collective bargaining agreement,
contract or other agreement or understanding with a labor union or labor
organization, nor, as of the date hereof, is FEI or any of its Subsidiaries
the subject of any material proceeding asserting that FEI or any of its
Subsidiaries has committed an unfair labor practice or is seeking to compel
it to bargain with any labor union or labor organization nor is there
pending or, to the Knowledge of FEI, threatened, nor has there been for the
past five years, any labor strike, dispute, walkout, work stoppage,
slow-down or lockout involving FEI or any of its Subsidiaries.
Section 3.12 Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained by FEI or any of its
Subsidiaries are with reputable insurance carriers and provide a reasonable
amount of coverage in light of the normal risks incident to the business of
FEI and its Subsidiaries and their respective properties and assets.
Section 3.13 Takeover Statutes. No "fair price," "moratorium,"
"control share acquisition" or other similar anti-takeover statute or
regulation (including Sec tions 60.801 to 60.816 of the Oregon Business
Corporation Act) (each a "Takeover Statute") or any applicable
anti-takeover provision in FEI's certificate of incorporation and by-laws
is, or at the Closing will be, applicable to the Transaction contemplated
by this Agreement.
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Section 3.14 Taxes. FEI and each of its Subsidiaries (i) have prepared
in good faith and duly and timely filed (taking into account any extension
of time within which to file) all Tax Returns required to be filed by any
of them and all such filed Tax Returns are complete and accurate in all
material respects; (ii) have paid all Taxes that are required to be paid,
or that FEI or any of its Subsidiaries are obligated to withhold from
amounts owing to any employee, creditor or third party, except with respect
to matters contested in good faith; and (iii) have not waived any statute
of limitations with respect to Taxes or agreed to any extension of time
with respect to a Tax assessment or deficiency. As of the date hereof,
there are not pending or, to the Knowledge of FEI threatened in writing,
any audits, examinations, investigations or other proceedings in respect of
Taxes or Tax matters. There are not, to the Knowledge of FEI, any
unresolved questions or claims concerning a material Tax liability of FEI
or any of its Subsidiaries. FEI has made available to PIE true and correct
copies of the United States federal income Tax Return filed by FEI and its
Subsidiaries for each of the fiscal years ended December 31, 1993, 1994 and
1995, together with any examination reports or statements of deficiency
issued with respect to any Tax Returns of FEI or any Subsidiary since
October 15, 1992. Neither FEI nor any of its Subsidiaries has any liability
with respect to income, franchise or similar Taxes that accrued on or
before September 30, 1996 in excess of the amounts accrued in respect
thereto that are reflected in the financial statements included in the FEI
Reports filed on or prior to the date hereof. The most recent consolidated
financial statements contained in the FEI Reports reflect an adequate
reserve for all taxes payable by FEI and its Subsidiaries for all taxable
periods and portions thereof through the date of such financial statements.
None of FEI or any of its Subsidiaries is a party to or is bound by any tax
sharing agreement, tax indemnity obligation or similar agreement,
arrangement or practice with respect to Taxes (including any advance
pricing agreement, closing agreement or other agreement relating to Taxes
with any taxing authority). There is no employment, severance or
termination agreement, other compensation arrangement or Compensation and
Benefit Plan currently in effect which provides for the payment of any
amount (whether in cash or property or the vesting of property) as a result
of any of the transactions contemplated by this Agreement to any employee,
officer or director of FEI or any of its affiliates who is a "disqualified
individual" (as such term is defined in Section 280G(c) of the Code), that
would be characterized as an "excess parachute payment" (as such term is
defined in Section 280G(b)(1) of the Code). FEI and each of its
Subsidiaries are not currently, have not been within the last five years,
and do not anticipate becoming a "United States real property holding
company" within the meaning of Section 897(c) of the Code. None of the
assets of FEI or any Subsidiary are subject to any Encumbrances that arose
in connection with any failure or alleged failure to pay any Tax. Except as
disclosed in Section 3.14 of the Disclosure Schedule, no claim has ever
been made by an authority in a jurisdiction where FEI or any Subsidiary
does not file Tax Returns that FEI or the relevant Subsidiary is or may be
subject to taxation by that jurisdiction.
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Section 3.15 Intellectual Property.
(a) To the Knowledge of FEI, FEI and/or each of its Subsidiaries
owns, or is licensed or otherwise possesses legally enforceable rights to
use all Intellectual Property and tangible or intangible proprietary
information or materials that are used in the business of FEI and its
subsidiaries as currently conducted, except for any such failures to own,
be licensed or possess that, individually or in the aggregate, are not
reasonably likely to have an FEI Material Adverse Effect. Section 3.15(a)
of the Disclosure Schedule sets forth a list of all current patents, patent
applications, registered trademarks, registered service marks, readily
identifiable common law trademarks, trademark or service xxxx applications,
of FEI.
(b) Except as disclosed in Section 3.15(b) of the Disclosure
Schedule or as is not reasonably likely to have an FEI Material Adverse
Effect:
(i) to the Knowledge of FEI, FEI is not, nor will it be as a
result of the execution and delivery of this Agreement or
the performance of its obligations hereunder, in violation
of any licenses, sublicenses and other agreements as to
which FEI is a party and pursuant to which FEI is authorized
to use any Intellectual Property of any third party ("Third-
Party Intellectual Property");
(ii) no claims with respect to any Intellectual Property
owned by FEI or any of its Subsidiaries (the "FEI
Intellectual Property"), any trade secret material to FEI,
or Third-Party Intellectual Property to the extent arising
out of any use, reproduction, or distribution of such
Third-Party Intellectual Property by or through FEI or any
of its Subsidiaries, are currently pending or, to the
Knowledge of FEI, are overtly threatened by any person;
(iii) to the Knowledge of FEI, there are no valid grounds
for any bona fide claims (A) to the effect that the
manufacture, sale, licensing or use of any product as now
used, sold or licensed or proposed for use, sale or license
by FEI or any of its Subsidiaries, infringes on any
copyright, patent, trademark, service xxxx, or trade secret;
(B) against the use by FEI or any of its Subsidiaries, of
any trademarks, trade names, trade secrets, copyrights,
patents, technology, know-how, or computer software programs
and applications used in the business of FEI or any of its
Subsidiaries as currently conducted or as proposed to be
conducted; (C) challenging the ownership, validity, or
effectiveness of any of the FEI Intellectual Property or
other trade secret material to FEI; or (D)
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challenging the license or legally enforceable right to use
of the Third- Party Intellectual Property by FEI or any of
its Subsidiaries;
(iv) to the Knowledge of FEI, all patents, registered
trademarks and service marks, and copyrights held by FEI are
valid, enforceable and subsisting; and
(v) to the Knowledge of FEI, there is no material
unauthorized use, infringement or misappropriation of any of
FEI Intellectual Property by any third party, including any
employee or former employee of FEI or any of its
Subsidiaries.
(iv) FEI is not a party to any agreement that would, as a
result of the Closing, obligate Philips or any of its
Affiliates to cross license to any third party any of
Philips' or any of such Affiliates' Intellectual Property.
Section 3.16 Contracts. Section 3.16 of the Disclosure Schedule sets
forth a list, as of the date hereof, of each written Contract of FEI or its
Subsidiaries (other than (i) purchase orders in the ordinary and usual
course of business involving less than $1,000,000, (ii) sales orders in the
ordinary and usual course of business involving less than $2,000,000, (iii)
any Contract involving the payment of less than $500,000 in the aggregate
or that is terminable by FEI without penalty or other expense on 60 days'
notice or less, (iv) confidentiality agreements entered into in the usual
course of business, (v) employment agreements covering non-U.S. Employees
(other than contracts with key non-U.S. Employees), (vi) trademark
agreements and (vii) service maintenance agreements in the ordinary and
usual course of business). Section 3.16 of the Disclosure Schedule does not
omit any Contract (written or oral) that is material to FEI's Business.
Except as set forth in Section 3.16(ii) of the Disclosure Schedule, each
Contract that is material to FEI's Business as currently conducted is a
valid and binding agreement of FEI or its Subsidiaries and is in full force
and effect. To the Knowledge of FEI, there is no material default by the
other party to or any event, occurrence or circumstance which, upon the
passage of time or the giving of notice or both, would result in a material
default under any Contract that is material to FEI's Business, which
default or potential default has not been cured or waived.
Section 3.17 Brokers and Finders. Neither FEI nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders, fees in
connection with the Transaction or the other transactions contemplated in
this Agreement except that FEI has employed Xxxxxxx & Company, Inc. as its
financial advisor, the arrangements with which have been disclosed to PIE
prior to the date hereof.
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Section 3.18 Customers and Suppliers. To the Knowledge of FEI, no
material customer or supplier of FEI's Business will cease or substantially
reduce the business conducted with FEI after, or as a result of, the
consummation of the Transaction contemplated hereby.
Section 3.19 Voting Agreement. The shareholders of FEI listed on Annex
3.19(a) have duly executed voting agreements in substantially the form
attached hereto as Annex 3.19(b), pursuant to which such shareholders have
agreed to vote their shares at the Shareholders Meeting to approve and
adopt this Agreement, including the Transaction and the issuance of Shares
contemplated hereby, and to approve an increase in the number of shares of
Common Stock authorized for issuance from 15 million to 21.5 million.
Section 3.20 Press Releases. FEI has provided to PIE a copy of each
press release distributed by FEI or its Subsidiaries since the Audit Date.
Section 3.21 Industrial Security Clearances. Neither FEI, its
Subsidiaries nor any of its employees has or is required to have any
industrial security clearance relating to classified information and none
is needed for purposes of any Contract with any United States government
department, agency or instrumentality or, any subcontract under such a
Contract.
Section 3.22 Other Information. The information furnished by FEI in
this Agreement, the Annexes hereto, the Disclosure Schedule and in any
certificate executed or delivered pursuant hereto by or on behalf of FEI is
not materially false or misleading and does not contain a misstatement of a
material fact or omit to state any material fact required to be stated in
order to make the statements herein and therein not misleading.
Section 3.23 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article III, neither FEI
nor any other Person makes any other express or implied representation or
warranty on behalf of FEI.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF PIE
PIE hereby represents and warrants, and Philips hereby represents and
warrants with respect to Sections 4.1, 4.2, 4.3, 4.6 and 4.15 only, that:
Section 4.1 Organization, Good Standing and Qualification. Each of
Philips and PIE, and the PEO Group is or, with regard to the PEO Group,
will be at Closing, a
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corporation duly organized, validly existing and in good standing, to the
extent such concept or analogous concepts exist in the applicable
jurisdiction, under the laws of its respective jurisdiction of organization
and has, or will have at Closing, all requisite corporate or similar power
and authority to own and operate its properties and assets and to carry on
its business as presently conducted and is, or will be at Closing,
qualified to do business and in good standing as a foreign corporation in
each jurisdiction where the ownership or operation of its properties or
conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing, when taken together with
all other such failures, is not reasonably likely to have a PEO Material
Adverse Effect. PIE has made available to FEI a complete and correct copy
of PIE's Articles of Association, as amended to date. Prior to the Closing,
PIE will have made available to FEI a complete and correct copy of the
Certificate of Incorporation of PEO-US, the Articles of Association of PEO
Holdings and, with respect to its Subsidiaries, their equivalents, and such
Articles of Association and such equivalents, so delivered are in full
force and effect. Section 4.1 of the Disclosure Schedule contains a correct
and complete list of each jurisdiction where any corporation in the PEO
Group is organized. At Closing, PEO- US and PEO Holdings, to the extent a
concept equivalent to due qualification exists in jurisdictions in which it
operates, will be duly qualified to transact business in each jurisdiction
in which failure to so qualify would result in a PEO Material Adverse
Effect.
Section 4.2 Corporate Authority and Approval.
(a) Philips and PIE have all requisite corporate power and
authority and have taken all corporate action necessary in order to
execute, deliver and perform their obligations under this Agreement and to
consummate the Transaction. The obligations of Philips and PIE contained in
this Agreement are valid and legally binding obligations of Philips and PIE
enforceable against Philips and PIE, respectively, in accordance with its
terms.
(b) The board of management of PIE has duly approved this
Agreement and the Transaction and the board of management of Philips has
duly approved the Restructuring and Transaction.
Section 4.3 Governmental Filings; No Violations.
(a) Except as set forth on Schedule 4.3 and other than the
filings and/or notices (i) under the HSR Act, (ii) pursuant to the
Exon-Xxxxxx Amendment, (iii) pursuant to ISRA, and (iv) any filings,
consents, registrations, approvals, permits
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or authorizations required in connection with the Restructuring all of
which have been or will be timely made or obtained, no notices, reports or
other filings are required to be made by Philips or PIE with, nor are any
consents, registrations, approvals, permits or authorizations required to
be obtained by Philips or PIE from any Governmental Entity, in connection
with the execution and delivery of this Agreement by Philips and PIE and
the consummation by Philips and PIE of the Transaction contemplated hereby,
except those that the failure to make or obtain are not, individually or in
the aggregate, reasonably likely to have a PEO Material Adverse Effect or
prevent, materially delay or materially impair the ability of Philips or
PIE to consummate the Transaction or the Restructuring contemplated by this
Agreement.
(b) The execution, delivery and performance of this Agreement by
Philips and PIE do not, and the consummation by Philips and PIE of the
Restructuring and the Transaction contemplated hereby will not, constitute
or result in (i) a breach or violation of, or a default under, the
Certificate of Incorporation of PEO-US or Articles of Association of
Philips, PIE or PEO Holdings or their equivalents in the case of PEO
Holdings' Subsidiaries or (ii) a breach or violation of, or a default
under, the acceleration of any obligations or the creation of any
Encumbrance on any of the assets used in the PEO Business of PIE, or the
PEO Group (with or without notice, lapse of time or both) pursuant to, any
Contracts binding upon PIE or any corporation in the PEO Group or any Law
or governmental or non-governmental permit or license to which PIE or any
corporation in the PEO Group is subject except, in the case of clause (ii)
above, for any breach, violation, default, acceleration, creation or change
that, individually or in the aggregate, is not reasonably likely to
prevent, materially delay or materially impair the ability of PIE to
consummate the Restructuring and the Transaction contemplated by this
Agreement.
Section 4.4 Capital Stock. Prior to Closing, PIE will directly own all
of the outstanding capital stock of PEO Holdings and PEO-US, in each case,
free and clear of all Encumbrances. There are no preemptive or other
outstanding rights, options, warrants, conversion rights or agreements or
commitments to issue or sell any shares of capital stock or other equity
interest of any such entity or any securities or obligations convertible
into or exchangeable for, or giving any Person a right to subscribe for or
acquire, any shares of capital stock or other equity interest of PEO
Holdings or PEO-US, and no securities or obligations evidencing such rights
are outstanding. Prior to Closing each of the outstanding shares of capital
stock or other securities of each of PEO Holdings' Subsidiaries and of
PEO-US will be duly authorized, validly issued, fully paid and
nonassessable and all of the securities of PEO Holdings' Subsidiaries are
owned, directly or indirectly, by PEO Holdings, free and clear of all
Encumbrances.
Section 4.5 PEO Financial Statements. Each of the consolidated balance
sheets included in or incorporated by reference into the PEO financial
statements for the PEO Business for the years ended December 31, 1993, 1994
and 1995 and the nine months ended September 30, 1996 (including the
related notes and schedules) (the "PEO Financial Statements") was audited
by KPMG Accountants and fairly presents the
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consolidated financial position of the PEO Business as of its date and each
of the consolidated statements of operations, cash flows and stockholders'
equity included in or incorporated by reference into the PEO Financial
Statements fairly presents the results of operations, changes in cash flows
and stockholders' equity, as the case may be, of the PEO Business for the
periods set forth therein (subject, in the case of unaudited statements, to
notes and normal year-end audit adjustments that will not be material in
amount or effect), in each case in accordance with GAAP consistently
applied during the periods involved, except as may be noted therein. The
PEO Financial Statements were made available to FEI prior to the date
hereof.
Section 4.6 Employee Benefits.
(a) Compensation and Benefit Plans. A copy of each Compensation
and Benefit Plan that covers Employees (the "PEO Compensation and Benefit
Plans") and any trust agreement or insurance contract forming a part of the
PEO Compensation and Benefit Plans has been made available for inspection
locally by FEI prior to the date hereof. All pension arrangements Philips
and PIE have in place covering current or former Non-U.S. Employees are set
forth in Section 4.6(a) of the Disclosure Schedule. Philips and PIE have
complied with the terms and conditions of these arrangements.
(b) Acceleration and Vesting. Except as set forth in Section
4.6(b) of the Disclosure Schedule, the consummation of the Transaction
contemplated by this Agreement will not (i) entitle any Employees to
severance pay, (ii) accelerate the time of payment or vesting or trigger
any payment of compensation or benefits under, increase the amount payable
or trigger any other material obligation pursuant to, any of PEO
Compensation or Benefit Plans as in effect as of the date hereof or (iii)
result in any breach or violation of, or a default under, any of the PEO
Compensation and Benefit Plans.
(c) U.S. Employee Benefits. (i) All PEO Compensation and Benefit
Plans covering U.S. Transferred Employees ("U.S. PEO Compensation and
Benefit Plans") are in substantial compliance with all applicable law,
including the Code and ERISA. Each U.S. PEO Compensation and Benefit Plan
that is a Pension Plan and that is intended to be qualified under Section
401(a) of the Code has received a favorable determination letter from the
Internal Revenue Service, and to the Knowledge of PEO, there are no
circumstances likely to result in revocation of any such favorable
determination letter.
(ii) As of the date hereof, no liability under Subtitle C or D of
Title IV of ERISA has been or is expected to be incurred by the PEO
Business or any corporation in the PEO Group with respect to any U.S. PEO
Compensation and Benefit Plan which is an ongoing, frozen or terminated
"single-employer plan", within the meaning of
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Section 4001(a)(15) of ERISA, currently or formerly maintained by any of
them, or the single-employer plan of an ERISA Affiliate. No corporation in
the PEO Group has incurred and none expect to incur any withdrawal
liability under Subtitle E to Title IV of ERISA with respect to a
multiemployer plan contributed to by them or by an ERISA Affiliate. No
notice of a "reportable event", within the meaning of Section 4043 of ERISA
for which the 30-day reporting requirement has not been waived, has been
required to be filed for any U.S. PEO Compensation and Benefits Plan which
is a Pension Plan within the 12-month period ending on the date hereof or
will be required to be filed in connection with the transaction
contemplated by this Agreement.
(iii) Except as set forth in Section 4.6(c)(iii) of the Disclosure
Schedule, all contributions required to be made under the terms of any U.S.
PEO Compensation and Benefit Plan as of the date hereof have been timely
made or have been reflected on the PEO Financial Statements. No U.S. PEO
Compensation and Benefit Plan which is a Pension Plan has an "accumulated
funding deficiency" (whether or not waived) with respect to the PEO
Business within the meaning of Section 412 of the Code or Section 302 of
ERISA. No member of the Philips Group has provided, or is required to
provide security, in respect of the U.S. PEO Compensation and Benefit Plans
pursuant to Section 401(a)(29) of the Code.
(iv) Except as set forth in Section 4.6(c)(iv) of the Disclosure
Schedule, no corporation in the PEO Group will have at Closing any
obligations for retiree health and life benefits under any U.S. PEO
Compensation and Benefit Plan in respect of the Employees that would be
material to the PEO Business.
(d) Non-U.S. Employee Benefits. (i) All PEO Compensation and Benefit
Plans covering current or former Non-U.S. Employees comply in all material
respects with applicable local law.
(ii) Neither Philips nor PIE have ever received any letter or other
communication from an industry wide pension fund claiming compulsory
participation of current or former Non-U.S. Employees in any of its pension
arrangements, and Philips and PIE each represent and warrant that each of
them have no reason to believe that either of them will receive such a
letter, communication or claim as a result of the Restructuring or the
Transaction.
Section 4.7 Absence of Certain Changes. Except as set forth in Section
4.7 of the Disclosure Schedule and other than as has been or shall be
required or contemplated in connection with the Restructuring, since
September 30, 1996 the PEO Business has been conducted in, and no material
transaction has been engaged in other than according to, the ordinary and
usual course of such business and there has not been (i) any change in the
financial condition, properties, prospects, business or results of
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operations of the PEO Business or any development or combination of
developments affecting the PEO Business to the Knowledge of PIE, except
those changes, developments or combinations of developments that,
individually or in the aggregate, are not reasonably likely to have a PEO
Material Adverse Effect or (ii) any material damage, destruction or other
casualty loss with respect to any material asset or property owned, leased
or otherwise used by the PEO Business, whether or not covered by insurance.
Section 4.8 Litigation and PEO Liabilities. Except as disclosed in
Section 4.8 of the Disclosure Schedule, there are no (i) Proceedings
pending or, to the Knowledge of PIE, threatened against or affecting the
PEO Business or any corporation in the PEO Group or (ii) obligations or
liabilities, whether or not accrued, contingent or otherwise and whether or
not required to be disclosed, including those relating to matters involving
any Environmental Law environmental and occupational safety and health
matters, or any other facts or circumstances to the Knowledge of PIE that
could result in any claims against, or obligations or liabilities of, the
PEO Business, the PEO Assets, or any corporation in the PEO Group, except
for those that are not, individually or in the aggregate, reasonably likely
to have a PEO Material Adverse Effect.
Section 4.9 Compliance with Laws; Permits. Except as disclosed in
Section 4.9(a) of the Disclosure Schedule, the PEO Business has not been,
and is not being, conducted in violation of any applicable Laws except for
any such violations which have not had or are not reasonably likely,
individually or in the aggregate, to have a PEO Material Adverse Effect. No
investigation or review by any Governmental Entity with respect to the PEO
Business, or any corporation in the PEO Group is pending or, to the
Knowledge of PIE, threatened, nor has any Governmental Entity indicated an
intention to conduct the same other than routine investigations occurring
in the ordinary course of business. To the Knowledge of PIE, no material
change is required in the processes, properties or procedures of the PEO
Business or any corporation in the PEO Group in connection with any such
Laws, and PIE has not received any notice or communication of any material
noncompliance with any such Laws that has not been cured as of the date
hereof. Except as set forth in Section 4.9(b) of the Disclosure Schedule,
the PEO Business has, and, prior to Closing, the PEO Group will have, all
material permits, licenses, trademarks, service marks, franchises,
variances, exemptions, orders and other Governmental Authorizations,
consents and approvals necessary to conduct its business as currently
conducted.
Section 4.10 Environmental Matters. Except as disclosed in the Section
4.10 of the Disclosure Schedule and except for such matters that, alone or
in the aggregate, are not reasonably likely to have a PEO Material Adverse
Effect: (i) to the Knowledge of PIE, the PEO Business and the PEO Group
have complied with all applicable Environmental Laws; (ii) to the Knowledge
of PIE, the properties currently owned by
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or operated for the PEO Business and the PEO Group (including soils,
groundwater, surface water, buildings or other structures) are not
contaminated with any Hazardous Substances requiring remediation under
applicable Environmental Laws; (iii) to the Knowledge of PIE, the
properties formerly owned or operated for the PEO Business were not
contaminated by the PEO Business with Hazardous Substances during the
period of ownership or operation by the PEO Business requiring remediation
under applicable Environmental Laws; (iv) to the Knowledge of PIE, the PEO
Group is not subject to liability for any Hazardous Substance disposal or
contamination on any third party property; (v) the PEO Business and the PEO
Group have not received any notice, demand, letter, claim or request for
information alleging that the PEO Business or the PEO Group may be in
violation of or liable under any Environmental Law; (vi) the PEO Business
and the PEO Group are not subject to any orders, decrees, injunctions or
other arrangements with any Governmental Entity relating to liability under
any Environmental Law or relating to Hazardous Substances; and (vii) to the
Knowledge of PIE, there are no circumstances or conditions involving the
PEO Business, the PEO Assets or the PEO Group that could reasonably be
expected to result in any claims, liability, investigations, costs or
restrictions on the ownership, use, or transfer of any property used in the
PEO Business or by the PEO Group.
Section 4.11 Labor Matters. All material collective bargaining
agreements, contracts, and other agreements and understandings with a labor
union or organization are set forth in Section 4.11 of the Disclosure
Schedule. As of the date hereof neither the PEO Business nor any
corporation in the PEO Group is the subject of any material proceeding
asserting that either the PEO Business or any corporation in the PEO Group
has committed an unfair labor practice nor is there pending or, to the
Knowledge of PIE, threatened, nor has there been for the past five years,
any labor strike, dispute, walkout, work stoppage, slow-down or lockout
involving the PEO Business and the PEO Group.
Section 4.12 Insurance. All material fire and casualty, general
liability, business interruption, product liability, and sprinkler and
water damage insurance policies maintained for the PEO Business and the PEO
Group are with reputable insurance carriers and provide reasonable coverage
for all normal risks incident to the PEO Business and the PEO Group and
their respective properties and assets and will continue in effect at and
subsequent to Closing at FEI's cost.
Section 4.13 Takeover Statutes. No Takeover Statute is, or at the
Closing will be, applicable to PEO Holdings or PEO-US.
Section 4.14 Taxes. No corporation in the PEO Group will have at
Closing any liability with respect to income or similar Taxes or, in the
case of the PEO Business in the U.S., franchise Taxes that accrued on or
before December 31, 1995 in excess of the
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amounts accrued in respect thereto that are reflected in the PEO Financial
Statements. The PEO Financial Statements reflect an adequate reserve for
all taxes payable by the PEO Group for all taxable periods and portions
thereof through the date of such financial statements. No corporation in
the PEO Group will have at Closing or thereafter any income tax liability
resulting from the Restructuring. No corporation in the PEO Group will be
at Closing a party to or be bound by any tax sharing agreement, tax
indemnity obligation or similar agreement, arrangement or practice with
respect to Taxes (including any advance pricing agreement, closing
agreement or other agreement relating to Taxes with any taxing authority).
No corporation in the PEO Group will have any legal liability for any Tax
imposed on any entity not in the PEO Group, except for customs duties and
value added taxes incurred in the ordinary course of business by the PEO
Business and paid for their account by Nederlandse Philips Bedrijven B.V.
None of the assets of the PEO Group are subject to any Encumbrances that
arose in connection with any failure or alleged failure to pay any Tax.
Section 4.15 Intellectual Property.
(a) To the Knowledge of Philips, the Philips Group owns, or is
licensed or otherwise possesses legally enforceable rights to use all
Intellectual Property and tangible or intangible proprietary information or
materials that are used in the PEO Business as currently conducted, except
for any such failures to own, be licensed or possess that, individually or
in the aggregate, are not reasonably likely to have a PEO Material Adverse
Effect, all of which, upon closing of the Transaction, may be used and
exploited in the PEO Business. Section 4.15(a) of the Disclosure Schedule
sets forth a list of all current patents, patent applications, registered
trademarks, registered service marks, readily identifiable common law
trademarks, trademark or service xxxx applications, originated in and
having their principal commercial use within the PEO Business.
(b) Except as disclosed in Section 4.15(b) of the Disclosure
Schedule or as is not reasonably likely to have a PEO Material Adverse
Effect:
(i) to the Knowledge of Philips, the PEO Business and the PEO Group
are not, nor will be as a result of the execution and delivery of this
Agreement or the performance of its obligations hereunder, in
violation of any licenses, sublicenses and other agreements as to
which the PEO Business or any corporation in the PEO Group is a party
and pursuant to which the PEO Business or any corporation in the PEO
Group is authorized to use any Third-Party Intellectual Property;
(ii) no claims with respect to any Intellectual Property used by the
PEO Business or any corporation in the PEO Group (the "PEO
Intellectual Property"), any trade secret material to the PEO Business
or any corporation in the PEO Group, or
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Third-Party Intellectual Property to the extent arising out of any
use, reproduction, or distribution of such Third-Party Intellectual
Property by or through the PEO Business or the PEO Group, are
currently pending or, to the Knowledge of Philips, are overtly
threatened by any person;
(iii) to the Knowledge of Philips there are no valid grounds for any
bona fide claims (A) to the effect that the manufacture, sale,
licensing or use of any product as now used, sold or licensed or
proposed for use, sale or license by the PEO Business or the PEO
Group, infringes on any copyright, patent, trademark, service xxxx, or
trade secret; (B) against the use by the PEO Business or the PEO Group
of any trademarks, trade names, trade secrets, copyrights, patents,
technology, know-how, or computer software programs and applications
used in the PEO Business or the PEO Group as currently conducted or as
proposed to be conducted; (C) challenging the ownership, validity, or
effectiveness of any of the PEO Intellectual Property or other trade
secret material to the PEO Business; or (D) challenging the license or
legally enforceable right to use of the Third-Party Intellectual
Property by the PEO Business or the PEO Group;
(iv) to the Knowledge of Philips, all patents, registered trademarks
and service marks, and copyrights originated in and having their
principal commercial use within the PEO Business, are valid,
enforceable and subsisting; and
(v) to the Knowledge of Philips, there is no material unauthorized
use, infringement or misappropriation of any of the PEO Intellectual
Property by any third party, including any employee or former employee
of the PEO Business.
Section 4.16 Contracts. Section 4.16 of the Disclosure Schedule sets
forth a list, as of the date hereof, of each written Contract that, to the
Knowledge of PIE, is related to the PEO Business (other than (i) purchase
orders in the ordinary and usual course of business involving less than
$1,000,000, (ii) sales orders in the ordinary and usual course of business
involving less than $2,000,000, (iii) any Contract involving the payment of
less than $500,000 in the aggregate or that is terminable by the PEO
Business without penalty or other expense on 60 days' notice or less, (iv)
confidentiality agreements entered into in the usual course of business,
(v) employment agreements covering Non-U.S. Employees (other than contracts
with key Non-U.S. Employees), (vi) trademark agreements and (vii) service
maintenance agreements in the ordinary and usual course of business).
Except for patent licenses, Section 4.16 of the Disclosure Schedule does
not omit any Contract (written or oral) that is material to the PEO
Business. Except as set forth in Section 4.16(ii) of the Disclosure
Schedule, each Contract that is material to the PEO Business as currently
conducted is a valid and binding agreement of the Philips Affiliate which
is a party thereto and is in full force and effect. To the Knowledge of
PIE, there is no material
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default by the other party to or any event, occurrence or circumstance
which, upon the passage of time or the giving of notice or both, would
result in a material default under any Contract that is material to the PEO
Business as currently conducted, which default or potential default has not
been cured or waived.
Section 4.17 Brokers and Finders. Neither PIE nor any of its officers,
directors or employees has employed any broker or finder or incurred any
liability for any brokerage fees, commissions or finders fees in connection
with the Transaction or the other transactions contemplated in this
Agreement.
Section 4.18 Customers and Suppliers. To the Knowledge of PIE, no
material customer or supplier of the PEO Business will cease or
substantially reduce the business conducted with the PEO Business after, or
as a result of, the consummation of the Transaction contemplated hereby.
Section 4.19 PEO Assets and PEO Liabilities.
(a) Except as set forth in Section 4.19(a) of the Disclosure
Schedule, PIE will duly transfer to the PEO Group, and as of the Closing
Date, the PEO Group will own, directly or indirectly, all right, title and
interest in and to all of the assets (the "PEO Assets") and will assume all
of the liabilities of the PEO Business (the "PEO Liabilities") prior to the
Closing Date.
(b) Except for the Excluded Business and as set forth in Section
4.19(a) of the Disclosure Schedule, the PEO Assets, together with any
Transitional Services contemplated hereby, comprise all of the assets
necessary to conduct the PEO Business as currently conducted and at Closing
will include, without limitation, all of the assets purchased pursuant to
the Electro-Scan Purchase Agreement. Section 4.19(b) of the Disclosure
Schedule contains a list of substantially all of the Employees to be
transferred pursuant to this Agreement.
Section 4.20 Shared Assets; Title to and Condition of Property.
(a) Section 4.20(a) of the Disclosure Schedule sets forth a list
of (i) shared facilities that are used in connection with the PEO Business
and with other operations of PIE or PIE's other Affiliates or (ii) services
provided to the PEO Business by PIE or any of PIE's other Affiliates.
(b) Section 4.20(b) of the Disclosure Schedule sets forth a list
of the Leased Real Property as of the date hereof. PIE or its Affiliates
have, and at Closing PEO Holdings will have, good title to, or with respect
to the Leased Real Property a valid and binding leasehold interest in, the
property used in the PEO Business, free and clear
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of all Encumbrances, except (i) as set forth in Section 4.20(b) of the
Disclosure Schedule, (ii) liens for Taxes, assessments and other
governmental charges not yet due and payable or due but not delinquent or
being contested in good faith by appropriate proceedings, (iii) original
purchase price conditional sales contracts and equipment leases with third
parties entered into in the ordinary course of business, (iv) other liens
incurred in the ordinary course of business which, individually or in the
aggregate, do not secure liabilities of $250,000 or more, (v) with respect
to real property, easements, quasi-easements, licenses, covenants,
rights-of-way, zoning, building and other similar restrictions that are not
material to the PEO Business or to the operations or condition of the
property so encumbered (all items included in (i) through (v), together
with any matter set forth in Section 4.20(b) of the Disclosure Schedule,
are referred to collectively herein as the "Permitted Encumbrances").
(c) The leases described on Section 4.20(b) of the Disclosure Schedule
constitute all of the leases under which PIE or its Affiliates holds a
leasehold interest in real estate that is used in the PEO Business. Except
as set forth on Section 4.20(b) of the Disclosure Schedule, the leases
described thereon are in full force and effect. PIE has made available for
inspection locally by FEI complete and accurate copies of each of the
leases described on Section 4.20(b) of the Disclosure Schedule and none of
such leases has been modified in any material respect, except to the extent
that such modifications are disclosed by the copies made available to FEI.
(d) Except as set forth on Section 4.20(d) of the Disclosure Schedule,
the uses for which the Leased Real Property are zoned do not restrict, or
in any manner impair, the use thereof for purposes of the PEO Business, as
currently conducted, other than restrictions which, individually or in the
aggregate, would not materially impair the use of the Leased Real Property
in the PEO Business as currently conducted.
(e) All of the material machinery, equipment and other tangible
personal property and assets at or upon any Leased Real Property are in
satisfactory condition for use in the ordinary course of the PEO Business
consistent with the past practice of the PEO Business, and PIE or its
Affiliates have performed regular maintenance on such machinery, equipment
and other tangible personal property in accordance with their past practice
(giving due account to the age and length of use of the same, ordinary wear
and tear excepted).
(f) PIE and its Affiliates have not received any notice of any
violation of any applicable zoning, building code or subdivision ordinance
or other Laws, or requirements relating to the operation of the Leased Real
Property or any of the other PEO Assets (including, without limitation,
applicable occupational health and safety laws and regulations) or any
condemnation, eminent domain or any other Proceedings
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with respect to or any of the PEO Assets, other than violations or
requirements which, individually or in the aggregate, would not have a PEO
Material Adverse Effect.
Section 4.21 Securities Act. PIE is acquiring the Shares for its own
account and not with a view to their distribution within the meaning of
Section 2(11) of the Securities Act in any manner that would be in
violation of the Securities Act. PIE understands each certificate
representing the Shares shall bear legends in the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS.
THEY MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE
OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE
SECURITIES UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW OR AN OPINION OF COUNSEL REASONABLY
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED."
Section 4.22 Press Releases. PIE has provided to FEI a copy of each
press release with respect to the PEO Business distributed by PIE or its
Affiliates since December 31, 1995.
Section 4.23 Industrial Security Clearances. The PEO Business is not
required to have, and does not have, and at Closing the PEO Group will not
be required to have, any industrial security clearance relating to
classified information and none is needed for purposes of any Contract with
any United States government department, agency or instrumentality or, any
subcontract under such a Contract.
Section 4.24 Other Information. The information furnished by PIE in
this Agreement, the Annexes hereto, the Disclosure Schedule and in any
certificate executed or delivered pursuant hereto by or on behalf of PIE is
not materially false or misleading and does not contain a misstatement of a
material fact or omit to state any material fact required to be stated in
order to make the statements herein and therein not misleading.
Section 4.25 No Other Representations or Warranties. Except for the
representations and warranties contained in this Article IV, none of
Philips, PIE, any corporation in the PEO Group nor any other Person makes
any other express or implied representation or warranty on behalf of PIE or
any corporation in the Philips Group or the PEO Group.
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ARTICLE V
COVENANTS
Section 5.1 Interim Operations. FEI covenants and agrees as to itself
and its Subsidiaries, and PIE covenants and agrees as to the PEO Group and
the PEO Business that after the date hereof and prior to the Closing
(unless the other party shall otherwise approve in writing, which approval
shall not be unreasonably withheld or delayed), except as otherwise
expressly contemplated by this Agreement or in connection with the
Restructuring:
(a) its business and that of its Subsidiaries shall be conducted
in the ordinary and usual course and they and their Subsidiaries shall use
their respective best efforts to preserve their business organizations
intact and maintain their existing relations and goodwill with customers,
suppliers, distributors, creditors, lessors, employees and business
associates;
(b) they shall not (i) issue, sell, pledge, dispose of or
encumber any capital stock owned by them in any of their Subsidiaries; (ii)
amend their Articles of Association, certificate of incorporation or
by-laws; (iii) split, combine or reclassify their outstanding shares of
capital stock; (iv) declare, set aside or pay any dividend or make any
distribution payable in cash, stock or property in respect of any capital
stock other than dividends from its direct or indirect wholly-owned
Subsidiaries; or (v) repurchase, redeem or otherwise acquire, or permit any
of their Subsidiaries to purchase or otherwise acquire, any shares of their
capital stock or any securities convertible into or exchangeable or
exercisable for any shares of its capital stock;
(c) neither they nor any of their Subsidiaries shall (i) issue,
sell, pledge, dispose of or encumber any shares of, or securities
convertible into or exchangeable or exercisable for, or options, warrants,
calls, commitments or rights of any kind to acquire, any shares of their
capital stock of any class or any Voting Debt or any other property or
assets (other than, in the case of FEI, shares of Common Stock issuable
without further action of FEI's board of directors pursuant to options
outstanding on the date hereof under the Stock Option Plan); (ii) other
than in the ordinary and usual course of business, transfer, lease,
license, guarantee, sell, mortgage, pledge, dispose of or encumber any
other property or assets (including capital stock of any of their
Subsidiaries) or incur or modify any material indebtedness or other
liability; (iii) except as disclosed in budgets provided to the other party
hereto prior to the date hereof, make any commitments for, make or
authorize any capital expenditures other than in the ordinary and usual
course of business and in amounts less than $50,000 individually and
$250,000 in the aggregate or, by any means, make any acquisition of, or
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investment in, assets or stock of any other Person or entity; or (iv) enter
into any joint venture, merger or other similar agreement with any Person;
(d) except for grants of options, consistent with FEI's past
practice, pursuant to its Stock Option Plan to purchase no greater than
5,000 shares of Common Stock, neither they nor any of their Subsidiaries
shall terminate, establish, adopt, enter into, make any new grants or
awards under, amend or otherwise modify, any Compensation and Benefit
Plans, or increase the salary, wage, bonus or other compensation of any
employees except increases occurring in the ordinary and usual course of
business in accordance with established past practice (which shall include
normal periodic performance reviews and related compensation and benefit
increases);
(e) neither they nor any of their Subsidiaries shall settle or
compromise any material claims or litigation or, except in the ordinary and
usual course of business modify, amend or terminate any of their material
Contracts or waive, release or assign any material rights or claims;
(f) neither they nor any of their Subsidiaries shall make any Tax
election or permit any insurance policy naming it as a beneficiary or
loss-payable payee to be cancelled or terminated except in the ordinary and
usual course of business;
(g) neither they nor any of their Subsidiaries will authorize or
enter into an agreement to do any of the foregoing.
Section 5.2 Acquisition Proposals. Each of FEI and PIE agrees that
neither it nor any of its Affiliates nor any of the officers and directors
of it or its Affiliates shall, and that it shall direct and use its best
efforts to cause its and its Affiliates' employees, agents and
representatives (including any investment banker, attorney or accountant
retained by it or any of its Subsidiaries) with knowledge of the
transactions contemplated hereby not to, directly or indirectly, initiate,
solicit, encourage or otherwise facilitate any inquiries or the making of
any proposal or offer with respect to a merger, reorganization, share
exchange, consolidation or similar transaction involving, or any purchase
of all or any significant portion of the assets or any equity securities
of, it or any of its Subsidiaries that are the subject of this Transaction
(any such proposal or offer being hereinafter referred to as an
"Acquisition Proposal"). FEI and PIE each further agrees that neither it
nor any of its Affiliates nor any of the officers and directors of it or
its Affiliates shall, and that it shall direct and use its best efforts to
cause its and its Affiliates' employees, agents and representatives
(including any investment banker, attorney or accountant retained by it or
any of its Affiliates) not to, directly or indirectly, engage in any
negotiations concerning, or provide any confidential information or data
to, or have any discussions with, any Person relating to an Acquisition
Proposal, or otherwise facilitate any effort or attempt to make or
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implement an Acquisition Proposal; provided, however, that nothing
contained in this Agreement shall prevent either FEI or PIE or their
respective boards of directors from, as applicable, (A) complying with Rule
14e-2 promulgated under the Exchange Act with regard to an Acquisition
Proposal; (B) providing information in response to a request therefor by a
Person who has made an unsolicited bona fide written Acquisition Proposal
if the board of directors receives from the Person so requesting such
information an executed confidentiality agreement on terms no less
protective of the confidential information of FEI or the PEO Business than
those contained in the Confidentiality Agreement (attached as Annex 5.2);
(C) engaging in any negotiations or discussions with any Person who has
made an unsolicited bona fide written Acquisition Proposal; or (D) in the
case of FEI, recommending such an Acquisition Proposal to the shareholders
of FEI or in the case of PIE, entering into an agreement with respect to
such an Acquisition Proposal if and only to the extent that, in each such
case referred to in clause (B), (C) or (D) above, (i) the board of
directors of FEI or PIE, as the case may be, determines in good faith after
consultation with outside legal counsel that such action is necessary in
order for its directors to comply with their respective fiduciary duties
under applicable law and (ii) in each case referred to in clause (C) or (D)
above, the board of directors of FEI or PIE, as the case may be, believes
in good faith (after consultation with its financial advisor) that such
Acquisition Proposal is reasonably likely to be consummated, taking into
account all legal, financial and regulatory aspects of the proposal and the
Person making the proposal and would, if consummated, result in a
transaction more favorable to FEI's shareholders or to PIE and, as
applicable, its Affiliates from a financial point of view than the
Transaction contemplated by this Agreement (any such more favorable
Acquisition Proposal being referred to in this Agreement as a "Superior
Proposal"). FEI and PIE each agrees that it will immediately cease and
cause to be terminated any existing activities, discussions or negotiations
with any parties conducted heretofore with respect to any of the foregoing.
FEI and PIE each agrees that it will take the necessary steps to promptly
inform the individuals or entities referred to in the first sentence of
this Section 5.2 of the obligations undertaken in this Section 5.2. FEI and
PIE each agrees that it will notify the other immediately if any such
inquiries, proposals or offers are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated or continued with, any of its representatives indicating, in
connection with such notice, the name of such Person and the material terms
and conditions of any proposals or offers and thereafter shall keep PIE or
FEI, as the case may be, informed, on a current basis, on the status and
terms of any such proposals or offers and the status of any such
negotiations or discussions. FEI and PIE each also agrees that it will
promptly request each Person that has heretofore executed a confidentiality
agreement in connection with such Person's consideration of acquiring it or
any of its Subsidiaries that are the subject of this Transaction to return
all confidential information heretofore furnished to such Person by or on
behalf of FEI or PIE, as the case may be, or any Subsidiaries of either of
them that are the subject of this Transaction.
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Section 5.3 Information Supplied.
(a) FEI agrees, as to itself and its Subsidiaries that (i) none of the
information, except for such information to be provided by PIE pursuant to
Section 5.3(b) below, to be included or incorporated by reference in the
proxy statement (including any amendments or supplements thereto, the
"Proxy Statement") used in connection with the Shareholder's Meeting will,
at the time the Proxy Statement is published and mailed to FEI's
Shareholders, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and (ii) the Proxy Statement will not, at the date of
mailing to shareholders and at the times of the Shareholders Meeting,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading, except to the extent any such untrue statement is
provided by PIE pursuant to Section 5.3(b) below or such omission is
directly caused by PIE's breach of its covenant in Section 5.3(b) below.
(b) PIE agrees to provide to FEI in writing all material information
required by Law to be included in the Proxy Statement that cannot
reasonably be provided by FEI or its Subsidiaries because such information
is exclusively within the control and Knowledge of PIE or its Affiliates
(such information, the "PIE Information"). PIE agrees, as to itself and its
Affiliates, that none of the PIE Information supplied by it for inclusion
in the Proxy Statement will, at the time the Proxy Statement is published
and mailed to FEI's shareholders, contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. PIE further
agrees to supply such additional PIE Information to FEI for inclusion in
the Proxy Statement if, in light of circumstances occurring subsequent to
the time the Proxy Statement is published and mailed, such additional PIE
Information is necessary in order that the PIE Information in the Proxy
Statement will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
Section 5.4 Shareholders Meeting. Subject to fiduciary obligations
under applicable law, FEI will take, in accordance with applicable law and
its certificate and by-laws, all action necessary to convene a meeting of
holders of its Common Stock (the "Shareholders Meeting") as promptly as
practicable to consider and vote upon the approval and adoption of this
Agreement, including the Transaction and the issuance of Shares
contemplated thereby and to approve an increase in the number of shares of
Common Stock authorized for issuance from 15 million to 21.5 million.
Subject to
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fiduciary obligations under applicable law, FEI's board of directors shall
recommend such approval and shall take all lawful action to solicit such
approval.
Section 5.5 Filings; Other Actions; Notification.
(a) FEI shall promptly prepare and file with the SEC the Proxy
Statement, shall promptly respond to any SEC comments thereon and shall, as
soon as practicable thereafter, mail the Proxy Statement to the
shareholders of FEI. Subsequent to mailing the Proxy Statement, FEI shall
promptly amend or supplement the Proxy Statement, if the information in it
is required by law to be amended or supplemented or if such an amendment or
supplement is otherwise necessary, proper or advisable in light of the
terms hereof. FEI shall use its reasonable efforts to obtain all necessary
state securities law or "blue sky" permits and approvals required in
connection with the Transaction contemplated by this Agreement and will pay
all expenses incident thereto. FEI shall also use its best efforts to
comply with all NASDAQ rules applicable to the Transaction and shall use
its best efforts to obtain the approvals necessary for the Shares to be
quoted on the NASDAQ National Market System.
(b) FEI and PIE shall cooperate with each other and use (and
shall cause their respective Affiliates to use) their respective reasonable
efforts to take or cause to be taken all actions, and do or cause to be
done all things, necessary, proper or advisable under this Agreement and
applicable Laws to consummate and make effective the Restructuring and the
Transaction contemplated by this Agreement as soon as practicable,
including preparing and filing as promptly as practicable all documentation
to effect all necessary applications, notices, petitions, filings and other
documents and to obtain as promptly as practicable all permits, consents,
approvals and authorizations necessary or advisable to be obtained from any
third party and/or any Governmental Entity in order to consummate the
Restructuring and the Transaction as contemplated by this Agreement.
Subject to applicable laws relating to the exchange of information, FEI and
PIE shall have the right to review in advance all the information relating
to PIE or FEI, as the case may be, and any of their respective Affiliates,
that appear in any filing made with, or written materials submitted to, any
third party and/or any Governmental Entity in connection with the
Transaction and the other transactions contemplated by this Agreement. In
exercising the foregoing right, each of FEI and PIE shall act reasonably
and as promptly as practicable.
(c) FEI and PIE each shall, upon request by the other, furnish
the other with all information concerning itself and as applicable, its
Affiliates, directors, officers and, shareholders and such other matters as
may be reasonably necessary or advisable in connection with the Proxy
Statement or any other statement, filing, notice or application made by or
on behalf of PIE, FEI or any of their respective Subsidiaries to
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any third party and/or any Governmental Entity in connection with the
Transaction and the transactions contemplated by this Agreement.
(d) FEI and PIE each shall keep the other apprised of the status
of matters relating to completion of the transactions contemplated hereby,
including promptly furnishing the other with copies of notices or other
communications received by PIE or FEI, as the case may be, or any of its
Subsidiaries, from any third party and/or any Governmental Entity with
respect to the Transaction contemplated by this Agreement. FEI and PIE each
shall give prompt notice to the other of any change that is reasonably
likely to result in an FEI Material Adverse Effect or PEO Material Adverse
Effect, respectively.
Section 5.6 Access. Upon reasonable notice, and except as may
otherwise be required by applicable law, each of FEI and PIE shall (and
shall cause its Affiliates to) afford the other's officers, employees,
counsel, accountants and other authorized representatives
("Representatives") access, during normal business hours throughout the
period prior to the Closing, to the properties, books, contracts and
records of FEI and of the PEO Business and the PEO Group, respectively,
and, during such period, each shall (and shall cause its Affiliates to)
furnish promptly to the other all information concerning the business,
properties and personnel of FEI and the PEO Business, respectively, as may
reasonably be requested, provided that no investigation pursuant to this
Section shall affect or be deemed to modify any representation or warranty
made by FEI, PIE or the PEO Group, and provided, further, that the
foregoing shall not require FEI or PIE to permit any inspection, or to
disclose any information, that in the reasonable judgment of FEI or PIE, as
the case may be, would result in the disclosure of any trade secrets of
third parties or violate any of its obligations with respect to
confidentiality if FEI or PIE, as the case may be, shall have used
reasonable efforts to obtain the consent of such third party to such
inspection or disclosure. All requests for information made pursuant to
this Section shall be directed to a designated officer of FEI or PIE, as
the case may be, or such Person as may be designated by such officer. All
such information shall be governed by the terms of the Confidentiality
Agreement.
Section 5.7 Publicity. FEI and PIE shall consult with each other prior
to issuing any press releases or otherwise making public announcements with
respect to the Transaction contemplated by this Agreement and prior to
making any filings with any third party and/or any Governmental Entity
(including any interdealer quotation service) with respect thereto, except
as may be required by law or by obligations pursuant to any listing
agreement with or rules of any interdealer quotation service.
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Section 5.8 U.S. Transferred Employees.
(a) Effective as of the Closing Date, FEI shall, or shall cause
PEO-US to, continue to employ all employees of the PEO Business on the U.S.
payroll, excluding expatriate employees (the "U.S. Transferred Employees"),
in comparable positions, and as of the Closing Date, FEI shall provide the
U.S. Transferred Employees with the same Compensation and Benefit Plans,
programs and policies and fringe benefits (including post-employment
welfare benefits) provided from time to time by FEI to its similarly
situated employees, it being understood, that notwithstanding the
foregoing, FEI will maintain a severance plan for the U.S. Transferred
Employees that is no less favorable than the severance plan provided to the
employees of the PEO Business immediately prior to the Closing Date. U.S.
Transferred Employees shall be given credit for all service with the PEO
Business (or service credited by PENAC, PIE or its Subsidiaries) under (i)
all employee benefit plans, programs and policies, and fringe benefits of
FEI or its Subsidiaries in which they become participants for purposes of
eligibility, vesting, waiting periods and benefit accrual and (ii)
severance plans and vacation plans for purposes of calculating the amount
of each U.S. Transferred Employee's severance benefits or vacation
entitlement.
(b) Effective as of the Closing Date, all U.S. Transferred
Employees shall cease to be covered by the employee welfare benefit plans
covering them prior to Closing, including plans, programs, policies and
arrangements which provide medical and dental coverage, life and accident
insurance, disability coverage, and vacation and severance pay
(collectively, "Welfare Plans") except to the extent otherwise provided by
the applicable Welfare Plan. PIE or its Affiliates, excluding FEI and its
Subsidiaries, shall retain responsibility for providing employees of the
PEO Business in the U.S., who terminated employment prior to the Closing
Date, and who elected group health coverage required by Section 4980B of
the Code ("Continuation Coverage") under the terms of the health plan
covering such employees with such Continuation Coverage. Effective as of
the Closing Date, FEI shall perform the duties required of a successor
employer with respect to Continuation Coverage, including, but not limited
to, making such coverage available to the U.S. Transferred Employees on and
after the Closing Date upon their termination of employment subsequent to
the Closing Date to the extent required by law.
(c) PIE or its Affiliates, excluding FEI and its Subsidiaries,
shall retain responsibility for all Welfare Plan claims incurred by U.S.
Transferred Employees prior to the Closing Date (i) under any medical,
dental or health plans for treatment or service rendered prior to the
Closing Date; (ii) under any life insurance plans with respect to deaths
occurring prior to the Closing Date; and (iii) for any other payments or
benefits owing prior to the Closing Date under any other Welfare Plans. For
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purposes of this paragraph, a claim shall be deemed to have been incurred
on the date on which medical or other treatment or service was rendered and
not the date of the inception of the related illness to injury or the date
of submission of a claim related thereto.
(d) FEI shall include the U.S. Transferred Employees and their
dependents and beneficiaries in FEI's medical, dental or health plans as of
the Closing Date and FEI shall use its best efforts to cause such plans to
waive any preexisting condition limitations and to honor any deductible and
out-of-pocket expenses incurred by such U.S. Transferred Employees and
their dependents and beneficiaries under PIE's or its Affiliates' medical,
dental or health plans during the portion of the calendar year preceding
the Closing Date, such deductible and out-of-pocket expenses to be credited
by FEI as though such amounts had been paid under FEI Compensation and
Benefit Plans, as soon as practicable following the Closing Date.
(e) FEI and PIE agree to consult with each other in order to
comply with any applicable notice requirements under WARN or other similar
Law of any jurisdiction relating to any plant closing or mass layoffs or as
otherwise required by any such Law.
Section 5.9 Other Employees.
(a) Philips shall as of Closing, to the extent permitted under
country or local law and regulations, provide for, at the expense of FEI,
the continued coverage of all employees of the PEO Business other than the
U.S. Transferred Employees (the "Non-U.S. Employees") under the applicable
Compensation and Benefit Plans of the Philips Group subsequent to Closing;
provided, however, it is expressly understood that (a) such local law and
regulations, including any laws and regulations directly governing any PEO
Compensation and Benefit Plans may change from time to time, (b) the PEO
Compensation and Benefit Plans, including the funding requirements and
funding structure thereof and the eligibility requirements for
participation therein, may change or be changed by Philips from time to
time without prior consultation with, or consent of, the participating
corporations in the Philips Group, FEI or the PEO Group (it being
understood that no such change shall be made by Philips which would have an
adverse effect solely with respect to the Non-U.S. Employees) and (c) no
representation is made that any such changes will not occur or that any
such change will not require FEI to establish alternative Compensation and
Benefit Plans to cover the Non-U.S. Employees. FEI may discontinue
participation in the PEO Compensation and Benefit Plans, at any time, to
the extent allowable under local law and regulations. If any Non-U.S.
Employees should cease to be covered by the Pension Plan within the PEO
Compensation and Benefit Plans, then the pension reserves required for the
accrued pension rights of the Employees concerned, calculated in accordance
with the then applicable valuation formulas for such purposes for the plans
concerned, will be
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transferred by the Philips pension fund to the pension fund or insurance
company indicated by FEI, provided that all then applicable approvals have
been obtained. Unless otherwise agreed in writing, Non-U.S. Employees will
not be eligible to continue their affiliation with the PEO Compensation and
Benefit Plans after Philips ceases to Control FEI.
(b) FEI and PIE agree that PIE's only obligation with regard to
Pension Plans covering Non-U.S. Employees is that PIE shall fund, in
accordance with the valuation rules for such purposes for the plans
concerned, at such times, prior to or after the Closing Date, and in such
amounts as are required in respect of such employees' employment prior to
the Closing Date. FEI and PIE agree that FEI shall, prior to Closing, have
reasonable access to the actuarial assumptions (including relevant
historical assumptions and contribution information) used to determine the
funded status of the Pension Plans within the PEO Compensation and Benefit
Plans.
(c) FEI and PIE agree that FEI's employees shall continue as
employees of FEI following the Closing Date with Compensation and Benefit
Plans in the aggregate that are not materially less favorable than FEI
Compensation and Benefit Plans in effect on the date hereof and that FEI's
employees and employees of PEO Holdings, its Subsidiaries and PEO-US,
including in all cases management employees, will, upon Closing, be
eligible to participate in the Stock Option Plan or an equivalent incentive
compensation plan of FEI in accordance with the terms of any such plan.
(d) FEI and PIE agree that all employees of the PEO Business in
Japan shall remain employees of the Philips entity that currently employs
such employees and, upon Closing and thereafter, shall be seconded by
contract to FEI.
Section 5.10 Expenses. FEI shall pay all charges and expenses incurred
by it, and PIE shall pay all charges and expenses incurred by it or its
Affiliates, in connection with the Transaction and any other transactions
contemplated by this Agreement, including without limitation the
establishment of PEO Holdings and the Restructuring.
Section 5.11 Takeover Statute. If any Takeover Statute is or may
become applicable to the Transaction or the other transactions contemplated
by this Agreement, each of FEI and PIE and its board of directors shall
grant such approvals and take such actions as are necessary so that such
transactions may be consummated as promptly as practicable on the terms
contemplated by this Agreement and otherwise act to eliminate the effects
of such statute or regulation on such transactions.
Section 5.12 Insurance of PEO Business. To the extent that insurance
policies of the PEO Business will not survive the Closing, FEI and PIE
shall cooperate to procure effective upon the Closing, insurance policies
with respect to all material risks of the
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PEO Business, including, without limitation, fire and casualty, general
liability, business interruption, product liability, and sprinkler and
water damage insurance policies. Such insurance policies shall be from
reputable insurance carriers, shall provide full and adequate coverage for
all normal risks incident to the PEO Business and the properties and assets
used thereby, and shall be in character and amount at least equivalent to
that carried by Persons engaged in similar businesses and subject to the
same or similar perils or hazards.
Section 5.13 Distribution and Other Agreements.
(a) FEI and PIE agree that any distribution/agency agreements
between the PEO Business and Affiliates of PIE that are a part of the
Excluded Business shall be reduced to writing and entered into
substantially in the form of the Distribution Agreement attached as Annex
5.13(a) hereto. Section 5.13(a) of the Disclosure Schedule contains a
complete list of all countries where distribution agreements will need to
be entered into with respect to the Excluded Business.
(b) In any case where both the PEO Business and FEI are
represented by separate third party distributor/agents in the same country
and it is legally impossible to continue with those separate
distributor/agents after the Closing Date because of exclusivity
obligations existing as of September 4, 1996 or a non-cancelable agreement
is in place, FEI and PIE agree to work out a practical solution prior to
the Closing Date.
(c) Immediately after the date of this Agreement, FEI and PIE
will approach all of the customers and distributors/agents whose contracts
will be assigned to FEI and other third parties who are party to an
agreement with the PEO Business, and whom FEI and PIE deem it appropriate
to so approach, in order to, where applicable, secure their consent to
assignment of their agreements insofar as they relate to the PEO Business.
Should one or more of those customers, distributors, agents or other third
parties disagree with such assignment or should they continue to hold any
company belonging to the Philips Group liable for the performance of such
agreements, then FEI and PIE will enter into specific arrangements for each
particular case pursuant to which the performance of such agreements after
the Closing Date shall be for the risk and account of FEI.
(d) FEI and PIE agree that Affiliates of Philips shall enter into
agreements, on customary terms, with the PEO Group to provide for the
provision of services necessary to the PEO Business, whether previously
provided by such Affiliates to the PEO Business or otherwise deemed
necessary or desirable by each of the parties hereto ("Transitional
Services"). Section 5.13(d)(i) of the Disclosure Schedule sets forth a
representative list of the Transitional Services. FEI and PIE agree that
they shall enter
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into agreements substantially in the form attached as Annex 5.13(d) hereto
prior to Closing for those Transitional Services listed in Section
5.13(d)(i) of the Disclosure Schedule that FEI wishes to continue.
Section 5.14 Secondary Offering. FEI and PIE hereby agree that within
six months after the Closing FEI and PIE shall cooperate with the
shareholders of FEI listed in Annex 5.14 (the "Selling Shareholders") in
their sale to third parties of up to 1 million shares of Common Stock in
such a manner as will effectively result in such Selling Shareholders
receiving a reasonable price for the shares sold without undue market
discount. If, on the basis of information from or presentations by the
Selling Stockholders, the Board of Directors of FEI is satisfied that
registration under the Securities Act of the shares to be sold is necessary
or will meaningfully improve the marketability of the shares, FEI will use
all reasonable efforts to effect such registration in a timely manner. In
connection with any such secondary offering (i) the Selling Shareholders
shall pay their counsel fees and expenses and all underwriting commissions
and discounts for such secondary offering, (ii) the Selling Shareholders
(pro rata in proportion to the number of shares sold) and FEI shall split
equally any other out-of-pocket expenses of the secondary offering, (iii)
no more than two of FEI's officers shall be involved in any road show and
related preparations and each such officer need only participate in such
road show and related preparations for one week or less, and (iv) neither
FEI nor the Selling Shareholders shall request any form of indemnification
from FEI, PIE or any member of the Philips Group in connection with such
secondary offering.
Section 5.15 Acht Property.
(a) Prior to Closing, FEI and PIE or, as appropriate, one of its
Affiliates, shall enter into a 10 year lease agreement with respect to the
Acht Property on terms (i) substantially equivalent to those reflected in
the general conditions of the model lease agreement approved by the Council
of Real Property of the real estate brokers association of The Netherlands
or in any other form agreed to by FEI and (ii) including the specific terms
set forth in Section 5.15(a) of the Disclosure Schedule.
(b) FEI and PIE hereby agree that prior to the Closing Date, FEI
shall have the right to conduct a Phase I environmental audit of the Acht
Property to update the most recent environmental survey concerning the Acht
Property, provided, however, such environmental audit shall not include any
soil sampling or other invasive procedures.
(c) FEI and PIE hereby agree that subsequent to Closing PIE shall
use reasonable efforts to assist FEI to obtain in FEI's name, or the name
of any corporation
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in the PEO Group, any use permits required for the operation of the PEO
Business on the Acht Property.
Section 5.16 Intellectual Property. FEI and PIE hereby agree to enter
into, or to cause their respective Affiliates to enter into, the following
arrangements with respect to Intellectual Property:
(a) Patents. (i) In respect of patents and patent applications
owned or controlled by Philips, Philips shall grant, subject to all prior
commitments, including those set forth in Section 5.16(a)(i) of the
Disclosure Schedule, to FEI, PEO-US, PEO Holdings and their then respective
direct or indirect wholly owned Subsidiaries a paid-up, royalty-free,
non-exclusive, non-transferable right and license, for so long as Philips
shall Control FEI, to make, have made, use, sell or otherwise dispose of
any products now or hereafter manufactured by or for FEI within the scope
of the PEO Business or FEI's Business; provided, however, that the licenses
granted in this Section 5.16(a)(i) to any Subsidiaries of FEI shall
terminate when such Subsidiary shall cease to be a wholly owned Subsidiary
of FEI.
(ii) Upon termination of Philips' Control of FEI, the patents and
patent applications owned and controlled by Philips and originated from and
having, within the Philips Group, their principal commercial use in the PEO
Business, which are set forth in Section 5.16(a)(ii) of the Disclosure
Schedule, shall be transferred by or at the direction of Philips to FEI at
FEI's expense subject to (a) prior commitments, and (b) ordinary patent and
patent application management from the date hereof to the date of such
transfer (which may include withdrawal, cancellation or modification of
patents and patent applications) and (c) the Philips Group retaining a free
right and license, including the right to sublicense not within the scope
of FEI's Business or the PEO Business, to make, have made, use, sell or
otherwise dispose of any products not in the scope of FEI's Business or the
PEO Business. Upon such termination, the Philips Group will, subject to all
prior commitments, also grant to FEI, PEO-US, PEO Holdings and their then
respective direct or indirect wholly owned Subsidiaries, on commercially
reasonable terms, a non-exclusive non-transferable license without right to
sublicense, under all other patents owned or controlled by Philips to make,
have made, use, sell or otherwise dispose of any products manufactured at
the date of termination, or for which a serious development is going on at
the date of termination, by or for FEI or by or for the PEO Group within
the scope of FEI's Business or the PEO Business; provided, however, that
the licenses granted in this Section 5.16(a)(ii) to any Subsidiaries of FEI
shall terminate when such Subsidiary shall cease to be a wholly owned
Subsidiary of FEI.
(iii) Philips and PIE shall not make and shall cause their
Affiliates not to make any commitments nor take any other action after the
Closing Date that would
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prevent Philips from fully performing the undertakings described in clause
(ii) above insofar as they relate to transfers or licensing of or under
patents or patent applications originated from and having within the
Philips Group their principal commercial use in the PEO Business.
(b) Wordmarks and Tradenames. (i) In respect of the wordmark
"Philips" and the Philips shield emblem, it is agreed between the parties
that for as long as Philips shall Control FEI, FEI shall be entitled to
apply such wordmark and emblem on its products and in any advertising of
such products, but not in combination with any other trademark. 60 days
after FEI gains knowledge that Philips no longer Controls or will Control
FEI, FEI shall cease applying such wordmark and emblem to any products and
in any advertising and 120 days after FEI gains knowledge that Philips no
longer Controls or will Control FEI, FEI shall not sell any products or
distribute any advertising that utilizes such wordmark and emblem;
provided, however, that if within 60 days after FEI gains knowledge that
Philips no longer Controls or will Control FEI, FEI demonstrates to PIE
that ceasing to sell any products and distribute any advertising that
utilize such wordmark and emblem within the 120 days described above will
cause significant financial detriment to FEI, then FEI and PIE shall agree
upon a reasonable extension of such 120 day period taking into account such
financial detriment and Philips' corporate policy with respect to such
wordmark and emblem. For these purposes trademark license agreements shall
be entered into at Closing with FEI and each of the legal entities applying
the trademarks to the products. Should at any time Philips not Control the
entity operating under any such license, then such license agreement shall
forthwith terminate with respect to such entity.
(ii) Other trademarks and tradenames owned by Philips, insofar as
only used for products within the PEO Business, shall be transferred to the
PEO Group with the PEO Business, subject to prior commitments listed on
Section 5.16(b)(ii) of the Disclosure Schedule.
(c) Know-how. Subject to all prior commitments, which will not
materially affect the PEO Business as it is now conducted, the PEO Group
shall have full rights to all know-how generated within the PEO Business.
The PEO Group shall have the same rights as previously held by the PEO
Business with respect to all know-how generated by Philips or any of its
Affiliates under written contract expressly for the benefit of the PEO
Business. The Philips Group will also have the free right to continue to
use all such know-how for its purposes, to the extent such know-how is
available within the Philips Group at the Closing Date of the Transaction.
For know- how utilized within the PEO Business but generated within other
parts of the Philips Group, FEI shall be granted, subject to all prior
commitments, a paid up royalty free non-exclusive non-transferable license
to use such know-how within the scope of FEI's Business and the PEO
Business.
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(d) Software. In cases where the PEO Business uses software
either itself or as product to be distributed (whether or not embedded in
such product), and such software is owned or co-owned by any company within
the Philips Group, other than any company transferred to PEO Holdings as
part of the PEO Business, Philips will grant to FEI a license in order to
enable it to continue to use such software. The license will be paid-up for
the current use of the software in its current release to the extent the
PEO Business is not already paying a license fee (by way of royalty or
otherwise) for such use.
(e) Cross Licensing. After the Closing Date, FEI shall not be
required, without the approval of FEI's board of directors, to participate
in any specific cross licensing, pooling or other patent sharing or
licensing agreement or arrangement entered into by Philips covering patents
and patent applications generated in FEI's Business before the Closing Date
or by FEI thereafter which includes in the field of use to which such
agreement or arrangement relates FEI's Business or the PEO Business;
provided, however, that FEI hereby agrees to participate in broad scope
cross license agreements, which are license agreements that apply to
several fields of activity of the parties thereto, of which FEI's Business
and the PEO Business are beneficiaries without requiring that any field of
use exclusion be included with respect to FEI's Business and the PEO
Business. FEI and PIE hereby agree that FEI's patents and patent
applications will be subject to the existing cross licensing, pooling and
other patent sharing or licensing agreements or arrangements of Philips
which by their terms would apply to FEI and that in respect of all of its
and PEO Group's patents and patent applications FEI will on the Closing
Date and thereafter grant to Philips a fully paid up, royalty free
non-exclusive right and license, with right to sublicense not within the
scope of FEI's Business or the PEO Business, to make, have made, use, sell
or otherwise dispose of any product not in the scope of FEI's Business or
the PEO Business; provided, however, that with respect to broad scope
license agreements of which FEI's Business and the PEO Business are
beneficiaries, Philips' right to sublicense shall not be limited to fields
of use outside the scope of FEI's Business or the PEO Business.
(f) Zeiss Claim. FEI and PIE hereby agree that PIE shall not
enter into any agreement in respect of the Zeiss Claim that would prevent
in any material way FEI or any corporation in the PEO Group from engaging
in FEI's Business or the PEO Business.
Section 5.17 Right to Maintain Percentage Interest. FEI and PIE hereby
agree that PIE shall have the right to maintain its percentage interest of
the voting securities of FEI in accordance with the terms of this Section
5.17. Until the first instance when Philips' ownership, whether direct or
indirect, of the outstanding voting securities of FEI drops below 40%,
whenever FEI offers, or has cumulatively offered since the last offer to
PIE pursuant to this Section 5.17, more than 0.5% of the then outstanding
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voting securities to any Person, FEI shall also offer PIE a reasonable
opportunity to purchase from FEI at the then market price such number of
such voting securities as would enable Philips to maintain its percentage
of FEI's voting securities at up to 55% or such lower percentage as is
calculated by subtracting from 55 the product of (x) 100 and (y) the number
determined by dividing (a) the number of shares of FEI common stock sold by
PIE subsequent to the date hereof (less such number of shares of FEI common
stock bought subsequent to the date hereof other than pursuant to this
Section 5.17) by (b) the outstanding shares of FEI on the date of any sale
of shares by FEI that triggers Philips' right under this Section 5.17.
Section 5.18 Issuance of Additional Shares.
(a) FEI and PIE hereby agree that, subject to Section 5.18(b)
below, upon the issuance of any shares of Common Stock upon the exercise or
conversion of any Right Outstanding at Closing, FEI shall promptly issue to
PIE such additional shares of Common Stock (constituting Additional Shares)
such that the Shares constitute 55% of the Outstanding Common Stock.
(b) FEI and PIE agree that FEI shall not be obligated to issue
fractional shares of Common Stock pursuant to Section 5.18(a) above. Any
fractional shares of Common Stock required to be issued under Section
5.18(a), without regard to this Section 5.18(b), shall be added to all
other fractional shares of Common Stock previously not issued to PIE due to
this Section 5.18(b) until the sum of such fractional shares equals at
least one share of Common Stock, at which time such share of Common Stock
shall be issued to PIE.
Section 5.19 Independent Directors. For a period ending two years
after the date of this Agreement, PIE shall, in any election of directors
of FEI, vote all shares of voting stock of FEI as to which PIE has voting
discretion so as to cause, to the extent possible, FEI's board of directors
to have not less than two directors who qualify as "Independent Directors"
as that term is defined by Section 6(a) of Part III to Schedule D of the
By-laws of the National Association of Securities Dealers, Inc. and PIE
hereby agrees that it shall, in the election of directors to occur at the
annual meeting of FEI shareholders in April 1997, vote all shares of voting
stock of FEI as to which PIE has voting discretion so as to cause, to the
extent possible, two persons who shall not be present or prior employees of
any Affiliate of Philips other than FEI to be elected directors of FEI.
Section 5.20 List of PEO Assets. FEI and PIE hereby agree that prior
to Closing, PIE shall provide FEI with the asset ledgers of the PEO
Business, referred to by the PEO Business as the "MAVA lists", as of a date
no less recent than September 30, 1996.
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Section 5.21 Notice of Deconsolidation. FEI and PIE hereby agree that
if PIE should ever cease to have the benefit of the financial guarantee
issued by Philips to PIE pursuant to Section 403 of Book 2 of the Dutch
Civil Code, PIE shall promptly provide FEI notice of such event and, if PIE
ceases to have the benefit of such financial guarantee within 18 months
following the Closing Date, Philips shall take such action to provide a
substitute financial guarantee to the reasonable satisfaction of FEI,
including, without limitation, by assigning PIE's obligations under this
Agreement to an Affiliate of Philips that is a beneficiary of such
financial guarantee pursuant to Section 403 of Book 2.
Section 5.22 Limitation on Equity Position. For one year following the
Closing, PIE agrees not to own, together with other members of the Philips
Group, more than 70% of the outstanding Common Stock, except with the
consent of FEI as approved by a majority of the directors of FEI who are
not affiliates of Philips, or as results from actions by FEI approved by
such a majority.
ARTICLE VI
CONDITIONS TO CLOSING
Section 6.1 Conditions to the Obligations of FEI and PIE. The
obligations of the parties hereto to effect the Closing are subject to the
satisfaction (or waiver) prior to the Closing of the following conditions:
(a) Shareholders Approval. At the Shareholders Meeting, the
shareholders of FEI shall have voted to approve and adopt this Agreement,
including the Transaction and the issuance of Shares contemplated hereby
and to approve an increase in the number of shares of Common Stock
authorized for issuance from 15 million to 21.5 million;
(b) HSR and Other Antitrust Laws. All required filings under the
HSR Act and other applicable Competition Laws shall have been made, all
necessary approvals have been obtained and any required waiting period
under the laws applicable to the transactions contemplated hereby shall
have expired or been earlier terminated. In the case of each country or
territory (including, for this purpose the Member States of the European
Union) in which FEI or any of its Affiliates or PIE or any of its
Affiliates carries on business and in which the implementation of the
transactions contemplated by this Agreement will or might give rise to any
investigation or other proceeding under the Competition Laws of that
country or territory, neither this Agreement nor any of the material
transactions contemplated hereby nor any actual or potential consequences
thereof shall have been referred to any Governmental Entity having
jurisdiction under
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the Competition Laws of that country or territory for investigation or
review pursuant to those Competition Laws and no proceedings with respect
thereto shall have been initiated before any such Governmental Entity and
be continuing;
(c) 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;
(d) Consents and Approvals. All Required Approvals shall have
been made or obtained and shall not have expired or been rescinded;
(e) 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;
(f) NASDAQ Listing. The Shares shall have been approved for
quotation on the NASDAQ National Market System; and
(g) Agreements. Agreements covering the Transitional Services
listed in Section 5.13(d)(i) of the Disclosure Schedule that FEI wishes to
continue shall have been executed and delivered by the parties thereto.
Section 6.2 Conditions to the Obligations of PIE. The obligation of
PIE to effect the Closing is subject to the satisfaction (or waiver by PIE)
prior to the 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 PIE 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 PIE
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shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of FEI;
(c) Legal Opinions. PIE shall have received the opinion of Stoel
Rives L.L.P., dated as of the Closing Date, addressed to PIE substantially
to the effect set forth in Annex 6.2(c) hereto;
(d) No Material Adverse Effect. Since December 31, 1995, FEI
shall not have suffered an FEI Material Adverse Effect and PIE shall have
received a certificate to such effect dated the Closing Date and executed
by a duly authorized officer of FEI;
(e) Duly Executed Proxy and Required Approval. FEI, shall have
duly obtained the necessary shareholder approval under the relevant Laws;
(f) FEI's Board of Directors and Officers. FEI shall have taken
such actions so that upon Closing, FEI's board of directors shall be
composed of the nine persons listed on Annex 6.2(f)(i) and, the officer
positions at FEI shall be held by the persons listed opposite such
positions on Annex 6.2(f)(ii); and
(g) Receipt of Shares. PIE shall have received from FEI a
certificate evidencing the Definite Shares.
Section 6.3 Conditions to the Obligations of FEI. The obligation of
FEI to effect the Closing is subject to the satisfaction (or waiver) prior
to the Closing of the following conditions:
(a) Representations and Warranties. Each of the representations
and warranties of PIE contained herein that is qualified by materiality
shall be true and correct, and each of the representations and warranties
of PIE 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 PIE;
(b) Covenants. The covenants and agreements of PIE 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 PIE;
(c) Legal Opinions. FEI shall have received the opinion, dated as
of the Closing Date, of each of a member of the law department of Philips
and, as to the
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binding and enforceable nature of this Agreement, of Xxxxxxxx & Xxxxxxxx,
addressed to FEI substantially to the effect set forth in Annex 6.3(c)
hereto;
(d) No Material Adverse Effect. Since June 30, 1996, the PEO
Business shall not have suffered a PEO Material Adverse Effect and FEI
shall have received a certificate to such effect dated the Closing Date and
executed by a duly authorized officer of PIE;
(e) Employment Agreements. Employment agreements in substantially
the form attached hereto as Annex 6.3(e) shall have been entered into with
up to seven key employees and management representatives of FEI;
(f) Cash Contribution to the PEO Assets. The PEO Assets shall
include a total of $8,000,000 in cash; and
(g) PEO Stock. FEI shall have received from PIE or its Affiliates
the conveyance of all right, title and interest in and to the PEO Stock by
the due execution of a notarial deed of transfer in accordance with
Netherlands law and shall have received the PEO-US Certificates.
ARTICLE VII
SURVIVAL; INDEMNIFICATION
Section 7.1 Survival. All of the representations and warranties of FEI
and PIE contained in this Agreement and all claims and causes of action
with respect thereto shall survive the Closing and shall terminate upon
expiration of 18 months after the Closing Date, except that (i) the
representations and warranties of FEI and PIE contained in sections 3.10
and 4.10 of this Agreement and all claims and causes of action with respect
thereto shall survive the Closing and terminate upon the expiration of five
years after the Closing Date and (ii) the representations and warranties of
FEI and PIE contained in sections 3.14 and 4.14 of this Agreement and all
claims and causes of action with respect thereto shall survive the Closing
and terminate upon the expiration of the applicable statute of limitations,
including any extensions or waivers thereof.
Section 7.2 Indemnification by PIE.
(a) PIE and Philips (only to the extent it expressly makes any
representations and warranties or covenants) hereby agrees that it shall
indemnify, defend and hold harmless FEI, its Affiliates, and, if
applicable, their respective directors, officers,
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shareholders, partners, attorneys, accountants, agents and employees and
their heirs, successors and assigns (the "FEI Indemnified Parties") from,
against and in respect of any damages, claims, losses, charges, actions,
suits, Proceedings, deficiencies, Taxes, interest, penalties, and
reasonable costs and expenses (including without limitation reasonable
attorneys' fees, removal costs, remediation costs, closure costs, fines,
penalties and expenses of investigation and ongoing monitoring)
(collectively, the "Losses") imposed on, sustained, incurred or suffered by
or asserted against any of FEI Indemnified Parties, directly or indirectly
relating to or arising out of (i) subject to Section 7.2(b), any breach of
any representation or warranty made by PIE or Philips contained in this
Agreement and (ii) the breach of any covenant or agreement of PIE or
Philips contained in this Agreement.
(b) Except for any Losses with regard to the Excluded Business,
PIE and Philips shall not be liable to FEI Indemnified Parties for any
Losses with respect to the matters contained in Section 7.2(a)(i) except to
the extent (and then only to the extent) the Losses therefrom exceed $1
million.
Section 7.3 Indemnification by FEI.
(a) FEI hereby agrees that it shall indemnify, defend and hold
harmless PIE, its Affiliates and, if applicable, their respective
directors, officers, shareholders, partners, attorneys, accountants, agents
and employees and their heirs, successors and assigns (the "PIE Indemnified
Parties" and, collectively with FEI Indemnified Parties, the "Indemnified
Parties") from, against and in respect of any Losses imposed on, sustained,
incurred or suffered by or asserted against any of the PIE Indemnified
Parties, directly or indirectly relating to or arising out of (i) subject
to Section 7.3(b), any breach of any representation or warranty made by FEI
contained in this Agreement and (ii) the breach of any covenant or
agreement of FEI contained in this Agreement.
(b) FEI shall not be liable to the PIE Indemnified Parties for
any Losses with respect to the matters contained in Section 7.3(a)(i)
except to the extent (and then only to the extent) the Losses therefrom
exceed $1 million.
Section 7.4 Indemnification Procedures. With respect to third party
claims, all claims for indemnification by any Indemnified Party hereunder
shall be asserted and resolved as set forth in this Section 7.4. In the
event that any claim or demand ("Claim") for which FEI, PIE or Philips as
the case may be (each an "Indemnifying Party"), may be liable to any
Indemnified Party hereunder is asserted against or sought to be collected
from any Indemnified Party by a third party, such Indemnified Party shall
promptly, but in no event more than 30 days following such Indemnified
Party's receipt of written notice of such Claim, notify the Indemnifying
Party in writing of such Claim and the amount or the estimated amount
thereof to the extent then feasible (which
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estimate shall not be conclusive of the final amount of such Claim) (the
"Claim Notice"). The failure on the part of the Indemnified Party to give
any such Claim Notice within such 30 day period shall not relieve the
Indemnifying Party of any indemnification obligation hereunder unless, and
only to the extent that, the Indemnifying Party is materially prejudiced
thereby. The Indemnifying Party shall have 60 days from the personal
delivery or mailing of the Claim Notice (the "Notice Period") to notify the
Indemnified Party (a) whether or not the Indemnifying Party disputes the
liability of the Indemnifying Party to the Indemnified Party hereunder with
respect to such Claim and (b) whether or not it desires to defend the
Indemnified Party against such Claim. Except as hereinafter provided, in
the event that the Indemnifying Party notifies the Indemnified Party within
the Notice Period that it desires to defend the Indemnified Party against
such Claim, the Indemnifying Party shall, at its sole cost and expense,
have the right to defend the Indemnified Party by appropriate proceedings
and shall have the sole power to direct and control such defense; provided,
that the Indemnifying Party shall not take any action which would result in
the creation, and shall promptly seek the removal, of any Encumbrance on
the property or assets of the Indemnified Party resulting from such Claim
or the litigation thereof. If any Indemnified Party desires to participate
in any such defense it may do so at its sole cost and expense. The
Indemnified Party shall not settle a Claim for which it is indemnified by
the Indemnifying Party without the written consent of the Indemnifying
Party unless the Indemnifying Party elects not to defend the Indemnified
Party against such Claim. The Indemnifying Party may, with the consent of
the Indemnified Party (which consent shall not be unreasonably withheld),
settle or compromise any action or consent to the entry of any judgment
which (i) includes as a term thereof the delivery by the claimant or
plaintiff to the Indemnified Party of a duly executed written unconditional
release of the Indemnified Party from all liability in respect of such
action, which release shall be reasonably satisfactory in form and
substance to counsel for the Indemnified Party and (ii) would not adversely
affect the right of the Indemnified Party and its Affiliates to own, hold
and use their respective assets or operate businesses. Notwithstanding the
foregoing, (i) the Indemnified Party shall have the sole right to defend,
settle or compromise any Claim with respect to which it has waived its
right to indemnification pursuant to this Agreement and (ii) the
Indemnified Party, during the period the Indemnifying Party is determining
whether to elect to assume the defense of a matter covered by this section,
may take such reasonable actions as it deems necessary to preserve any and
all rights with respect to the matter, without such actions being construed
as a waiver of the Indemnified Party's rights to defense and
indemnification pursuant to this Agreement. If the Indemnifying Party
elects not to defend the Indemnified Party against such Claim, whether by
not giving the Indemnified Party timely notice as provided above or
otherwise, then the amount of any such Claim, or, if the same be contested
by the Indemnified Party, then that portion thereof as to which such
defense is unsuccessful (and the reasonable costs and expenses pertaining
to such defense) shall be the liability of the Indemnifying Party
hereunder, subject to the limita-
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tions set forth in Section 7.2(b) or 7.3(b) hereof. To the extent the
Indemnifying Party shall direct, control or participate in the defense or
settlement of any third party claim or demand, the Indemnified Party will
give the Indemnifying Party and its counsel access to, during normal
business hours, the relevant business records and other documents, and
shall permit them to consult with the employees and counsel of the
Indemnified Party. The Indemnified Party shall use its reasonable efforts
in the defense of all such claims.
Section 7.5 Indemnification Net of Taxes. (a) If the Indemnified Party
realizes during any year a reduction in Taxes which is attributable to any
Loss having occurred and the Indemnified Party shall have been indemnified
for such Loss, the Indemnified Party shall pay to the Indemnifying Party
the actual amount of such aggregate reduction in Taxes. Any payment due to
the Indemnifying Party pursuant to this Section 7.5(a) shall be paid within
30 days after the earlier of the filing of any tax return or the making of
any tax payment reflecting the utilization by the Indemnified Party of a
tax deduction or other tax benefit attributable to any Loss.
(b) The amount of each Loss being indemnified for shall be increased
by any net Tax costs actually incurred by the Indemnified Party as a result
of the receipt of such amount, so that the Indemnifying Party shall pay to
the Indemnified Party, in addition to the amounts due with respect to such
Loss, (i) an amount equal to the net Taxes payable by the Indemnified Party
as a consequence of the receipt or accrual of the amount payable pursuant
to Section 7.2 or 7.3 and (ii) an amount that reflects the net Tax
consequences of the receipt of the amount payable under Section 7.5(b)(i)
and 7.5(b)(ii).
ARTICLE VIII
TERMINATION
Section 8.1 Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by agreement of FEI and PIE;
(b) by either FEI or PIE, by giving written notice of such
termination to the other party, if Closing shall not have occurred on or
prior to March 31, 1997 (unless the failure to consummate the Closing by
such date shall be due to the failure of the party seeking to terminate
this Agreement to have fulfilled any of its obligations under this
Agreement);
-57-
(c) by either FEI or PIE in writing, if there shall have occurred
any failure of any condition precedent to the obligations of the
terminating party and such failure is either not capable of being cured
prior to the Closing or if such failure is capable of being cured, is not
cured within a reasonable amount of time; provided, however, that the right
to terminate this Agreement pursuant to this Section 8.1(c) shall not be
available to any party that has failed to fully comply with its obligations
hereunder in any manner that shall have proximately caused such failure to
satisfy any condition precedent;
(d) by PIE if FEI has materially breached any representation,
warranty, covenant or agreement contained in this Agreement and such breach
is either not capable of being cured prior to the Closing or if such breach
is capable of being cured, is not so cured within a reasonable amount of
time; provided, however, that termination pursuant to this Section 8.1(d)
shall not relieve FEI of liability for such breach or otherwise;
(e) by FEI if PIE or Philips has materially breached any
representation, warranty, covenant or agreement made by it in this
Agreement and such breach is either not capable of being cured prior to the
Closing or if such breach is capable of being cured, is not so cured within
a reasonable amount of time; provided, however, that termination pursuant
to this Section 8.1(e) shall not relieve PIE or Philips of liability for
such breach or otherwise;
(f) by PIE if FEI's Common Stock is no longer quoted on the
NASDAQ National Market System;
(g) (i) by FEI or PIE if the board of directors of FEI shall have
recommended to the shareholders of FEI, or agreed to enter into, a Superior
Proposal or (ii) by FEI or PIE if the board of management of PIE shall have
agreed to enter into a Superior Proposal;
(h) by FEI or PIE if the other party or any of the other Persons
described in Section 5.2 as affiliates, representatives or agents of the
other party shall take any of the actions that would be proscribed by
Section 5.2 but for the proviso therein allowing certain actions to be
taken pursuant to clause (B), (C) or (D) of the proviso under the
conditions set forth therein.
(i) by PIE if the board of directors of FEI shall have withdrawn
or adversely modified its approval or recommendation of this Agreement or
failed to reconfirm its recommendation of this Agreement within five
business days after a written request by PIE to do so.
-58-
Section 8.2 Effect of Termination.
(a) Except as set forth in paragraph (b) below, in the event of
the termination of this Agreement in accordance with Section 8.1 hereof,
this Agreement shall thereafter become void and have no effect, and no
party hereto shall have any liability to the other party hereto or their
respective Affiliates, directors, officers or employees, except for the
obligations of the parties hereto contained in this Sec tion 8.2 and in
Sections 9.1, 9.7, 9.8, 9.9 and 9.11 hereof, the obligations contained in
the Confidentiality Agreement and except that nothing herein will relieve
any party from liability for any breach of this Agreement prior to such
termination.
(b) In the event this Agreement is terminated by FEI or PIE
pursuant to Section 8.1(g)(i), FEI shall promptly pay to PIE all of the
expenses of the Philips Group incurred in connection with this Agreement,
the Transaction, the Restructuring (other than the contemplated sale and
leaseback expenses associated with the Acht Property) and any other
transactions contemplated by this Agreement. In the event this Agreement is
terminated by FEI or PIE pursuant to Section 8.1(g)(ii), PIE shall promptly
pay to FEI all of the expenses of FEI incurred in connection with this
Agreement, the Transaction and any other transactions contemplated by this
Agreement.
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices. All notices or other communications hereunder
shall be deemed to have been duly given and made if in writing and if
served by personal delivery upon the party for whom it is intended, if
delivered by registered or certified mail, return receipt requested, or by
a national courier service, or if sent by telecopier, provided that the
telecopy is promptly confirmed by telephone confirmation thereof, to the
person at the address set forth below, or such other address as may be
designated in writing hereafter, in the same manner, by such person:
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To PIE:
PHILIPS INTERNATIONAL B.V.
Building VP-1, X.X. Xxx 000
0000 XX Xxxxxxxxx
Xxx Xxxxxxxxxxx
Telephone: 00-00-0000000
Telecopy: 00-00-0000000
Attn: Xxxxx Xxxxxxx
With a copy to:
XXXXXXXX & XXXXXXXX
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: X. Xxxxxx Landau
To FEI:
FEI COMPANY
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: Chief Executive Officer
With a copy to:
STOEL RIVES LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: Xxxxxxx X. Xxxxxx
Section 9.2 Amendment; Waiver. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by FEI and PIE, or in the case of
a waiver, by the party
-60-
against whom the waiver is to be effective. No failure or delay by any
party in exercising any right, power or privilege hereunder shall operate
as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and, except as otherwise provided herein, shall not be exclusive
of any rights or remedies provided by law.
Section 9.3 Assignment. (a) No party to this Agreement may assign any
of its rights or obligations under this Agreement without the prior written
consent of the other party hereto but PIE may assign all or any portion of
its rights and obligations pursuant to this Agreement to any other Person
in the Philips Group; provided, however, that from the date hereof until 18
months after the Closing Date PIE shall not assign its rights and
obligations hereunder to any Person within the Philips Group that does not
have a financial guarantee by Philips pursuant to Netherlands law.
Section 9.4 Entire Agreement. This Agreement (including the Disclosure
Schedule and all Annexes hereto) contains the entire agreement between the
parties hereto with respect to the subject matter hereof and supersedes all
prior agreements and understandings, oral or written, with respect to such
matters, including the Letter of Intent, but excepting the Confidentiality
Agreement which will remain in full force and effect for the term provided
for therein and other than any written agreement of the parties that
expressly provides that it is not superseded by this Agreement.
Section 9.5 Fulfillment of Obligations. Any obligation of any party to
any other party under this Agreement, which obligation is performed,
satisfied or fulfilled by an Affiliate of such party, shall be deemed to
have been performed, satisfied or fulfilled by such party.
Section 9.6 Parties in Interest. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective
successors and permitted assigns. Nothing in this Agreement, express or
implied, is intended to confer upon any Person other than Philips, PIE,
FEI, or their successors or permitted assigns, any rights or remedies under
or by reason of this Agreement.
Section 9.7 Public Disclosure. Notwithstanding anything herein to the
contrary, each of the parties to this Agreement hereby agrees with the
other party hereto that, except as may be required to comply with the
requirements of any applicable Laws, and the rules and regulations of each
stock exchange or interdealer quotation system upon which the securities of
one of the parties or an Affiliate thereof is listed or quoted, no press
release or similar public announcement or communication shall, if prior to
the Closing, be made or caused to be made concerning the execution or
performance of this Agreement unless the parties shall have consulted in
advance with respect thereto.
-61-
Section 9.8 Expenses. Except as otherwise expressly provided in this
Agreement, whether or not the transactions contemplated by this Agreement
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby by FEI and its
Subsidiaries and by PIE and its Affiliates and Subsidiaries shall be borne
by FEI and PIE, respectively.
Section 9.9 Disclosure Schedules. The disclosure of any matter in the
Disclosure Schedule, including any FEI Reports incorporated by reference
therein, pursuant to this Agreement shall be deemed to be a disclosure for
all purposes of this Agreement to which such matter could reasonably be
expected to be pertinent, but shall expressly not be deemed to constitute
an admission by FEI or PIE, or to otherwise imply, that any such matter is
material for the purposes of this Agreement.
Section 9.10 Governing Law; Mediation and Arbitration.
(a) The Agreement shall be governed by the laws of the state of
New York, without giving effect to principles of conflicts of laws thereof.
(b) If a dispute arises out or relates to this contract, or the
breach thereof, and if that dispute cannot be settled through direct
discussions, the parties agree to first endeavor to settle the dispute in
an amicable manner by mediation administered by the American Arbitration
Association under its Commercial Mediation Rules, before resorting to
arbitration. Thereafter, any unresolved controversy or claim arising out of
or relating to this contract, or breach thereof, shall be settled by
arbitration administered by the American Arbitration Association in
accordance with its International Arbitration Rules and Title 9 of the U.S.
Code and Philips hereby consents to the jurisdiction of such arbitration to
the extent required. Judgment on the award rendered by the arbitrators may
be entered in any court having jurisdiction thereof.
(c) The number of arbitrators shall be three, one of whom shall
be appointed by each of Philips and FEI and the third of whom shall be
selected by mutual agreement, if possible, within 30 days of the selection
of the second arbitrator and thereafter by the administering authority and
the place of arbitration shall be New York, New York. The language of the
arbitration shall be English, but documents or testimony may be submitted
in Dutch if a translation is provided.
(d) The arbitrators will have no authority to award punitive
damages or any other damages not measured by the prevailing party's actual
damages, and may not, in any event, make any ruling, finding or award that
does not conform to the terms and conditions of the Agreement.
-62-
(e) Either party may make an application to the arbitrators
seeking injunctive relief to maintain the status quo until such time as the
arbitration award is rendered or the controversy is otherwise resolved.
Either party may apply to any court having jurisdiction hereof and seek
injunctive relief in order to maintain the status quo until such time as
the arbitration award is rendered or the controversy is otherwise resolved.
Section 9.11 Counterparts. This Agreement may be executed by the
parties on separate counterparts which, when taken together with
counterparts signed by each of the other parties, shall constitute a single
fully executed Agreement which shall be as fully binding and effective as
if each party had executed a single signature page.
Section 9.12 Headings. The heading references herein and the table of
contents hereto are for convenience purposes only, do not constitute a part
of this Agreement and shall not be deemed to limit or affect any of the
provisions hereof.
IN WITNESS WHEREOF, the parties have executed or caused this Agreement
to be executed as of the date first written above.
PHILIPS INDUSTRIAL ELECTRONICS
INTERNATIONAL B.V.
By: /s/ Xxxxxx X. Xxx
-----------------------------------------
Name: Xxxxxx X. Xxx
Title:
By: /s/ Theo Sonnemanns
-----------------------------------------
Name: Theo Sonnemanns
Title:
FEI COMPANY
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
-63-
For purposes of Sections 4.1, 4.2, 4.3,
4.6(d)(ii), 4.15, 5.8(b), 5.8(c),
5.9(a), 5.13(a),5.13(d), 5.16, 7.2 and
9.10 only:
PHILIPS ELECTRONICS N.V.
By: /s/ Xxxx Xxxxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title:
-64-
Annex 3.19(b)
Form of Voting Agreement
FORM OF
SHAREHOLDER VOTING AGREEMENT
----------------------------
THIS SHAREHOLDER VOTING AGREEMENT (the "Agreement") is entered
into as of November __, 1996, between the undersigned ______________, a
shareholder (the "Shareholder") of FEI Company, an Oregon corporation (the
"Company"), and PHILIPS INDUSTRIAL ELECTRONICS INTERNATIONAL B.V., a
Netherlands corporation ("PIE").
WHEREAS, contemporaneously with the execution and delivery of
this Agreement, PIE and the Company are entering into a Combination
Agreement, dated as of the date hereof (the "Combination Agreement"), by
which PIE will acquire common stock (the "Common Stock") of FEI,
constituting 55% of the Outstanding Common Stock (as defined in the
Combination Agreement), upon the terms and conditions set forth therein;
WHEREAS, the Shareholder desires that PIE transfer to FEI in
payment for such Common Stock 100% of the issued and outstanding capital
stock of PEO Holdings (as defined in the Combination Agreement) and PEO-US
(as defined in the Combination Agreement) (the issuance of the Common Stock
to PIE and the transfer of such outstanding capital stock to FEI being
referred to herein collectively as the "Transaction");
NOW, THEREFORE, for good and valuable consideration, the receipt,
sufficiency and adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
1. Representations of Shareholders. The Shareholder represents
that he (a) is the holder of [_________] shares of the Common Stock (the
Shareholder's "Shares"), (b) does not beneficially own (as such term is
defined in the Securities Exchange Act of 1934, as amended (the "1934
Act")) any shares of the Common Stock other than his Shares, but excluding
any shares of the Common Stock which he has the right to obtain upon the
exercise of stock options outstanding on the date hereof, and (c) has full
power and authority to make, enter into and carry out the terms of this
Agreement.
2. Agreement to Vote Shares. The Shareholder agrees to vote his
Shares and any New Shares (as defined in Section 6 hereof), and shall cause
any holder of record of his Shares or New Shares to vote (a) to approve and
adopt the Combination Agreement, including the issuance of Shares by the
Company contemplated thereby, and to approve an amendment to the Second
Amended and Restated Articles of Incorporation to increase in the number of
shares of Common Stock authorized for issuance from 15 million to ____
million and (b) against any proposal that would compete with or serve to
interfere or inhibit the timely consummation of the Transaction. The
Shareholder agrees to deliver to Xxxxxxx X. Xxxxxxx, Chairman of the Board
and Chief Executive Officer of the Company, immediately upon request
therefor a proxy substantially in the form attached hereto as Exhibit A,
which proxy shall be irrevocable to the extent permitted by law, with the
total number of his Shares and any New Shares correctly indicated thereon.
3. No Voting Trusts. After the date hereof, the Shareholder
agrees that he will not, nor will he permit any entity under his control
to, deposit any of his Shares in a
voting trust or subject any of his Shares to any arrangement with respect
to the voting of such Shares other than agreements entered into with PIE.
4. No Proxy Solicitations. The Shareholder agrees that he will
not, nor will he permit any entity under his control to, (a) solicit
proxies or become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the 0000 Xxx) in opposition to or
competition with the consummation of the Transaction or otherwise encourage
or assist any party in taking or planning any action which would compete
with or otherwise serve to interfere with or inhibit the timely
consummation of the Transaction in accordance with the terms of the
Combination Agreement, (b) directly or indirectly encourage, initiate or
cooperate in a shareholders' vote or action by consent of the Company's
shareholders in opposition to or in competition with the consummation of
the Transaction, or (c) become a member of a "group" (as such term is used
in Section 13(d) of the 0000 Xxx) with respect to any voting securities of
the Company for the purpose of opposing or competing with the consummation
of the Transaction.
5. Transfer and Encumbrance. Except for gifts given without
consideration where the recipient thereof agrees to execute a voting
agreement in form and substance similar to this Agreement, on or after the
date hereof, the Shareholder agrees not to voluntarily transfer, sell,
offer, pledge or otherwise dispose of or encumber any of his Shares or New
Shares prior to the earlier of (a) the effective date of the Transaction or
(b) the date this Agreement shall be terminated in accordance with its
terms; provided, however, that the Shareholder shall have the right to
transfer his Shares to charitable organizations meeting the requirements of
Section 501(c)(3) of the Internal Revenue Code of 1986 without obtaining a
voting agreement from such charitable organization.
6. Additional Purchases. The Shareholder agrees that he will not
purchase or otherwise acquire beneficial ownership of any shares of the
Common Stock after the execution of this Agreement ("New Shares"), nor will
he voluntarily acquire the right to vote or share in the voting of any
shares of the Common Stock other than the Shares, unless he agrees to
deliver to PIE immediately after such purchase or acquisition an
irrevocable proxy substantially in the form attached hereto as Exhibit A
with respect to such New Shares. The Shareholder also agrees that any New
Shares acquired or purchased by him shall be subject to the terms of this
Agreement to the same extent as if they constituted Shares.
7. Specific Performance. Each party hereto severally acknowledges
that it will be impossible to measure in money the damage to the other
party if a party hereto fails to comply with any of the obligations imposed
by this Agreement, that every such obligation is material and that, in the
event of any such failure, the other party will not have an adequate remedy
at law or damages. Accordingly, each party hereto severally agrees that
injunctive relief or other equitable remedy, in addition to remedies at law
or damages, is the appropriate remedy for any such failure and will not
oppose the granting of such relief on the basis that the
-2-
other party has an adequate remedy at law. Each party hereto severally
agrees that it will not seek, and agrees to waive any requirement for, the
securing or posting of a bond in connection with any other party's seeking
or obtaining such equitable relief.
8. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and shall not be assignable without the written
consent of all other parties hereto.
9. Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof, and
this Agreement supersedes all prior agreements, written or oral, between
the parties hereto with respect to the subject matter hereof. This
Agreement may not be amended, supplemented or modified, and no provisions
hereof may be modified or waived, except by an instrument in writing signed
by all the parties hereto. No waiver of any provisions hereof by any party
shall be deemed a waiver of any other provisions hereof by any such party,
nor shall any such waiver be deemed a continuing waiver of any provision
hereof by such party.
10. Miscellaneous.
(a) This Agreement shall be deemed a contract made under,
and for all purposes shall be construed in accordance with, the laws
of the State of New York.
(b) If any provision of this Agreement or the application of
such provision to any person or circumstances shall be held invalid by
a court of competent jurisdiction, the remainder of the provision held
invalid and the application of such provision to persons or
circumstances, other than the party as to which it is held invalid,
shall not be affected.
(c) This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original but all
of which together shall constitute one and the same instrument.
(d) This Agreement shall terminate upon the earliest to
occur of (i) the consummation of the Transaction or (ii) termination
of the Combination Agreement.
(e) All Section headings herein are for convenience of
reference only and are not part of this Agreement, and no construction
or reference shall be derived therefrom.
(f) The obligations of the Shareholder set forth in this
Agreement shall not be effective or binding upon him until after such
time as the Combination Agreement is executed and delivered by the
Company and PIE. The parties agree that
-3-
there is not and has not been any other agreement, arrangement or
understanding between the parties hereto with respect to the matters
set forth herein.
IN WITNESS WHEREOF, the parties hereto have executed and
delivered this Agreement as of the date first written above.
PHILIPS INDUSTRIAL ELECTRONICS
INTERNATIONAL B.V.
By: ____________________________________
Name: __________________________________
Title: _________________________________
SHAREHOLDER:
By: ____________________________________
Name: __________________________________
Title: _________________________________
-4-
(EXHIBIT A)
FORM OF PROXY
The undersigned, for consideration received, hereby appoints
Xxxxxxx X. Xxxxxxx, Chairman of the Board and Chief Executive Officer of
the Company, his proxy, with power of substitution, to vote all shares of
common stock of FEI Company, an Oregon corporation (the "Company"), owned
by the undersigned at the upcoming Special Meeting of Shareholders of the
Company, and at any adjournment thereof, FOR approval and adoption of the
Combination Agreement, dated as of November __, 1996 (the "Combination
Agreement"), between the Company, Philips Industrial Electronics
International B.V., a Netherlands corporation ("PIE"), the issuance of
shares of common stock of the Company to PIE contemplated thereby and FOR
the approval of an amendment to the Second Amended and Restated Articles of
Incorporation to increase the number of shares of Common Stock authorized
for issuance from 15 million to ___ million, and AGAINST any proposal that
would compete with or serve to interfere or inhibit the timely consummation
of the transactions contemplated by the Combination Agreement. This proxy
is coupled with an interest and is irrevocable until such time as the
Shareholder Voting Agreement, dated as of November __, 1996, among the
undersigned and PIE terminates in accordance with its terms.
Dated November __, 1996
____________________________________________+
(Signature of Shareholder)
Annex 5.13(a)
Form of Distribution Agreement
FORM OF
DISTRIBUTION AGREEMENT
----------------------
This Agreement is entered into as of ___________________, 1996 by and between:
PHILIPS _________________, a ______________ corporation with offices at
_____________________, hereinafter referred to as "Distributor";
and
PHILIPS ELECTRON OPTICS B.V., a Netherlands corporation, having its office
in _____________, _______________, hereinafter referred to as "PEO",
WHEREAS FEI Company ("FEI") and Philips Industrial Electronics
International B.V. have entered into an agreement for the transfer of such
number of newly issued shares of FEI as will constitute, when issued, 55%
of the stock of FEI in exchange for 100% of the stock of each of Philips
Electron Optics International B.V. and Philips Electron Optics, Inc.
(referred to as the "Combination Agreement");
WHEREAS, in connection with said transfer, Distributor is willing and able
to distribute or intermediate to enable PEO to distribute the PEO products
as defined hereinafter, all as of January 1, 1997; and
WHEREAS, PEO desires to appoint Distributor as its exclusive distributor
and sales intermediary subject to the conditions set out below,
NOW, THEREFORE, the parties hereto agree as follows:
1. PEO hereby appoints Distributor as its exclusive distributor and sales
intermediary for the products and territory defined hereinafter and
Distributor hereby accepts said appointment, and hereby agrees that
Distributor shall act exclusively for PEO in respect of the Products
to the exclusion of any products that compete therewith, all subject
to the terms and conditions set out below.
The territory in respect of which the Distributor will act as PEO's
exclusive distributor and, as the case may be, PEO's sales
intermediary is ___________________________ (hereinafter referred to
as the "Territory").
2. The products in respect of which Distributor will act are those
products and related materials and spare parts made available by PEO
for marketing in the Territory under the trademark "Philips", "FEI"
and/or possibly other trademarks, as specified in Annex I hereto
(hereinafter referred to as "the Products").
The product range of Annex I may be altered or extended by mutual
agreement between the parties, it being understood that PEO shall be
entitled to withdraw products in the event of the discontinuation of
their manufacture or their marketing in the Territory. Distributor
will be informed, at the latest, 6 months prior to the withdrawal of
any products. PEO and Distributor hereby agree that Distributor shall,
if requested, meet with FEI, for the purposes of discussing the terms
of a mutually agreeable distribution agreement for FEI's products.
3. Distributor will buy and sell the Products for its own account and its
own risk in accordance with the orders placed by Distributor and
accepted by PEO. PEO shall supply the Products to Distributor at
prices and conditions, determined in accordance with Annex II, it
being understood that PEO's General Conditions of Sale and Software
License as attached hereto (Annex III) will be applicable to such
supplies.
In lieu of article 11 or the General Conditions of Sale and Software
License, PEO shall supply the Products without any installation and
warranty obligation while Distributor shall provide reasonable
installation and warranty conditions to its customers in accordance
with customary practice in the Territory.
Such Products will be resold by Distributor at prices determined in
accordance with Annex II.
It is further understood that Distributor shall not incur any
expenditure on PEO's behalf or name without PEO's express written
authorization and that Distributor shall not make any payment or gift
or promise or offering to any officer of the government in the
Territory or any instrument thereof for purposes of influencing any
act or decision by such officer or by any governmental department or
instrument thereof.
PEO will provide Distributor's purchase orders for products similar
priority as orders for products to be supplied to entities belonging
to the PEO business.
4. In addition to the business done as described under 3, above,
Distributor shall act as independent intermediary between PEO and
potential customers in the Territory for the direct supply of the
Products by PEO to such customers on the terms and conditions as
agreed between PEO and the customer. Unless agreed otherwise in
writing, PEO's General Conditions of Sale and Software License as
attached hereto (Annex III) will be applicable to such direct
supplies.
-2-
It is further agreed that Distributor shall, if so requested by PEO,
also take over the installation and warranty obligations of Products
that have been sold without the mediation of the Distributor but that
are destined for use in the Territory.
For such direct supplies by PEO, Distributor will be entitled to a
commission calculated in accordance with Annex II hereto. Any such
commission will only become due and payable pro rata, as and when PEO
shall receive irrevocable payment(s) from the customer of the invoiced
value of the relevant Products.
Distributor's commission shall be deemed to cover all expenses he may
incur and any commitments he may enter into. If a customer's order is
not accepted by PEO, or no contract is concluded or comes into force
between PEO and such customer, for whatever reason, Distributor shall
have no right to reimbursement of any expenses incurred by it nor to
any remuneration whatsoever in connection with such order. PEO shall
not be bound to sign any contract with any customer if the terms and
conditions of such contract are not satisfactory to PEO.
5. No order for Products will be deemed accepted unless duly confirmed by
PEO in writing. Distributor shall not enter into any contract or
commitments in the name of or on behalf of PEO or otherwise bind PEO
in any respect.
6. Distributor will have available adequate service and installation
facilities for the Products sold in the Territory and, to that end, at
Distributor's reasonable discretion, Distributor will maintain an
adequate stock of service and replacement parts, as well as a proper
and efficient service organization staffed with capable technicians
that, except as is provided in this Agreement with respect to Product
know-how, will be trained at Distributor's own expense so as to be
able to give adequate service for the installation as well as for
ongoing service and maintenance of the Products sold in the Territory.
7. PEO will further undertake to:
a. supply to Distributor free of charge publicity materials, such as
leaflets in such quantities as PEO may consider adequate;
b. cooperate with Distributor and give all reasonably necessary
information with respect to the Products;
c. provide necessary technical and sales training; and
d. assist Distributor in organizing meetings, symposia, exhibitions
and other commercial activities which shall generally be for
Distributor's account.
-3-
With respect to technical and sales training, the number of trainees,
timing, duration, language, costs and other details are to be
determined between the parties. Generally, the costs of tutoring, full
board and lodging shall be for the account of PEO, and all other costs
shall be for the account of the Distributor.
For initial training for the service staff for new Products, the
number of service staff, the time and exact place of training shall be
agreed upon between the parties. Generally, PEO shall bear all costs
for the service seminar, full board and lodging, if such costs do not
exceed PEO's standard rates. Distributor shall pay for the travel
costs and shall arrange for the necessary travel documents for said
service staff that are travelling abroad. In case of illness during
the training period, PEO will provide medical care, the costs of which
are to be reimbursed to PEO by Distributor.
If new Products are added to Annex I hereof that need on site
installation by a trained service engineer, and that are supplied to
the Territory for the first time, PEO shall provide, free of charge,
the necessary support during the installation of such Product in the
form of field training.
The number of staff eligible for sales training and the cost sharing
will depend, among other things, on changes in the Products, changes
in sales policy, achieved sales figures in the preceding year and
sales projections.
8. Distributor further agrees:
a. to actively promote the sale of the Products in the Territory to
the best of Distributor's ability in accordance with PEO's
directives including to sell the products only in accordance with
applicable U.S. export controls and regulations and in no way to
act against PEO's interests. To that end, Distributor will
maintain a proper and efficient organization staffed with capable
engineers.
b. not to actively promote and/or sell the Products outside or for
use outside the Territory and not to actively support sales by
third parties outside the Territory; however, if so requested by
PEO, the Distributor shall, against payment of the special fee as
set forth in Annex II, generally, be prepared to assist PEO in
commercial and/or technical matters outside the Territory. The
Philips guidelines for cross border sales and customer support
dated December 1, 1995, (nr. DT-21022) as set forth in Annex IV
shall apply.
c. to treat with utmost confidence during and after this Agreement
all knowledge obtained in connection with Distributor's relations
with PEO.
-4-
d. to send to PEO from time to time, but at least twice a year, full
information of Distributor's sales of the Products, as well as
regular market reports containing as many particulars as possible
with regard to the market situation in respect to the Products,
including but not limited to sales forecasts as follows:
(1) unit based order income forecasting;
(2) lost/gained order analysis; and
(3) installation feedback.
e. to keep a list of services performed ("Service Reports") on the
Products during and after the warranty term. To this end, upon
request, these Service Reports and possible suggestions
concerning improvement of the quality of the service shall be
sent to PEO.
f. to enable PEO to visit Distributor's service workshop and to give
PEO all relevant information concerning the service with the aim
to contribute to the improvement of the service activities.
9. Distributor shall immediately after receipt of the Products delivered
by PEO, install and test the Products at each customer's site in
accordance with the Specifications and any special written
Specifications that may have been mutually agreed upon by the parties.
Within thirty (30) days after the date of invoice, Distributor shall
inform PEO in writing of the results of such test.
Distributor will provide PEO with all reports of Product failures made
known to Distributor by its customers who purchased any of the
Products.
10. PEO warrants that each Product delivered under this Agreement, upon
delivery and up to the date of the acceptance test, shall conform to
PEO's written specifications for such Products (including any special
additional specifications mutually agreed upon by the parties) and
shall be free from defects in materials or workmanship under normal
use and service.
If the result of the acceptance test is negative, PEO will act in the
following way:
a. Any Product or part found to be defective will be repaired or
replaced without charge for service or materials if Distributor
returns the unit or part, freight prepaid, to the factory or
service centre designated by PEO.
b. PEO will not be required to ship replacement units until it has
confirmed through its examination that the unit is in fact
defective or not conforming, but
-5-
such determination is subject to good faith negotiation. A
handling charge will be billed to Distributor for any items which
it returns under this warranty found by PEO to be functioning
normally or out of warranty. PEO will reimburse Distributor for
freight charges prepaid by it on any device which PEO finds to be
defective, and it shall also pay freight costs for any
replacement units shipped to Distributor under this warranty. By
mutual agreement however, PEO may perform warranty service at
customer sites.
c. This warranty shall not apply to any Product or part which PEO
determines:
(1) has failed as a result of a modification not introduced or
approved in writing by PEO.
(2) has failed as a result of damage after PEO's delivery to
Distributor due to shipment, handling, storage, operation or
maintenance in a manner which does not conform to PEO's
published instructions or specifications in effect at the
time of delivery.
(3) has failed as a result of the Product, unit or part having
been subjected by Distributor or another party to (i)
operating and/or environmental conditions in excess of the
maximum values stated in the applicable specifications; (ii)
damage, misuse or neglect; or (iii) improper installa tion,
repair or alteration. This warranty also excludes expendable
items such as filaments, lamps, fuses or other parts which
fail from normal usage.
d. All of the Distributor's expenses relating to epidemic failures
or other extraordinary product defects shall be reimbursed by
PEO.
11. Prior to the 1st of November of each calendar year the parties shall
mutually establish a sales quota for the next calendar year for the
Products based upon forecasts prepared by Distributor taking into
consideration reasonable expectations in the Territory for the year in
question.
12. This Agreement supersedes any oral and/or written agreements between
the parties that may exist with respect to the subject matter hereof.
13. The effective date of this Agreement shall be January 1, 1997. The
initial term of this Agreement shall be the period from the effective
date to the third anniversary thereof and the term shall automatically
be extended year to year for one year periods, unless Distributor
gives notice at least 180 days prior to the end of the initial three
year period or any such one year period that it is terminating this
Agreement or PEO gives 180 days notice of termination at any time
after the date hereof.
-6-
14. In the event that this Agreement is terminated by PEO pursuant to
Paragraph 13 above and provided Distributor is not in material breach
of this Agreement, PEO shall acquire the part of Distributor's
business that is principally used in connection with the distribution
of PEO's Products, including, without limitation, the total installed
capacity for sales and service of the Products, at a price to be
agreed upon reflecting the fair market value of the business, and PEO
shall either (A) provide continuing employment in comparable positions
for all of Distributor's employees who, prior to termination of this
Agreement, were more than 50% of their business time engaged in the
sale and or service of the Products or (B) compensate Distributor for
all costs and expenses, including any payments required to be made
upon termination of any such employee's employment, incurred in
connection with either the termination of such employees employment by
Distributor or the transfer of such employees to comparable positions
in Distributor or an affiliate of Distributor. In the event PEO
decides not to provide continuing employment for all of such
employees, Distributor agrees to use reasonable efforts to provide for
the transfer of such employees to comparable positions in Distributor
or an affiliate of Distributor in an effort to mitigate any costs and
expenses to be paid by PEO pursuant to the foregoing sentence.
15. PEO and Distributor each agree that any claim or dispute between them
arising out of or in connection with this Agreement or any alleged
breach of this Agreement (a "Claim") shall be submitted promptly to an
executive of each of PEO and Distributor who shall have authority to
settle the Claim, and who shall meet in the first above mentioned
registered office of PEO, within 30 days of such submission to seek in
good faith an amicable settlement. In seeking an amicable settlement,
the Parties may consult with a neutral third party mediator if both
agree in writing. Unless the Parties agree to the contrary in writing,
any advice or decision of the mediator shall not be binding. Each
Party agrees any Claim not settled by the Parties within 60 days after
notice of the Claim is first given by either party to the other shall
be finally settled by arbitration conducted in the Netherlands under
the rules of arbitration of the Netherlands Arbitration Institute in
Rotterdam (the "Rules"), and judgment upon the award rendered by the
arbitrators may be entered in any court having jurisdiction over it.
The proceedings shall be conducted in the English language.
The Parties will continue to perform obligations required hereunder
pending the resolution of any dispute between the Parties. The Parties
will also continue to make payments which are due and payable pursuant
hereunder pending the resolution of any such dispute except regarding
performance of obligations specifically in dispute between the
Parties, but only to the extent such obligations are in dispute.
This Agreement shall be governed by the laws of The Netherlands with
the exclusion of the United Nations Convention on Contracts for the
International Sale of Goods and the United Nations Convention on
Statutory Limitation.
-7-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the date first above written.
PHILIPS NO PHILIPS ELECTRON OPTICS B.V.
By _______________________________ By ________________________________
Title ____________________________ Title _____________________________
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ANNEX I TO THE DISTRIBUTION AGREEMENT BETWEEN
PHILIPS ELECTRON OPTICS B.V. AND _________________
The Products
* Scanning Electron Microscopes
* Transmission Electron Microscopes
* Scanning Transmission Electron Microscopes
* Energy Dispersive X-Ray Spectrometers for column instruments under the
EDAX brandname.
Including:
- the related Software packages
- the related Accessories
All as and as long as marketed by Philips Electron Optics B.V.
I-1
ANNEX II TO THE DISTRIBUTION AGREEMENT BETWEEN
PHILIPS ELECTRON OPTICS B.V. AND __________________
1. Transfer Prices
Transfer prices from PEO to Distributor will be based on the following
principles:
a) Net market prices minus concept. This will be based on yearly to
be agreed upon sales organization cost and 5% profit for
Distributor (5% profit on total of sales plus service turnover).
b) Based on external circumstances like local market prices and
currencies developments transfer prices will be agreed two times
a year (per January 1st and July 1st).
c) Payment conditions within 60 days after invoice date.
2. Intermediary sales commission:
The commission to be paid shall be calculated over the net FCA
Ex-Works value of each transaction which will be fixed from case to
case by mutual agreement thereby taking into consideration the nature
and extent of Distributor's assistance and intermediary as well as the
competitive situation in question.
3. Remuneration for activities outside the Territory:
For all activities outside the Territory performed by Distributor on
request of PEO, PEO shall pay Distributor NLG 1000.- per day
(traveling days and working days) plus travel and lodging expenses as
justified by notes.
II-1
ANNEX III TO THE DISTRIBUTION AGREEMENT BETWEEN
PHILIPS ELECTRON OPTICS B.V. AND __________________
General Terms and Conditions of Sale and Software License
III-1
ANNEX IV TO THE DISTRIBUTION AGREEMENT BETWEEN
PHILIPS ELECTRON OPTICS B.V. AND ____________________
Guidelines Cross Border Sales
IV-1
Annex 5.13(d)
Form of Service Agreement
FORM OF
SERVICES AGREEMENT
------------------
This Agreement is entered into as of ___________________, 1996 by and
between the following entities (each a "Party" or collectively, the
"Parties"): PHILIPS __________________, a _______________ corporation with
offices at __________________, hereinafter referred to as "PHILIPS NO";
and
PHILIPS ELECTRON OPTICS ____, a __________ corporation, having its office
in _____________, _______________, hereinafter referred to as "PEO",
WHEREAS FEI Company ("FEI") and Philips Industrial Electronics
International B.V. ("PIE") have entered into a Combination Agreement dated
__________, 1996 (the "Combination Agreement") for the transfer of such
number of newly issued shares of FEI as will constitute, when issued, 55%
of the stock of FEI in exchange for 100% of the stock of each of Philips
Electron Optics International B.V. and Philips Electron Optics, Inc.;
WHEREAS, the PEO Group (as defined in the Combination Agreement) will
become wholly owned by FEI but will continue, so long as PIE holds a
controlling interest in FEI, as a PIE entity in close cooperation with PIE
and its affiliates;
WHEREAS, under the Combination Agreement, PIE has agreed to provide, or
cause its affiliates to provide, certain services that will be essential to
the continuing operations of the PEO Group; and
WHEREAS, PHILIPS NO is willing to provide or cause others to provide
certain services to assist PEO in the conduct of its business and
operations as is PEO willing, if applicable, to provide certain services to
PHILIPS NO; and
WHEREAS, the Parties have agreed separately to continue the (sub-)lease of
the facility used by PEO as defined hereinafter;
NOW, THEREFORE, the parties hereto agree as follows:
1
Article 1
Definitions
-----------
1.01 "Services" means the services, listed in Appendix A hereto (as
amended from time to time in accordance with Section 2.01 below),
to be provided by PHILIPS NO to PEO, and the services, listed in
Appendix B (as amended from time to time in accordance with Section
2.01 below), to be provided by PEO to PHILIPS NO.
1.02 "Lease Agreement" shall mean the (sub-)lease agreement with respect
to the facilities at __________, where the PEO business is
operated, as the Lease Agreement is entered into by the Parties on
this date.
Article 2
Services, price and payment
---------------------------
2.01 The Parties agree to render and take the Services as provided for
herein. The Services and prices, rates and fees to be paid for such
Services as well as their validity term and service provider are
set forth in Appendices A and B. Appendix A and Appendix B may be
amended from time to time (a) upon the mutual written agreement of
the Parties to add one or more services to either or both; or (b)
by either Party upon written notice to the other to delete one or
more services from either or both, subject to the notice period
requirement specified in Appendix A or Appendix B, as the case may
be, applicable to the Service to be terminated, except that no such
termination shall be effective before December 31, 1998 unless the
related Service is dependent upon, and unique to, the facility
covered by the Lease Agreement, in which case the provision of such
Service shall terminate simultaneously with the termination of the
Lease Agreement.
2.02 With respect to any amounts identified in Appendices A or B as
estimated, this charge is a reasonable estimate of the costs of the
Services which would be charged to PEO, based upon PHILIPS NO 1997
budgeted expenses for such services and the assumptions relating to
sales volume contained therein.
The parties agree that the charges for Services under this
Agreement shall be arm's-length charges. Unless a comparable
service is provided by the Party rendering a particular Service to
an entity unrelated to either Party, or unless the provision of
Services under this Agreement is a principal activity of either
Party, an arm's-length charge shall be determined based on the
costs or deductions, including indirect costs or deductions (but
not including interest expenses of the service provider, costs of
issuance of stock or expenses of compliance with governmental
regulations not directly related to the service in question)
incurred with respect to such Services by the Party rendering such
Services, allocated consistently with historic budgeting practices
of the Philips group, taking into account all relevant factors
including total expenses, asset size, sales, and payroll, of the
beneficiary
2
or beneficiaries of each activity, and the space utilized and time
spent in providing the Service.
Notwithstanding any provision of the foregoing paragraph to the
contrary, in those instances where the amount for a Service is
based on a rate per activity, an hourly rate or the like, rather
than a fixed amount, the rates for 1997 and 1998 shall not in any
event exceed the actual 1996 rate for such Service, except to
reflect changes due to inflation or significant changes in
circumstances.
2.03 Subject to the provisions of Article 4.02, all Services shall be
provided at quality levels not lower than the quality levels of the
Services supplied during the year 1996. All Services shall be
provided in a timely manner.
2.04 PHILIPS NO shall charge PEO for Services monthly, no later than the
end of the month following the month during which such Services
were provided, unless specified otherwise in Appendix A. PEO shall
pay invoices within thirty days of receipt thereof.
2.05 PEO shall charge PHILIPS NO for Services monthly, no later than the
end of the month following the month during which such Services
were provided, unless specified otherwise in Appendix B. PHILIPS NO
shall pay invoices within thirty days of receipt thereof.
2.06 In the event of extension of any Service beyond the initial Term of
this Agreement, as may be subject to Article 4.01, the prices,
rates and fees of the current year shall be deemed applicable for
the calendar year to follow unless prior to October 1st of any
calendar year one Party notifies the other Party in writing of any
price, rate or fee changes following which Parties shall in good
faith negotiate new prices, rates or fees (whichever is
applicable).
Article 3
Secrecy
-------
3.01 Any information disclosed hereunder by a Party hereto and
identified herein or at the time of disclosure in writing to be of
a confidential nature, shall be presumed to be confidential and
proprietary to the disclosing party ("Discloser").
3.02 The receiving party ("Recipient") shall use any confidential
information disclosed or provided by Discloser, whether orally, or
in writing, by demonstration, in models or otherwise, only as
permitted under this Agreement and shall maintain such information
in confidence and not disclose or divulge such information to any
third party or to any of its own personnel not having a need to
know, for a period of three (3) years from the receipt thereof,
provided that Recipient shall not be obliged to maintain in
confidence that information which:
3
(a) Discloser makes freely available to third parties without imposing
conditions of confidentiality;
(b) was already in Recipient's possession, provided that such
information is not known by Recipient to be subject to another
confidentiality agreement with or other obligation of secrecy to
Discloser;
(c) becomes generally available to the public other than as a result of
a disclosure by Recipient or its directors, officer, employees,
agents or advisors;
(d) becomes available to Recipient on a non-confidential basis from a
source other than Discloser or its advisors, provided that such
source is not known by Recipient to be bound by a confidentiality
agreement with or other obligation of secrecy to Discloser; or
(e) as may be required in connection with compliance with any
applicable law, regulation or order.
3.03 Recipient shall ensure that suitable undertakings of secrecy are
imposed, with respect to such information provided to it by
Discloser, upon its present employees, as well as upon its future
employees.
3.04 The Parties acknowledge that FEI may be required to disclose the
material terms of this agreement and similar agreements entered
into by FEI or any of its subsidiaries pursuant to the requirements
of U.S. securities laws.
Article 4
Term and termination
--------------------
4.01 This Agreement shall become effective on the date first above
written and shall remain in effect until December 31, 1998 unless
terminated sooner in accordance with Sections 4.02 and 4.03 below
or later as referred to in Section 4.05. Prior to October 1, 1998
Parties shall in good faith negotiate the extension of this
Agreement and Services then specified.
4.02 Notwithstanding the provision of Section 4.01 hereof, unless
otherwise provided in Appendix A or B whichever is applicable, a
Party may prior to December 1st, 1998 terminate the provision of
particular Services by providing the other party three (3) months'
prior written notice.
4.03 Notwithstanding the provisions of Sections 4.01 and 4.02 hereof,
this Agreement may be terminated (also prior to December 31, 1998),
as follows:
4
(a) by either Party hereto with immediate effect upon written or
telegraphic notice to the other Party in the event of the other
Party being in material breach of or in material default of this
Agreement, and such breach or default not being remedied within
thirty (30) days after receipt of a written notice from the first
Party specifying the nature of the breach or default.
(b) by either Party forthwith upon written or telegraphic notice to the
other Party in the event the other Party should become insolvent or
make an assignment for the benefit of its creditors or voluntarily
file for or be placed in voluntary bankruptcy or take any other
action which would indicate insolvency on its part.
4.04 Article 3 shall survive the termination of this Agreement as will
any particular Service referred in Appendix A or B with a validity
term exceeding beyond the termination date of this Agreement.
Article 5
Administrative and Accounting Services
--------------------------------------
5.01 The administrative and accounting services set out in Appendix A
will be rendered according to the instructions and requirements of
FEI, applicable principles of accounting and applicable law.
PHILIPS NO will ensure that the way the books are kept meets all
requirements under applicable tax regulations and other
governmental regulations.
5.02 With respect to these administrative and accounting services
PHILIPS NO shall maintain in a (separate) accounting system such
records of the PEO business that it will be possible for PEO at any
time to have all the information and data it needs at its disposal
within a reasonable period of time.
5.03 At PEO's request copies will be made and information and data
relating to PEO business will be provided on hard copy, in case
such information is needed by PEO or its advisors.
5.04 At the termination of this Agreement all administrative data of the
PEO business shall be provided to PEO on hard copy and on such
other medium as may be reasonably made available.
5.05 Each Party rendering Services under this Agreement shall keep
adequate books and records to permit verification of costs or
deductions incurred in rendering such Services and the basis of the
charges for such Services under this Agreement, and shall make such
information available at the request of taxing authorities of any
jurisdiction.
5
Article 6
Force Majeure
-------------
6.01 The expression "Force Majeure" shall mean and include a happening
or event beyond a Party's reasonable control in consequence of
which it cannot execute or cannot reasonably be required to execute
its obligations. Such circumstances include but are not limited to:
acts of God, war, civil war, insurrection, fire, flood, strikes,
lock-outs, epidemics, governmental law or regulations and freight
embargoes.
6.02 The party affected by Force Majeure shall inform the other Party
promptly in writing specifying the Force Majeure as well as its
expected duration. The Party so affected shall be excused from
performance hereunder to the extent of the prevention, but shall
use its best efforts to limit the period of prevention or delay as
much as possible.
Article 7
Dispute Resolution and Law
--------------------------
7.01 PEO and PHILIPS NO each agree that any claim or dispute between
them arising out of or in connection with this Agreement or any
alleged breach of this Agreement (a "Claim") shall be submitted
promptly to an executive of each of PEO and PHILIPS NO who shall
have authority to settle the Claim, and who shall meet in the first
above mentioned office of PEO, within 30 days of such submission to
seek in good faith an amicable settlement. In seeking an amicable
settlement, the Parties may consult with a neutral third Party
mediator if both agree in writing. Unless the Parties agree to the
contrary in writing, any advice or decision of the mediator shall
not be binding.
7.02 Each Party agrees any Claim not settled by the Parties within 60
days after notice of the Claim is first given by either Party to
the other shall be finally settled by arbitration conducted in the
Netherlands under the rules of arbitration of the Netherlands
Arbitration Institute in Rotterdam (the "Rules"), and judgment upon
the award rendered by the arbitrators may be entered in any court
having jurisdiction over such arbitration. The proceedings shall be
conducted in the English language.
7.03 The Parties will continue to provide all Services hereunder pending
the resolution of any dispute between the parties. The Parties will
also continue to make payment for all Services provided hereunder
pending the resolution of any such dispute except for those
Services specifically in dispute between the parties, but only to
the extent such Services are in dispute.
7.04 This Agreement shall be governed by the laws of the jurisdiction
where PEO and PHILIPS NO are organized.
6
7.05 The dispute resolution procedures provided for herein shall be
mutually exclusive of the dispute resolution procedures set forth
in Section 9.10(b) of the Combination Agreement, with the effect
that any dispute within the scope of both this paragraph and such
Section 9.10(b) arising out of the same facts and circumstances
shall be resolved under Section 9.10(b).
Article 8
Miscellaneous
-------------
8.01 This Agreement sets forth the entire agreement and understanding
between the parties as to the subject matter hereof and merges all
prior discussions and negotiations between them. No modification or
amendment of this Agreement shall be valid or binding unless made
in writing and signed on behalf of the Parties by their duly
authorized officers or representatives.
8.02 Neither this Agreement nor any right or obligation hereunder is
assignable in whole or in part by any Party without the prior
written consent of the other Party.
8.03 If any one or more of the provisions contained in this Agreement or
any document executed in connection herewith shall be invalid,
illegal, or unenforceable in any respect under any applicable law,
the validity, legality, and enforceability of the remaining
provisions contained herein shall not in any way be affected or
impaired; provided, that in such case the parties oblige themselves
to use their best efforts to achieve the purpose of the invalid
provision by a new legally valid stipulation.
8.04 Except as otherwise set forth herein, each Party shall pay its own
legal, accounting and other expenses incident to this Agreement and
the consummation of the transactions contemplated thereby.
8.05 Neither Party shall be liable to the other Party for any special,
indirect or consequential damages howsoever caused.
8.06 This Agreement may be executed simultaneously in any number of
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
8.07 The Parties hereto expressly agree that the provisions of this
Agreement shall be superseded by the provisions of any agreement
entered into or to be entered into by PHILIPS NO and PEO concerning
particular Services.
8.08 The provisions of this Agreement shall enure to the benefit of and
be binding upon the successors and assigns of each of the Parties.
7
Article 9
Notices
-------
Any notice or other communication to a Party required or permitted
hereunder shall be made in writing and shall be sent by registered mail,
return receipt requested, addressed to the address of such Party set forth
below or to such other address as such Party shall have communicated to the
other.
If to PHILIPS NO to:
If to PEO to:
Or such other address as may be communicated subsequently in writing by the
relevant Party to the other Party.
8
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
PHILIPS PHILIPS ELECTRON OPTICS
By _______________________________ By ________________________________
Title ____________________________ Title _____________________________
9
Annex 6.3(e)
Form of Employment Agreement
FORM OF EMPLOYMENT AGREEMENT
----------------------------
AGREEMENT, effective as of [ ], 1996, by and between FEI Company,
an Oregon corporation ("Employer"), and ______________, an individual
("Employee").
IN CONSIDERATION OF the mutual covenants herein contained, and
other good and valuable consideration, the parties hereto agree as follows:
1. Employment.
Employer hereby agrees to employ Employee, and Employee agrees to
serve, as an [executive] [officer] of Employer, during the Period of
Employment as defined in Section 2.
2. Period of Employment.
(a) Duration Under Normal Circumstances.
The "Period of Employment" shall be the period commencing on the
date hereof and ending on [ ], 199_ .
(b) Termination Events.
Notwithstanding anything in this Section 2 to the contrary, the
Period of Employment shall terminate upon the earliest to occur of the
following:
(i) the retirement of Employee under the terms of Employer's
401(k) plan; and
(ii) the Disability (as defined in Section 8) of Employee and the
expiration of the 30-day period referred to in the definition of
Disability without the actions referred to therein being taken by
Employee;
(iii) the death of Employee;
(iv) the 90th day after service of notice by Employee to
Employer, in accordance with the provisions of Section 11, that
Employee elects to terminate the
-1-
Period of Employment (with or without Good Reason) (a "voluntary
termination by Employee"); and
(v) the 90th day after service of notice by Employer to Employee,
in accordance with the provisions of Section 11, that Employer elects
to terminate the Period of Employment (a "voluntary termination by
Employer"), other than a termination by Employer with Cause; and
(vi) promptly upon service of notice by Employer to Employee, in
accordance with the provisions of Section 11, that Employer elects to
terminate the Period of Employment with Cause.
3. Duties During the Period of Employment.
Employee shall devote his full business time, attention and best
efforts to the affairs of Employer and its subsidiaries during the Period
of Employment and shall have such duties, responsibilities and authority as
shall be assigned to him from time to time by the Chief Executive officer
or the Board of Directors of Employer, which duties, responsibilities and
authority shall be commensurate in all material respects with those held,
exercised and assigned as of the date of this Agreement. It is expressly
acknowledged and agreed that Employee may be requested to assume the
position of president or senior officer of any subsidiary of Employer or
any position of corporate officer of Employer, provided that the
responsibilities and authority assigned to such position are commensurate
in all material respects with those assigned to, or held and exercised by,
Employee as of the date of this Agreement, and provided further that, in
the event of a transfer of Employee to the employ of a subsidiary of
Employer, such subsidiary expressly assumes all of Employer's obligations
under this Agreement, mutatis mutandis. Employee may engage in other
activities, such as activities involving charitable, educational, religious
and similar types of organizations (all of which are deemed to benefit
Employer), speaking engagements, and similar type activities, and may serve
on the board of directors of other corporations approved by the Chief
Executive Officer of Employer, in each case to the extent that such other
activities do not materially detract from or limit the performance of his
duties under this Agreement, or inhibit or conflict in any material way
with the business of Employer and its subsidiaries.
-2-
4. Location of Employment.
During the Period of Employment, Employer may only require
Employee to be based in or within 50 miles of Hillsboro, Oregon, except
that Employer may require Employee to be based more than 50 miles from
Hillsboro, Oregon in connection with the relocation of the executive office
of Employer in which Employee is employed; provided, however, that Employer
shall pay to, or reimburse Employee for, on an after-tax basis, all
reasonable expenses of relocation of Employee and Employee's immediate
family living with Employee at the time of such relocation, incurred and
substantiated by Employee in connection with any such relocation.
5. Current Cash Compensation.
Employer will pay to Employee during the Period of Employment a
base annual salary of not less than $__________ (or such greater amount as
may have been approved by the Board of Directors in its sole discretion),
payable in substantially equal monthly installments during each calendar
year, or portion thereof, of the Period of Employment; provided, however,
that Employer agrees to review such base annual salary annually and in
light of such review may, in the sole discretion of the Board of Directors
of Employer, increase such salary, taking into account such factors as it
deems pertinent.
6. Employee Benefits.
(a) Vacation and Sick Leave.
Employee shall be entitled to [insert 2, 3 or 4 based on current
FEI entitlement] weeks paid annual vacation, all paid Employer holidays and
reasonable sick leave.
(b) Regular Reimbursed Business Expenses.
Employer shall reimburse Employee for all expenses and
disbursements reasonably incurred at Employer's request or consistent with
Employer's policies, and substantiated by Employee, in the performance of
his duties during the Period of Employment.
(c) Employee Benefit Plans or Arrangements.
-3-
In addition to the cash compensation provided for in Section 5
hereof, Employee, subject to meeting eligibility requirements and to the
provisions of this Agreement, shall be entitled to participate without
discrimination or duplication in all employee (including executive) benefit
plans of Employer, as presently in effect or as they may be modified or
added to by Employer from time to time, to the extent such plans are
available to other similarly situated executives or employees of Employer,
including, without limitation, plans providing retirement benefits, medical
and other health insurance, life insurance, disability insurance, and
accidental death or dismemberment insurance.
(d) Employer's Incentive Compensation Plans.
In addition to the cash compensation provided for in Section 5
hereof and the employee benefits of Employer provided for in paragraph (c)
of this Section 6, Employee, subject to meeting eligibility requirements
and to the provisions of this Agreement, shall be entitled to participate
in all incentive compensation plans of Employer, as presently in effect or
as they may be modified or added to by Employer from time to time, to the
extent such plans are available to similarly situated executives or
employees of Employer, including, without limitation, the 1995 Stock
Incentive Plan and the 1995 Supplemental Stock Incentive Plan (as the same
may be modified, replaced, or added to by Employer from time to time), and
other performance share plans, management incentive plans, deferred
compensation plans, and supplemental retirement plans.
7. Termination.
(a) Death, or Retirement or Disability.
If the Period of Employment terminates pursuant to paragraph (b)
of Section 2 as a result of (1) the death of Employee, (2) the retirement
of Employee under the terms of Employer's 401(k) plan or (3) the Disability
of the Employee, Employee (or Employee's estate) will be entitled to
receive only:
(i) the base salary otherwise payable under Section 5 through the
end of the month in which Employee's employment is terminated,
together with salary,
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compensation or benefits which have been earned or become payable as
of the date of termination but which have not yet been paid to
Employee;
(ii) such other awards or bonuses as the Board of Directors may
in its sole discretion determine;
(iii) during the 12-month period following the termination of
Employee's employment as a result of the death of Employee,
maintenance in effect for the continued benefit of Employee's
dependents of all insured and self-insured employee medical and dental
benefit plans in which Employee was participating immediately prior to
termination provided that such continued participation is possible
under the general terms and conditions of such plans (and any
applicable funding media) and Employee's dependents continue to pay an
amount equal to the Employee's regular contribution for such
participation; and
(iv) such other benefits, if any, as shall be determined to be
applicable in accordance with Employer's plans and practices as in
effect on the date of termination.
(b) Voluntary Termination by Employee without Good Reason.
If the Period of Employment terminates pursuant to paragraph (b)
of Section 2 as a result of a voluntary termination by Employee without
Good Reason, Employee will be entitled to receive only:
(i) the base salary otherwise payable under Section 5 through the
day on which Employee's employment is terminated, together with
salary, compensation or benefits which have been earned or become
payable as of the date of termination but which have not yet been paid
to Employee;
(ii) to the extent possible, the opportunity to convert group and
individual life and disability insurance policies of Employer then in
effect for Employee to individual policies of Employee upon the same
terms as similarly situated employees of Employer may apply for such
conversions; and
-5-
(iii) such other benefits, if any, as shall be determined to be
applicable in accordance with Employer's plans and practices in effect
on the date of termination.
(c) Voluntary Termination by Employee with Good Reason, or by
Employer without Cause.
If the Period of Employment terminates pursuant to paragraph (b)
of Section 2 as a result of a voluntary termination by Employee with Good
Reason (as hereinafter defined), or a voluntary termination by Employer
without Cause (as hereinafter defined), then Employee will be entitled to
receive:
(i) the base salary otherwise payable under Section 5 through the
end of the month in which Employee's employment is terminated,
together with salary, compensation or benefits which have been earned
or become payable as of the date of termination but which have not yet
been paid to the Employee;
(ii) a lump-sum severance payment in an amount equal to the
product of (A) the base annual salary at the rate in effect under
Section 5 on the date of termination, and (B) a multiplier equal to
x/52, where "x" equals the number of weeks remaining until the Final
Day of Period of Employment; provided that the payment made pursuant
to this paragraph (ii) shall be repaid by Employee in the event
Employee violates in any material respect the provisions of Section 9
hereof;
(iii) maintenance in effect for the continued benefit of Employee
and his spouse and his dependents for a period terminating on the
earlier of (A) the earlier of the Final Day of Period of Employment
and the date on which Employee retires under the terms of Employer's
401(k) plan, and (B) the commencement of equivalent benefits from a
new employer of:
(A) all insured and self-insured medical and dental benefit
plan in which Employee was participating immediately prior to
termination, provided that Employee's continued participation if
possible under the general terms and conditions of such plans
(and any applicable funding media) and Employee continues to pay
an amount equal to Employee's regular contribution for such
participation; and
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(B) the group and individual life and disability insurance
policies of Employer then in effect for Employee;
provided, however, that if Employer so elects, or if such continued
participation is not possible under the general terms and conditions
of such plans or under such policies, Employer shall, in lieu of the
foregoing, arrange to have issued for the benefit of Employee and
Employee's dependents individual policies of insurance providing
benefits substantially similar (on an after-tax basis) to those
described in this paragraph (iii), or, if such insurance is not
available at a reasonable cost to Employer, Employer shall otherwise
provide Employee and Employee's dependents equivalent benefits (on an
after-tax basis); provided further that, in no event shall Employee be
required to pay any premiums or other charges in an amount greater
than that which Employee would have paid in order to participate in
Employer's plans and policies.
(iv) for a period terminating on the earlier of the Final Day of
Period of Employment and the date on which Employee reaches age 65,
Employer shall provide Employee with benefits equivalent to the
additional benefits Employee would have received under the employee
pension and retirement benefit plans maintained by the Employer and
supplemental or excess executive retirement plans, or executive plans
of deferred compensation whether or not qualified for federal income
tax purposes in which Employee was participating immediately prior to
termination and assuming an annual rate of Salary equal to the rate
applicable to the Employee immediately prior to termination is in
effect, as if Employee had received credit under such plans for
service with Employer during such period following Employee's
termination, with such benefits payable by Employer at the same times
and in the same manner as such benefits would have been received by
Employee under such plans.
(d) Termination by Employer with Cause.
If the Period of Employment terminates pursuant to paragraph (b)
of Section 2 as a result of a termination by Employer with Cause, Employee
will be entitled to receive only:
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(i) the base salary otherwise payable under Section 5 through the
day on which Employee's employment is terminated, together with
salary, compensation or benefits which have been earned or become
payable as of the date of termination but which have not yet been paid
to Employee; and
(ii) such other benefits, if any, as shall be determined to be
applicable under the circumstances in accordance with Employer's plans
and practices in effect on the date of termination.
(e) Date of Payment.
Except as otherwise provided herein, all cash payments and
lump-sum awards required to be made pursuant to the provisions of
paragraphs (a) through (e) of this Section 7 shall be made no later than
the thirtieth day following the date of Employee's termination.
(f) Exclusive Remedy.
Employee shall have no claim for damages or other remedies, at
law, in equity or otherwise, by reason of any breach of this Agreement by
Employer, or of termination of this Agreement by reason thereof, other than
as set forth in this Section 7.
(g) Release of Claims.
Employer shall have the right to require Employee to execute a
limited release with respect to claims that could be brought by Employee
hereunder as a condition to Employee's receipt of any payments pursuant to
Section 7(c) hereof.
8. Definitions.
For purposes of this Agreement, the following capitalized terms
shall have the meanings set forth below:
"Cause" shall mean (i) the willful engaging by Employee in
conduct which is not authorized by the Board of Directors of Employer or
within the normal course of Employee's business decisions and is known by
Employee to be materially detrimental to the best interests of Employer or
any of its subsidiaries, (ii) the willful engaging by Employee in conduct
which Employee knows is, or has substantial reason to believe to be,
illegal to the extent of a felony violation, or the equivalent seriousness
under laws other than those of the United States, and which has effects on
Employer or Employee materially injurious to
-8-
Employer, (iii) the engaging by Employee in any willful and conscious act
of serious dishonesty, in each case which the Board of Directors of
Employer reasonably determines affects adversely, or could in the future
affect adversely, the value, reliability or performance of Employee to
Employer in a material manner; (iv) the willful and continued failure by
Employee to perform substantially his duties to Employer under this
Agreement (including any sustained and unexcused absence of Employee from
the performance of his duties under this Agreement, which absence has not
been certified in writing as due to physical or mental illness in
accordance with the procedures set forth in this Section 8 under
"Disability"), after a written demand for substantial performance has been
delivered to Employee by the Board of Directors specifically identifying
the manner in which Employee has failed to substantially perform his duties
and after such Employee has had a reasonable opportunity to cease such
failure to perform, or (v) the sustained and unexcused absence of Employee
from the performance of his duties under this Agreement for a period of 180
days or more within any period of 365 consecutive days, regardless of the
reason for such absence, unless Employee demonstrates that such absence is
due to Disability. For purposes of this paragraph, no act, or failure to
act, on Employee's part shall be considered "willful" unless done, or
omitted to be done, in bad faith and without reasonable belief that such
action or omission was in, or not opposed to, the best interests of
Employer. Any act, or failure to act, based upon authority given pursuant
to a resolution duly adopted by the Board of Directors of Employer or based
upon the advice of counsel for Employer shall be conclusively presumed to
be done, or omitted to be done, in good faith and in the best interests of
Employer. Notwithstanding the foregoing, there shall not be deemed to be a
termination by Employer with Cause unless and until there shall have been
delivered to Employee a copy of a resolution duly adopted by the
affirmative vote of a majority of the entire membership of the Board of
Directors of Employer at a meeting of such Board held after reasonable
notice to Employee and at which Employee has an opportunity, together with
his counsel, to be heard before such Board, finding that, in the good faith
opinion of such Board, Employee was guilty of the conduct set forth above
and specifying the particulars thereof in detail.
"Disability" shall mean the absence of Employee from his duties
with Employer on a full-time basis for one hundred eighty (180) days within
any period of three hundred and sixty-five (365) consecutive days as a
result of Employee's incapacity due to physical or mental illness as
certified in writing by a physician selected by Employee and reasonably
acceptable to Employer (it being understood that such physician shall be
deemed to be reasonably acceptable to Employer if, within a period of
fifteen (15) days after Employee notifies Employer of the name of such
physician, Employer does not object to the use of such physician), unless
within thirty (30) days after written notice to Employee by Employer, in
accordance with the provisions of Section 12, that Employee's employment is
being terminated by reason of such absence, Employee shall have returned to
the full performance of Employee's duties.
"Final Day of Period of Employment" shall mean the final day of
the Period of Employment under Section 2(a) as in effect on the date of
termination.
-9-
Voluntary termination by Employee with "Good Reason" shall mean a
voluntary termination by Employee resulting from the Employer (i) reducing
Employee's base annual salary as in effect immediately prior to such
reduction or reducing in a material respect Employee's opportunity to earn
incentive compensation as provided in Section 6(d) of this Agreement; (ii)
effecting a change in the position of Employee which does not represent a
promotion from Employee's position provided for herein; (iii) assigning
Employee duties or responsibilities which are materially inconsistent with
Employee's position provided for herein; (iv) removing Employee from or
failing to reappoint or reelect Employee to such position, except in
connection with a termination as a result of death, Disability, voluntary
termination by Employee, retirement by Employee or termination by Employer
with Cause; or (v) otherwise materially breaching its obligations under
this Agreement, in each case after notice in writing from Employee to
Employer and a period of 30 days after such notice during which Employer
fails to correct such conduct; provided, however, that it is expressly
acknowledged and agreed that a transfer of Employee (a) to the position of
another corporate officer of Employer, or to any subsidiary of Employer in
the capacity of president or senior officer of such subsidiary or (b) from
the position of president or senior officer of any subsidiary of Employer
to a position of corporate officer of Employer (in each case as
contemplated by the second sentence of Section 3 of this Agreement) shall
not by itself constitute "Good Reason" within the meaning of clauses (ii),
(iii), (iv) or (v) of this paragraph, provided that, in the case of any
transfer to a subsidiary of Employer, such subsidiary expressly assumes all
of Employer's obligations under this Agreement, mutatis mutandis.
-10-
9. Non-Competition and Non-Disclosure; Employee Cooperation.
(a) Without the consent in writing of the Board of Directors of
Employer, upon termination of Employee's employment for any reason,
Employee will not for a period of two years thereafter, acting alone or in
conjunction with others, directly or indirectly (i) engage (either as
owner, partner, stockholder, employer, employee, director, consultant or
agent) in any business in which he has been directly engaged, or has
supervised as an executive, during the last two years prior to such
termination and which is directly in competition with a business conducted
by Employer or any of its subsidiaries; (ii) induce any customers of
Employer or any of its subsidiaries with whom Employee has had contacts or
relationships, directly or indirectly, during and within the scope of his
employment with Employer or any of its subsidiaries, to curtail or cancel
their business with such companies or any of them; (iii) solicit or canvas
business from any person who was a customer of Employer or any of its
subsidiaries at or during the two-year period immediately preceding
termination of Employee's employment; or (iv) induce, or attempt to
influence, any Employee of Employer or any of its subsidiaries to terminate
his employment; provided, however, that the limitation of subparagraph (i)
shall not apply if Employee's employment is terminated as a result of a
voluntary termination by Employee with Good Reason or a termination by
Employer without Cause. The provisions of subparagraphs (i), (ii), (iii)
and (iv) above are separate and distinct commitments independent of each of
the other subparagraphs. It is agreed that the ownership of not more than
1/2 of 1% of the equity securities of any company having securities listed
on an exchange or regularly traded in the over-the-counter market shall
not, of itself, be deemed inconsistent with clause (i) of this paragraph
(a).
(b) Employee shall not, at any time during the Period of
Employment or following Employee's termination of employment for any reason
whatsoever, disclose, use, transfer or sell, except in the course of
employment with Employer, any confidential or proprietary information of
Employer and its subsidiaries so long as such information has not otherwise
been publicly disclosed by Employer or is not otherwise in the public
domain, except as required by law or pursuant to legal process.
-11-
(c) Employee agrees to cooperate with Employer, by making himself
available to testify on behalf of Employer or any subsidiary or affiliate
of Employer, in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, and to assist Employer, or any subsidiary
or affiliate of Employer in any such action, suit or proceeding, by
providing information and meeting and consulting with the Board of
Directors of Employer or its representatives or counsel, or representatives
or counsel of Employer, or any subsidiary or affiliate of Employer, as
requested by such Board of Directors, representatives or counsel. Employer
agrees to reimburse the Employee, on an after-tax basis, for all expenses
actually incurred in connection with his provision of testimony or
assistance.
10. Governing Law; Modification and Severability; Disputes;
Arbitration.
(a) This Agreement is governed by and is to be construed and
enforced in accordance with the laws of the State of New York.
(b) If any portion of this Agreement is at any time deemed to be
in conflict with any applicable statute, rule, regulation, ordinance or
principle of law, such portion shall be deemed to be modified or altered to
the extent necessary to conform thereto or, if that is not possible, to be
omitted from this Agreement; and the invalidity of any such portion shall
not affect the force, effect and validity of the remaining portion hereof.
(c) Except as provided in this Section 10(c), any controversy or
claim arising out of or relating to this Agreement, or the breach thereof,
shall be settled by arbitration administered by the American Arbitration
Association in accordance with its Commercial Arbitration Rules, and
judgment on the award rendered by the arbitrators may be entered in any
court having jurisdiction thereof.
The arbitrators shall have the authority to award such remedies
or relief that a court of the State of New York could order or grant in an
action governed by New York law, including, without limitation, specific
performance of any obligation created under this Agreement, the issuance of
an injunction, or the imposition of sanctions for abuse or frustration of
the arbitration process, but shall not be empowered to award punitive
damages. The arbitration proceedings shall be conducted in Portland, Oregon
or, in the event that the
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executive office of Employer has been relocated, in such other major city
as is most proximate to such relocated executive office.
Notwithstanding the foregoing, any party may bring and pursue an
action in any Federal or State court in the city where the arbitration
proceedings shall be conducted pursuant to the foregoing sentence or in New
York, New York seeking provisional relief, including a temporary
restraining order or preliminary injunction, pending an arbitration
proceeding. Any provisional relief obtained shall be discontinued once the
arbitrators have assumed jurisdiction and ordered such discontinuance.
(d) Any amounts that have become payable pursuant to the terms of
this Agreement or any judgment by a court of law or a decision by
arbitrators pursuant to this Section 10 but which are not timely paid shall
bear interest at the prime rate in effect at the time such payment first
becomes payable, as quoted by the Xxxxxx Guaranty Trust Company of New
York.
11. Notices.
All notices or other communications hereunder shall be deemed to
have been duly given and made if in writing and if served by personal
delivery upon the party for whom it is intended, if delivered by registered
or certified mail, return receipt requested, or by a national courier
service, or if sent by telecopier, provided that the telecopy is promptly
confirmed by telephone confirmation thereof, to the person at the address
set forth below, or such other address as may be designated in writing
hereafter, in the same manner, by such person:
To Employee:
-----------------------------
-----------------------------
-----------------------------
-----------------------------
Telephone:
Telecopy:
-----------------------------
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To Employer:
FEI Company
0000 X.X. Xxxxxxxxx Xxxxxxx
Xxxxxxxxx, Xxxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: Chief Executive Officer
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With a copy to:
[STOEL RIVES LLP
000 X.X. Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxx, Xxxxxx 00000-0000
Telephone: 000-000-0000
Telecopy: 000-000-0000
Attn: Xxxxxxx X. Xxxxxx]
12. Withholding.
All payments to be made to Employee under this Agreement will be
subject to required withholding taxes and other deductions.
13. Successors; Binding Agreement.
(a) Any Successor (as hereinafter defined) to Employer shall be
bound by this Agreement. Employer will seek to have any Successor assent to
the fulfillment by Employer of its obligations under this Agreement at
Employee's request. Failure of Employer to obtain such assent within thirty
(30) days after such request shall constitute Good Reason for termination
by Employee of Employee's employment and, upon a voluntary termination by
Employee pursuant to Section 2, shall entitle Employee to the benefits
provided in Section 7(c). For purposes of this Agreement, "Successor" shall
mean any person other than Philips Electronics N.V. and its affiliates that
succeeds to, or has the practical ability to control (either immediately or
with the passage of time), Employer's business directly, by merger or
consolidation, or indirectly, by purchase of the Employer's voting
securities, all or substantially all of its assets or otherwise.
(b) For purposes of this Agreement, "Employer" shall include any
corporation or other entity which is the surviving or continuing entity in
respect of any amalgamation, merger, consolidation, dissolution, asset
acquisition or other form of business combination.
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14. Miscellaneous.
(a) Except to the extent that the terms of this Agreement confer
benefits that are more favorable to Employee than are available under any
other employee benefit or executive compensation plan of Employer in which
Employee is a participant, Employee's rights under any such employee
(including executive) benefit plan or executive compensation plan shall be
determined in accordance with the terms of such plan (as it may be modified
or added to by Employer from time to time).
(b) This Agreement constitutes the entire understanding between
Employer and Employee relating to employment of Employee by Employer and
its subsidiaries and supersedes and cancels all prior agreements and
understandings with respect to the subject matter of this Agreement and
such other written agreements. Employee shall not be entitled to any
payment or benefit under this Agreement which duplicates a payment or
benefit received or receivable by Employee under such prior agreements and
understandings.
(c) This Agreement may be amended but only by a subsequent
written agreement of the parties.
(d) This Agreement shall be binding upon and shall inure to the
benefit of Employee, his heirs, executors, administrators and
beneficiaries, and shall be binding upon and inure to the benefit of
Employer and its successors and assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the year and day first above written.
FEI COMPANY
By: ___________________________________
(Authorized Officer)
________________________________________
[Name of Employee]
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