<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 23, 1999
REGISTRATION NO. 333-
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-1
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
METRON TECHNOLOGY N.V.
(Exact name of registrant as specified in its charter)
--------------------------
<TABLE>
<S> <C> <C>
THE NETHERLANDS 3559 98-0180010
(State or other jurisdiction (Primary Standard Industrial (I.R.S. Employer
of Classification Code Number) Identification
incorporation or organization) No.)
</TABLE>
------------------------
1350 OLD BAYSHORE HIGHWAY
SUITE 360
BURLINGAME, CALIFORNIA 94010
(650) 373-1133
(Address, including zip code, and telephone number,
including area code, of registrant's principal executive offices)
--------------------------
EDWARD D. SEGAL
PRESIDENT AND CHIEF EXECUTIVE OFFICER
METRON TECHNOLOGY N.V.
1350 OLD BAYSHORE HIGHWAY
SUITE 360
BURLINGAME, CALIFORNIA 94010
(650) 373-1133
(Name, address, including zip code, and telephone number, including area code,
of agent for service)
--------------------------
COPIES TO:
ALAN C. MENDELSON, ESQ. CHRISTOPHER L. KAUFMAN, ESQ.
SUZANNE SAWOCHKA HOOPER, ESQ. WILLIAM DAVISSON, ESQ.
COOLEY GODWARD LLP LATHAM & WATKINS
FIVE PALO ALTO SQUARE 135 COMMONWEALTH DRIVE
3000 EL CAMINO REAL MENLO PARK, CA 94025
PALO ALTO, CA 94306-2155 (650) 328-4600
(650) 843-5000
------------------------
APPROXIMATE DATE OF PROPOSED SALE TO THE PUBLIC:
AS SOON AS PRACTICABLE AFTER THE REGISTRATION STATEMENT BECOMES EFFECTIVE.
--------------------------
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, as amended (the "Securities Act"), check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If this Form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the Prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
--------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
PROPOSED MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF SECURITIES TO BE REGISTERED AGGREGATE OFFERING PRICE(1) REGISTRATION FEE(1)
<S> <C> <C>
Common shares, par value NLG 0.96....................................... $57,500,000 $15,985
</TABLE>
(1) Estimated solely for the purpose of calculating the amount of the
registration fee in accordance with Rule 457(a) under the Securities Act of
1933.
--------------------------
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT THAT SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THE REGISTRATION STATEMENT
SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID
SECTION 8(a), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
SUBJECT TO COMPLETION, DATED SEPTEMBER 23, 1999
The information in this prospectus is not complete and may be changed. We may
not sell these securities until the registration statement filed with the
Securities and Exchange Commission is effective. This prospectus is not an offer
to sell these securities and we are not soliciting offers to buy these
securities in any state where the offer or sale is not permitted.
<PAGE>
SHARES
[LOGO]
COMMON SHARES
----------------
Metron Technology N.V. is offering common shares, and the selling
shareholders are offering common shares in a firmly underwritten offering.
Metron will not receive any of the proceeds from the sale of shares by the
selling shareholders. This is Metron's initial public offering, and no public
market currently exists for Metron's common shares. Metron anticipates that the
initial public offering price for its shares will be between $ and $
per share. After the offering, the market price for Metron's shares may be
outside of this range.
------------------------
We have applied to list our common shares on the Nasdaq National Market
under the symbol "MTCH."
------------------------
INVESTING IN THE COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. SEE "RISK
FACTORS" BEGINNING ON PAGE 6.
---------------------
<TABLE>
<CAPTION>
Per Share Total
----------- -------------
<S> <C> <C>
Offering Price $ $
Discounts and Commissions to Underwriters $ $
Offering Proceeds to Metron $ $
Offering Proceeds to the Selling Shareholders $ $
</TABLE>
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or complete. Any representation to the contrary is a
criminal offense.
Metron Technology N.V. has granted the underwriters the right to purchase up
to an additional common shares to cover over-allotments. The underwriters
can exercise this right at any time within thirty days after the offering. Banc
of America Securities LLC expects to deliver the common shares to investors on
, 1999.
BANC OF AMERICA SECURITIES LLC
SG COWEN
U.S. BANCORP PIPER JAFFRAY
----------------
The date of this Prospectus is , 1999.
<PAGE>
Graphic depicting certain of Metron's principals' logos with arrows pointing
toward the Metron logo in the center of the page, below which arrows point
toward the logos of certain of Metron's customers.
<PAGE>
Graphic depicting a map of the world indicating the locations of Metron's
offices and facilities.
<PAGE>
YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS PROSPECTUS. WE
HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH INFORMATION THAT IS DIFFERENT. WE
ARE OFFERING TO SELL, AND SEEKING OFFERS TO BUY, COMMON SHARES ONLY IN
JURISDICTIONS WHERE OFFERS AND SALES ARE PERMITTED. THIS PROSPECTUS MAY ONLY BE
USED WHERE IT IS LEGAL TO SELL THESE SECURITIES. THE INFORMATION IN THIS
DOCUMENT MAY ONLY BE ACCURATE ON THE DATE OF THIS PROSPECTUS, REGARDLESS OF THE
TIME OF DELIVERY OF THIS PROSPECTUS OR OF ANY SALE OF OUR EQUITY SHARES.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
Prospectus Summary......................................................................................... 3
Risk Factors............................................................................................... 6
Use of Proceeds............................................................................................ 19
Dividend Policy............................................................................................ 19
Capitalization............................................................................................. 20
Dilution................................................................................................... 21
Selected Consolidated Financial Data....................................................................... 22
Management's Discussion and Analysis of Financial Condition and Results of Operations...................... 23
Business................................................................................................... 32
Management................................................................................................. 41
Certain Transactions....................................................................................... 53
Principal and Selling Shareholders......................................................................... 56
Description of Capital Shares.............................................................................. 58
Shares Eligible for Future Sale............................................................................ 62
Underwriting............................................................................................... 64
Legal Matters.............................................................................................. 66
Experts.................................................................................................... 66
Additional Information..................................................................................... 66
Index to Consolidated Financial Statements................................................................. F-1
</TABLE>
"METRON" AND THE METRON LOGO ARE REGISTERED TRADEMARKS OF METRON TECHNOLOGY
N.V. IN THE UNITED STATES AND OTHER JURISDICTIONS. ALL OTHER TRADEMARKS OR
SERVICE MARKS APPEARING IN THIS PROSPECTUS ARE TRADEMARKS OR SERVICE MARKS OF
THE RESPECTIVE COMPANIES THAT USE THEM.
<PAGE>
PROSPECTUS SUMMARY
THIS SUMMARY HIGHLIGHTS SELECTED INFORMATION CONTAINED ELSEWHERE IN THIS
PROSPECTUS. THIS SUMMARY IS NOT COMPLETE AND DOES NOT CONTAIN ALL OF THE
INFORMATION THAT YOU SHOULD CONSIDER BEFORE INVESTING IN OUR COMMON SHARES. YOU
SHOULD READ THE ENTIRE PROSPECTUS CAREFULLY BEFORE MAKING AN INVESTMENT
DECISION. THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENTS WHICH INVOLVE
RISKS AND UNCERTAINTIES. OUR RESULTS COULD DIFFER MATERIALLY FROM THOSE
ANTICIPATED IN THESE FORWARD-LOOKING STATEMENTS AS A RESULT OF VARIOUS FACTORS,
INCLUDING THOSE SET FORTH IN "RISK FACTORS" AND THE CONSOLIDATED FINANCIAL
STATEMENTS AND THE RELATED NOTES. EXCEPT AS OTHERWISE INDICATED, ALL INFORMATION
IN THIS PROSPECTUS ASSUMES NO EXERCISE OF THE UNDERWRITERS' OVER-ALLOTMENT
OPTION, THE EFFECTIVENESS OF AN AMENDMENT TO OUR ARTICLES OF ASSOCIATION UPON
COMPLETION OF THIS OFFERING AND THE CONVERSION OF METRON TECHNOLOGY FROM A
"B.V." INTO AN "N.V." UNDER NETHERLANDS LAW. REFERENCES TO "GUILDERS" AND "NLG"
ARE TO DUTCH GUILDERS, AND REFERENCES TO "DOLLARS," "U.S.$" AND "$" ARE TO
UNITED STATES DOLLARS.
METRON TECHNOLOGY
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. On behalf of semiconductor materials and equipment suppliers,
which we refer to as our principals, we provide a broad range of materials and
equipment to leading semiconductor manufacturers such as Advanced Micro Devices,
IBM, Intel, Lucent, Motorola, NEC Electronics, Philips, Infineon (Siemens) and
STMicroelectronics. This enables our customers to purchase a broad range of
products from a single supplier. We also provide semiconductor manufacturers
with the ability to outsource a wide variety of fab and equipment support
services, such as materials management, cleanroom services and facility
maintenance. These services enable our customers to increase fab productivity in
a cost-effective manner, simplify and standardize their materials and equipment
purchases and focus on their core competencies, such as product development,
manufacturing and marketing. By partnering with us, our principals can focus on
product development and other core competencies, reduce their time to market and
use our global network to better compete with larger companies that often have
established sales, service and support infrastructures. Our principals are both
independent companies that have developed emerging technologies and divisions of
larger companies that have other primary products and markets and include Cabot,
Entegris, FSI, Komatsu, Pall, Schumacher, SDI, Seiko Instruments and Zeiss.
Demand by semiconductor manufacturers for global solutions is being driven
by profitability pressures. As semiconductors have become increasingly complex,
the manufacturing process requires a wide range of complex and expensive
fabrication equipment and materials, and modern fabs can cost over $2.0 billion
to build. At the same time, semiconductor average selling prices have
consistently declined. Therefore, it is imperative that fabs quickly reach and
maintain optimal productivity levels in order to maximize their return on
investment. This necessitates around-the-clock manufacturing, which in turn
requires effective materials management and support services to minimize
equipment downtime.
We work closely with our principals to support semiconductor manufacturers
in numerous ways, from supplying materials to installing and servicing complex
equipment. Our materials offerings include an extensive array of over 15,000
items, including wafer carriers and shippers, fluid and gas handling components,
high purity chemicals and cleanroom products. Our equipment offerings include
cleaning, microlithography, metrology, photomask inspection and repair, and
inspection and defect characterization equipment. Our global infrastructure,
developed over our 25-year history in the semiconductor industry, provides our
principals with access to our extensive customer base, a technically
sophisticated sales force and the ability to effectively provide global product
service and support in all major semiconductor manufacturing markets in the
world, except Japan.
3
<PAGE>
Our goal is to be the leading global provider of marketing, sales, service
and support solutions to semiconductor materials and equipment suppliers and
semiconductor manufacturers. The key elements of our strategy include:
- leveraging our global infrastructure and expanding our leadership
position;
- continuing to broaden product and service offerings;
- expanding our materials business;
- fostering long-term relationships with our principals;
- acquiring complementary businesses; and
- expanding into Japan.
We were incorporated under the laws of The Netherlands in October 1975. Our
principal executive offices are located at 1350 Old Bayshore Highway, Suite 360,
Burlingame, California 94010, and our telephone number is (650) 373-1133. The
address of our web site is "www.metrontech.com." Information contained on our
web site is not a part of this prospectus.
THE OFFERING
<TABLE>
<S> <C>
Common shares offered by Metron...................... shares
Common shares offered by the selling shareholders.... shares
Common shares to be outstanding after this shares
offering...........................................
Use of proceeds...................................... For working capital and general
corporate purposes. We may also use
a portion of the proceeds to acquire
complementary businesses. See "Use
of Proceeds."
Proposed Nasdaq National Market symbol............... MTCH
</TABLE>
The number of common shares to be outstanding after this offering is based
on the number of shares outstanding as of August 31, 1999 and does not include
the following:
- 1,994,098 shares subject to options outstanding as of August 31, 1999 at a
weighted average exercise price of $5.50 per share;
- 821,202 shares that we could issue under employee stock plans; and
- shares that may be purchased by the underwriters to cover
over-allotments, if any.
4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
----------------------------------
1997 1998 1999
---------- ---------- ----------
<S> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue................................................................ $ 298,576 $ 275,024 $ 228,618
Cost of revenue............................................................ 241,675 222,028 189,295
---------- ---------- ----------
Gross profit............................................................... 56,901 52,996 39,323
Selling, general, administrative and other expenses........................ 49,417 48,997 43,391
Restructuring and merger costs............................................. 258 881 2,550
---------- ---------- ----------
Operating income (loss).................................................... 7,226 3,118 (6,618)
Equity in net income (loss) of joint ventures.............................. 273 (497) 267
Other expense, net......................................................... (602) (71) (397)
---------- ---------- ----------
Income (loss) before income taxes.......................................... 6,897 2,550 (6,748)
Provision (benefit) for income taxes....................................... 2,699 1,448 (2,214)
---------- ---------- ----------
Net income (loss).......................................................... $ 4,198 $ 1,102 $ (4,534)
---------- ---------- ----------
---------- ---------- ----------
Basic net income (loss) per share.......................................... $ 0.40 $ 0.11 $ (0.44)
Diluted net income (loss) per share........................................ $ 0.37 $ 0.10 $ (0.44)
Shares used to compute basic net income (loss) per share(1)................ 10,386 10,369 10,325
Shares used to compute diluted net income (loss) per share(1).............. 11,195 11,112 10,325
</TABLE>
<TABLE>
<CAPTION>
MAY 31, 1999
----------------------------------------
PRO FORMA
ACTUAL PRO FORMA(2) AS ADJUSTED(3)
--------- ------------- --------------
<S> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................................. $ 10,601 $ 10,601
Working capital....................................................... 22,630 22,630
Total assets.......................................................... 99,625 99,675
Total shareholders' equity............................................ 29,955 31,928
</TABLE>
- ------------------------
(1) See Note 1 of Notes to Consolidated Financial Statements for an explanation
of the determination of the number of shares used in computing per share
data.
(2) Pro Forma to give effect to the termination of certain put rights as a
result of the termination of a buy and sell agreement upon completion of
this offering.
(3) Adjusted to reflect the sale by Metron of common shares
(assuming no exercise of the underwriters' over-allotment option) at an
assumed initial public offering price of $ per share and the
application of the estimated net proceeds after deducting the underwriting
discounts and commissions and our estimated offering expenses.
5
<PAGE>
RISK FACTORS
YOU SHOULD CAREFULLY CONSIDER THE FOLLOWING RISK FACTORS AND ALL OTHER
INFORMATION CONTAINED IN THIS PROSPECTUS BEFORE PURCHASING OUR COMMON SHARES.
INVESTING IN OUR COMMON SHARES INVOLVES A HIGH DEGREE OF RISK. THE RISKS AND
UNCERTAINTIES DESCRIBED BELOW ARE NOT THE ONLY ONES THAT WE FACE. ADDITIONAL
RISKS AND UNCERTAINTIES NOT PRESENTLY KNOWN TO US OR THAT WE CURRENTLY BELIEVE
ARE IMMATERIAL ALSO MAY IMPAIR OUR BUSINESS OPERATIONS. IF ANY OF THE EVENTS
DESCRIBED IN THE FOLLOWING RISKS OCCUR, OUR BUSINESS, OPERATING RESULTS AND
FINANCIAL CONDITION COULD BE MATERIALLY ADVERSELY AFFECTED. IN ADDITION, THE
TRADING PRICE OF OUR COMMON SHARES COULD DECLINE DUE TO ANY OF THE EVENTS
DESCRIBED IN THESE RISKS, AND YOU MAY LOSE ALL OR PART OF YOUR INVESTMENT.
THIS PROSPECTUS CONTAINS FORWARD-LOOKING STATEMENT THAT INVOLVE RISKS AND
UNCERTAINTIES. ACTUAL RESULTS COULD DIFFER MATERIALLY FROM THOSE DISCUSSED IN
THIS PROSPECTUS. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES
INCLUDE, BUT ARE NOT LIMITED TO, THOSE IDENTIFIED BELOW AS WELL AS THOSE
DISCUSSED ELSEWHERE IN THIS PROSPECTUS.
RISKS RELATED TO OUR COMPANY.
WE ARE DEPENDENT ON A FEW KEY PRINCIPALS FOR A MAJORITY OF OUR REVENUE.
If our commercial relationship with FSI or Entegris were to materially
change or were terminated, our business would be significantly adversely
affected due to the large percentage of our revenue generated by sales of these
companies' products. For the fiscal year ended May 31, 1999, 24% of our total
revenue was generated from the sale of products manufactured by FSI and 21% from
the sale of products manufactured by Entegris. In each of our last three fiscal
years, a majority of our revenue came from the sale of products from five or
fewer of the semiconductor materials and equipment companies we represent, who
we refer to as our principals. Although the principals that comprise our largest
sources of revenue may change from period to period, we expect that revenue from
the sale of products of a relatively small number of principals will account for
a substantial portion of our revenue for the foreseeable future. For more
information about our relationships with FSI and Entegris, see also the risk
titled "We are significantly controlled by FSI and Entegris, which may limit
your ability to influence the outcome of director elections and other
shareholder matters" and "Certain Transactions."
THE LOSS OF ONE OR MORE OF OUR KEY PRINCIPALS COULD SERIOUSLY HARM OUR BUSINESS.
If, for any reason, any of our key principals were to materially reduce
their business or terminate their relationship with us, the loss of the key
principal would have a material adverse effect on our business. All of the
semiconductor materials, equipment and products we market, sell, service and
support are sold pursuant to agreements with our principals. These agreements
are generally cancelable at will, subject to notification periods which range
from 30 days to two years. We generally do not sell competing products in the
same market, and therefore the number of principals we can represent at any one
time is limited. It is likely that in the future some of our principals will
terminate their relationships with us upon relatively short notice. If we lose a
key principal, we may not be able to find a replacement quickly, or at all. The
loss of a key principal may cause us to lose customers and incur expenses
associated with ending our agreement with that principal. We may lose principals
for various reasons, including:
- mergers and acquisitions involving our principals and other semiconductor
materials and equipment manufacturers that we do not represent;
- a principal's decision to attempt to build a direct sales organization;
- the expansion of a principal's product offerings to compete with the
products of another principal, because we generally do not offer competing
product lines;
6
<PAGE>
- a principal's dissatisfaction with our level or quality of service; and
- the failure of a principal's business.
We have lost principals in the past. For example, after Ontrak was acquired
by Lam Research in August 1997, we ceased marketing and selling Ontrak products
in Europe in September 1998 and in South Korea in June 1998. In March 1999, A.G.
Associates was acquired by Steag. As a result of this acquisition, we will cease
marketing and selling A.G. Associates' products in September 1999. In July 1999,
FSI sold its chemical management division to BOC Edwards. As a result of this
divestiture, we are phasing out our marketing and sale of products of this
division. In May 1999, Applied Materials announced an agreement to acquire
Obsidian. Upon completion of the acquisition, we expect that Obsidian will
terminate its agreement with us.
THE SEMICONDUCTOR INDUSTRY IS HIGHLY CYCLICAL, AND THEREFORE, A DOWNTURN MAY
RESULT IN POOR OPERATING RESULTS.
The recent downturn in the semiconductor industry has had a material adverse
effect on our recent operating results. Our business depends in large part on
the procurement expenditures of semiconductor manufacturers, which, in turn,
depend on the current and anticipated demand for semiconductors and products
utilizing semiconductors. The semiconductor industry is highly cyclical and
historically has experienced periodic downturns, which often have resulted in
decreased expenditures by semiconductor manufacturers. These downturns generally
have adversely affected the sales, gross profits and operating results of
semiconductor materials and equipment suppliers. From 1996 through 1998, the
semiconductor industry experienced a downturn, which led semiconductor
manufacturers to delay or cancel capital expenditures. During this downturn,
some of our customers delayed or canceled purchases of semiconductor materials
and equipment and our results of operations suffered. We cannot predict when
downturns will occur and how we will be affected by future downturns.
IF WE ARE UNABLE TO SUCCESSFULLY IDENTIFY NEW PRODUCTS AND ENTER INTO AND
IMPLEMENT ARRANGEMENTS WITH THE SUPPLIERS OF THESE PRODUCTS, OUR BUSINESS WILL
BE SERIOUSLY HARMED.
Any failure by us to enter into relationships with principals that
anticipate or respond adequately to technological developments or customer
requirements, or any significant delays in product development or introductions
by these principals, could result in a loss of competitiveness and could
materially adversely effect our business. The semiconductor materials and
equipment market is subject to rapid technological change, changing customer
requirements and frequent new product introductions. Because of this, the life
cycle of products that we market and sell is difficult to determine. Our future
success will depend to a significant extent on our principals' ability to keep
pace with changes in the market and on our ability to identify and carry
successful new product lines, particularly because we generally do not carry
competing product lines.
WE FACE INTENSE COMPETITION FROM COMPANIES WITH SIGNIFICANTLY GREATER FINANCIAL,
TECHNICAL AND MARKETING RESOURCES, WHICH COULD ADVERSELY AFFECT OUR ABILITY TO
MAINTAIN OR INCREASE SALES.
We face intense competition on two distinct fronts: competition for product
lines and competition for customers.
COMPETITION FOR PRODUCT LINES
We compete with independent sales and distribution companies for the right
to sell specific product lines in specific territories. We believe that our most
formidable competition comes from regionally established semiconductor materials
and equipment distribution companies. Some of these independent sales and
distribution companies have substantially greater financial resources to devote
to a particular region than we do, are better established in particular regions
than we are, have greater
7
<PAGE>
name recognition in their chosen markets than we have and have long-standing
collaborative business relationships with semiconductor materials and equipment
manufacturers which are difficult to overcome. If we are unable to effectively
compete with sales and distribution companies to attract and retain principals,
our business will be adversely effected.
COMPETITION FOR CUSTOMERS
We compete for orders from semiconductor manufacturers with established
semiconductor materials and equipment manufacturers who sell directly to
customers and with independent sales and distribution companies and sales
representatives. We believe that to compete effectively for customers we must
maintain a high level of investment in marketing, customer service and support
in all of the markets in which we operate, and we may not have sufficient
financial resources, technical expertise or marketing, services and support
capabilities to continue to compete successfully in the future. Some of our
competitors have greater name recognition in the territories they serve and have
long-standing relationships with semiconductor manufacturers that may give them
an advantage in attracting and retaining customers. Furthermore, we believe that
once a semiconductor manufacturer has selected a particular product for a
specific use from a vendor that is not one of our principals, it may be
difficult to achieve significant sales of a competing product to that customer
unless there are compelling reasons for the customer to switch products, such as
significant performance or cost advantages.
We anticipate that as we continue to diversify our product portfolio and
expand into new markets for our principals' products, we will encounter
additional competition for customers. If we cannot continue to compete
successfully for customers in the future, it will have a significant negative
impact on our business.
THE MANAGEMENT INFORMATION SYSTEMS THAT WE CURRENTLY USE IN OUR DAY-TO-DAY
OPERATIONS ARE NOT INTEGRATED ACROSS COUNTRY BORDERS AND NEED TO BE UPGRADED.
UPGRADING THEM WILL BE COSTLY, AND IF THE NEW SYSTEM IS NOT SUCCESSFULLY
IMPLEMENTED, OUR BUSINESS MAY SUFFER MATERIAL ADVERSE CONSEQUENCES.
While our financial reporting management information system is integrated
and operational, our current management information systems that we use to
control our day-to-day operations are not integrated across country borders. To
accommodate growth in the past, we have had to hire additional people to
compensate for the lack of a fully-functional, integrated operations management
information system. We anticipate that we will need to invest in a new
operations management information system in order to maintain our current level
of business and accommodate any future growth. We anticipate that the total
costs associated with the implementation of the new system will be approximately
$3.0 to $4.0 million. Any failure to successfully choose and implement a new
operations management information system may result in delayed growth, increased
inefficiency due to a lack of centralized data, higher inventories, increased
expenses associated with employing additional employees, a loss of our
investment in the new operations management information system and may have
additional material adverse effects on our business.
WE NEED TO SUCCESSFULLY MANAGE THE ANTICIPATED EXPANSION IN OUR OPERATIONS OR
OUR BUSINESS MAY SUFFER MATERIAL ADVERSE CONSEQUENCES.
Any failure by us to effectively manage future expansion and the system and
procedural transitions required by expansion could seriously harm our business.
We have expanded our operations in the past and anticipate future expansion of
our operations through acquisitions and otherwise. Our growth has placed and
will continue to place significant demands on our management, operational,
financial and technical resources, as well as our accounting and control
systems, as we work to integrate geographically dispersed offices and
administrative personnel, diverse service and maintenance
8
<PAGE>
operations and different accounting and financial systems. Our future operating
results will depend on the ability of our management and other employees to:
- continue to implement and improve our operational, customer support and
financial control systems;
- recruit, train, manage and motivate our employees;
- identify companies that are strategic acquisition candidates and
successfully acquire and integrate them with our existing business;
- communicate information efficiently throughout our organization; and
- work effectively with principals and customers.
We cannot predict whether these efforts will be successful or will occur in
a timely or efficient manner. We may not be able to install adequate control
systems in an efficient and timely manner, and our current or planned
operational systems, procedures and controls may not be adequate to support our
future operations. The difficulties associated with installing and implementing
new systems, procedures and controls may place a significant burden on our
management and our internal resources. Delays in the implementation of new
systems or operational disruptions when we transition to new systems would
impair our ability to accurately forecast sales demand, manage our product
inventory and record and report financial and management information on a timely
and accurate basis.
WE MAY NOT BE SUCCESSFUL IN ANY EFFORT TO PENETRATE JAPAN.
We do not market and sell products to semiconductor manufacturers in Japan.
However, approximately 21% of the world's production of semiconductors takes
place in Japan. Accordingly, to reach all of the world's major semiconductor
markets, we will need to establish or acquire sales and marketing capabilities
in Japan. Historically, it has been difficult for non-Japanese companies to
succeed in establishing themselves in Japan, and we believe that expanding our
operations to Japan would be both expensive and time-consuming and would place
additional demands on our management. We cannot predict whether any of our
efforts to penetrate the Japanese market will be successful.
WE EXPECT CONTINUED DOWNWARD PRESSURE ON THE GROSS MARGINS OF THE PRODUCTS WE
SELL.
Particularly during industry down cycles, pressure on the gross margins of
the products we sell is intense and can adversely impact our financial
performance. We have experienced significant downward pressure on our gross
margins mainly as a result of sales discounts offered by our competitors and
pressure from our customers to reduce prices and from our principals to reduce
the discounts they provide to us. This, in turn, has put significant downward
pressure on our operating margins. To maintain or increase our gross margins, we
must develop and maintain relationships with principals who introduce new
products and product enhancements on a timely basis. As a result of continued
pressure on gross margins, we must find ways to decrease our selling, general,
administrative and other expenses as a percentage of sales to increase or
maintain our operating margins. If our principals cannot continue to innovate,
if we cannot maintain our relationships with the innovating principals, or if we
cannot successfully manage our selling, general, administrative and other
expenses, our operating margins may decrease. If our operating margins decline
as a result of these factors, our business would be harmed.
OUR EMPLOYMENT COSTS IN THE SHORT-TERM ARE TO A LARGE EXTENT FIXED, AND
THEREFORE ANY UNEXPECTED REVENUE SHORTFALL COULD ADVERSELY AFFECT OUR OPERATING
RESULTS.
Our operating expense levels are based in significant part on our head
count, which is generally driven by longer-term revenue goals. For a variety of
reasons, particularly the high cost and disruption
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of lay-offs and the costs of recruiting and training, our head count in the
short-term is, to a large extent, fixed. In particular, approximately half of
our employees are in Europe, and the costs associated with the reduction of our
labor force in Europe are high. Accordingly, we may be unable to reduce
employment costs in a timely manner to compensate for any unexpected revenue or
gross margin shortfall, which could have a material adverse effect on our
operating results.
WE ANTICIPATE ACQUIRING COMPLEMENTARY BUSINESSES, AND IF WE ARE UNABLE TO
COMPLETE THESE ACQUISITIONS OR SUCCESSFULLY INTEGRATE THESE BUSINESSES, OUR
BUSINESS WILL SUFFER.
We may not be successful in our strategy to acquire complementary
businesses. If we do acquire complementary businesses, we may never achieve the
anticipated benefits that led us to acquire any particular target, and
integrating the acquired businesses may be a complex, time-consuming and
expensive process. Prior to acquisition, the businesses we acquire will be
independent. After acquisition, the businesses we acquire and Metron must
operate as a combined organization utilizing common information and
communications systems; operating procedures; financial controls; and human
resources practices, including benefit, training and professional development
programs. Some challenges may arise from any attempted acquisition and
integration, including:
- distracting management from our existing business;
- potential incompatibility of corporate cultures; and
- costs and delays in implementing common systems and procedures.
Any of these factors may increase operating costs or lower anticipated
financial performance.
WE MAY BEAR INVENTORY RISK DUE TO AN INABILITY TO RETURN PRODUCTS.
We bear inventory risk because we generally take title to our products when
we receive them from our principals, and we cannot always return products to the
principal in the event the products are not sold. Our customers do not always
purchase at the time or in the quantities we originally anticipated. For
example, as a result of the industry downturn in 1997 and 1998, we had excess
inventory for which we booked reserves in both the United States and Asia.
Typically, products cannot be returned to principals after they have been in our
inventory for a certain period of time; this time period varies depending on the
product and the principal. In addition, although it is typical when a
relationship with a principal terminates for that principal to repurchase most
of the inventory we have of that principal's products, it is possible under
certain circumstances that a principal may be unable or unwilling to repurchase
our inventory. If we fail to manage our inventory and accumulate substantial
product that cannot be returned, our financial results could be adversely
affected. Furthermore, if a principal cannot provide refunds in cash for the
inventory we desire to return, we may be forced to dispose of inventory below
cost, and this may have a material adverse effect on our financial condition.
OUR REVENUE AND OPERATING RESULTS MAY FLUCTUATE IN FUTURE PERIODS, WHICH COULD
ADVERSELY AFFECT OUR SHARE PRICE.
In the past, we have experienced fluctuations in our quarterly and annual
operating results and anticipate that these fluctuations will continue in the
future due to a variety of factors, many of which are out of our control.
Fluctuations in our results could cause our share price to decline
substantially. We believe that period-to-period comparisons of our results of
operations may not be meaningful, and you should not rely upon them as
indicators of our future performance. Our sales in, and the operating results
for, a particular quarter can vary significantly due to a variety of factors,
including:
- THE TIMING OF SIGNIFICANT CUSTOMER ORDERS AND CUSTOMER SPENDING PATTERNS.
Because we are highly dependent on sales to a relatively small number of
customers, changes in demand from those customers can have a large effect
on our revenue and result of operations. Furthermore, during
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industry downturns, our customers may ask us to delay or even cancel the
shipment of previously firm orders. Delays and cancellations may adversely
affect our operating results in any particular quarter if we are unable to
recognize revenue for particular sales in the quarter in which those sales
were expected.
- THE TIMING OF PRODUCT SHIPMENTS BY OUR PRINCIPALS. For the most part, we
recognize sales upon the shipment of goods to our customers. Most of the
equipment and some of the materials we sell are shipped by the principal
directly to our customers, and we do not necessarily have any control over
the timing of a particular shipment. If we are unable to recognize revenue
for a particular sale in the quarter in which that sale was expected, our
operating results in that particular quarter will be negatively affected.
- THE LOSS OF ANY SIGNIFICANT CUSTOMER OR PRINCIPAL. The loss of any
significant principal may lead to the loss of customers and/or a reduction
in sales. The loss of any significant principal or of significant
customers or sales could lead to a reduction in revenue and could
adversely impact our results.
- THE TIMING OF NEW PRODUCT AND SERVICE ANNOUNCEMENTS BY OUR PRINCIPALS AND
THEIR COMPETITORS. New product announcements by our principals and their
competitors could cause our customers to delay a purchase or to decide to
purchase products of one of our principal's competitors which would
adversely affect our revenue and, therefore, our results of operations.
New product announcements by others may make it necessary for us to reduce
prices on our products or offer more service options, which could
adversely impact operating margins and net income.
- THE MIX OF PRODUCTS SOLD AND THE MARKET ACCEPTANCE OF OUR NEW PRODUCT
LINES. The mix of products we sell varies from period to period, and
because margins vary amongst or within different product lines, this can
adversely affect our results of operations. If we fail to sell our
products which generate higher margins, our average gross margins may be
lower than expected. If we fail to sell our new product lines, our revenue
may be lower than expected.
- THE EFFICIENCIES WE ARE ABLE TO ACHIEVE IN MANAGING INVENTORIES OF
MATERIALS AND SPARE PARTS. If we are unable to coordinate among our
various offices worldwide to achieve appropriately sized and located
inventories, we may invest too much in inventory. If we are unable to sell
some of our older inventory and have to take reserves against it or write
it off, our results will be adversely affected.
- THE TIMING OF EXPENDITURES INTENDED TO INCREASE FUTURE SALES OF MATERIALS
AND EQUIPMENT. We expense most of the expenditures we make to increase
market awareness and attract customers and principals at the time we incur
them, even though we expect them to have continuing impact in future
periods. These costs may have little impact on revenue in the period they
are expensed, and as a result, our results may suffer.
- GENERAL GLOBAL ECONOMIC CONDITIONS OR ECONOMIC CONDITIONS IN A PARTICULAR
REGION. When economic conditions in a region or worldwide worsen,
customers may delay or cancel their orders. There may also be an increase
in the time it takes to collect from our customers or even outright
defaults in payments. This can negatively affect our cash flow and our
results.
- CHANGES IN PRICING BY US, OUR PRINCIPALS OR OUR COMPETITORS. Our gross
margins are dependent on the price we are able to charge our customers and
the prices, we pay our principals. If our principals increase the prices
of their products, we may be unable to pass these price increases on to
our customers. In addition, if our competitors lower their prices or we
raise our prices we may lose customers. Any of the above changes in
pricing may impact our gross margins and may negatively impact our
results.
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- CHANGES IN CURRENCY VALUATIONS RELATIVE TO THE DOLLAR. Although we engage
in hedging activities, we may not be able to compensate for all currency
fluctuations and thus may be adversely impacted by currency fluctuations.
- COSTS WE MAY INCUR IF WE BECOME INVOLVED IN FUTURE LITIGATION. Litigation
is often costly, and even if we are successful in defending or making any
claim, the expenses incurred may significantly impact our results.
As a result of the factors listed above, our future operating results are
difficult to predict. Further, we base our current and future expense plans in
significant part on our expectations of our longer-term future revenue. As a
result, we expect our expense levels to be relatively fixed in the short-run. An
unanticipated decline in revenue for a particular quarter may disproportionately
affect our net income in that quarter. If our revenue is below our projections,
then our operating results will also be below expectations and, as we have in
the past, we may even have losses in the short-run. Any one of the factors
listed above, or a combination thereof, could adversely affect our quarterly
results of operations, and consequently may cause a decline in our share price.
OUR DEPENDENCE ON SALES TO A RELATIVELY SMALL NUMBER OF CUSTOMERS FOR A
SIGNIFICANT PORTION OF OUR REVENUE EXPOSES US TO FINANCIAL RISKS.
A loss or a significant reduction or delay in sales to any of our major
customers could materially and adversely affect our revenue. We depend on a
small number of customers for a substantial portion of our revenue. During
fiscal 1999, our top 10 customers accounted for an aggregate of 32% of our
sales. Although a ranking by revenue of our largest customers will vary from
period to period, we expect that revenue from a relatively small number of
customers will account for a substantial portion of our revenue in any
accounting period for the foreseeable future. Consolidation in the semiconductor
industry may result in increased customer concentration and the potential loss
of customers as a result of acquisitions. Unless we diversify and expand our
customer base, our future success will significantly depend upon certain factors
which are not within our control, including:
- the timing and size of future purchase orders, if any, from our larger
customers;
- the product requirements of our customers; and
- the financial and operational success of our customers.
If any of our largest customers were to stop or reduce their purchasing from
us, our financial results could be adversely affected. A significant decrease in
sales to a major customer or the deferral or cancellation of any significant
order would have a material adverse effect on our operating results.
OUR SALES CYCLE, PARTICULARLY FOR EQUIPMENT, IS LONG AND UNPREDICTABLE.
Sales cycles for some of our products, particularly equipment, can run as
long as 12 to 18 months. As a result, we may not recognize revenue from efforts
to sell particular products for extended periods of time. We believe that the
length of the sales cycle may increase as some current and potential customers
of our key principals centralize purchasing decisions into one decision-making
entity. We expect this may intensify the evaluation process and require us to
make additional sales and marketing expenditures with no assurance that a sale
will result.
WE HAVE NOT YET DEVELOPED A STRATEGY TO SELL TO OUR CUSTOMERS OVER THE INTERNET,
AND IF A COMPETITOR DEVELOPS AND IMPLEMENTS AN EFFECTIVE E-COMMERCE STRATEGY, WE
MAY LOSE SOME OF OUR CUSTOMERS, WHICH WOULD HAVE A NEGATIVE IMPACT ON OUR
RESULTS OF OPERATIONS.
We have not developed a strategy to sell to our customers over the Internet.
Because rights to sell principals' products are granted only for specific
territories and sales conducted over the Internet may
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occur anywhere around the globe, it is difficult to adopt e-commerce practices
in this industry. If principals decide to directly distribute their products
over the Internet, if our competitors develop a successful strategy for engaging
in e-commerce or if our customers require e-commerce capability, we may lose
customers, which would have a negative impact on our revenue and on our
operating results.
WE FACE YEAR 2000 RISKS.
The year 2000 problem arises because many older computer hardware and
software systems use only two digits to represent the year. As a result, these
systems and programs cannot distinguish between 20(th) and 21(st) century dates,
which may cause errors in information or system failures. Since uncertainty is
inherent in any assessment of the potential year 2000 issues, we recognize the
need to remain vigilant and are continuing our analysis, assessment and
conversion for the various year 2000 issues which we have identified across our
business. In addition, we have been working with suppliers and customers to
review and assess the software in these older products and in our current
product portfolio to identify any year 2000 issues since the beginning of 1998.
We cannot, however, assure you that we have identified all of the potential
risks. Failure by us to identify and remediate all material year 2000 risks
could adversely affect our business, financial condition and results of
operations. Some of the risks you should be aware of include:
- we cannot assure you that the entities that we rely on for products and
services that are important for our business, including our principals,
will be successful in addressing all of their software and systems
problems in order to operate without disruption in the year 2000;
- our customers or potential customers may be affected by year 2000 issues
that may, in part, cause a reduction, delay or cancellation of customer
orders; cause a delay in payments for products shipped; or cause customers
to expend significant resources on year 2000 compliance matters rather
than the products we sell; and
- we have not developed a contingency plan related to a failure of our, or a
third party's, year 2000 remediation efforts and may not be prepared if
this occurs.
Although we have not yet determined the most-likely worst-case year 2000
scenarios or quantified the likely impact of these scenarios, it is clear that
the occurrence of one or more of the risks described above could have a material
adverse effect on our business, financial condition or results of operations.
While we have made efforts to notify our customers who have purchased
potentially non-compliant products, we cannot be sure that these customers will
not assert claims against us alleging that the purchased products should have
been year 2000 compliant at the time of purchase, which could result in costly
litigation and divert management's attention. Although we do not separately
account for year 2000 expenses, we estimate that the expenses we have incurred
to date to address year 2000 issues have not been material and, although we have
not completed our full assessment of our year 2000 readiness, we do not expect
to incur material expenses in connection with any required future remediation
efforts.
RISKS RELATED TO OUR INTERNATIONAL OPERATIONS.
ECONOMIC DIFFICULTIES IN COUNTRIES IN WHICH WE SELL OUR PRODUCTS CAN LEAD TO A
DECREASE IN DEMAND FOR OUR PRODUCTS AND IMPAIR OUR FINANCIAL RESULTS.
The volatility of general economic conditions and fluctuations in currency
exchange and interest rates can lead to decreased demand in countries in which
we sell product. For example, in 1997 and 1998 many Asian countries experienced
economic and financial difficulties. During this period, we experienced
cancellation or delay of orders for our products from customers in Asia, thus
adversely affecting our results of operations. Moreover, any economic, banking
or currency difficulties experienced by countries in which we have sales may
lead to economic recession in those countries.
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This in turn may result in the cancellation or delay of orders for our products
from customers in these countries, thus adversely affecting our results of
operations.
MOST OF OUR PRODUCT SALES ARE OUTSIDE THE UNITED STATES, AND CURRENCY
FLUCTUATIONS MAY IMPAIR OUR FINANCIAL RESULTS.
While most of our international sales are denominated in dollars, some are
denominated in various foreign currencies. To the extent that our sales and
operating expenses are denominated in foreign currencies, our operating results
may be adversely affected by changes in exchange rates. For example, in fiscal
1997, we recorded exchange losses of approximately $600,000. Given the number of
currencies involved, the substantial volatility of currency exchange rates, and
our constantly changing currency exposures, we cannot predict the effect of
exchange rate fluctuations on our future operating results. Although we engage
in foreign currency hedging transactions from time to time, these hedging
transactions can be costly, and therefore, we do not attempt to cover all
potential foreign currency exposures. These hedging techniques do not eliminate
all of the effects of foreign currency fluctuations on anticipated revenue.
In addition, the transition period from legacy currencies to the euro
currently is set to expire January 1, 2002. We are assessing our information
technology systems to determine whether they will accommodate the eventual
elimination of the legacy currencies. If our information technology systems are
unable to do so, they would have to be upgraded or replaced.
IF WE OR OUR NON-UNITED STATES SUBSIDIARIES ARE DEEMED SUBJECT TO UNITED STATES
TAXES, OUR BUSINESS, FINANCIAL CONDITION AND RESULTS MAY SUFFER.
Metron and its non-United States subsidiaries conduct most of their
activities in a manner which we believe does not constitute the conduct of a
trade or business in the United States. Accordingly, although we report taxable
income and pay taxes in the countries where we operate, including the United
States, we believe that income earned by Metron and its non-United States
subsidiaries from operations outside the United States is not reportable in the
United States for tax purposes and is not subject to United States income tax.
If income earned by us or our non-United States subsidiaries from operations
outside the United States is determined to be income effectively connected to an
United States trade or business and as a result becomes taxable in the United
States, we could be subject to United States taxes on this income. If we were to
be deemed to be subject to these taxes, our business, financial condition and
results of operations might be materially and adversely affected.
RISKS RELATED TO INVESTING IN OUR INITIAL PUBLIC OFFERING.
WE ARE SIGNIFICANTLY CONTROLLED BY FSI AND ENTEGRIS, WHICH MAY LIMIT YOUR
ABILITY TO INFLUENCE THE OUTCOME OF DIRECTOR ELECTIONS AND OTHER SHAREHOLDER
MATTERS.
Prior to this offering, FSI owned 32.7% and Entegris owned 32.7% of our
outstanding shares, and following the offering, FSI will own % and Entegris
will own % of our outstanding shares. By virtue of their share ownership and
the fact that each holds one of the three seats on our supervisory board, FSI
and Entegris can exercise significant voting and management control over Metron.
As a result, each of these shareholders will have significant influence over all
matters requiring shareholder or supervisory board approval, including the
election of directors and approval of significant corporate transactions, which
may have the effect of delaying or preventing a third party from acquiring
control over us.
WE WILL HAVE BROAD DISCRETION AS TO THE USE OF THE OFFERING PROCEEDS.
We have not allocated the majority of the net proceeds of this offering for
specific uses, and our shareholders may disagree with the uses to which
management puts the proceeds from this offering. We
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may use a portion of the net proceeds to acquire additional businesses or to
invest in one or more principals that we believe will complement or enhance our
current or future business. We cannot be certain that we will be able to use the
proceeds to earn a favorable return.
WE MAY NEED TO RAISE ADDITIONAL CAPITAL.
We expect the net proceeds from this offering, cash from operations and
borrowings under our credit facilities will be sufficient to meet our working
capital and capital expenditure needs for the foreseeable future. However, we
may need to raise additional capital to acquire or invest in complementary
businesses. Further, if we issue additional equity securities, the ownership
stakes of our existing shareholders would be reduced, and the new equity
securities may have rights, preferences or privileges senior to those of our
existing common shares. If we cannot raise funds, if needed, on acceptable
terms, we may not be able to develop our business, take advantage of future
opportunities or respond to competitive pressures or unanticipated requirements,
all of which could seriously harm our business and results of operations.
NEW INVESTORS IN OUR COMMON SHARES WILL EXPERIENCE IMMEDIATE AND SUBSTANTIAL
DILUTION.
The initial public offering price is substantially higher than the book
value per share of our common shares. Investors purchasing common shares in this
offering will, therefore, incur immediate dilution of $ in net tangible
book value per common share. Investors will incur additional dilution upon the
exercise of outstanding share options. See "Dilution."
THERE IS CURRENTLY NO PUBLIC MARKET FOR OUR COMMON SHARES AND FOLLOWING THE
OFFERING, OUR SHARE PRICE MAY BE VOLATILE.
There has not been a public market for our common shares prior to this
offering, and a liquid trading market for our shares may not develop following
this offering. The initial price for our common shares to be sold in the
offering has been determined by negotiations between us and the representatives
of the underwriters and may not be indicative of prices that will prevail in the
trading market. The trading price of our common shares could be subject to wide
fluctuations in response to various factors, some of which are beyond our
control, such as:
- actual or anticipated variations in quarterly results of operations;
- failure to meet the published expectations of securities analysts for a
given quarterly period;
- changes in financial estimates by securities analysts;
- changes in market values of comparable companies;
- stock market price and volume fluctuations, which are particularly common
among securities of high technology companies;
- stock market price and volume fluctuations attributable to inconsistent
trading volume levels;
- any future sales by us of common shares or other securities;
- announcements by us or our competitors of significant contracts,
acquisitions, strategic partnerships, joint ventures or capital
commitments;
- loss of or decrease in sales to a major customer or failure to complete
significant transactions;
- additions or departures of key personnel;
- introductions of new products or new pricing policies by us or our
competitors; and
- commencement of our involvement in litigation.
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In the past, securities class action litigation has often been brought
against a company following periods of volatility in the market price of its
securities. We may in the future be the target of similar litigation. Securities
litigation may result in substantial costs and divert management's attention and
resources, which may seriously harm our business.
SUBSTANTIAL SALES OF SHARES MAY IMPACT THE MARKET PRICE OF OUR COMMON SHARES.
If our shareholders sell substantial amounts of our common shares, including
shares issued upon the exercise of outstanding options, the market price of our
common shares may fall. These sales also might make it more difficult for us to
sell equity or equity-related securities in the future at a time and price that
we deem appropriate. After completion of this offering, we will have outstanding
common shares, assuming no exercise of outstanding options after ,
1999. All of the shares sold in this offering will be freely tradable.
additional shares are eligible to be sold immediately, of these are
subject to volume limitations, under federal securities laws. shares are
subject to lock-up arrangements between the shareholders and us or the
underwriters. shares will be eligible for sale in the public market 180
days following the date of this prospectus. Of these shares shares
will be subject to volume limitations, under federal securities laws. The
remaining shares will be eligible for sale in the public market subject to
volume restrictions through 2001.
If our shareholders sell substantial amounts of common shares (including
shares issued upon the exercise of outstanding options) in the public market,
the market price of our common shares could fall.
WE DO NOT INTEND TO PAY DIVIDENDS.
We have never declared or paid any cash dividends on our capital shares. We
currently intend to retain any future earnings for funding growth and,
therefore, do not expect to pay any dividends in the foreseeable future.
RISKS RELATED TO BEING A DUTCH COMPANY.
OUR SUPERVISORY BOARD HAS THE AUTHORITY TO ISSUE SHARES WITHOUT SHAREHOLDER
APPROVAL, WHICH MAY MAKE IT MORE DIFFICULT FOR A THIRD PARTY TO ACQUIRE US.
As a Netherlands "NAAMLOZE VENNOOTSCHAP," or N.V., we are subject to
requirements not generally applicable to corporations organized in United States
jurisdictions. Among other things, under Netherlands law the issuance of shares
of a N.V. company must be resolved by the general meeting of shareholders except
to the extent the general meeting has delegated this authority to issue shares
to another corporate body, which delegation may be revoked at any time by the
general meeting. Our articles of association provide that the general meeting
has the authority to resolve to issue shares, common or preferred, and may
designate the Metron board of supervisory directors as the corporate body with
the authority to adopt the resolution to issue shares, which designation shall
not exceed a period of five years. Our articles also provide that as long as the
supervisory board has the authority to adopt a resolution to issue shares, the
general meeting shall not have the authority to adopt this resolution. Pursuant
to the Metron articles, the supervisory board has the authority to adopt
resolutions to issue shares until five years from the date of execution of the
deed of conversion and amendment of the articles. This authorization of the
supervisory board may be renewed by the general meeting from time to time. In
the event that the supervisory board no longer has the authority to resolve to
issue shares, pursuant to our articles, any resolution of the general meeting to
issue shares will require the prior approval of the supervisory board.
Pursuant to our articles, apart from common shares, preferred shares may be
issued in the manner described above. The issuance of preferred shares could
have the effect of making it more difficult for
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a third party to acquire, or of discouraging a third party from acquiring, a
majority of the outstanding shares of our share capital.
IT MAY NOT BE POSSIBLE TO ENFORCE UNITED STATES JUDGMENTS AGAINST NETHERLANDS
CORPORATIONS, DIRECTORS AND OTHERS.
Our articles provide that Metron has two separate boards of directors, a
managing board and a supervisory board. One of our managing directors resides
outside of the United States. A significant percentage of our assets are located
outside the United States. As a result, it may not be possible to effect service
of process within the United States upon the managing director who lives outside
the United States. Furthermore, judgments of United States courts, including
judgments against us, our directors or our officers predicated on the civil
liability provisions of the federal securities laws of the United States, are
not directly enforceable in The Netherlands.
PROVISIONS OF OUR CHARTER DOCUMENTS AND DUTCH LAW COULD DISCOURAGE POTENTIAL
ACQUISITION PROPOSALS AND COULD DELAY, DETER OR PREVENT A CHANGE IN CONTROL.
Our articles of association and the applicable law of The Netherlands
contain provisions that may be deemed to have anti-takeover effects. These
provisions may delay, defer or prevent a takeover attempt that a shareholder
might consider in the best interest of our shareholders. For example, our
articles may be amended only pursuant to a proposal of the supervisory board
followed by a resolution of the general meeting of shareholders. To amend our
articles requires that at a general meeting of shareholders, (1) more than half
of the issued share capital is represented and (2) the resolution to amend the
articles is supported by a two-thirds majority of the valid votes cast. This
supermajority voting requirement may have the effect of discouraging a third
party from acquiring a majority of the outstanding Metron shares. In addition,
some United States tax laws may discourage third parties from accumulating
significant blocks of our common shares. For a more full description of
anti-takeover measures, see "Description of Capital Shares."
WE HAVE IN THE PAST BEEN CLASSIFIED AS A "CONTROLLED FOREIGN CORPORATION," AND
MAY BE SO CLASSIFIED IN THE FUTURE, WHICH MAY LIMIT OUR ABILITY TO MOVE OUR
FINANCIAL RESOURCES AROUND OUR OPERATIONS.
Following this offering, we do not believe that we will be a "controlled
foreign corporation" for the purposes of United States tax law. However, we are
currently classified as a "controlled foreign corporation" and we may again be
so classified if the sum of the percentage ownership by all United States
holders of more than 10% of our common shares were greater than 50% by voting
power or value. In the event we are determined to be a "controlled foreign
corporation" after this offering, our ability to move financial resources from
one part of our operations to another by having one or more of our operating
subsidiaries pay dividends to us could be limited because these dividends could
be taxable to our 10% or more United States shareholders even in the absence of
a distribution of our income to them.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Some of the statements under the captions "Prospectus Summary," "Risk
Factors," "Use of Proceeds," "Management's Discussion and Analysis of Financial
Condition and Results of Operations" and "Business" and elsewhere in this
prospectus are "forward-looking statements." These statements involve known and
unknown risks, uncertainties, and other factors that may cause our, or our
industry's, actual results, levels of activity, performance or achievements to
be materially different from any future results, levels of activity, performance
or achievements expressed or implied by the forward-looking statements. These
factors are listed under "Risk Factors" and elsewhere in this prospectus.
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In some cases, you can identify forward-looking statements by terminology
such as "expects," "anticipates," "intends," "may," "should," "plans,"
"believes," "seeks," "estimates," "could," "would" or the negative of such terms
or other comparable terminology.
Although we believe that the expectations reflected in the forward-looking
statements are reasonable, we cannot guarantee future results, levels of
activity, performance or achievements. Moreover, neither we nor any other person
assumes responsibility for the accuracy and completeness of these statements. We
are under no duty to update any of the forward-looking statements after the date
of this prospectus to conform these statements to actual results.
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USE OF PROCEEDS
We expect to receive net proceeds of approximately $ from the sale of
common shares (and an additional $ from the sale of common
shares if the underwriters' over-allotment option is exercised in full) at an
assumed initial public offering price of $ per share. We will not receive
any proceeds from the sale of common shares by the selling shareholders.
We intend to use the proceeds of the offering for working capital and
general corporate purposes, including sales, marketing, customer support and
other activities related to our business. We may also use a portion of the net
proceeds to acquire additional businesses or to invest in one or more of our
principals that we believe will complement or enhance our current or future
business. However, we have no specific plans, agreements or commitments to do so
and are not currently engaged in any negotiations for any acquisition or joint
venture.
The amounts that we actually expend for working capital and other general
corporate purposes will vary significantly depending on a number of factors,
including future revenue growth, if any, and the amount of cash we generate from
operations. As a result, we will retain broad discretion in the allocation of
the net proceeds of this offering. Pending such uses, we intend to invest the
net proceeds of the initial public offering in investment grade interest-bearing
securities.
DIVIDEND POLICY
We have never declared or paid any cash dividends on our common shares. We
currently intend to retain any future earnings to fund the development and
growth of the our business. Therefore, we currently do not anticipate paying any
cash dividends in the foreseeable future.
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CAPITALIZATION
The following table sets forth our capitalization as of May 31, 1999: (1) on
an actual basis; (2) pro forma to give effect to the termination of certain put
rights as a result of the termination of a buy-sell agreement upon completion of
this offering; and (3) pro forma as adjusted to give effect to the sale of
common shares offered in this offering and to give effect to the receipt
of the estimated net proceeds from the sale of such shares at an assumed initial
public offering price of $ per share and the application of the net
proceeds from such sale.
The capitalization information set forth in the table below is qualified by,
and you should read it in conjunction with, our more detailed Consolidated
Financial Statements and the related Notes and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" appearing elsewhere
in this prospectus.
<TABLE>
<CAPTION>
MAY 31, 1999
-----------------------------------
PRO FORMA
ACTUAL PRO FORMA AS ADJUSTED
--------- ----------- -----------
(IN THOUSANDS, EXCEPT SHARE DATA)
<S> <C> <C> <C>
Short-term debt (including current portion of long-term debt)..... $ 11,086 $ 11,086
--------- -----------
--------- -----------
Long-term debt (excluding current portion)........................ $ 1,141 $ 1,141
Common shares subject to Buy-Sell Agreement....................... 1,973 --
Shareholders' equity:
Preferred shares: NLG 0.96 par value, 10,000,000 shares
authorized; no shares issued and outstanding, actual; no
shares issued and outstanding, as adjusted.................... -- --
Common shares: NLG 0.96 par value, 40,000,000 shares authorized;
10,385,268 shares issued and 10,104,261 shares outstanding,
actual; shares issued and shares outstanding, as
adjusted...................................................... 3,030 5,003
Retained earnings............................................... 30,186 30,186
Cumulative other comprehensive loss............................. (3,130) (3,130)
Treasury shares: 281,007........................................ (131) (131)
--------- ----------- -----------
Total shareholders' equity.................................... $ 29,955 $ 31,928
--------- ----------- -----------
Total capitalization.......................................... $ 33,069 $ 33,069
--------- ----------- -----------
--------- ----------- -----------
</TABLE>
This table excludes the following shares as of May 31, 1999:
- 1,944,348 shares subject to options outstanding as of May 31, 1999 at a
weighted average exercise price of $5.41 per share; and
- 370,952 additional shares that could be issued under our stock plans.
Subsequent to May 31, 1999 through August 31, 1999:
- an additional 500,000 shares were made available for issuance under our
stock plans;
- we granted options to purchase 83,500 shares at a weighted average
exercise price of $8.33 per share; and
- options covering 33,750 shares have been canceled.
20
<PAGE>
DILUTION
Our pro forma tangible book value as of May 31, 1999 was $ million, or
approximately $ per share. Pro forma net tangible book value per share
represents the amount of our total assets less total liabilities, divided by the
number of common shares outstanding. Dilution in net tangible book value per
share represents the difference between the amount per share paid by purchasers
of common shares in this offering and the net tangible book value per common
share immediately after the completion of this offering. After giving effect to
the sale of the common shares in this offering at an assumed initial
public offering price of $ per share and after deducting the estimated
underwriting discounts and commissions and estimated offering expenses payable
by us, our pro forma net tangible book value at May 31, 1999 would have been
$ million, or approximately $ per share. This represents an immediate
increase in pro forma net tangible book value of $ per share to existing
shareholders and an immediate dilution in net tangible book value of $ per
share to purchasers of common shares in this offering. The following table
illustrates this dilution on a per share basis:
<TABLE>
<S> <C> <C>
Assumed initial public offering price per share......... $
Pro forma net tangible book value per share as of May
31, 1999............................................ $
Increase in net tangible book value per share
attributable to new investors.......................
---------
Pro forma net tangible book value per share after
offering..............................................
---------
Dilution in net tangible book value per share to new
investors............................................. $
---------
---------
</TABLE>
The following table sets forth, on a pro forma basis as of May 31, 1999,
after giving effect to the difference between the number of common shares
purchased from us, the total cash consideration paid and the average price per
share paid by existing holders of common shares and by the new investors, before
deducting underwriting discounts and commissions and estimated offering expenses
payable by us, at an assumed initial public offering price of $ per share:
<TABLE>
<CAPTION>
SHARES PURCHASED TOTAL CONSIDERATION AVERAGE
-------------------- --------------------- PRICE
NUMBER PERCENT AMOUNT PERCENT PER SHARE
--------- --------- ---------- --------- ----------
<S> <C> <C> <C> <C> <C>
Existing shareholders.............. % $ % $
New investors......................
--------- --------- ---------- ---------
Total.......................... 100.0% $ 100.0%
--------- --------- ---------- ---------
--------- --------- ---------- ---------
</TABLE>
This table excludes the following shares as of May 31, 1999:
- 1,944,348 shares subject to options outstanding as of May 31, 1999 at a
weighted average exercise price of $5.41 per share; and
- 370,952 additional shares that could be issued under our stock plans.
Subsequent to May 31, 1999 through August 31, 1999:
- an additional 500,000 shares were made available for issuance under our
stock plans;
- we granted options to purchase 83,500 shares at a weighted average
exercise price of $8.33 per share; and
- options covering 33,750 shares have been canceled.
The sale of common shares by the selling shareholders in this offering will
reduce the number of common shares held by existing shareholders to , or
approximately % of the total number of common shares outstanding upon the
closing of this offering and will increase the number of shares held by new
public investors to , or approximately % of the total number of common
shares outstanding after this offering.
21
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The tables that follow present portions of our consolidated financial
statements and are not complete. You should read the following selected
consolidated financial data in conjunction with our Consolidated Financial
Statements and the related Notes and with "Management's Discussion and Analysis
of Financial Condition and Results of Operations" included elsewhere in this
prospectus. The consolidated statement of operations data for the years ended
May 31, 1997, 1998 and 1999, and the consolidated balance sheet data as of May
31, 1998 and 1999, are derived from and are qualified in their entirety by our
Consolidated Financial Statements that have been audited by KPMG LLP,
independent auditors, and are included elsewhere in this prospectus. The
consolidated statement of operations data for the years ended May 31, 1995 and
1996, and the consolidated balance sheet data as of May 31 1995, 1996 and 1997
are derived from our audited consolidated financial statements which do not
appear elsewhere in this prospectus. The historical results presented below are
not necessarily indicative of the results to be expected for any future fiscal
year.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
----------------------------------------------------------
1995 1996 1997 1998 1999
---------- ---------- ---------- ---------- ----------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF OPERATIONS DATA:
Net revenue........................................ $ 167,681 $ 283,325 $ 298,576 $ 275,024 $ 228,618
Cost of revenue.................................... 130,921 223,292 241,675 222,028 189,295
---------- ---------- ---------- ---------- ----------
Gross profit....................................... 36,760 60,033 56,901 52,996 39,323
Selling, general, administrative and other
expenses......................................... 23,229 43,989 49,417 48,997 43,391
Restructuring and merger costs..................... -- -- 258 881 2,550
---------- ---------- ---------- ---------- ----------
Operating income (loss)............................ 13,531 16,044 7,226 3,118 (6,618)
Equity in net income (loss) of joint ventures...... 97 355 273 (497) 267
Minority interest in net income of consolidated
entities......................................... (116) -- -- -- --
Other income (expense), net........................ (1,401) 15 (602) (71) (397)
---------- ---------- ---------- ---------- ----------
Income (loss) before income taxes.................. 12,111 16,414 6,897 2,550 (6,748)
Provision (benefit) for income taxes............... 3,682 5,435 2,699 1,448 (2,214)
---------- ---------- ---------- ---------- ----------
Net income (loss).................................. $ 8,429 $ 10,979 $ 4,198 $ 1,102 $ (4,534)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Basic net income (loss) per share.................. $ 0.93 $ 1.07 $ 0.40 $ 0.11 $ (0.44)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Diluted net income (loss) per share................ $ 0.93 $ 1.02 $ 0.37 $ 0.10 $ (0.44)
---------- ---------- ---------- ---------- ----------
---------- ---------- ---------- ---------- ----------
Shares used to compute basic in per share
calculation...................................... 9,094 10,289 10,386 10,369 10,325
Shares used to compute diluted in per share
calculation...................................... 9,094 10,801 11,195 11,112 10,325
</TABLE>
<TABLE>
<CAPTION>
MAY 31,
--------------------------------------------------------
1995 1996 1997 1998 1999
--------- ---------- ---------- ---------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
CONSOLIDATED BALANCE SHEET DATA:
Cash and cash equivalents............................ $ 11,008 $ 13,683 $ 17,033 $ 10,387 $ 10,601
Working capital...................................... 17,782 23,296 26,383 24,469 22,630
Total assets......................................... 68,869 125,791 110,791 114,161 99,625
Total shareholders' equity........................... 22,825 32,908 36,399 36,049 29,955
</TABLE>
22
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The information in this Management's Discussion and Analysis of Financial
Condition and Results of Operations, except for the historical information,
contains forward-looking statements. These statements are subject to risks and
uncertainties. You should not place undue reliance on these forward-looking
statements as actual results could differ materially. We do not assume any
obligation to publicly release the results of any revision or updates to these
forward-looking statements to reflect future events or unanticipated
occurrences. This discussion and analysis should be read in conjunction with our
Consolidated Financial Statements and the related Notes, which are included
elsewhere in this prospectus. This discussion of fiscal 1997, 1998 and 1999
refers to the fiscal years ended on May 31 of each year.
OVERVIEW
Metron Technology N.V. is a holding company organized under the laws of The
Netherlands. Through our various operating subsidiaries, we are a leading global
provider of marketing, sales, service and support solutions to semiconductor
materials and equipment suppliers and semiconductor manufacturers. We operate in
Europe, Asia and the United States. We were founded in Europe in 1975 by our two
corporate shareholders, who own a majority of our shares, and certain of our
current and former management. In 1995, we reorganized the company and purchased
Transpacific Technology Corporation and its subsidiaries, TTC for short. TTC was
founded in California in 1982 as a semiconductor equipment manufacturers'
representative company and expanded into the distribution business in 1990. In
July 1998, we acquired T.A. Kyser Co., which we refer to as Kyser, in a
transaction accounted for as a pooling of interests. Founded in 1977, Kyser
markets and sells materials in nine states within the United States principally
to the semiconductor industry.
We derive our revenue from sales of materials, equipment, service and spare
parts to the semiconductor industry, as well as from commissions on sales of
equipment and materials. We recognize revenue for most of an equipment sale and
all other product sales upon the shipment of goods to customers. We defer the
portion of our equipment revenue associated with our estimate of our
installation and warranty obligations. We amortize the deferred revenue over the
applicable installation and warranty periods. We recognize service revenue in
the periods the services are rendered to customers.
In each of our three fiscal years ended May 31, 1999, a majority of our
revenue came from the sale of products from five or fewer of the semiconductor
materials and equipment companies we represent, who we refer to as our
principals. For fiscal 1999, 24% of our total revenue was generated from the
sale of products manufactured by FSI and 21% from the sale of products
manufactured by Entegris. In addition to representing our two largest sources of
revenue, FSI and Entegris are also our two largest shareholders, and after the
offering FSI will hold % and Entegris will hold % of our outstanding shares.
Although the principals that comprise our largest sources of revenue may change
from period to period, we expect that revenue from the sale of products of a
relatively small number of principals will account for a substantial portion of
our revenue for the foreseeable future.
23
<PAGE>
We operate in all areas of the world in which there is a significant
semiconductor industry, except Japan. The following table shows our sales in
Europe, Asia and the United States in dollars and as a percentage of net revenue
for each of the three fiscal years ended May 31, 1997, 1998 and 1999:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-------------------------------------------------------------------
1997 1998 1999 1997 1998 1999
---------- ---------- ---------- --------- --------- ---------
(IN THOUSANDS) (PERCENTAGE OF NET REVENUE)
<S> <C> <C> <C> <C> <C> <C>
Net revenue
Europe....................................... $ 179,853 $ 155,472 $ 112,369 60.2% 56.5% 49.2%
Asia......................................... 58,839 53,047 62,243 19.7 19.3 27.2
United States................................ 59,884 66,505 54,006 20.1 24.2 23.6
---------- ---------- ---------- --------- --------- ---------
Total net revenue.......................... $ 298,576 $ 275,024 $ 228,618 100.0% 100.0% 100.0%
---------- ---------- ---------- --------- --------- ---------
---------- ---------- ---------- --------- --------- ---------
</TABLE>
Since the beginning of fiscal 1999, we have been organized into two
worldwide operating divisions, equipment and materials. Our equipment division
derives the majority of its revenue from the sale of capital equipment. The
remainder of the division's revenue comes from service, which includes the
installation, maintenance and repair of semiconductor equipment, spare part
sales and commissions. Our equipment sales represent products that support
various production activities for the manufacture of semiconductors. The sales
of the equipment division principally represent a small number of high-dollar
value transactions for which the products are generally shipped directly to the
customer by the manufacturer. As a result, our equipment sales are significantly
affected by the pattern of capital spending by customers, the timing of customer
orders and the timing of product shipments by the equipment manufacturer.
Our materials division derives the majority of its revenue from sales of
materials and components. The remainder of the division's revenue comes from
commissions. The materials and components we sell are used both in the
production of semiconductors and in the building and maintenance of
semiconductor equipment and manufacturing facilities. Materials include products
such as wafer handling cassettes and accessories, wafer surface preparation
materials, fluid-handling components such as fittings, valves and tubing, and
disposable cleanroom clothing. Sales of these products tend to be less cyclical
than sales of semiconductor equipment and generally offer higher gross margins.
RESULTS OF OPERATIONS
Beginning in the second half of 1996, as the result of excess capacity and
significant price erosion, especially for memory chips, semiconductor industry
growth slowed significantly. This slowdown caused semiconductor manufacturers to
exercise caution in making capital equipment purchasing decisions. Some
semiconductor manufacturers reduced or delayed the expansion or construction of
facilities. This directly affected the sales of semiconductor capital equipment
and, to a lesser extent, the sales of materials. As a result of the slowdown, we
experienced order cancellations, delays in booking new orders and delays in
shipping orders to customers, all of which contributed to the reductions in our
revenue in fiscal 1998 and 1999. Because we base our operating expense levels on
longer term revenue goals, we did not reduce our operating expenses sufficiently
to prevent the company from recording an operating loss in fiscal 1999.
The following table summarizes our historical results of operations as a
percentage of net revenue for the fiscal years indicated. The historical
financial data for fiscal 1997, 1998 and 1999 were derived
24
<PAGE>
from, and should be read in conjunction with, our audited Consolidated Financial
Statements and the related Notes included elsewhere in this prospectus.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net revenue..................................................... 100.0% 100.0% 100.0%
Cost of revenue................................................. 80.9 80.7 82.8
--------- --------- ---------
Gross margin.................................................... 19.1 19.3 17.2
Selling, general, administrative, and other expenses............ 16.6 17.8 19.0
Restructuring and merger costs.................................. 0.1 0.3 1.1
--------- --------- ---------
Operating margin................................................ 2.4 1.2 (2.9)
</TABLE>
The following table shows our materials division and equipment division
revenue as a percent of net revenue, together with the related gross margins:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net revenue
Equipment division.............................................. 62.9% 55.1% 55.7%
Materials division.............................................. 37.1 44.9 44.3
Gross margins
Equipment division.............................................. 18.2% 17.4% 14.9%
Materials division.............................................. 20.5 21.6 20.1
</TABLE>
NET REVENUE
EQUIPMENT DIVISION. The equipment division's net revenue in fiscal 1999 was
$127.4 million, down $24.2 million or 16.0% from fiscal 1998. Net revenue in
fiscal 1998 was $151.6 million, down $36.3 million or 19.3% from $187.9 million
in fiscal 1997. The revenue decline over the three-year period was primarily the
result of reduced equipment sales in Europe, our largest geographic segment. The
decline in our equipment sales during the three-year period ended May 31, 1999
reflected the influence of the cyclical slowdown in the growth of the
semiconductor industry. In the third and fourth quarters of fiscal 1999, as the
industry began to emerge from its prolonged downturn, revenue grew by 16.2% in
the third quarter and 6.4% in the fourth quarter of fiscal 1999.
MATERIALS DIVISION. The materials division's net revenue in fiscal 1999 was
$101.2 million, down $22.2 million or 18.0% from fiscal 1998. Net revenue in
fiscal 1998 was $123.4 million, up $12.8 million or 11.6% from the $110.6
million in fiscal 1997. The decline in net revenue in fiscal 1999 was a result
of the reduced and delayed expansion and construction of semiconductor
facilities and lower than expected increases in the number of wafers processed.
In fiscal 1999, materials revenue was lower in all geographic areas. However, as
the industry began to emerge from its prolonged downturn, revenue grew
sequentially from the two year low in the first quarter and, in the fourth
quarter of fiscal 1999, was 21.3% higher than in the third quarter. The increase
in fiscal 1998 from fiscal 1997 was primarily due to revenue growth in Europe
and the United States, with a smaller amount of revenue growth in Asia.
GROSS MARGINS
EQUIPMENT DIVISION. The equipment division's gross margin declined in both
fiscal 1999 and fiscal 1998. The decline in gross margin in fiscal 1999 was due
principally to the lower proportion of division revenue represented by
commission sales. This reflected both the closure of our United States
manufacturers' representative sales business in December 1998 and the decline in
equipment sales in
25
<PAGE>
South Korea, most of which are structured as commission sales. The decline in
gross margin in fiscal 1998 was due principally to the fact that we recorded a
small loss on service in fiscal 1998, whereas we recorded a small profit in
fiscal 1997.
MATERIALS DIVISION. The gross margin of the materials division declined in
fiscal 1999. The decline was due principally to changes in product mix,
increased reserves which we booked for potential inventory obsolescence and
higher period costs. Gross margin increased in fiscal 1998 as a result of
changes in product mix and higher margins on materials sales in Asia.
SELLING, GENERAL, ADMINISTRATIVE AND OTHER (SG&A) EXPENSES. SG&A expenses
in fiscal 1999 were $43.4 million, down $5.6 million or 11.4% from the $49.0
million incurred in fiscal 1998. Fiscal 1998 expenses were down by $0.4 million
or less than 1% from the $49.4 million incurred in fiscal 1997. SG&A expenses
consist principally of salaries and other employment-related costs, travel and
entertainment, occupancy, communications and computer-related expense, trade
show and professional services, depreciation and amortization of acquisition
goodwill. Our SG&A expenses are a function principally of our total headcount.
Over 60% of SG&A expenses consist of salaries and other employment-related
costs.
The decrease in SG&A expenses in fiscal 1999 was primarily the result of the
reduction in headcount levels which we made to match the lower than expected
levels of revenue. However, because we base our headcount levels on longer term
revenue goals, we did not reduce headcount sufficiently to prevent SG&A expense
from increasing as a percentage of net revenue.
RESTRUCTURING AND MERGER COSTS. The following table summarizes the
restructuring and merger costs we incurred in the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Restructuring costs................................................................... -- $ 261 $ 1,835
Merger costs.......................................................................... $ 258 620 715
--------- --------- ---------
Restructuring and merger costs...................................................... $ 258 $ 881 $ 2,550
--------- --------- ---------
--------- --------- ---------
</TABLE>
Restructuring costs represent primarily severance costs associated with the
implementation of our new organizational structure and other reductions in
headcount. During fiscal 1998, we began the transition from our organizational
structure based on geography to a global organization built around our product
lines. This change did not have a material impact on restructuring and merger
expenses in fiscal 1998, but we incurred approximately $856,000 of charges in
fiscal 1999. In February 1999, we entered into an early retirement agreement
with one of our managing directors in connection with the termination of his
employment agreement. To cover the entire cost of the early retirement
agreement, we recorded a pre-tax charge of $979,000 in fiscal 1999.
All the merger costs we incurred were in connection with the acquisition of
Kyser. We began discussions with Kyser regarding a possible combination of the
two companies in fiscal 1997. Discussions were terminated for extended periods
of time and subsequently resumed several times before completion of the
transaction in July 1998.
26
<PAGE>
OTHER EXPENSE. The following table summarizes the components of other
income (expense) for the periods indicated.
<TABLE>
<CAPTION>
FISCAL YEAR ENDED MAY 31,
-------------------------------
1997 1998 1999
--------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C>
Foreign exchange gain (loss).................................... $ (578) $ 489 $ 211
Interest income................................................. 487 514 438
Interest expense................................................ (1,260) (1,110) (913)
Loss on the sale of joint ventures.............................. -- -- (140)
Miscellaneous income............................................ 749 36 7
--------- --------- ---------
Other expense................................................... $ (602) $ (71) $ (397)
--------- --------- ---------
--------- --------- ---------
</TABLE>
We engage in limited hedging activities to reduce our exposure to exchange
risks arising from fluctuations in foreign currency, but because hedging
activities can be costly, we do not attempt to cover all potential foreign
currency exposures. During the three-year period ended May 31, 1999, we entered
into contracts to hedge firm purchase commitments, to hedge the maturities of
foreign currency denominated liabilities with foreign currency denominated
assets and to hedge differences existing between foreign currency assets and
liabilities. The currencies in which we purchase forward exchange contracts have
numerous market makers to provide ample depth and liquidity for our hedging
activities.
Interest income represents primarily earnings on our available cash
balances. The decrease in our interest income in fiscal 1999 is a result of
lower average cash balances and of declining interest rates. Our interest
expense decreased year over year primarily as the result of reduced interest
rates, and the reduction in average borrowings from our various overdraft
facilities.
QUARTERLY RESULTS OF OPERATIONS
The following tables present certain consolidated statements of operations
data in dollars and as a percentage of net revenue for the eight quarters ended
May 31, 1999. In management's opinion, this unaudited information has been
prepared on the same basis as our audited annual Consolidated Financial
Statements and includes all adjustments (consisting only of normal recurring
adjustments) necessary for fair presentation of the unaudited information for
the quarters presented. The results of operations for any quarter are not
necessarily indicative of results that we may achieve for any subsequent
quarters.
<TABLE>
<CAPTION>
QUARTER ENDED
------------------------------------------------------------------------------------------
AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1997 1997 1998 1998 1998 1998 1999 1999
-------- --------- -------- --------- --------- --------- --------- --------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
CONSOLIDATED STATEMENT OF
OPERATIONS DATA:
Net revenue................. $ 61,552 $ 72,209 $ 78,249 $ 63,014 $ 56,922 $ 51,296 $ 56,559 $ 63,840
Gross profit................ 12,533 13,432 14,343 12,689 10,326 8,445 9,022 11,530
Income (loss) from
operations................ 1,325 158 1,364 271 (1,801) (2,595) (2,832) 610
Net income (loss)........... 886 (308) 563 (39) (1,266) (1,513) (1,899) 144
PERCENTAGE OF NET REVENUE:
Net revenue................. 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0% 100.0%
Gross profit................ 20.4 18.6 18.3 20.1 18.1 16.5 16.0 18.1
Income (loss) from
operations................ 2.2 0.2 1.7 0.4 (3.2) (5.1) (5.0) 1.0
Net income (loss)........... 1.4 (0.4) 0.7 (0.1) (2.2) (2.9) (3.4) 0.2
</TABLE>
27
<PAGE>
Our quarterly operating results have fluctuated significantly and are likely
to continue to fluctuate significantly due to a number of factors including:
- the timing of significant customer orders and customer spending patterns;
- the timing of product shipments by our principals;
- the loss of any significant customer or principal;
- the timing of new product and service announcements by our principals and
their competitors;
- the mix of products sold and the market acceptance of our new product
lines;
- the efficiencies we are able to achieve in managing inventories of
materials and spare parts;
- the timing of expenditures intended to increase future sales of materials
and equipment;
- general global economic conditions or economic conditions in a particular
region;
- changes in pricing by us, our principals or our competitors;
- changes in currency valuations relative to the U.S. dollar;
- costs we may incur if we become involved in future litigation; and
- other factors, many of which are beyond our control.
Net revenue has fluctuated over the past eight quarters primarily due to the
cyclical downturn of the semiconductor industry. The following table shows our
materials division and equipment division net revenue, together with their
related gross margins:
<TABLE>
<CAPTION>
QUARTER ENDED
--------------------------------------------------------------------------------------
AUG. 31, NOV. 30, FEB. 28, MAY 31, AUG. 31, NOV. 30, FEB. 28, MAY 31,
1997 1997 1998 1998 1998 1998 1999 1999
--------- --------- --------- --------- --------- --------- --------- ---------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Net revenue
Equipment division.......... $ 31,642 $ 39,352 $ 47,804 $ 32,812 $ 33,975 $ 27,507 $ 31,950 $ 33,991
Materials division.......... 29,910 32,857 30,445 30,201 22,948 23,790 24,609 29,849
Gross margins
Equipment division.......... 18.8% 16.9% 15.7% 18.9% 16.5% 13.9% 12.9% 15.9%
Materials division.......... 22.0 20.7 22.5 21.4 20.5 19.4 19.9 20.5
</TABLE>
Equipment division revenue for the past eight quarters fluctuated primarily
due to the factors described above. The decline in materials division revenue
during the first quarter of fiscal 1999 was primarily due to the slowdown in the
construction of semiconductor fabrication facilities. In the fourth quarter of
fiscal 1999, the increase in equipment and materials division revenue reflects
the beginning of the industry's emergence from its prolonged downturn.
Equipment division gross margins fluctuate primarily due to changes in
product mix. Materials division gross margins have remained relatively stable
for the past eight quarters except for the second and third quarters of fiscal
1999 when we recorded additional provisions for inventory which we purchased for
customer orders in Asia that were subsequently delayed or canceled.
LIQUIDITY AND CAPITAL RESOURCES
Our principal sources of liquidity to date have been cash flow from
operations and bank borrowings. We define liquidity as our ability to generate
resources to pay our current obligations and to finance our growth during
periods of business expansion. Our principal requirement for capital is for
working capital to finance receivables and inventories. Our working capital
(current assets less current
28
<PAGE>
liabilities) at May 31, 1999 was $22.6 million. As a result of lower revenue,
our working capital decreased 7.5% from May 31, 1998, and our current ratio
(current assets divided by current liabilities) was 1.3 at May 31, 1998 and 1.4
at May 31, 1999.
Our current assets declined 11.1% between fiscal 1998 and 1999, mainly as
result of a 20.8% decrease in accounts receivable, which reflected lower
revenue, and a 7.0% decrease in inventories. Our current liabilities declined
12.4% between fiscal 1998 and 1999, mainly as a result of a 19.2% decline in
accounts payable, including a 27.6% decline in amounts due affiliates. This
reduction was likewise due to our reduced revenue.
INVESTING ACTIVITIES. In fiscal 1998, we contributed $526,000 to increase
our investment in FSI-CME, a joint venture with FSI in Europe, and invested
$583,000 to purchase a 35% interest in a new Korean joint venture with FSI
called FSI-CMK. In February 1999, we sold our interests in these joint ventures
to FSI for $2.5 million.
During fiscal 1999, through our wholly-owned subsidiary Metron Technology
(United Kingdom) Ltd. we formed a joint venture with WS Atkins Plc., a publicly
traded provider of engineering and facilities maintenance services around the
world. This joint venture Metron Atkins Partnership Limited, of which we own a
50% interest, makes available the services of both joint venturers to the
semiconductor industry and coordinates the supply of services from others. These
services include the design and engineering of manufacturing facilities changes,
facilities management and comprehensive technical support.
Our capital expenditures for property, plant and equipment totaled $3.6
million for fiscal 1997, $4.0 million for fiscal 1998 and $1.4 million for
fiscal 1999. Most of our capital expenditures are for leasehold improvements and
computer and communications equipment. We expect that our total capital
expenditures in fiscal 2000 will be about $2.5 million, excluding whatever
portion we incur this year of the costs of a new operations management
information system which we estimate could total $3.0 to $4.0 million over a 24
to 36 month period. At May 31, 1999, we had commitments to spend approximately
$22.0 million for the purchase of equipment, materials and spare parts for
resale.
FINANCING ACTIVITIES. During the three-year period ending May 31, 1999, we
satisfied our funding requirements principally from internally generated funds
and our various borrowing facilities. In fiscal 1999, we repurchased common
shares from two employee shareholders for a total of $1.2 million pursuant to
the Amended and Restated Buy and Sell Agreement. We expect that the net proceeds
from this offering will be sufficient to meet our cash needs for working capital
for the foreseeable future. We have no plans to pay any dividends on our common
shares and intend to retain all of our future profits to fund future growth.
However, our future growth, including potential acquisitions, may require
additional external financing, and from time to time we may need to raise
additional funds through public or private sales of equity and/or additional
borrowings. If we are unable to obtain this additional funding, we might have to
curtail our expansion plans. The issuance of additional equity or debt
securities convertible into equity could result in dilution to our existing
shareholders.
YEAR 2000 IMPLICATIONS
The year 2000 problem arises because many older computer hardware and
software systems use only two digits to represent the year. As a result, these
systems and programs cannot distinguish between 20(th) and 21(st) century dates,
which may cause errors in information or system failures. Since uncertainty is
inherent in any assessment of the potential year 2000 issues, we recognize the
need to remain vigilant and are continuing our analysis, assessment and
conversion for the various year 2000 issues which we have identified across our
business.
29
<PAGE>
We utilize many third party software packages for our business applications
and computer systems that support our day-to-day operations. We are upgrading
our business applications and computer systems to be year 2000 compliant as the
result of our analysis of identified year 2000 deficiencies.
Many of the pieces of equipment we sold to customers in prior years and sell
now rely on specialized integrated software to monitor and control their
functions. Since the beginning of 1998, we have been working with suppliers and
customers to review and assess the software in these older products and in our
current product portfolio to identify any year 2000 issues. In January 1999, we
completed a report on all our current equipment principals and sent it to all of
our customers. To date, we have completed analysis of approximately 80% of our
installed base and found that about 10% require modification or upgrading to be
year 2000 compliant. Our goal is to complete this analysis as soon as we can,
but we are significantly dependent for information on our customers and on
former principals, and we cannot predict whether we will be able to complete the
project before December 31, 1999. Wherever possible, we are letting our
customers know what upgrades or modifications are necessary to be year 2000
ready. We are in the process of upgrading the software for certain customers and
are working with all of our customers to insure that any necessary upgrades can
be scheduled for completion in a timely manner.
Our internal systems include both information technology, or IT, and non-IT
systems. We are in the process of completing an assessment of our material
internal IT systems (including both our own software products and third-party
software and hardware technology), but we have not initiated an assessment of
our non-IT systems. We expect to complete testing of our IT systems in 1999. To
the extent that we are not able to test the technology provided by principals
and third-party vendors, we are seeking assurances from vendors that their
systems are year 2000 compliant and/or installing upgrades and modifications
where recommended. We are not currently aware of any material operational issues
or costs associated with preparing our internal IT and non-IT systems for the
year 2000. However, we may experience material unanticipated problems and costs
caused by undetected errors or defects in the technology used in our internal IT
and non-IT systems. Although the year 2000 project team has not yet determined
the most-likely worst-case year 2000 scenarios or quantified the likely impact
of these scenarios, it is clear that the occurrence of one or more of the risks
described above could have a material adverse effect on our business, financial
condition or results of operations.
While we have made efforts to notify our customers who have purchased
potentially non-compliant products, we cannot be sure that these customers will
not assert claims against us alleging that the purchased products should have
been year 2000 compliant at the time of purchase, which could result in costly
litigation and divert management's attention. We cannot be sure that we will not
encounter unforeseen problems related to year 2000 issues, but we currently
expect that the year 2000 program and any resulting issues will be resolved in a
timely manner. We are currently incurring staff costs and may incur other costs
to complete our program to resolve year 2000 issues, but we do not account for
these costs separately. Although we do not separately account for year 2000
expenses, we estimate that the expenses we have incurred to date to address year
2000 issues have not been material and, although we have not completed our full
assessment of our year 2000 readiness, we do not expect to incur material
expenses in connection with any required future remediation efforts.
We have not developed a contingency plan related to a failure of our, or a
third party's, year 2000 remediation effort and may not be prepared if this
occurs. We are also subject to external forces, both in the United States and
elsewhere, that might affect generally affect industry and commerce, such as
utility or transportation company year 2000 compliance failures and related
service interruptions.
EFFECT OF CURRENCY EXCHANGE RATE AND EXCHANGE RATE RISK MANAGEMENT
A significant portion of our business is conducted outside of the United
States through our foreign subsidiaries. While most of our international sales
are denominated in dollars, some are denominated
30
<PAGE>
in various foreign currencies. To the extent that our sales and operating
expenses are denominated in foreign currencies, our operating results may be
adversely affected by changes in exchange rates. Owing to the number of
currencies involved, the substantial volatility of currency exchange rates, and
our constantly changing currency exposures, we cannot predict the effect of
exchange rate fluctuations on our future operating results. Although we engage
in foreign currency hedging transactions from time to time, these hedging
transactions can be costly, and therefore, we do not attempt to cover all
potential foreign currency exposures. These hedging techniques do not eliminate
all of the effects of foreign currency fluctuations on anticipated revenue.
In addition, the transition period from legacy currencies to the euro
currently is set to expire January 1, 2002. We are assessing our information
technology systems to determine whether they will accommodate the eventual
elimination of the legacy currencies. If our information technology systems are
unable to do so, they would have to be upgraded or replaced.
MARKET RISK
At May 31, 1999 we had aggregate forward exchange contracts in various
currencies as follows:
<TABLE>
<CAPTION>
CONTRACT AMOUNT WEIGHTED AVERAGE
US$ BUY SELL CONTRACT RATE FAIR VALUE EXPIRATION DATE
- ---------------------- -------------------- -------------------- ---------------- ---------- ---------------
<S> <C> <C> <C> <C> <C>
$3,773,000............ -- Singapore Dollars 1.69 $ 98,319 January 2000
$4,889,000............ Japanese Yen 107.26 (1,439) March 2000
$2,022,000............ Singapore Dollars 1.67 3,578 January 2000
$1,700,000............ Italian Lira 1,864.90 5,492 July 1999
$500,000.............. British Pound 1.63 (475) June 1999
$700,000.............. Deutsch Mark 1.79 (36,445) July 1999
----------
$ 69,030
----------
----------
</TABLE>
The building mortgage with the Royal Bank of Scotland plc interest rate is
comprised of a variable LIBOR rate, a fixed rate of 1.5%, and a regulatory bank
charge. In May 1996 we entered into an interest rate swap, expiring June 2001,
to convert only the variable LIBOR portion of the interest rate to a fixed
interest rate of 7.72%. The interest rates at May 31, 1998 and 1999 for the
mortgage were 9.25% and 6.87%, while the interest rates for the swap were 9.27%
and 9.24%, respectively. At May 31, 1999, the notional amount for the interest
rate swap was $1,002,000 and its estimated fair value was a payable of $43,000.
31
<PAGE>
BUSINESS
OVERVIEW
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. On behalf of semiconductor materials and equipment suppliers,
which we refer to as our principals, we provide a broad range of materials and
equipment to leading semiconductor manufacturers such as Advanced Micro Devices,
IBM, Intel, Lucent, Motorola, NEC Electronics, Philips, Infineon (Siemens) and
STMicroelectronics. We also provide semiconductor manufacturers with the ability
to outsource a wide variety of fab and equipment support services, such as
materials management, cleanroom services and facility maintenance. Our
principals are both independent companies that have developed emerging
technologies and divisions of larger companies that have other primary products
and markets and include Cabot, Entegris, FSI, Komatsu, Pall, Schumacher, SDI,
Seiko Instruments and Zeiss. Our materials offerings include an extensive array
of over 15,000 items, including wafer carriers and shippers, fluid and gas
handling components, high purity chemicals and cleanroom products. Our equipment
offerings include cleaning, microlithography, metrology, photomask inspection
and repair, and inspection and defect characterization equipment.
INDUSTRY BACKGROUND
Industry sources indicate that the semiconductor industry grew from $21.5
billion in revenue in 1985 to $125.5 billion in revenue in 1998, representing a
compound annual growth rate of 14.6%. Although the industry recently experienced
one of its periodic down cycles, Dataquest estimates that semiconductor industry
revenue will increase to $153.3 billion in 1999, representing 12.6% growth over
1998, and will increase at a compound annual growth rate of 12.4% to $244.0
billion in 2003. The increase in demand for semiconductors is driven by the
communications industry, particularly the Internet, as well as growth in
traditional markets for semiconductors such as computers, automobiles and other
consumer and industrial products.
The manufacture of semiconductors requires a wide array of equipment and
materials. The semiconductor capital equipment industry consists of equipment
for wafer manufacture and processing and equipment for assembly, packaging and
testing of semiconductors. In 1998, the semiconductor wafer fabrication
equipment industry generated $14.6 billion in revenue. The high cost of
equipment development and the desire of semiconductor manufacturers to buy
products from financially and technically strong suppliers have led to
consolidation among equipment manufacturers. At the same time, the long-term
growth prospects of the industry continue to attract small players with new
technologies to fill product niches. In addition, some suppliers to the industry
are divisions of larger companies which have other primary products and markets.
The semiconductor manufacturing materials industry provides the wide variety
of consumable and manufacturing materials that are required by semiconductor
manufacturers, including wafer carriers and shippers, fluid and gas handling
components, high purity chemicals and cleanroom products. In 1998, the
semiconductor manufacturing materials industry generated $19.8 billion in
revenue. Rapid changes in technology have led to the creation and emergence of
newer semiconductor materials manufacturers offering innovative products. The
materials industry is more fragmented and less cyclical than the equipment
industry, in part because demand for semiconductor materials is driven more by
the volume of semiconductors produced than by industry capacity and expectations
of future revenue growth. The lower barriers to entry in this industry also
attracts new competitors.
As semiconductors continually become smaller and more complex, the number of
manufacturing steps increases, which requires more complex and costly
semiconductor equipment. The complex manufacturing process also entails the use
of a large variety of materials from many sources. In addition, the high capital
cost of semiconductor fabrication plants, called fabs, which can now exceed
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<PAGE>
$2.0 billion, requires that fabs quickly reach and maintain optimal productivity
levels in order to maximize their return on investment. This also necessitates
around-the-clock manufacturing, which in turn requires that spare parts,
materials and service be delivered quickly and on short notice.
The semiconductor industry has evolved into a global industry as
semiconductor manufacturers are increasingly operating fabs in multiple
locations throughout the world in proximity to their customers. The requirement
for the rapid ramp-up of new facilities and new products has led semiconductor
manufacturers increasingly to standardize all aspects of their operations and to
require that their suppliers do the same. We believe that in order to ensure
standardization, semiconductor manufacturers are increasingly seeking materials
and equipment suppliers that offer a comprehensive and cost-effective global
procurement solution to their materials, equipment and service needs.
Semiconductor equipment and materials suppliers and semiconductor
manufacturers are increasingly focusing on their core competencies and
outsourcing other aspects of their operations to third parties. The increasing
complexity of semiconductors and related capital investment, combined with
long-term pricing pressures, have led semiconductor manufacturers to
increasingly focus on design, development and manufacturing and outsource to
third parties equipment service, materials management, cleanroom services and
facility maintenance, as well as other similar services. We believe that
outsourcing enables these companies to increase fab productivity in a
cost-effective manner. In addition, semiconductor equipment and materials
suppliers often focus on product development and manufacturing and outsource to
third parties the marketing, sale, installation, service and support of their
products. In particular, smaller semiconductor equipment and materials
manufacturers that cannot afford to invest the time or the capital resources
required to build a global infrastructure, and divisions of larger companies
whose main focus is on other products or markets, often benefit from
outsourcing. Outsourcing enables these companies to reduce time to market,
financial risk and marketing investment while maintaining the ability to compete
with often larger companies with established infrastructures.
Providers of outsourcing services to the semiconductor industry are able to
take advantage of operational efficiencies due to their ability to offer
products and services from multiple suppliers and leverage their infrastructure
costs over a larger revenue base. There are a large number of generally smaller
companies that provide outsourcing services, including regional, privately-held
companies that focus on a portion of, or a specific geographic market in, the
semiconductor manufacturing industry. We believe that semiconductor equipment
and materials manufacturers and semiconductor manufacturers are increasingly
seeking an international services and support company that offers a
comprehensive global solution.
THE METRON SOLUTION
We are a leading global provider of marketing, sales, service and support
solutions to semiconductor materials and equipment suppliers and semiconductor
manufacturers. We provide an important link between semiconductor manufacturers
and our principals. We provide semiconductor manufacturers, who otherwise might
be required to purchase materials and equipment from a range of suppliers
worldwide, with the ability to purchase their materials and equipment through a
single supplier and the ability to outsource equipment service, materials
management, cleanroom services and facility maintenance. These services enable
our customers to:
- simplify and standardize their materials and equipment purchases in
multiple locations throughout the world;
- focus their resources on product design, development and marketing; and
- increase fab productivity in a cost-effective manner.
33
<PAGE>
We also provide timely and comprehensive marketing, sales, installation,
service and support for materials and equipment manufacturers, enabling our
principals to:
- focus their resources on technology and product development and
manufacturing;
- reduce their time to market, financial risk and marketing investment; and
- enable them to compete more effectively with larger companies with
established infrastructures without investing the time or capital
resources required to build their own infrastructures.
STRATEGY
Our goal is to be the leading global provider of marketing, sales, service
and support solutions to semiconductor materials and equipment suppliers and
semiconductor manufacturers. The key elements of our strategy include:
- LEVERAGE OUR GLOBAL INFRASTRUCTURE AND EXPAND OUR LEADERSHIP POSITION. We
believe that our global infrastructure, as well as our 25-year history of
serving the semiconductor industry, provide us a significant competitive
advantage in serving our principals and customers. As of August 31, 1999,
we had approximately 390 sales and marketing and customer service and
support employees in 33 offices in Asia (except Japan), Europe and the
United States. We plan to continue to leverage our global infrastructure
by offering an increasing variety of products and services.
- CONTINUE TO BROADEN PRODUCT AND SERVICE OFFERINGS. We offer a wide range
of semiconductor manufacturing materials and equipment and plan to
selectively broaden our product lines and territories to meet the needs of
our customers. We believe our competitive advantage is generally greater
in product areas that are not served by one of the large
globally-integrated equipment or materials manufacturers. We will also
seek to enter into additional relationships with non-United States
principals seeking to penetrate the United States market and other markets
outside their home territories. We also plan to expand on-site maintenance
and other support services, including specialized parts cleaning,
inventory management and engineering services. We believe these efforts
will strengthen our long-term relationships with our customers.
- EXPAND MATERIALS BUSINESS. While continuing to expand our equipment
business, we intend to increase the relative size of our materials
business. We believe that the materials business is particularly
well-suited to benefit from the global infrastructure that we have
developed, in part because addressable markets are more fragmented, there
are a large number of individual products and typical transactions are
smaller. Materials products generally offer relatively favorable gross
margins, and the materials business is generally less cyclical than the
equipment business.
- FOSTER LONG-TERM RELATIONSHIPS WITH OUR PRINCIPALS. We seek to continue to
develop long-term relationships with our principals. Generally, within the
territories we serve for a principal, we operate as the exclusive
representative of the principal and do not offer competing product lines.
To foster long-term relationships with our principals, we will continue
the joint training of our sales, service and applications personnel, the
investment in inventories and demonstration equipment, as appropriate, and
the joint participation in trade shows with our principals. In addition,
to help us secure longer term relationships with our principals, we plan
to selectively invest in principals during their later stage financings.
- ACQUIRE COMPLEMENTARY BUSINESSES. To enable us to better serve our
principals and customers, we plan to selectively acquire complementary
businesses. Potential acquisition candidates include independent regional
sales, service and support companies, which currently operate in a highly
fragmented segment of the semiconductor industry. We believe that our
acquisition strategy will allow us to gain access to new principals and
territories, broaden our offerings to existing
34
<PAGE>
customers and gain new customers. Our acquisition of T.A. Kyser Co. in
1998, an example of our execution of this strategy, established our United
States materials and components business.
- EXPAND INTO JAPAN. Japan is the second largest producer of semiconductors
in the world and accounted for approximately 21% of world production in
1998. Although we represent a limited number of Japanese principals, we do
not currently operate an office in Japan. We currently intend to open an
office in Japan in 2000 to foster closer relations with Japanese materials
and equipment suppliers and to explore opportunities to service the
Japanese semiconductor manufacturing industry.
PRODUCTS AND SERVICES
We believe Metron markets and sells a wider range of materials, equipment,
spare parts, service and support solutions to the semiconductor industry than
any other independent provider of these products and services. We are organized
into two worldwide operating divisions, materials and equipment. In fiscal 1999,
sales by our equipment division accounted for approximately 56% of our revenue,
and sales by our materials division accounted for approximately 44% of our
revenue.
We operate under a series of agreements with our principals. These
agreements generally give us the exclusive right to market, sell and support
particular products in specific geographic regions. Generally, within the
territories we serve for a principal, we operate as the exclusive representative
of the principal and do not offer competing product lines. The agreements with
our principals are typically cancelable without cause with notice periods that
range from 30 days to two years. In addition to maintaining appropriate
inventories of materials and spare parts, we sometimes purchase equipment for
demonstration purposes which may be installed in a customer's fab for evaluation
purposes or at one of our facilities.
Product selection is critical to our success. We evaluate a large number of
product opportunities, relatively few of which we ultimately add to our product
offerings. In our evaluation of new product lines, we thoroughly review numerous
factors, including the product line's current and projected revenue stream and
market share, whether the product line is sufficiently developed for its
targeted market segment, whether distribution arrangements for the product line
are currently in place, the prospective principal's anticipated ability to offer
innovative and advanced products, the history and stability of the prospective
principal and our ability to market, sell and provide a consistent level of
service and support for the product line.
MATERIALS
Our materials business includes the marketing and sale of an extensive array
of over 15,000 items, including wafer carriers and shippers, fluid and gas
handling components, high purity chemicals and cleanroom products, to
semiconductor manufacturers, manufacturers of semiconductor equipment and to a
lesser extent, customers in other industries such as pharmaceuticals and
petroleum. As of August 31, 1999, our materials division represented over 50
principals. The table below lists the
35
<PAGE>
business units in our materials division, the types of products sold and the
largest principals within each business unit:
<TABLE>
<CAPTION>
BUSINESS UNIT TYPES OF PRODUCTS LARGEST PRINCIPALS
- ---------------------------------- ------------------------------------------------ ------------------------
<S> <C> <C>
Gas and fluid handling Valves, fittings and other components for Entegris
ultrapure applications
High end filtration products and systems Pall
Stainless steel control valves and regulators Tescom
Wafer management Wafer transport carriers Entegris
Pellicles MLI
Device handling Semiconductor device transport carriers Entegris
Vacuum release chip trays Gelpak
Quartz components MGI Products
Cleanroom products Latex gloves Omni Sales
Face masks Tecnol
Wipers and swabs Texwipe
Integrated shippers products Wafer and disc shippers Entegris
</TABLE>
We believe the materials business is particularly well-suited to benefit
from our global infrastructure because addressable markets are more fragmented,
there are a large number of individual products and average transaction sizes
are generally smaller than in the equipment business. As a result, we believe
that many companies are often unable to cost-effectively provide materials,
service and support globally in order to meet semiconductor manufacturer
requirements and can benefit from Metron's ability to distribute their products
through our international sales and marketing organization. Similarly, by
working with Metron, a customer can increase sales by improving fab productivity
while reducing inventory, warehousing and other costs. For some fabs of our
customers in the United States, including Intel, Motorola and Philips, our
materials division has primary responsibility for the operation of the
customer's on-site warehouse of materials and components we sell. Our
experience, infrastructure and systems in the United States enable us to
maintain a highly reliable materials inventory management and order processing
system, which allows us to increase the speed of order fulfillment and provide
other value-added services to both customers and principals. We plan to expand
our activities in this area to other parts of the world to provide more
comprehensive support to more of our customers.
EQUIPMENT
Our equipment business includes the marketing and sale of equipment,
including products for cleaning, coating, developing and etching; detection,
measurement and quality control tools; equipment used in the manufacture, fault
diagnosis and repair of the masks used to create the complex patterning of
semiconductors; automatic wafer handling, particle counting and cleanroom
monitoring equipment. The equipment division also markets specialized containers
of high purity chemicals which are used in the chemical vapor deposition and
diffusion phases of semiconductor wafer processing. As of
36
<PAGE>
August 31, 1999, our equipment division represented over 40 principals. The
table below lists the largest products by revenue in the equipment division and
the principals for those products:
<TABLE>
<CAPTION>
TYPES OF PRODUCTS PRINCIPALS
- ------------------------------------------------------------- ------------------------------
<S> <C>
Environmental gas cleaning systems ATMI
Wafer cleaning tools FSI
Photo-lithography processing tools FSI
High purity wafer processing chemicals Schumacher
Wafer characterization and diagnostic tools SDI
Photomask inspection and repair tools Seiko Instruments
</TABLE>
In July 1999, we signed an agreement with Carl Zeiss to market, sell,
service and support its semiconductor inspection tools in the United States. In
August 1999, we signed an agreement with Komatsu Ltd. to market, sell, service
and support its deep UV excimer lasers in Europe.
Particularly in the equipment business, we believe our competitive advantage
is generally greater in product areas that are not served by one of the large
globally-integrated manufacturers. We have sought, and expect to continue to
seek, relationships with non-United States principals seeking to penetrate the
United States market and other markets outside their home territories.
SERVICE AND SPARE PARTS
We believe that as semiconductor manufacturers become increasingly sensitive
to the costs of system downtime, they direct their purchases to suppliers who
can offer comprehensive local installation, maintenance and repair service and
spare parts. To meet these needs, we provide installation, maintenance, repair
and service for the equipment we sell, and we employ skilled service engineers
in 18 offices located in approximately 13 countries. In some cases, our service
engineers are located on-site at a semiconductor manufacturer's facility. By
continuing to maintain local offices in most major markets and staffing those
offices with nationals fluent in local languages and customs, we are able to
provide our principals and customers with sales, service and support 24 hours a
day, seven days a week where necessary. We provide our customers with
applications services and help them develop customized solutions to technical
problems. To better serve our customers, during fiscal 1999 Metron formed a
joint venture with WS Atkins Plc. to provide additional services to the
semiconductor industry, including facilities management and comprehensive
technical support of production equipment.
Our service personnel receive extensive initial and follow-up training
internally and/or from the principals whose products they service. Our service
personnel receive the same training from our principals as their own personnel
and receive and maintain the same certification. We generally warrant the
products we sell for a period of one year, and our warranty liability is
generally backed by a warranty from the principal. If we install the equipment
in a customer's fab, we are generally responsible for the costs of the labor
component of the warranty, and the principal is responsible for replacing parts
which are under warranty. After the warranty period has expired, we also offer
service contracts or on-call service support for equipment which we have
supplied.
We also provide our customers with the spare parts required to maintain and
repair the equipment we have supplied and to operate other systems in their
fabs. We work with our principals to maintain an inventory of mission-critical
spare parts and materials close to our customers' sites so we can deliver the
required parts in the shortest time possible. In some cases, we are responsible
for maintaining inventories at our customers' sites, and we plan to expand the
service we provide in this area.
37
<PAGE>
SALES AND MARKETING
Our worldwide sales and marketing organization is an essential part of our
strategy of maintaining close relationships with our principals and with our
semiconductor manufacturer customers. We provide timely and comprehensive
marketing, sales, service and support for materials and equipment manufacturers,
enabling these manufacturers to focus their resources on technology and product
development. As of August 31, 1999, we had 204 sales and marketing employees in
33 offices in Asia, Europe and the United States. Through these sales and
support offices, we maintain an important link between our principals and
semiconductor manufacturers. Our sales and marketing organization identifies
customer requirements, assists in product selection and monitors each
transaction through final sale, shipment and installation. We also employ
approximately 183 highly-skilled technical and engineering personnel around the
world to support our sales and marketing organization and our customers. In
Europe, we have approximately 114 support personnel in eight countries located
in eleven offices as well as at several semiconductor manufacturers' facilities.
In Asia, we have approximately 57 support personnel in five countries located in
seven offices as well as at several semiconductor manufacturers' facilities. In
the United States, we have approximately eleven support personnel located in two
states. Most of our employees are fully conversant in local languages and
familiar with local business culture and practices.
We offer comprehensive sales and marketing technical support services,
including materials and equipment specification review from the initial sales
effort through on-going product improvement programs; demonstration of materials
and equipment; tool installation, including customer site preparation and final
system acceptance; on-going customer support and process improvement; editing,
improving and writing of operation and maintenance manuals; and customer
training programs including maintenance training and on-site operator training.
Our ability to offer these extensive support services is due in part to
extensive initial and follow-up training of our sales and marketing technical
support personnel both in-house and by the principals whose products we sell. We
also conduct technical seminars, training sessions and user group meetings, and
we own and operate a 720 square foot, Class 100 cleanroom facility in Sunnyvale,
California.
We also employ applications engineers who work closely with our customers to
solve particular customer problems and develop innovative processing solutions
using particular equipment supplied by our principals. In some cases, our
customers' engineers have collaborated with our engineers to produce and publish
technical papers. Application selling and application support is a key part of
our strategy to introduce and sell new technology into the semiconductor
marketplace.
We utilize a number of other marketing techniques that enable our principals
to access new markets and semiconductor manufacturers. We seek to actively
involve our principals in the marketing and sales process and often conduct
joint sales calls on existing and potential customers with representatives from
our principals. We assign product managers to some of our principals to provide
particular attention to the marketing, service and support of specific product
lines. We participate in various trade shows around the world, including Semicon
Europa in Europe, Semicon Korea, Semicon Singapore and Semicon Taiwan in Asia
and Semicon Southwest and Semicon West in the United States.
CUSTOMERS
We market semiconductor materials and equipment to most of the world's
semiconductor manufacturers and to many suppliers to the semiconductor industry,
including semiconductor equipment manufacturers. In fiscal 1999, our 10 largest
customers accounted for approximately 32% of our net revenue. We expect that
sales to relatively few semiconductor manufacturers will continue to account for
a significant percentage of our revenue for the foreseeable future, although the
relative revenue ranking of individual customers may change from period to
period. The table below sets forth
38
<PAGE>
our 10 largest customers in 1999 based on revenue and the geographic regions
where we support these customers:
<TABLE>
<CAPTION>
CUSTOMER LOCATIONS
- ---------------------------------------------- ----------------------------------------------
<S> <C>
Advanced Micro Devices Germany, Singapore, United States
Dupont Photomask France, United States
IBM France, Germany, United States
Intel Ireland, Israel, United States
Lucent France, Singapore, United States
Motorola France, Hong Kong, United Kingdom, United
States
NEC Electronics United Kingdom, United States
Philips France, Hong Kong, The Netherlands
Infineon (Siemens) Germany
STMicroelectronics France, Italy
</TABLE>
COMPETITION
The semiconductor industry is highly competitive. We face substantial
competition on two distinct fronts: competition for product lines and
competition for customers.
COMPETITION FOR PRODUCT LINES
For those semiconductor equipment and materials manufacturers who elect to
sell through independent sales and distribution companies, we must compete with
other companies for the right to sell specific product lines. Some of these
independent sales and distribution companies have long-standing collaborative
business relationships with semiconductor equipment and materials manufacturers
which are difficult to overcome. We believe that the most significant
competition on this front comes from regional semiconductor equipment and
materials distribution companies. Furthermore, many equipment and materials
manufacturers choose to sell directly to semiconductor manufacturers in some or
all markets. In Europe and Asia, we compete with equipment and materials
manufacturers who choose to sell their products directly to semiconductor
manufacturers as well as with regional independent distribution companies such
as Hermes in Taiwan and Macrotron and Teltec in Europe. In the United States, we
compete primarily with United States semiconductor equipment and materials
manufacturers who choose to sell their products directly to semiconductor
manufacturers.
We believe that our competitive advantage is greater in product areas that
are not served by one of the large globally-integrated equipment or materials
manufacturers. We believe that to compete effectively we must maintain a high
level of investment in marketing, customer service and support in all of the
markets in which we operate. Although we consider our global operations and
reputation to be significant competitive advantages, we cannot be certain that
we will have sufficient financial resources, technical expertise, or marketing,
services and support capabilities to continue to compete successfully on this
front in the future.
COMPETITION FOR CUSTOMERS
We compete with established semiconductor equipment and materials
manufacturers who sell directly to customers and with other independent sales
and distribution companies for orders from semiconductor manufacturers. Some of
these competitors have greater name recognition in the territories they serve
and have long-standing relationships with semiconductor manufacturers that may
39
<PAGE>
give them a competitive advantage. Other significant competitive factors in the
semiconductor equipment and materials market include product specifications and
quality, product performance, product reliability, process repeatability,
customer service and support, timeliness of new product introductions, in
addition to total cost of ownership and price. We anticipate that as we expand
our product portfolio and expand into new markets, we will encounter additional
competition, and the competitive factors listed above, among others, might make
it difficult for us to establish sales and distribution capability in new
markets such as Japan. This competition, as well as the local political climate
and local business practices, may limit our ability to successfully expand into
new markets. We cannot be certain that we will continue to compete successfully
in the future.
EMPLOYEES
As of August 31, 1999, we had 571 full-time employees, including 142 in our
materials division, 246 in our equipment division and 183 in general
administrative activities, including finance and accounting, sales
administration, shipping and receiving and corporate management. Of our
full-time employees, 125 are located in the United States, 311 are located in
Europe and 135 are located in Asia. None of our employees is covered by a
collective bargaining arrangement. We consider our relationships with our
employees to be good.
FACILITIES
Our corporate headquarters are located in Burlingame, California. The head
of our global materials division is also based in Burlingame, California, and
the head of our global equipment division is based in the United Kingdom. We own
our 30,000 square foot facility in Livingston, Scotland, 18,000 square foot
facility in Aschheim, Germany and 6,500 square foot facility in Almere, The
Netherlands. In addition, we leased space for marketing and customer service and
support purposes in 33 locations worldwide as of August 31, 1999. We operate a
720 square foot, Class 100 cleanroom in our leased facility in Sunnyvale,
California.
LEGAL PROCEEDINGS
We are not a party to any material pending legal proceedings.
40
<PAGE>
MANAGEMENT
SUPERVISORY AND MANAGING DIRECTORS
The following tables set forth, as of August 31, 1999, certain information
with respect to the supervisory directors and managing directors of Metron:
SUPERVISORY BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- ----- -----------------------------------------------------
<S> <C> <C>
Robert R. Anderson(1)(2)............................. 61 Supervisory Director
James E. Dauwalter(1)(2)............................. 48 Supervisory Director
Joel A. Elftmann(1)(2)............................... 59 Supervisory Director
</TABLE>
MANAGING BOARD
<TABLE>
<CAPTION>
NAME AGE POSITION
- ----------------------------------------------------- ----- -----------------------------------------------------
<S> <C> <C>
Edward D. Segal(3)................................... 59 President, Chief Executive Officer and Managing
Director
Michael A. Grandinetti(4)............................ 51 Executive Vice President, Materials Division and
Managing Director
C. Garry Hendricks(4)................................ 65 Vice Chairman of T.A. Kyser Co. and Managing Director
Peter V. Leigh(4).................................... 54 Vice President, Finance, Chief Financial Officer and
Managing Director
J. Christopher Levett-Prinsep(4)..................... 53 Executive Vice President, Equipment Division and
Managing Director
Keith Reidy(4)....................................... 42 Vice President, Marketing and Managing Director
</TABLE>
- ------------------------
(1) Member of the audit committee.
(2) Member of the compensation committee.
(3) Managing director A.
(4) Managing director B.
ROBERT R. ANDERSON has been a supervisory director of Metron since November
1995. Mr. Anderson is presently Chairman of the Board and Chief Executive
Officer of Yield Dynamics, Inc., (YDI) a semiconductor yield management software
start-up company. He became a director of YDI in August 1997 and Chairman and
Chief Executive Officer in October 1998. Mr. Anderson has been Chairman of the
Board of Silicon Valley Research, a semiconductor design automation software
company, since January 1994 and served as Chief Executive Officer from April
1994 until July 1995 and from December 1996 until October 1997 and as Chief
Financial Officer from September 1994 to November 1995. Mr. Anderson co-founded
KLA Instruments Corporation (now KLA-Tencor Corporation), a supplier of
equipment for semiconductor process control, in 1975 and served in various
capacities including Chief Operating Officer, Chief Financial Officer, Vice
Chairman and Chairman. Mr. Anderson also serves as a director of Applied Science
& Technology Inc., a supplier of systems components for the semiconductor
industry.
41
<PAGE>
JAMES E. DAUWALTER has been a supervisory director of Metron since November
1995 and was a managing director from June 1979 until November 1995. Mr.
Dauwalter is Executive Vice President of Fluoroware, Inc., a wholly-owned
subsidiary of Entegris, Inc. which is a principal and a large minority
shareholder of Metron. Mr. Dauwalter joined Fluoroware in 1973. Mr. Dauwalter
also serves as a director of Nippon Fluoroware K.K., Fluoroware-Valqua Japan
K.K. and Fluoroware Southeast Asia PTE Ltd.
JOEL A. ELFTMANN, a co-founder of Metron, has been a supervisory director
since November 1995 and was a managing director from October 1975 until November
1995. Mr. Elftmann is Chairman of the Board, President and Chief Executive
Officer of FSI International, Inc., a principal and a large minority shareholder
of Metron. Mr. Elftmann is also a co-founder of FSI and has served as a director
of FSI since 1973 and as Chairman of the Board since August 1983. From August
1983 to August 1989, and from May 1991 until the present, Mr. Elftmann also has
served as Chief Executive Officer of FSI. From 1977 to August 1983, from May
1991 until January 1998 and from August 1999 to the present, Mr. Elftmann has
served as President of FSI. Mr. Elftmann also serves as a director of Veeco,
Inc.
EDWARD D. SEGAL has been a managing director of Metron since November 1995.
He joined Metron as President and Chief Executive Officer in July 1995. Prior to
joining Metron, Mr. Segal served as President and Chief Executive Officer of
Transpacific Technology Corporation, a company which he founded in 1982. Mr.
Segal is a member of the Board of Directors of Semiconductor Equipment &
Materials International, a trade association for suppliers to the semiconductor
industry. Mr. Segal holds a B.S. degree in Metallurgical Engineering from
Rensselaer Polytechnic Institute.
MICHAEL A. GRANDINETTI has been a managing director and served as Executive
Vice President, Materials Division of Metron since December 1997. From 1990 to
1997, Mr. Grandinetti served in several management positions at Tylan General,
Inc., a publicly-traded manufacturer of mass flow controllers, vacuum gauges and
other engineering products, most recently as Senior Vice President, and prior to
that as Vice President of Sales and Marketing. Mr. Grandinetti holds a B.S.
degree in Mechanical Engineering and an M.S. degree in Engineering Management
from Northeastern University.
C. GARRY HENDRICKS has been a managing director of Metron since January
1999. He was a founding associate of T.A. Kyser Co. and Chief Executive Officer
since its inception in 1977 until Kyser became a wholly-owned subsidiary of
Metron in July of 1999, at which point he joined Metron and was appointed Vice
Chairman of Kyser. Mr. Hendricks has served on various distributor councils of
principals represented by Metron and its subsidiary, Kyser. Mr. Hendricks holds
a B.B.A. degree from North Texas State University in production management.
PETER V. LEIGH has served as Vice President, Finance and Chief Financial
Officer of Metron since November 1995 and has been a managing director of Metron
since November 1996. From 1992 to 1995 Mr. Leigh served as Vice President,
Finance and Chief Financial Officer of Sequus Pharmaceuticals, a publicly-traded
bio-pharmaceutical firm. From 1982 until 1992, Mr. Leigh served as Corporate
Controller of Bio-Rad Laboratories, a publicly-traded multi-national
manufacturer and marketer of analytical chemistry, diagnostic and semiconductor
metrology equipment and materials. Mr. Leigh holds a B.A. degree from the
University of Oxford and an M.B.A. degree from the Harvard Business School.
J. CHRISTOPHER LEVETT-PRINSEP has been a managing director of Metron since
July 1983 and has served as managing director of Metron's United Kingdom
subsidiary, of which he was the founder and first employee, since 1978. Mr.
Levett-Prinsep served as President of Metron's European Operations from August
1994 until December 1997, when he became Executive Vice President, Equipment
Division. Mr. Levett-Prinsep holds an Ordinary Certificate in Technology from
Coventry Technical College and an Advanced Certificate from Wednesbury College
of Technology.
42
<PAGE>
KEITH REIDY has been a managing director of Metron since April 1999 and has
served as Vice President, Marketing since March 1999. Mr. Reidy has also served
as Director, Product Development and Director, U.S. Representative Organization.
Prior to joining Metron in July 1995, Mr. Reidy served as the Vice President,
Sales of Transpacific Technology. Mr. Reidy holds a B.S. degree in engineering
from the University of California, Davis and an M.S. in engineering from Purdue
University.
DUTIES OF METRON MANAGEMENT
Metron has a supervisory board and a managing board. Under the laws of The
Netherlands, supervisory directors cannot be managing directors of a company.
The primary responsibilities of the supervisory board are supervising the
managing board of Metron and the general affairs and business of Metron and
advising the managing board. The managing board is responsible for the
management of the day-to-day operations of Metron and is required to keep the
supervisory board informed about such operations. Under Metron's articles of
association, the managing board is required to obtain the prior approval of the
supervisory board for those resolutions of the managing board as the supervisory
board has designated by resolution and so informed the managing board. No
resolution to this effect has been passed to date. Generic references in this
prospectus to directors refer to members of either the supervisory board or
managing board. Other executives do not bear the responsibilities attributed to
members of the managing board and the supervisory board, or the related
liabilities, if any.
The Metron articles provide for a supervisory board of one or more persons.
The Metron articles also provide for the appointment of one or more managing
directors A and one or more managing directors B under the supervision of the
supervisory board. The number of supervisory directors and the number of
managing directors is determined by the supervisory board. Metron presently has
three supervisory directors, one managing director A (Mr. Segal, its President
and Chief Executive Officer) and five managing directors B.
The general meeting of shareholders appoints the supervisory directors and
at all times has the power to suspend or dismiss any supervisory director. A
resolution to appoint a supervisory director can only be passed upon
recommendation by the supervisory board. Under the Metron articles, each member
of the supervisory board holds office for a one-year term following that
member's election as a member of the supervisory board, or until that member's
earlier resignation, death or removal by a decision of a general meeting.
However, a member of the supervisory board elected not at the general meeting of
shareholders but at an extraordinary meeting of shareholders serves until the
next general meeting of shareholders or until that member's earlier resignation,
death or removal by a decision of the general meeting. Each member of the
supervisory board holds office until that member's resignation, death or removal
by a decision of a general meeting of shareholders. In addition, each
supervisory director is required to resign as of the date of the general meeting
of shareholders held in the year in which that director attains the age of 72. A
shareholders' resolution to suspend or dismiss a supervisory director must be
adopted by a two-thirds majority of the valid votes cast representing more than
half of the issued share capital.
The entire managing board, as well as each managing director A individually,
has the power to represent Metron and bind Metron in agreements with third
parties. A managing director B may only represent Metron together with another
managing director. The general meeting appoints the managing directors for an
unlimited period of time, determines whether the managing director shall serve
as a managing director A or as a managing director B and at all times has the
power to suspend or dismiss any managing director. A resolution to appoint a
managing director can only be passed upon recommendation by the supervisory
board. Each managing director can at all times also be suspended by the
supervisory board for a period of up to three months. A shareholders' resolution
to suspend or dismiss a managing director must be adopted by a two-thirds
majority of the valid votes cast representing more than half of the issued share
capital. The supervisory board decides on the remuneration and further terms and
conditions of employment for each of the managing directors.
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<PAGE>
Managing directors, along with other employees of subsidiaries of Metron, are
eligible for options under the terms of Metron's employee option plans.
Metron's managing directors have been appointed by the general meeting to
serve for an indefinite period of time.
COMMITTEES OF THE SUPERVISORY BOARD
In March 1996, the supervisory board created two supervisory board
committees. The compensation committee has responsibility for providing
recommendations to the supervisory board for final decision concerning salaries
and incentive compensation for managing directors, executive officers and
certain key employees of, and consultants to, Metron. The audit committee has
responsibility for reviewing the internal accounting procedures and controls of
Metron and the results and scope of the audit and other services provided by
Metron's independent auditors. At the present time, and until the general
meeting appoints further supervisory board members, all of the existing
supervisory directors are members of both committees.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Our compensation committee consists of Messrs. Anderson, Dauwalter and
Elftmann.
None of the current members of our compensation committee is an officer or
employee of Metron. Mr. Elftmann is Chairman of the Board and Chief Executive
Officer of FSI, one of our principals and shareholders. Mr. Dauwalter is
Executive Vice President of Fluoroware, a wholly-owned subsidiary of Entegris,
one of our principals and shareholders. See "Certain Transactions" for a more
detailed description of the relationship between Metron and each of FSI and
Entegris.
SUPERVISORY DIRECTOR COMPENSATION
The supervisory board may grant a remuneration to one or more of the
supervisory directors. Members of the supervisory board are paid annual
director's fees of $1,000 for each meeting which they attend in person or by
telephone. In addition, supervisory board members are paid $500 for each meeting
they attend of a board committee of which they are a member, but only when the
board committee meets on a day when the supervisory board itself is not meeting.
Beginning in January 1998, the supervisory directors voluntarily opted to forego
receiving their directors fees. The supervisory directors may at any time choose
to accept their director fees and at that point the fees would again be paid by
Metron to the supervisory directors. Each member of the supervisory board will
receive an initial grant of 15,000 options and subsequent annual grants of 3,750
options.
44
<PAGE>
MANAGING DIRECTOR COMPENSATION
The following table sets forth certain information for fiscal 1999 regarding
the compensation of Metron's Chief Executive Officer and each of the four most
highly compensated managing directors of Metron whose salary and bonus for such
year were in excess of $100,000 on an annualized basis, which we refer to as the
Named Executive Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------------------------
OTHER ANNUAL ALL OTHER
NAME AND POSITION SALARY BONUS COMPENSATION(1) COMPENSATION
- ---------------------------------------------- --------- --------- --------------- -----------
<S> <C> <C> <C> <C>
Edward D. Segal .............................. $ 281,730 $ 86,000 -- $ 699(2)
President and Chief Executive Officer and
Managing Director
J. Christopher Levett-Prinsep ................ 207,611 60,644 -- 44,338(3)
Executive Vice President, Equipment Division
and Managing Director
Keith Reidy .................................. 192,500 60,000 $ 1,308(4) 677(2)
Vice President, Marketing and Managing
Director
C. Garry Hendricks ........................... 190,818 25,000 -- --
Vice Chairman of T.A. Kyser Co. and Managing
Director
Peter V. Leigh ............................... 155,513 51,000 -- 614(2)
Vice President, Finance and Chief Financial
Officer and Managing Director
</TABLE>
- ------------------------
(1) None of the perquisites and other benefits paid to any Named Executive
Officer exceeded the lesser of $50,000 or 10% of the total annual salary and
bonus received by the Named Executive Officer.
(2) Represents insurance premiums.
(3) Represents $8,654 in insurance premiums and $35,684 in payments to a defined
contribution plan.
(4) Represents commissions.
OPTION GRANTS IN LAST FISCAL YEAR
There were no options or stock appreciation rights awarded to any of the
Named Executive Officers during fiscal 1999.
45
<PAGE>
AGGREGATE OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FISCAL YEAR-END
OPTION/SAR VALUES
None of the Named Executive Officers exercised options in the last fiscal
year. The following table sets forth the number and value of securities
underlying unexercised options held by the Named Executive Officers at May 31,
1999:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS/SARS AT MAY 31, IN-THE-MONEY OPTIONS
1999 AT MAY 31, 1999(1)
-------------------------- ---------------------------
NAME EXERCISABLE UNEXERCISABLE EXERCISABLE UNEXERCISABLE
- ----------------------------------------------------- ----------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
Edward D. Segal ..................................... 493,076 32,872 $ 2,490,034 $ 166,004
President and Chief Executive Officer and Managing
Director
J. Christopher Levett-Prinsep ....................... 84,375 5,625 426,094 28,406
Executive Vice President, Equipment Division and
Managing Director
Keith Reidy ......................................... 84,375 5,625 426,094 28,406
Vice President, Marketing and Managing Director
C. Garry Hendricks .................................. -- -- -- --
Vice Chairman of T.A. Kyser Co. and Managing
Director
Peter V. Leigh ...................................... 78,750 11,250 397,688 56,813
Vice President, Finance and Chief Financial Officer
and Managing Director
</TABLE>
- ------------------------
(1) The value of unexercised "in-the-money" options is based on the fair market
value of $7.83 as of May 31, 1999, as determined by the supervisory board,
minus the exercise price, multiplied by the number of shares underlying the
option.
EQUITY AND PROFIT SHARING PLANS
EMPLOYEE STOCK OPTION PLAN. The Amended and Restated Employee Stock Option
Plan (Option Plan) was adopted by our supervisory board in February 1995 and
approved by our shareholders in July 1995. An amendment and restatement of the
Option Plan, adopted by our supervisory board in 1999, amended the
Option Plan in preparation for this offering. Our shareholders will also be
asked to approve the amendment and restatement of the Option Plan.
There are 2,750,000 common shares reserved for issuance under the Option
Plan. Shares subject to share awards that have lapsed or terminated, without
having been exercised in full, and any shares repurchased by Metron pursuant to
a repurchase option provided under the Option Plan may again become available
for the grant of awards under the Option Plan.
The Option Plan provides for grants of incentive stock options that qualify
under Section 422 of the Internal Revenue Code of 1986, as amended (Code), to
our employees (including officers and employee directors) or the employees of
any of our affiliates. Nonqualified stock options, rights to acquire restricted
shares and share bonuses may be granted to employees (including officers),
directors of and consultants to Metron or any of our affiliates. Options, rights
to acquire restricted shares and share bonuses are referred to collectively as
"stock awards" for purposes of the Option Plan. The Option Plan may be
administered by the supervisory board or a committee appointed by the
supervisory board; references herein to the supervisory board shall include any
such committee. After this offering, it is intended that the Option Plan will be
administered by the compensation committee,
46
<PAGE>
currently consisting of Messrs. Anderson, Dauwalter and Elftmann, all of whom
are "non-employee directors" under applicable securities laws and "outside
directors," as defined under the Code. The supervisory board has the authority
to determine to whom awards are granted, the terms of such awards, including the
type of awards to be granted, the exercise price, the number of shares subject
to the awards and the vesting and exercisability of the awards.
The term of an option granted under the Option Plan generally may not exceed
ten years. The exercise price of options granted under the Option Plan is
determined by the supervisory board, but cannot be less than 100% of the fair
market value of the underlying common shares on the date of grant. Options
granted under the Option Plan vest at the rate specified in the option
agreement. No option may be transferred by the optionee other than by will or
the laws of descent or distribution, provided that an optionee may designate a
beneficiary who may exercise the option following the optionee's death. An
optionee whose relationship with Metron or any of our affiliates ceases for any
reason (other than due to disability) generally may exercise vested options
during the 90-day period following such cessation (unless such options terminate
or expire sooner by their terms) or during such longer or shorter period as may
be determined by the supervisory board and set forth in the option agreement.
Vested options generally may be exercised during the 12-month period after an
optionee's relationship with Metron or any of our affiliates ceases due to the
optionee's disability.
No incentive stock options may be granted to any person who, at the time of
the grant, owns (or is deemed to own) shares possessing more than 10% of the
total combined voting power of Metron or any of our affiliates, unless the
option exercise price is at least 110% of the fair market value of the shares
subject to the option on the date of grant and the term of the option does not
exceed five years from the date of grant. In addition, the aggregate fair market
value, determined at the time of grant, of the common shares underlying
incentive stock options which become exercisable by an optionee during any
calendar year may not exceed $100,000. Any options, or portions thereof, which
exceed this limit are treated as nonqualified stock options.
If Metron becomes subject to Section 162(m) of the Code (which denies a
deduction to publicly held corporations for certain compensation paid to
specific employees in a taxable year to the extent that the compensation exceeds
$1,000,000), no person may be granted options under the Option Plan covering
more than common shares in any calendar year.
Rights to acquire restricted shares granted under the Option Plan may be
granted subject to a repurchase option in favor of Metron that will expire
pursuant to a vesting schedule. The purchase price of such awards will be at
least 85% of the fair market value of the common shares on the date of grant.
Share bonuses may be awarded in consideration for past services without the
payment of a purchase price. Rights under a share bonus or restricted share
bonus agreement may not be transferred other than by will, the laws of descent
and distribution or a qualified domestic relations order while the shares
awarded pursuant to such an agreement remain subject to the agreement, provided
that a holder of such rights may designate a beneficiary who may exercise the
right following the holder's death.
Upon certain changes in control of Metron, all outstanding share awards
under the Option Plan may be assumed by the surviving entity or replaced with
similar share awards granted by the surviving entity. If the surviving entity
does not assume such awards or provide substitute awards, then with respect to
persons whose service with Metron or an affiliate has not terminated prior to
such change in control, the awards shall become fully vested and will terminate
if not exercised prior to such change in control.
As of August 31, 1999, there were 1,926,598 options outstanding under the
Option Plan, held by 331 employees including all of the managing directors, to
purchase shares of Metron at a weighted average exercise price of $5.41 per
share. No other share awards were outstanding under the Option Plan. The Option
Plan will terminate in February 2009, unless terminated sooner by the
supervisory board.
47
<PAGE>
1999 EMPLOYEE STOCK PURCHASE PLAN. In 1999, our supervisory board
adopted, subject to shareholder approval, the 1999 Employee Stock Purchase Plan
(Purchase Plan). A total of 300,000 common shares have been reserved for
issuance under the Purchase Plan. The Purchase Plan is intended to qualify as an
employee stock purchase plan within the meaning of Section 423 of the Code.
The Purchase Plan provides a means by which employees may purchase common
shares of Metron through payroll deductions. The Purchase Plan is implemented by
offerings of rights to eligible employees. Under the Purchase Plan, the
supervisory board may specify offerings with a duration of not more than 27
months, and may specify shorter purchase periods within each offering. The
initial offering will begin on the effective date of this offering and terminate
on . Purchase dates will occur each and
after the initial offering.
Employees who participate in an offering may have up to 10% of their
earnings withheld pursuant to the Purchase Plan. The amount withheld is then
used to purchase common shares on specified purchase dates determined by the
supervisory board, up to a maximum of common shares on each
specified purchase date. The price of common shares purchased under the Purchase
Plan will be equal to 85% of the lower of the fair market value of the common
shares on the commencement date of each offering period or the fair market value
of the common shares on the relevant purchase date. Employees who become
eligible to participate in the Purchase Plan for the first time during an
ongoing offering will be permitted to begin participating in the Purchase Plan
on the day after the next purchase date that occurs under the offering. The
price of common shares purchased under the Purchase Plan for employees who begin
participating in the Purchase Plan during an ongoing offering will be equal to
85% of the lower of the fair market value of the common shares on the day they
begin participating in the Purchase Plan or the fair market value of the common
shares on the relevant purchase date. Employees may end their participation in
an offering at any time during such offering except during the 15-day period
immediately prior to a purchase date. Employees' participation in all offerings
will end automatically on termination of their employment with us or one of our
subsidiaries.
Unless otherwise determined by our supervisory board, employees are eligible
to participate in the Purchase Plan only if they are customarily employed by us
or one of our subsidiaries designated by the supervisory board for at least 20
hours per week and five months per calendar year. No employee shall be eligible
for the grant of any rights under the Purchase Plan if immediately after such
rights are granted, such employee will have voting power over 5% or more of our
outstanding capital shares. Eligible employees may be granted rights only if the
rights together with any other rights granted under employee stock purchase
plans do not permit such employees' rights to purchase shares of Metron to
accrue at a rate which exceeds $25,000 of fair market value of those shares for
each calendar year in which those rights are outstanding.
Upon a change in control of Metron, our supervisory board has discretion to
provide that each right to purchase common shares will be assumed or an
equivalent right substituted by the successor corporation or that all sums
collected by payroll deductions to be applied to purchase shares immediately
prior to the change in control. The supervisory board has the authority to amend
or terminate the Purchase Plan; provided, however, that no action may adversely
affect any outstanding rights to purchase common shares.
1997 SUPERVISORY DIRECTORS' STOCK OPTION PLAN. Effective October 1997, our
supervisory board and managing board adopted, and our shareholders approved, the
1997 Supervisory Directors' Stock Option Plan (Directors' Plan), to provide for
the automatic grant of options to purchase common shares to supervisory
directors of Metron. The Directors' Plan is administered by the supervisory
board.
The aggregate number of common shares that may be issued pursuant to options
granted under the Directors' Plan is 225,000. Pursuant to the terms of the
Directors' Plan, each of our directors who is not an employee of or consultant
to Metron or one of our affiliates was automatically granted an
48
<PAGE>
option to purchase 15,000 common shares on the effective date of the Directors'
Plan. Each person who is elected or appointed for the first time to be a
non-employee director after the effective date of the Directors' Plan will be
granted an option to purchase 15,000 common shares upon such election or
appointment. In addition, each non-employee director who has served as a
non-employee director for six months prior to an annual meeting and who is
reelected at such annual meeting will be automatically granted an option to
purchase 3,750 common shares on the day of each such annual meeting. The
exercise price of options under the Directors' Plan will equal the fair market
value of the common shares on the date of grant. No option granted under the
Directors' Plan may be exercised after the expiration of ten years from the date
on which it was granted.
Each option granted under the Directors' Plan will vest in four equal annual
installments, with the first installment vesting on the first anniversary of the
date of grant, provided that the optionee has, during the entire period prior to
each vesting installment date, continuously served as a non-employee director or
employee of or consultant to Metron or one of our affiliates. If a non-employee
director's service as a non-employee director or employee of or consultant to
Metron or one of our affiliates ceases for any reason other than a voluntary
termination by the optionee or an involuntary termination for cause, the option
will become fully vested on the date of termination. A non-employee director
whose service as a non-employee director or employee of or consultant to Metron
or any of our affiliates ceases for any reason other than death may exercise
outstanding options in the 12-month period following such cessation (unless
these options terminate or expire sooner by their terms). Outstanding options
may be exercised during the 18-month period after such service ceases due to
death.
Upon specified changes in control of Metron, all outstanding share awards
under the Directors' Plan may be assumed by the surviving entity or replaced
with similar share awards granted by the surviving entity. If the surviving
entity does not assume the awards or provide substitute awards, then the awards
will terminate if not exercised prior to the change in control.
As of August 31, 1999, there were 67,500 options outstanding under the
Directors' Plan, held by three non-employee directors, to purchase common shares
of Metron at a weighted average exercise price of $8.03 per share. The
Directors' Plan will terminate in October 2007, unless terminated sooner by the
supervisory board.
T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN. Prior to our acquisition
of Kyser, Kyser established a stock bonus plan that qualifies as a tax-qualified
employee stock ownership plan under Sections 401(a) and 4975(e)(7) of the Code
and Section 407(d)(6) of ERISA, the T.A. Kyser Company Employee Stock Ownership
Plan (Kyser ESOP). Employees of Kyser are eligible to participate in the Kyser
ESOP. Unlike our 401(k) plan, eligible employees may not make deferrals from
their own compensation as contributions to the Kyser ESOP. Instead, we may make
discretionary contributions to the Kyser ESOP on behalf of eligible employees.
These contributions are then used to purchase common shares of Metron, which is
held in the Kyser ESOP in participants' accounts. Participants may also elect to
invest a portion of their account balances in other investment options. Eligible
employees may not sell the Metron shares held in their accounts until they
retire or otherwise terminate employment with Kyser. Contributions to the Kyser
ESOP, if any, are subject to a vesting schedule. Although Kyser made
contributions to the Kyser ESOP prior to our acquisition of Kyser, we do not
intend to make, and have not made, any contributions to the Kyser ESOP following
that acquisition.
METRON TECHNOLOGY CORPORATION 401(k) RETIREMENT PLAN. We have established a
tax-qualified employee savings and retirement plan, the Metron Technology
Corporation 401(k) Retirement Plan (401(k) Plan), for eligible employees.
Eligible employees may elect to defer a percentage of their pre-tax gross
compensation in the 401(k) Plan, subject to the statutorily prescribed annual
limit. We may make matching contributions on behalf of all participants in the
401(k) Plan in an amount determined by our supervisory board. We may also make
additional discretionary profit sharing
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contributions in such amounts as determined by the supervisory board, subject to
statutory limitations. Matching and profit-sharing contributions, if any, are
subject to a vesting schedule; all other contributions are at all times fully
vested. We intend the 401(k) Plan, and the accompanying trust, to qualify under
Sections 401 and 501 of the Code so that contributions by employees or by Metron
to the 401(k) Plan, and income earned (if any) on plan contributions, are not
taxable to employees until withdrawn from the 401(k) Plan, and so that we will
be able to deduct our contributions, if any, when made. The trustee under the
401(k) Plan, at the direction of each participant, invests the assets of the
401(k) Plan in any of a number of investment options.
The Named Executive Officers, along with other members of management, are
also entitled to participate in various annual profit sharing plans which are
adopted on an annual basis by our supervisory board on the recommendation of our
Chief Executive Officer. These profit sharing plans generally provide that we
will reserve various amounts, a profit sharing pool, calculated in accordance
with certain pre-determined formulas, and that participants in a particular
profit sharing pool will be entitled to receive a pre-determined share of such
pool. In addition, the compensation committee of the supervisory board does,
from time to time, grant discretionary bonuses to our employees, including the
Named Executive Officers.
EMPLOYMENT AGREEMENTS AND TERMINATION OF EMPLOYMENT ARRANGEMENTS
All of the Named Executive Officers are employed pursuant to employment
contracts with a subsidiary of Metron which is incorporated in their country of
residence.
Edward D. Segal is employed at will pursuant to an employment contract
entered into in September 1999 with Metron Technology Corporation (MTC), a
California corporation and with Metron Technology N.V. The employment contract
provides that Mr. Segal will serve as a managing director of Metron and as
Metron's President and Chief Executive Officer at an annual salary of not less
than $295,000. The agreement also provides for Mr. Segal's participation in an
annual incentive compensation plan approved by the supervisory board and for
other usual and customary benefits. Metron and MTC agreed to indemnify Mr. Segal
against any liability to which he may be subject for judgments, settlements,
penalties, fees and expenses of defense (including attorney's fees, bonds and
costs of investigation), arising out of or in any way related to acts or
omissions as a member of the management board, or an executive officer, or in
any other capacity in which services are rendered to Metron or MTC and its
subsidiaries. However, Mr. Segal would not be entitled to indemnification under
this agreement under certain circumstances including if indemnification is
expressly prohibited under applicable law and if indemnification is expressly
prohibited by Metron's articles or MTC's charter. If Mr. Segal's employment is
terminated by MTC without cause or by Mr. Segal for good reason or due to
disability, in exchange for Mr. Segal's signing a release of all claims, he will
continue to receive his base salary for a period of 12 months in addition to
other customary benefits.
Michael A. Grandinetti is employed pursuant to an employment contract
entered into in September 1999 with MTC and with Metron Technology N.V. The
employment contract provides that Mr. Grandinetti will serve as a managing
director and as Executive Vice President, Materials of Metron at an annual
salary of not less than $190,000. The agreement also provides for Mr.
Grandinetti's participation in an annual incentive compensation plan approved by
the supervisory board and for other usual and customary benefits. Metron and MTC
agreed to indemnify Mr. Grandinetti against any liability to which he may be
subject for judgments, settlements, penalties, fees and expenses of defense
(including attorney's fees, bonds and costs of investigation), arising out of or
in any way related to acts or omissions as a member of the management board, or
an executive officer, or in any other capacity in which services are rendered to
Metron or MTC and its subsidiaries. However, Mr. Grandinetti would not be
entitled to indemnification under this agreement under specified circumstances,
including if indemnification is expressly prohibited under applicable law or
prohibited by Metron's articles or MTC's charter. If Mr. Grandinetti's
employment is terminated by MTC without cause or by
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Mr. Grandinetti for good reason or due to disability, in exchange for Mr.
Grandinetti's signing a release of all claims, he will continue to receive his
base salary for a period of 12 months in addition to other customary benefits.
C. Garry Hendricks is employed pursuant to an employment contract entered
into July 1998 with Kyser, MTC and Metron Technology N.V. The employment
contract provides that Mr. Hendricks will serve as Vice Chairman of Kyser at an
annual salary of not less than $195,000. The agreement also provides that if Mr.
Hendricks' employment is terminated by Metron for cause or by Mr. Hendricks for
good reason prior to July 2001, Mr. Hendricks will enter into a consulting
arrangement with Metron and will continue to receive his base salary until July
2001. Under the agreement, Mr. Hendricks participates in an annual incentive
compensation plan approved by the supervisory board of Metron and an incentive
compensation plan for employees of Kyser and receives other usual and customary
benefits. Kyser agreed to indemnify Mr. Hendricks against any liability to which
he may be subject for judgments, settlements, penalties, fees and expenses of
defense (including attorney's fees, bonds and costs of investigation), arising
out of or in any way related to acts or omissions as an employee, officer,
director or agent in which services are rendered to Kyser. However, Mr.
Hendricks would not be entitled to indemnification under this agreement under
specified circumstances, including if indemnification is expressly prohibited
under applicable law or prohibited by Kyser's charter.
Peter V. Leigh is employed pursuant to an employment contract entered into
in September 1999 with MTC and with Metron Technology N.V. The employment
contract provides that Mr. Leigh will serve as a managing director of Metron and
as Metron's Vice President, Finance and Chief Financial Officer at an annual
salary of not less than $170,000. The agreement also provides for Mr. Leigh's
participation in an annual incentive compensation plan approved by the
supervisory board and for other usual and customary benefits. Metron and MTC
agreed to indemnify Mr. Leigh against any liability to which he may be subject
for judgments, settlements, penalties, fees and expenses of defense (including
attorney's fees, bonds and costs of investigation), arising out of or in any way
related to acts or omissions as a member of the management board, or an
executive officer, or in any other capacity in which services are rendered to
Metron or MTC and its subsidiaries. However, Mr. Leigh would not be entitled to
indemnification under this agreement under specified circumstances including if
indemnification is expressly prohibited under applicable law or prohibited by
Metron's articles or MTC's charter. If Mr. Leigh's employment is terminated by
MTC without cause or by Mr. Leigh for good reason or due to disability, in
exchange for Mr. Leigh's signing a release of all claims, he will continue to
receive his final base salary for a period of 12 months in addition to other
customary benefits.
J. Christopher Levett-Prinsep is employed by Metron Technology (U.K.) Ltd.,
pursuant to an employment contract entered into in May 1996. The employment
contract provides that Mr. Levett-Prinsep will serve as a managing director of
Metron and of Metron Technology (U.K.) Ltd. and as President of Metron's
European Operations at an annual salary of not less than L103,000 (approximately
$173,000). The agreement also provides for Mr. Levett-Prinsep's participation in
an annual incentive compensation plan approved by our supervisory board and for
other usual and customary benefits. The employment contract may be terminated by
either party on twelve months' notice.
Keith Reidy is employed by Metron Technology Corporation, pursuant to an
employment contract entered into in September 1999 with MTC and with Metron
Technology N.V. The employment contract provides that Mr. Reidy will serve as a
managing director and as Vice President, Marketing of Metron at an annual salary
of not less than $200,000. The agreement also provides for Mr. Reidy's
participation in an annual incentive compensation plan approved by the
supervisory board, and for other usual and customary benefits. Metron and MTC
agreed to indemnify Mr. Reidy against any liability to which he may be subject
for judgments, settlements, penalties, fees and expenses of defense (including
attorney's fees, bonds and costs of investigation), arising out of or in any way
related to acts or omissions as a
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member of the management board, or an executive officer, or in any other
capacity in which services are rendered to Metron or MTC and its subsidiaries.
However, Mr. Reidy would not be entitled to indemnification under this agreement
under specified circumstances, including if indemnification is expressly
prohibited under applicable law or prohibited by Metron's articles or MTC's
charter. If Mr. Reidy's employment is terminated by MTC without cause or by Mr.
Reidy for good reason or due to disability, in exchange for Mr. Reidy's signing
a release of all claims, he will continue to receive his base salary for a
period of 12 months in addition to other customary benefits.
LIMITATION OF LIABILITY AND INDEMNIFICATION
In addition to the indemnification provisions included in some of the
managing directors' employment agreements discussed above, under the Metron
articles, except in case of willful misfeasance, bad faith or gross negligence
or improper personal benefit, every person or legal entity who is, or has been,
a managing director, a supervisory director or an officer with the power to
represent Metron, employee or agent of Metron, who is made a party or is
threatened to be made a party to any claim by virtue of such capacity, shall be
indemnified by Metron, to the fullest extent permitted under any applicable law,
against (1) any and all liabilities imposed on him or it, (2) any and all
expenses and (3) any and all amounts paid in settlement by him or it, in each
case in connection with any such claim.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933, as amended, may be permitted to directors, officers or persons
controlling Metron pursuant to the foregoing provisions, Metron has been
informed that in the opinion of the SEC, such indemnification is against public
policy as expressed in the Securities Act and therefore is unenforceable.
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CERTAIN TRANSACTIONS
The following is a description of transactions since June 1, 1996, to which
Metron has been a party, in which the amount involved in the transaction exceeds
$60,000, and in which any of our directors, executive officers or holders of
more than 5% of our capital stock had or will have a direct or indirect material
interest other than compensation arrangement which are otherwise required to be
described under "Management."
TRANSACTIONS WITH FSI
Prior to this offering, FSI held approximately 32.7% of Metron's outstanding
shares, and in fiscal 1999, products from FSI accounted for 24% of Metron's
revenue. In addition, Mr. Elftmann, a supervisory director of Metron, is
Chairman of the Board of FSI.
DISTRIBUTION AGREEMENT. In March 1998, Metron and FSI entered into a
distribution agreement. Pursuant to the terms of this agreement, FSI and Metron
agreed that, with some exceptions, Metron would distribute some of FSI's
products and related spare parts in specific countries primarily in Europe and
Asia. Metron, as distributor, agreed to use its best efforts to sell the agreed
upon products and spare parts in the designated territory. Provided that FSI
does not provide Metron with a termination notice prior to the closing of this
offering, the distribution agreement shall continue for a term of two years from
the date of the closing of the offering. Either party may terminate the
agreement after the expiration of this initial term by providing at least 12
months prior written notice. In the event that, in connection with a public
offering, the agreement with Entegris is amended to change the term and
termination provisions which are in effect, and if those terms are more
favorable to Entergis, then the agreement with FSI shall be amended to include
the terms of the Entegris amendment regarding the term and termination.
FSI sells products to Metron and Metron receives from FSI discounts ranging
from 5% to 20% of the net sales price. The exact percentage varies depending on
the product. For some products, the discounts may be renegotiated at the request
of FSI if FSI's ownership of Metron drops below 25%. In cases where customers
receive discounts off of the net sales price, the discounts are generally
divided between FSI and Metron. The actual terms vary depending on product,
location and the extent of the discount.
JOINT VENTURE AND SHARE PURCHASE AGREEMENTS. Prior to February 27, 1999,
Metron and FSI were parties to joint venture agreements. Pursuant to these
agreements, Metron owned 50% of FSI-CME and 35% of FSI-CMK. Metron contributed
470,925,000 South Korean won (approximately $583,000) as an initial capital
contribution to FSI-CMK in June 1997 and was responsible for 35% of any further
capital contributions. Metron was responsible for 50% of any capital
contributions to FSI-CME. Metron distributed some of the products of FSI-CME
pursuant to a distribution agreement with FSI-CME. Metron was entitled to elect
two members to FSI-CME's board and one member to the board of FSI-CMK.
As of February 27, 1999, Metron entered into share purchase agreements with
FSI whereby Metron sold, and FSI purchased, all of Metron's ownership interest
in FSI-CMK for $310,000 and all of Metron's ownership interest in FSI-CME for
$2,200,000. Pursuant to the share purchase agreements, Metron agreed to execute
whatever documentation was reasonably determined necessary for the parties to
terminate the joint venture agreements and the distribution agreement with
FSI-CME. In addition, the directors appointed by Metron to the boards of FSI-CMK
and FSI-CME resigned from these board positions. On May 18, 1999 Metron and FSI
entered into an agreement, effective as of February 27, 1999, to terminate the
joint venture agreements and the distribution agreement with FSI-CME.
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OTHER AGREEMENTS. FSI is also party to an investor rights agreement which
grants FSI registration rights pursuant to the shares it owns. See "Summary of
Certain Provisions of the Metron Articles and Other Matters--Registration
Rights" for a description of the registration rights granted to FSI.
As a supervisory director of Metron, Mr. Elftmann receives yearly option
grants. In connection with Mr. Elftmann's service as the Chairman of the Board
of FSI, he has entered into an agreement with FSI pursuant to which he agrees to
exercise his options to purchase common shares of Metron at the request of FSI,
to vote the shares received upon exercise of the options as directed by FSI and
to hold title to these shares only as a nominee for FSI, without any beneficial
right, ownership, or interest in the shares. In addition, Mr. Elftmann agreed to
convey title to the option (if this is permitted by its terms) and any shares
received upon exercise of the option to FSI or to sell the shares and remit the
proceeds to FSI upon FSI's request.
TRANSACTIONS WITH ENTEGRIS
Prior to this offering, Entegris held approximately 32.7% of Metron's
outstanding shares, and in fiscal 1999, products from Entegris accounted for 21%
of Metron's revenue. In addition, Mr. Dauwalter, a supervisory director of
Metron, is Executive Vice President and Chief Operating Officer of Fluoroware, a
wholly-owned subsidiary of Entegris.
DISTRIBUTION AGREEMENTS. In July 1995, Metron and Fluoroware, now a
wholly-owned subsidiary of Entegris, entered into a distribution agreement.
Pursuant to the terms of this agreement, Entegris and Metron agreed that, with
some exceptions, Metron would be the exclusive, independent distributor of some
of Entegris's products in specific countries primarily in Europe and Asia.
Metron, as distributor, agreed to use its best efforts to sell the agreed upon
products in the designated territory. Unless the contract is terminated under
specific conditions, the contract will remain in place until July 1, 2000, and
is automatically renewed thereafter for additional terms of two years. The
contract can be terminated upon written notification given more than twelve
months prior to the expiration of the applicable term.
Entegris may sell products for use in the territories on a representative
basis, but agrees to pay Metron a commission of 10% of the applicable sales list
price of the products for all such sales, such commission may, at the option of
Entegris, be divided between Metron and a third party on an equitable basis and
consistent with past practices between Metron and Entegris. With certain
exceptions, products are sold to Metron at the U.S. domestic sales list prices,
less a discount which ranges from 5% to 40% depending on the product, unless
another amount is agreed to in writing.
In September of 1997, Fluoroware entered into a distribution agreement with
Kyser. Pursuant to the terms of this agreement, Fluoroware and Kyser agreed that
Kyser would be stocking distributor for specific Fluoroware gas and liquid
handling products in certain states in the United States. Kyser, as distributor,
agreed to use its best efforts to stock, market and sell products within the
states which comprise its territory. The agreement is for a term of five years,
expiring August 31, 2002, and, unless either party terminates, the agreement is
renewed automatically for successive five year terms. Notice of termination must
be given one year prior to the expiration of the term of the agreement for
termination without cause. Termination for cause may occur at any time if
specific conditions are met.
Fluoroware agreed to sell its products to Kyser at a 15% to 40% discount
from the Fluoroware published list price, with the exact percentage dependent on
the product. In some instances, Kyser may act as a manufacturer's representative
rather than as a stocking distributor. As a manufacturer's representative, Kyser
receives a commission of between 10% and 2% of the sales price depending on the
discount off of the list price given to the customer and the products sold. In
some instances the commission is not specified and is to be negotiated prior to
the sale.
OTHER AGREEMENTS. Entegris is also party to an investor rights agreement
which grants Entegris registration rights pursuant to the shares it owns. See
"Summary of Certain Provisions of the Metron
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Articles and Other Matters--Registration Rights" for a description of the
registration rights granted to Entegris.
As a supervisory director of Metron, Mr. Dauwalter receives yearly option
grants. In connection with Mr. Dauwalter's service as the Executive Vice
President of Fluoroware, he has entered into an agreement with Fluoroware
pursuant to which he agrees to exercise his options to purchase common shares of
Metron at the request of Fluoroware, to vote the shares received upon exercise
of the options as directed by Fluoroware and to hold title to these shares only
as a nominee for Fluoroware, without any beneficial right, ownership, or
interest in the shares. In addition, Mr. Dauwalter agreed to convey title to the
option (if this is permitted by its terms) and any shares received upon exercise
of the option to Fluoroware or to sell the shares and remit the proceeds to
Fluoroware upon the request of Fluoroware.
KYSER TRANSACTIONS
In July 1998, Metron entered into a merger and reorganization agreement with
Kyser pursuant to which all of the outstanding shares of Kyser stock were
converted into 1,582,683 common shares of Metron, of which 10,230 have been
returned to Metron in accordance with the agreement. The transaction was valued
by an independent appraiser at approximately $12.3 million. Pursuant to the
transaction, Kyser became a wholly-owned subsidiary of Metron. Mr. Hendricks,
currently a managing director of Metron and Vice Chairman of Kyser, was the
Chief Executive Officer and large minority shareholder of Kyser at the time.
Pursuant to the merger agreement, Mr. Hendricks received 694,585 shares in the
transaction, valued at approximately $5.4 million, he entered into an employment
agreement with us, was elected as a managing director of Metron and appointed as
Vice Chairman of Kyser. For additional information on the terms of the
employment agreement, see "Employment Agreements and Termination of Employment
Arrangements."
Prior to Kyser's becoming a subsidiary of Metron, Mr. Hendricks personally
guaranteed loans and revolving credit agreements made by banks to Kyser for
general operating expenses. Mr. Hendricks was the guarantor on a revolving
credit agreement in a maximum amount of $11,000,000 with Compass Bank at the
time of the Kyser transaction. In October 1998, following the acquisition of
Kyser by Metron, the note was amended and Metron became the guarantor and Mr.
Hendricks was released as a guarantor.
EARLY RETIREMENT AGREEMENT
Udo Jaensch was the managing director of Metron Technology Deutschland Gmbh
(MTD), a subsidiary of Metron, until 1998 and a managing director of Metron
until February 15, 1999. Pursuant to a cancellation and early retirement
agreement among Metron, MTD and Mr. Jaensch, Mr. Jaensch resigned from both
positions. In exchange, MTD agreed to pay Mr. Jaensch early retirement payments
of DM 270,000 (approximately $150,000) per year in monthly installments until
April 2, 2005. The early retirement payment is to be adjusted yearly for changes
in the cost of living. In the event MTD fails to make these payments, Metron
agreed to make the payments to Mr. Jaensch. MTD also agreed to transfer certain
property owned by MTD and used by Mr. Jaensch to Mr. Jaensch.
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PRINCIPAL AND SELLING SHAREHOLDERS
The following table sets forth certain information regarding the beneficial
ownership of our common shares as of August 31, 1999, and as adjusted to reflect
the sale of our common shares offered in this offering: (1) each shareholder who
is known by us to own beneficially more than 5% of our common shares; (2) each
of our supervisory directors; (3) each of our Named Executive Officers; (4) all
of our supervisory directors and managing directors as a group; and (5) all
selling shareholders as a group. Unless otherwise indicated, to our knowledge,
all persons listed below have sole voting and investment power with respect to
their common shares, except to the extent authority is shared by spouses under
applicable law. Unless otherwise noted, the address of each shareholder is c/o
Metron Technology N.V., 1350 Old Bayshore Highway, Suite 360, Burlingame,
California 94010.
<TABLE>
<CAPTION>
SHARES BENEFICIALLY SHARES BENEFICIALLY
OWNED PRIOR TO THE NUMBER OF OWNED AFTER THE
OFFERING(1) SHARES OFFERING(1)
----------------------- BEING -----------------------
NAME AND ADDRESS NUMBER PERCENT OFFERED NUMBER PERCENT(2)
- ------------------------------------------------------ ---------- ----------- ----------------- ---------- -----------
<S> <C> <C> <C> <C> <C>
Entegris, Inc.(3) .................................... 3,315,774 32.8%
3500 Lyman Boulevard
Chaska, MN 55318
FSI International, Inc.(4) ........................... 3,315,774 32.8
322 Hazeltime Drive
Chaska, MN 55318
Joel A. Elftmann(5) .................................. 3,315,774 32.8
James E. Dauwalter(6) ................................ 3,315,774 32.8
Robert R. Anderson(7) ................................ 57,600 *
Edward D. Segal(8) ................................... 1,077,046 10.1
J. Christopher Levett-Prinsep(9) ..................... 710,712 7.0
C. Garry Hendricks ................................... 694,585 6.9
Keith Reidy(10) ...................................... 164,856 1.6
Peter V. Leigh(11) ................................... 84,375 *
Michael A. Grandinetti(12) ........................... 39,375 *
All supervisory directors and managing directors as a
group (9 persons)(13) .............................. 9,460,097 86.2
All selling shareholders as a group(14) .............. 7,342,260 71.8
</TABLE>
- ------------------------
* Represents beneficial ownership of less than one percent of the common
shares.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission. Applicable percentage ownership based
on 10,104,261 common shares outstanding as of August 31, 1999 and
common shares outstanding immediately following the completion of this
offering (both numbers include 0 shares issuable upon exercise of
warrants), together with applicable options for such shareholder. Common
shares subject to options currently exercisable, or exercisable within 60
days of August 31, 1999, are not deemed outstanding for computing the
percentage ownership of any other person.
(2) After giving effect to the issuance of common shares offered in this
offering (assuming no exercise of the underwriters' over-allotment option).
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(3) Includes 13,125 shares issuable to Mr. Dauwalter pursuant to an agreement
between Mr. Dauwalter and Entegris in which Mr. Dauwalter assigned
ownership rights to all shares issuable upon exercise of the options to
Entegris.
(4) Includes 13,125 shares issuable to Mr. Elftmann pursuant to an agreement
between Mr. Elftmann and FSI in which Mr. Elftmann assigned ownership
rights to all shares issuable upon exercise of the options to FSI.
(5) Mr. Elftmann is Chairman of the Board and Chief Executive Officer of FSI.
The shares listed consist of 3,302,649 shares held by FSI. and 13,125
shares issuable pursuant to options exercisable within 60 days of August
31, 1999. Mr. Elftmann disclaims beneficial ownership of all shares held by
FSI and of all shares issuable pursuant to the exercise of options,
pursuant to an agreement with FSI in which Mr. Elftmann assigned ownership
rights to all shares issuable upon exercise of the options to FSI.
(6) Mr. Dauwalter is Executive Vice President and Chief Operating Officer of
Entegris. The shares listed consist of 3,302,649 shares held by Entegris
and 13,125 shares issuable pursuant to options exercisable within 60 days
of August 31, 1999. Mr. Dauwalter disclaims beneficial ownership of all
shares held by Entegris and of all shares issuable pursuant to the exercise
of options, pursuant to an agreement with Entegris in which Mr. Dauwalter
assigned ownership rights to all shares issuable upon exercise of the
options to Entegris.
(7) Consists of 13,125 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(8) Consists of 421,570 shares held by Mr. Segal, 129,528 shares held by Segal
Investments LP, an investment partnership of which Mr. Segal is the
Managing Partner and 525,948 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999. Mr. Segal disclaims
beneficial ownership of the shares held by Segal Investment LP.
(9) Consists of 620,712 shares held by Mr. Levett-Prinsep and 90,000 shares
issuable pursuant to options exercisable within 60 days of August 31, 1999.
(10) Consists of 74,856 shares held by Mr. Reidy and 90,000 shares issuable
pursuant to options exercisable within 60 days of August 31, 1999.
(11) Consists of 84,375 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(12) Consists of 39,375 shares issuable pursuant to options exercisable within
60 days of August 31, 1999.
(13) Includes an aggregate of 869,073 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999. Also includes an aggregate
of 3,302,649 shares held by Entegris, 3,302,649 shares held by FSI and
129,528 shares owned by the investment partnership of Mr. Segal.
(14) Includes an aggregate of 116,250 shares issuable pursuant to options
exercisable within 60 days of August 31, 1999, including 13,125 options
held by Mr. Dauwalter and 13,125 options held by Mr. Elftmann, pursuant to
agreements with Entegris and FSI.
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DESCRIPTION OF CAPITAL SHARES
Following the closing of the sale of the common shares offered by this
prospectus, our authorized capital shares will consist of 48,000,000 Dutch
guilders, divided into 40,000,000 common shares, NLG 0.96 par value, and
10,000,000 preferred shares, NLG 0.96 par value.
will maintain the registry and act as transfer agent and
registrar for the shares sold in this offering.
Unless otherwise set forth in a supplement to this prospectus, all of the
common shares sold in this offering will initially be represented by a single
global certificate held through the Depository Trust Company, DTC, and
registered in the name of Cede & Co., the nominee of DTC. Beneficial interests
in the shares represented by the global certificate or otherwise held through
DTC will be represented, and transfers of such beneficial interests will be
effected through accounts of financial institutions acting on behalf of
beneficial owners as direct and indirect participants in DTC. Investors may hold
beneficial interests in the shares directly through DTC if they are a
participant in such system, or indirectly through organizations that are
participants in such system.
COMMON SHARES
As of August 31, 1999, there were 10,104,261 Metron common shares
outstanding, which were held of record by 32 shareholders. Each shareholder of
record is entitled to one vote for each Metron share held on every matter
submitted to a vote of shareholders. The shareholders, at a general meeting, may
decide upon a distribution of Metron's annual profits to all shareholders out of
nonreserved profits insofar as permitted by Netherlands law. In the event of the
dissolution of Metron, holders of Metron common shares are entitled to receive,
on a pro rata basis, all assets of Metron remaining after the payment of all
debts, liquidation expenses and taxes and after payment to the holders of
preferred shares of all amounts paid by such holders on such shares. The Metron
articles make no provision for cumulative voting and, as a result, the holders
of a majority of Metron's voting power will have the power to elect all members
of the supervisory and managing boards. The holders of Metron common shares are
entitled to preemptive rights to subscribe for a pro rata portion of future
issuances of Metron common shares, with the exception of shares issued to
employees of Metron or of a group company. However, pursuant to the Metron
articles, the supervisory board has the authority to limit or exclude these
preemptive rights with respect to issuances of Metron common shares until 5
years from the date of execution of the deed of conversion and amendment of the
articles or a later date if the general meeting of shareholders extends the term
of this authority.
PREFERRED SHARES
Pursuant to the Metron articles, the supervisory board has authority to
issue authorized but unissued preferred shares of Metron until 5 years from the
date of execution of the deed of conversion and amendment of the articles or a
later date if the general meeting of shareholders extends the term of this
authority. Each preferred share would have voting rights equal to those of the
Metron common shares. Preferred shares could be issued quickly for a
subscription price equal to their par value, irrespective of the then current
market value of the common shares. Furthermore, it can be agreed between Metron
and the subscriber that upon issuance, only 25% of the nominal value of the
preferred shares needs to be paid at the time of issuance, with the balance
subject to call by Metron. Consequently, the issuance of preferred shares could
effectively delay or prevent a change in control of Metron or make removal of
management more difficult. In addition, the issuance of preferred shares may
have the effect of decreasing the value of the Metron common shares. As of
August 31, 1999, there were no preferred shares outstanding and Metron has no
plans to issue any of the preferred shares.
58
<PAGE>
SUMMARY OF CERTAIN PROVISIONS OF THE METRON ARTICLES AND OTHER MATTERS
GENERAL MEETINGS OF SHAREHOLDERS. All holders of Metron shares are entitled
to attend any general meeting in person or by proxy and to cast one vote for
each share held. The annual general meeting is required to be held in The
Netherlands no later than six months after the end of Metron's financial year.
Other general meetings may be called by the managing board, the supervisory
board or, subject to certain conditions, by the holders of not less than 10% of
the outstanding share capital. Metron will mail notices to the shareholders at
least 14 days before any general meetings. Most resolutions at general meetings
may be adopted by an absolute majority of the votes cast but only when a quorum
of at least half of the outstanding shares entitled to vote are represented in
person or by proxy. There are no laws currently in effect in The Netherlands or
provisions in the Metron articles limiting the rights of non-resident or foreign
investors to hold or vote the Metron common shares. A resolution to legally
merge, to legally split-up, to amend the Metron articles, to dissolve Metron or
to suspend or dismiss a managing director or a supervisory director requires at
least two-thirds of the validly cast votes in a general meeting at which more
than half of the issued capital is present or represented. In addition, such a
resolution to legally merge, to legally split-up, to amend the Metron articles
or to dissolve the company must be proposed by the supervisory board.
Shareholders must give notice of at least 60 days and no more than 90 days prior
to the one year anniversary of the date of the previous year's annual general
meeting of any shareholder proposal to be discussed at an annual general meeting
of shareholders. Proposals by shareholders for extraordinary general meetings of
shareholders will be discussed only if timely notice has been given to Metron.
ADOPTION OF STATUTORY ANNUAL ACCOUNTS; DIVIDENDS. Within five months after
the close of Metron's financial year (except where this period is extended for a
further period of up to a maximum of six months by the general meeting on
account of special circumstances), the managing board is required to submit to
the general meeting its annual report with respect to such financial year and
Metron's statutory annual accounts for such year, prepared in accordance with
Dutch GAAP and accompanied by a report of an independent auditor on such
statutory annual accounts. The statutory annual accounts are submitted by the
managing board to the general meeting for confirmation and adoption by the
shareholders at the annual general meeting which must be held no later than six
months after the close of Metron's financial year; in the event that the period
for submitting the annual accounts has been extended as set forth above, a
special shareholders' meeting will be called for such purpose. Under the Metron
articles such confirmation and adoption shall, subject to compliance with
certain requirements of Dutch law (including disclosure of all relevant facts to
the general meeting), to the extent permitted by law, constitute a full release
from liability of the managing directors and the members of the supervisory
board for the exercise of their duties during the financial year concerned.
Under the Metron articles, the supervisory board may set aside as reserves a
part or all of the annual profits of Metron. The amount reserved is not
available to be distributed as a dividend. Out of the remaining profits, a
non-cumulative cash dividend of one tenth of one percent (0.1%) of the par value
of the preferred shares will be paid to the holders of such shares, if any. At
any general meeting, the shareholders are entitled to decide upon a distribution
of the remaining profits to all common shareholders insofar as permitted by law.
Metron can only make distributions to its shareholders to the extent that its
equity exceeds the aggregate of (1) the par value of its issued share capital
and (2) the reserves to be maintained pursuant to the law. In addition, subject
to statutory provisions, the supervisory board may distribute one or more
interim dividends on the common shares before the annual financial statements
for any financial year have been adopted at a general meeting. The general
meeting may also declare and pay dividends out of reserves other than reserves
set aside by the supervisory board. Dividends may be paid either in cash or in
kind. Dividends and distributions must be claimed within five years and one day
following the date on which they become payable. There are no laws currently in
force in The Netherlands or provisions of the Metron articles restricting
payment of dividends to holders of Metron common shares not resident in The
Netherlands.
59
<PAGE>
LIQUIDATION RIGHTS. In the event of dissolution of Metron, the liquidation
proceeds remaining after payment of all debts, liquidation expenses and taxes
are to be distributed ratably first to the holders of the preferred shares to
the extent of the amount paid by them on their shares and then to the holders of
Metron common shares.
PREEMPTIVE RIGHTS. Under the Metron articles, the holders of Metron shares
have preemptive rights with regard to any issue of Metron shares pro rata to the
aggregate amount of the Metron shares held by them. Metron shareholders have no
preemptive rights to subscribe for the Metron common shares issued to employees
of Metron or of a company belonging to the Metron group. Preemptive rights may
be limited or excluded by the supervisory board until 5 years from the date of
the execution of the deed of conversion and amendment of the Metron articles and
thereafter, provided that the supervisory board is so authorized by the general
meeting.
ACQUISITION BY METRON OF ITS OWN SHARES. Subject to certain restrictions
contained in Netherlands law and the Metron articles, the general meeting of
shareholders may delegate to the managing board for a period of not longer than
18 months the authority to cause Metron to acquire its own fully-paid shares in
an amount not to exceed 10% of the issued share capital. No such authorization
will be required if Metron acquires shares in its own capital for the purpose of
transferring the same to employees of Metron or of a group company under a plan
applicable to such employees, provided that such shares are officially listed on
an exchange (including the Nasdaq National Market).
ISSUANCE OF ADDITIONAL SHARES. Pursuant to the Metron articles, the
supervisory board has authority to issue authorized but unissued common shares
of Metron until five years from the date of execution of the deed of conversion
and amendment of the Metron articles or a later date if the general meeting
extends the term of this authority. As long as the supervisory board has the
authority to adopt a resolution to issue shares, the general meeting shall not
have the authority to adopt such resolutions. In the event that a future
supervisory board no longer has the authority to issue shares, pursuant to the
Metron articles any resolution of the general meeting to issue shares will
require the prior approval of the supervisory board.
PUT AND CALL RIGHTS WITH RESPECT TO CERTAIN METRON COMMON SHARES. Pursuant
to the terms of the Kyser ESOP, Metron is required in certain limited
circumstances to repurchase Metron common shares from the trustee of the Kyser
ESOP or participants or beneficiaries of the Kyser ESOP. However, there are
certain restrictions imposed by Netherlands law on the ability of Metron to
repurchase its common shares. See "Acquisition by Metron of its own Shares." To
the extent Metron is prohibited by Netherlands law from repurchasing any shares
when required to do so by the Kyser ESOP, Metron has agreed to use its best
efforts to timely obtain an alternate purchaser for Metron common shares
required to be purchased from the Trustee of the Kyser ESOP or participants or
beneficiaries of the Kyser ESOP.
REGISTRATION RIGHTS. Pursuant to an investor rights agreement entered into
in July 1995 and two accession agreements entered into in 1998, a limited number
of shareholders have the right to require Metron to register their common shares
under specific circumstances. In the event Metron decides to offer shares
pursuant to underwritten registrations, Metron must notify these shareholders
and include the shares of those who elect to be included in the offering. In the
case of an initial public offering involving net proceeds of more than
$7,500,000 and a gross offering price of at least $1.33 per share with a par
value of 0.10 Dutch guilders, the underwriters and Metron have the right to
reduce pro rata the number of shares proposed to be registered in view of market
conditions. The combined holders of at least 375,000 common shares of Metron, as
adjusted for share splits, share dividends and the like, may request that Metron
file a registration statement on Form S-3 (if available to Metron). However,
Metron shall not be obligated to file more than one Form S-3 registration in any
12 month period or within 180 days after completing Metron's initial public
offering. In addition, if the majority of the members of the supervisory board
determine in good faith that a registration on Form S-3 would be
60
<PAGE>
seriously detrimental to Metron, the registration may be delayed for up to 130
days. Metron will bear all registration expenses related to the above mentioned
registrations.
The registration rights are transferable to anyone acquiring all of a
shareholder's common shares and who agrees to be bound by the terms of the
investor rights agreement. The registration rights of each shareholder entitled
to such rights terminate on the earlier of the date three years after the date
of Metron's initial public offering and the date the holder may sell all of its
shares pursuant to Rule 144 during any 90 day period.
61
<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Prior to this offering, there has been no public market for the common
shares. We cannot provide any assurances that a significant public market for
the common shares will develop or be sustained after this offering. Future sales
of substantial amounts of common shares in the public market, or the possibility
of such sales occurring, could adversely affect prevailing market prices for the
common shares or our future ability to raise capital through an offering of
equity securities.
After this offering, we will have outstanding common shares. Of these
shares, the shares to be sold in this offering ( shares if the
underwriters' over-allotment option is exercised in full) will be freely
tradable in the public market without restriction under the Securities Act,
unless such shares are held by "affiliates" of Metron, as that term is defined
in Rule 144 under the Securities Act.
The remaining shares outstanding upon completion of this
offering will be "restricted securities" as that term is defined under Rule 144.
We issued and sold the restricted shares in private transactions in reliance on
exemptions from registration under the Securities Act. Restricted shares may be
sold in the public market only if they are registered or if they qualify for an
exemption from registration under Rule 144 or Rule 701 under the Securities Act,
as summarized below.
of the restricted shares are available for immediate sale (of
which shares will be subject to certain volume, manner of sale and other
limitations under Rule 144). Pursuant to certain "lock-up" agreements between
our shareholders and either Metron or the underwriters, the holders of
restricted shares have agreed not to offer, sell, pledge or
otherwise dispose of, directly or indirectly, or announce their intention to do
the same, any common shares of Metron or security convertible into, or
exchangeable or exercisable for any security of Metron for a period of 180 days
from the date of this offering. However, if the holder of the restricted shares
is an individual, he or she may transfer any such securities either during his
or her lifetime or on death by will or intestacy to his or her immediate family
or to a trust the beneficiaries of which are exclusively the holder of the
securities and/or a member of his or her immediate family. We also have entered
into an agreement with the underwriters that we will not offer, sell or
otherwise dispose of common shares for a period of 180 days from the date of
this offering. On the date of the expiration of the lock-up agreements,
of the Restricted shares will be eligible for immediate sale (of
which shares will be subject to certain volume, manner of sale and
other limitations under Rule 144) and shares will be eligible for
sale subject to volume restrictions through , 2001.
Following the expiration of such lock-up periods, certain shares issued upon
exercise of options we granted prior to the date of this offering will also be
available for sale in the public market pursuant to Rule 701 under the
Securities Act. Rule 701 permits resales of such shares in reliance upon Rule
144 under the Securities Act but without compliance with certain restrictions,
including the holding-period requirement, imposed under Rule 144. In general,
under Rule 144 as in effect at the closing of this offering, beginning 90 days
after the date of this prospectus, a person (or persons whose shares are
aggregated) who has beneficially owned Restricted shares for at least one year
(including the holding period of any prior owner who is not an Affiliate) would
be entitled to sell, within any three-month period, a number of shares that does
not exceed the greater of (1) 1% of the then-outstanding common shares or (2)
the average weekly trading volume of the common shares during the four calendar
weeks preceding the filing of a Form 144 with respect to such sale. Sales under
Rule 144 are also subject to certain manner of sale and notice requirements and
to the availability of current public information about us. Under Rule 144(k), a
person who is not deemed to have been an Affiliate at any time during the 90
days preceding a sale and who has beneficially owned the shares proposed to be
sold for at least two years (including the holding period of any prior owner who
is not an Affiliate) is entitled to sell such shares without complying with the
manner of sale, public information, volume limitation or notice provisions of
Rule 144.
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<PAGE>
We intend to file, after the effective date of this offering, a Registration
Statement on Form S-8 to register approximately common shares
reserved for issuance under the Option Plan, the Directors' Plan, the Purchase
Plan and the Kyser ESOP. The Registration Statement will become effective
automatically upon filing. Shares issued under the foregoing plans, after the
filing of a Registration Statement on Form S-8, may be sold in the open market,
subject, in the case of certain holders, to the Rule 144 limitations applicable
to affiliates, the above-referenced lock-up agreements and vesting restrictions
imposed by us.
In addition, following this offering, the holders of common
shares, including shares issuable upon exercise of options, will, under
certain circumstances, have rights to require us to register their shares for
future sale.
63
<PAGE>
UNDERWRITING
Metron and the selling shareholders are offering the common shares described
in this prospectus through a number of underwriters. Banc of America Securities
LLC, SG Cowen Securities Corporation and U.S. Bancorp Piper Jaffray Inc. are the
representatives of the underwriters. Metron and certain of the selling
shareholders have entered into an underwriting agreement with the
representatives. Subject to the terms and conditions of the underwriting
agreement, Metron and the selling shareholders have agreed to sell to the
underwriters, and each underwriter has severally agreed to purchase, the number
of common shares listed next to its name in the following table:
<TABLE>
<CAPTION>
NUMBER OF
UNDERWRITER SHARES
- ---------------------------------------------------------------------------------- -----------
<S> <C>
Banc of America Securities LLC....................................................
SG Cowen Securities Corporation...................................................
U.S. Bancorp Piper Jaffray Inc....................................................
-----------
Total.........................................................................
-----------
-----------
</TABLE>
Shares sold by the underwriters to the public will initially be offered on
the terms set forth on the cover page of this prospectus. The underwriters may
allow to selected dealers a concession of not more than $ per share, and
the underwriters may also allow, and any other dealers may reallow, a concession
of not more than $ per share to other dealers. If all the shares are not
sold at the initial public offering price, the underwriters may change the
offering price and the other selling terms. The common shares are offered
subject to receipt and acceptance by the underwriters and other conditions,
including the right to reject orders in whole or in part.
If the underwriters sell more shares than the total number of shares set
forth in the table above, they have an option to buy up to a maximum of
additional shares from Metron and the selling shareholders to cover
such sales. The underwriters have 30 days to exercise this option. If any shares
are purchased pursuant to this option, the underwriters will severally purchase
shares in approximately the same proportion as set forth in the table above. If
purchased, the underwriters will offer such additional shares on the same terms
as those on which the shares are being offered. The following table sets
forth the per share and total underwriting discounts and commissions to be paid
to the underwriters assuming both no exercise and full exercise of the
underwriters' option to purchase additional shares.
<TABLE>
<CAPTION>
FULL
NO EXERCISE EXERCISE
----------- ------------
<S> <C> <C>
Per share.......................................................... $ $
----------- ------------
Total.............................................................. $ $
----------- ------------
----------- ------------
</TABLE>
Metron, our executive officers, directors and shareholders holding in excess
of % of our outstanding common shares, as well as holders of options to
purchase common shares who are senior officers, have agreed with the
underwriters not to dispose of or hedge any of their common shares or securities
convertible into or exchangeable for common shares during the period from the
date of this prospectus continuing through 180 days after the date of this
prospectus without the prior written consent of Banc of America Securities LLC.
At any time and without notice, Banc of America Securities LLC may, in its sole
discretion, release all or any portion of the securities from these lock-up
agreements.
64
<PAGE>
The underwriting agreement provides that Metron and certain of the selling
shareholders will indemnify the underwriters against liabilities set forth in
such agreement, including civil liabilities under the Securities Act, or will
contribute to payments the underwriters may be required to make in respect
thereof.
At our request, the underwriters have reserved up to of the common
shares offered by this prospectus for sale at the initial public offering price
to persons having business relationships with us. The number of shares of common
stock available to the general public will be reduced to the extent that these
persons purchase the reserved shares. Any reserved common shares that are not
purchased by such persons at the closing of the initial public offering will be
offered by the underwriters to the general public on the same terms as the other
shares in the initial public offering.
In connection with this offering, the underwriters may purchase and sell
common shares in the open market. These transactions may include:
- short sales;
- stabilizing transactions; and
- purchases to cover positions created by short sales.
Short sales involve the sale by the underwriters of a greater number of
shares than they are required to purchase in this offering. Stabilizing
transactions consist of bids or purchases made for the purpose of preventing or
retarding a decline in the market price of the common shares while this offering
is in progress.
The underwriters also may impose a penalty bid. This occurs when a
particular underwriter repays to the underwriters a portion of the underwriting
discount received by it because the representatives have repurchased shares sold
by or for the account of such underwriter in stabilizing or short covering
transactions.
The underwriters may engage in activities that stabilize, maintain or
otherwise affect the price of the common shares, including:
- over-allotment;
- stabilization;
- syndicate covering transactions; and
- imposition of penalty bids.
As a result of these activities, the price of the common shares may be
higher than the price that otherwise might exist in the open market. If the
underwriters commence these activities, they may discontinue them at any time.
The underwriters may carry out these transactions on the Nasdaq National Market,
in the over-the-counter market or otherwise.
The underwriters do not expect sales to discretionary accounts to exceed 5%
of the total number of common shares offered by this prospectus.
Prior to this offering, there has been no public market for the common
shares of Metron. The initial public offering price will be negotiated among
Metron and the underwriters. Among the factors to be considered in such
negotiations are:
- the history of, and prospects for, Metron and the industry in which it
competes;
- the past and present financial performance of Metron;
- an assessment of Metron's management;
65
<PAGE>
- the present state of Metron's development;
- the prospects for Metron's future earnings;
- the prevailing market conditions of the applicable U.S. securities market
at the time of this offering;
- market valuations of publicly traded companies that Metron and the
representatives believe to be comparable to Metron; and
- other factors deemed relevant.
The total expenses related to this initial public offering of our common
shares are estimated to be $ .
LEGAL MATTERS
The validity of the issuance of the common shares offered hereby will be
passed upon for Metron by Nauta Dutilh, Netherlands counsel to the company.
Certain other legal matters in connection with the offering made hereby will be
passed upon for Metron by Cooley Godward LLP, Palo Alto, California. Certain
legal matters in connection with the offering will be passed upon for the
underwriters by Latham & Watkins, Menlo Park, California.
EXPERTS
The consolidated balance sheets of Metron Technology N.V. and subsidiaries
as of May 31, 1998 and 1999, and the related consolidated statements of
earnings, retained earnings and cash flows for each of the years in the three
year period ended May 31, 1999, have been included herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
auditors, as set forth in their report thereon appearing elsewhere herein, and
upon the authority of said firm as experts in accounting and auditing.
ADDITIONAL INFORMATION
A registration statement on Form S-1, including amendments thereto, relating
to the common shares offered hereby has been filed by us with the Commission.
This prospectus, which constitutes a part of the registration statement, does
not contain all of the information set forth in the registration statement and
the exhibits and schedules thereto. Statements contained in this prospectus as
to the contents of any contract or other document referred to are not
necessarily complete, and in each instance reference is made to the copy of such
contract or other document filed as an exhibit to the registration statement,
each such statement being qualified in all respects by such reference. For
further information with respect to us and the common shares offered hereby,
reference is made to such registration statement, exhibits and schedules. A copy
of the registration statement may be inspected by anyone without charge at the
public reference facilities maintained by the Commission at 450 Fifth Street,
NW, Judiciary Plaza, Washington, D.C. 20549, and copies of all or any part
thereof maybe obtained from the Commission upon payment of certain fees
prescribed by the Commission. The Commission maintains a World Wide Web site
that contains reports, proxy and information statements and other information
filed electronically with the Commission. The address of the site is
http://www.sec.gov.
66
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
METRON TECHNOLOGY N.V. AUDITED CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Accountants................................................. F-2
Consolidated Statements of Income for the years ended May 31, 1997, 1998 and
1999............................................................................. F-3
Consolidated Balance Sheets as of May 31, 1998 and 1999........................... F-4
Consolidated Statements of Cash Flows for the years ended May 31, 1997, 1998 and
1999............................................................................. F-5
Consolidated Statements of Shareholders' Equity for the years ended May 31, 1996,
1997, 1998 and 1999.............................................................. F-6
Notes to Consolidated Financial Statements........................................ F-7
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
WHEN METRON TECHNOLOGY B.V. CONVERTS FROM A B.V. TO AN N.V. UNDER THE LAWS OF
THE NETHERLANDS AS DISCUSSED IN NOTE 19, WE WILL BE IN A POSITION TO RENDER
THE FOLLOWING REPORT.
/s/ KPMG LLP
The Board of Directors and Shareholders
Metron Technology N.V.:
We have audited the accompanying consolidated balance sheets of Metron
Technology N.V. and subsidiaries as of May 31, 1999 and 1998, and the related
consolidated statements of income, shareholders' equity and cash flows for each
of the years in the three-year period ended May 31, 1999. These consolidated
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these consolidated financial
statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of Metron
Technology N.V. and subsidiaries as of May 31, 1999 and 1998, and the results of
their operations and their cash flows for each of the years in the three-year
period ended May 31, 1999 in conformity with generally accepted accounting
principles.
KPMG LLP
Mountain View, California
July 22, 1999
F-2
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF INCOME
(DOLLARS IN THOUSANDS EXCEPT PER SHARE)
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Net revenue................................................... $ 298,576 $ 275,024 $ 228,618
Cost of revenue............................................... 241,675 222,028 189,295
--------- --------- ---------
Gross profit.................................................. 56,901 52,996 39,323
Selling, general, administrative, and other expenses.......... 49,417 48,997 43,391
Restructuring and merger costs................................ 258 881 2,550
--------- --------- ---------
Operating income (loss)....................................... 7,226 3,118 (6,618)
Equity in net income (loss) of joint ventures................. 273 (497) 267
Other expense, net............................................ (602) (71) (397)
--------- --------- ---------
Income (loss) before income taxes............................. 6,897 2,550 (6,748)
Provision (benefit) for income taxes.......................... 2,699 1,448 (2,214)
--------- --------- ---------
Net income (loss)............................................. $ 4,198 $ 1,102 $ (4,534)
--------- --------- ---------
--------- --------- ---------
Earnings (loss) per common share
Basic....................................................... $ 0.40 $ 0.11 $ (0.44)
Diluted..................................................... $ 0.37 $ 0.10 $ (0.44)
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-3
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
MAY 31 PRO FORMA
-------------------- MAY 31,
1998 1999 1999
--------- --------- -----------
(UNAUDITED)
<S> <C> <C> <C>
ASSETS
Cash and cash equivalents........................................... $ 10,387 $ 10,601 $ 10,601
Accounts receivable, net of allowance for doubtful accounts of $815
and $1,312 in 1998 and 1999, respectively......................... 53,216 42,150 42,150
Inventories, net.................................................... 25,881 24,079 24,079
Prepaid expenses and other current assets........................... 8,375 10,126 10,126
--------- --------- -----------
Total current assets............................................ 97,859 86,956 86,956
Property, plant, and equipment, net................................. 9,901 8,152 8,152
Intangible assets, net.............................................. 2,995 2,572 2,572
Investments in joint ventures....................................... 2,342 185 185
Other assets........................................................ 1,064 1,760 1,760
--------- --------- -----------
Total Assets.................................................... $ 114,161 $ 99,625 $ 99,625
--------- --------- -----------
--------- --------- -----------
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable.................................................... $ 26,633 $ 21,507 $ 21,507
Amounts due affiliates.............................................. 18,125 13,125 13,125
Accrued wages and employee-related expenses......................... 5,716 5,304 5,304
Deferred revenue for installation and warranty...................... 7,224 4,611 4,611
Short term borrowings and current portion of long-term debt......... 8,771 11,086 11,086
Amounts payable to shareholders..................................... 76 1,016 1,016
Other current liabilities........................................... 6,845 7,677 7,677
--------- --------- -----------
Total current liabilities....................................... 73,390 64,326 64,326
Long-term debt, excluding current portion............................. 1,379 1,141 1,141
Deferred credits and other long-term liabilities...................... 1,343 2,230 2,230
--------- --------- -----------
Total liabilities............................................... 76,112 67,697 67,697
--------- --------- -----------
Commitments........................................................... -- -- --
Common shares subject to Buy-Sell Agreement........................... 2,000 1,973 --
--------- --------- -----------
Shareholders' Equity:
Preferred shares, par value NLG 0.96 Authorized; 10,000,000 shares
Issued and outstanding; none...................................... -- -- --
Common shares and additional paid-in capital, par value NLG 0.96
Authorized; 40,000,000 Issued; 10,383,068 in 1998 and 10,385,268
in 1999 Outstanding; 10,367,862 in 1998 and 10,104,261 in 1999.... 3,177 3,030 5,003
Retained earnings................................................... 35,559 30,186 30,186
Cumulative other comprehensive loss................................. (2,405) (3,130) (3,130)
Deferred compensation............................................... (275) -- --
Treasury shares; 15,206 shares in 1998 and 281,007 shares in 1999... (7) (131) (131)
--------- --------- -----------
Total shareholders' equity...................................... 36,049 29,955 31,928
--------- --------- -----------
Total Liabilities and Shareholders' Equity...................... $ 114,161 $ 99,625 $ 99,625
--------- --------- -----------
--------- --------- -----------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-4
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Cash flows from (used for) operating activities:
Net income (loss)........................................................ $ 4,198 $ 1,102 $ (4,534)
Adjustments to reconcile net income for items currently not affecting
operating cash flows:
Pooling adjustment relating to acquisition of T.A. Kyser Co............ -- (185) --
Depreciation and amortization.......................................... 2,748 2,911 3,047
Provision for inventory valuation and bad debts........................ 2,724 1,701 2,781
Deferred income taxes.................................................. (604) (1,152) (1,157)
Amortization of deferred compensation expense.......................... 329 245 275
Equity in net (income) loss of joint venture........................... (273) 497 (267)
Loss on disposition of assets.......................................... 9 80 126
Changes in assets and liabilities:
Accounts receivable, net............................................. 17,980 (5,779) 10,003
Inventories, net..................................................... (654) (3,309) (21)
Prepaid expenses and other current assets............................ (517) (1,123) (904)
Accounts payable..................................................... (3,513) 1,246 (5,126)
Amounts due affiliates............................................... (9,419) 6,089 (5,000)
Accrued wages and employee-related expenses.......................... 6 (378) (412)
Deferred revenue for installation and warranty....................... 635 (16) (2,613)
Other current liabilities............................................ (6,761) (802) 832
--------- --------- ---------
Net cash flows from (used for) operating activities.............. 6,888 1,127 (2,970)
--------- --------- ---------
Cash flows (used for) from investing activities:
Additions to property, plant, and equipment............................ (3,598) (3,966) (1,369)
Proceeds from the sale of property, plant, and equipment............... 383 66 334
Equity investment in joint venture..................................... -- (1,109) --
Proceeds from the sale of equity investment in joint ventures.......... -- -- 2,510
Other assets........................................................... (191) (90) (418)
Deferred credits and other long-term liabilities 121 254 283
--------- --------- ---------
Net cash flows (used for) from investing activities.............. (3,285) (4,845) 1,340
--------- --------- ---------
Cash flows (used for) from financing activities:
Increase (decrease) in short-term borrowings........................... 238 (1,522) 2,377
Proceeds from issuance of long-term debt............................... 407 40 120
Principal payments on long-term debt................................... (175) (283) (323)
Amounts payable to shareholders........................................ 372 -- 1,582
Principal payments on indebtedness to officer and shareholders......... (465) (342) (76)
Purchase of treasury stock............................................. -- (469) (1,152)
Proceeds from issuance of common and treasury shares................... -- 200 15
--------- --------- ---------
Net cash flows (used for) from financing activities.............. 377 (2,376) 2,543
--------- --------- ---------
Effect of exchange rate changes on cash and cash equivalents............... (629) (553) (699)
--------- --------- ---------
Net change in cash and cash equivalents.................................... 3,351 (6,647) 214
Beginning cash and cash equivalents........................................ 13,683 17,034 10,387
--------- --------- ---------
Ending cash and cash equivalents........................................... $ 17,034 $ 10,387 $ 10,601
--------- --------- ---------
--------- --------- ---------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-5
<PAGE>
METRON TECHNOLOGY N.V.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON SHARES AND
CUMULATIVE
ADDITIONAL OTHER
PAID-IN CAPITAL COMPREHENSIVE
----------------- TREASURY RETAINED INCOME DEFERRED
SHARES AMOUNT STOCK EARNINGS (LOSS) COMPENSATION TOTAL
------- ------- --------- -------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Balances at May 31, 1996................ 10,383 $3,221 $ (5) $30,444 $ 136 $ (888) $ 32,908
Net income.............................. 4,198 4,198
Foreign translation adjustment.......... (1,088) (1,088)
Amortization of deferred compensation... 329 329
Issuance of shares for license.......... 8 52 52
------- ------- --------- -------- ----------- ----------- -----------
Balances at May 31, 1997................ 10,391 3,273 (5) 34,642 (952) (559) 36,399
Net income.............................. 1,102 1,102
Kyser pooling adjustment................ (185) (185)
Foreign translation adjustment.......... (1,453) (1,453)
Amortization of deferred compensation... (38) 284 246
Release of rights under Buy-Sell
Agreement............................. 209 209
Purchase of treasury stock.............. (75) (463) (6) (469)
Issuance of shares
For cash.............................. 7 75 75
Exercise of stock option.............. 45 121 4 125
------- ------- --------- -------- ----------- ----------- -----------
Balances at May 31, 1998................ 10,368 3,177 (7) 35,559 (2,405) (275) 36,049
Net loss................................ (4,534) (4,534)
Foreign translation adjustment.......... (725) (725)
Amortization of deferred compensation... 275 275
Release of rights under Buy-Sell
Agreement............................. 27 27
Purchase of treasury stock.............. (266) (189) (124) (839) (1,152)
Issuance of shares
Exercise of stock option.............. 2 15 15
------- ------- --------- -------- ----------- ----------- -----------
Balances at May 31, 1999................ 10,104 $3,030 $ (131) $30,186 $(3,130) $ -- $ 29,955
------- ------- --------- -------- ----------- ----------- -----------
------- ------- --------- -------- ----------- ----------- -----------
<CAPTION>
COMPREHENSIVE
INCOME
(LOSS)
-----------
<S> <C>
Balances at May 31, 1996................
Net income.............................. $ 4,198
Foreign translation adjustment.......... (1,088)
Amortization of deferred compensation...
Issuance of shares for license..........
-----------
Balances at May 31, 1997................ $ 3,110
-----------
-----------
Net income.............................. $ 1,102
Kyser pooling adjustment................
Foreign translation adjustment.......... (1,453)
Amortization of deferred compensation...
Release of rights under Buy-Sell
Agreement.............................
Purchase of treasury stock..............
Issuance of shares
For cash..............................
Exercise of stock option..............
-----------
Balances at May 31, 1998................ $ (351)
-----------
-----------
Net loss................................ $(4,534)
Foreign translation adjustment.......... (725)
Amortization of deferred compensation...
Release of rights under Buy-Sell
Agreement.............................
Purchase of treasury stock..............
Issuance of shares
Exercise of stock option..............
-----------
Balances at May 31, 1999................ $(5,259)
-----------
-----------
</TABLE>
The accompanying Notes are an integral part of the Consolidated Financial
Statements.
F-6
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
Metron Technology N.V. ("Metron" or "the Company") is a holding company
organized under the laws of The Netherlands. Metron and its subsidiaries are
engaged in the marketing, sale and service of semiconductor equipment and
materials support in Europe, Asia and the United States. The majority of
Metron's revenue is derived from sales of materials and equipment. The Company's
principal subsidiaries include: Metron Technology (Deutschland) GmbH, Metron
Technology (United Kingdom) Ltd., Metron Technology (France) EURL, Metron
Technology (Italy) S.r.l., Metron Technology (Benelux) B.V., Metron Technology
(Israel) Ltd., Metron Technology (Asia) Ltd., Metron Technology (Hong Kong)
Ltd., T.A. Kyser Co. (a Nevada corporation), and Metron Technology Corporation
(a California corporation). Certain prior period items have been reclassified to
conform with the current year format.
In July 1998, the Company issued common shares in exchange for substantially
all of the outstanding capital stock of T.A. Kyser Co ("Kyser"), which was
engaged in the marketing and sale of semiconductor materials. The transaction
has been treated as a pooling of interests. Consequently, the Company's
consolidated financial statements have been restated to include the accounts and
operations of Kyser for all reported periods prior to the merger.
The Consolidated Financial Statements have been prepared in accordance with
generally accepted accounting principles ("GAAP") applicable in the United
States. Conformity with GAAP requires the use of estimates and assumptions that
affect the reported amounts of assets and liabilities, disclosure of contingent
assets and liabilities at the date of the financial statements, and the reported
amounts of revenues and expenses during the reporting period. Future results may
differ from these estimates.
PRINCIPLES OF CONSOLIDATION
The Consolidated Financial Statements include the accounts of the Company
and all its subsidiaries. All significant intercompany balances and transactions
have been eliminated.
REVENUE RECOGNITION
Equipment and other product sales are recognized on the shipment of goods to
customers. The Company defers the revenue associated with its installation and
warranty obligations. The deferred revenue is recognized ratably over the
applicable installation and warranty periods. Service revenue is recognized in
the periods the services are rendered to customers.
COMPREHENSIVE INCOME (LOSS)
Effective June 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, REPORTING COMPREHENSIVE INCOME.
SFAS No. 130 establishes standards of report and presentation of comprehensive
income and its components of net income and other comprehensive income. Other
comprehensive income pertains to revenues, expenses, gains, and losses that are
not included in net income, but rather are recorded directly in stockholders'
equity. For the years ended May 31, 1997, 1998, and 1999, the Company had one
item of other comprehensive loss related to the foreign currency translation
adjustment.
F-7
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
EARNINGS PER SHARE
Basic earnings per common share are based on the weighted-average number of
common shares outstanding in each year. Diluted earnings per common share
reflect the potential dilution that could occur if dilutive securities were
exercised into common shares. For all years presented the reported net income
(loss) was used in the computation of basic and diluted earnings per common
share.
A reconciliation of the shares used in the computation follows:
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(SHARES IN THOUSANDS)
<S> <C> <C> <C>
Weighted-average common shares outstanding
Shares used for basic earnings per common share................ 10,386 10,369 10,325
Shares used for stock options having a dilutive effect......... 809 743 --
Shares used for diluted earnings per share..................... 11,195 11,112 10,325
</TABLE>
As of May 31, 1999 there were 1,944,348 shares of stock options outstanding
to purchase the Company's common stock with a weighted-average exercise price of
approximately $5.41. These securities were not included in diluted earnings per
share as their effect was anti-dilutive, but could potentially dilute basic
earnings per share in the future.
CASH EQUIVALENTS
Cash equivalents are short-term, highly liquid investments with original
maturities of 90 days or less from the date of purchase.
INVENTORIES
Inventories consist primarily of purchased products and are stated at the
lower of cost (first-in, first-out basis) or net realizable value. Provision is
made for slow-moving and obsolete items.
FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS
The functional currency for Metron Technology N.V., Metron Technology (Asia)
Ltd., and Metron Technology (Hong Kong) Ltd. is the U.S. dollar. Accordingly,
the gains and losses from the re-measurement of these financial statements into
US dollars are included in current results of operations. The functional
currency for the remainder of the Company's operations is the applicable local
currency. The translation from foreign currencies to U. S. dollars is performed
for balance sheet accounts using current exchange rates in effect at the balance
sheet date and for revenue and expense accounts using an average exchange rate
during the period. Translation gains or losses are included in "Cumulative other
comprehensive income" within shareholders' equity.
FINANCIAL INSTRUMENTS AND CREDIT RISK
The carrying value of the Company's financial instruments, including cash
and cash equivalents, and accounts receivable approximates fair value. Financial
instruments that subject the Company to concentrations of credit risk consist
primarily of cash and cash equivalents and accounts receivable.
The Company sells its products and services principally to leading well
established semiconductor companies. Credit risk is concentrated in North
America, Europe and Asia. The Company performs ongoing credit evaluations of its
customers' financial condition and, generally, requires no collateral
F-8
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
from its customers. The Company has had write-offs of accounts receivable and,
based on an ongoing evaluation of its accounts receivable collectibility and
customer creditworthiness, believes it has adequately provided for such losses,
which have been within management's expectations.
The Company attempts to reduce its exposure arising from foreign currency
fluctuations by matching the maturities of foreign currency assets and
liabilities, mainly accounts receivable and accounts payable. Metron enters into
forward exchange contracts that are designated to hedge differences existing
between foreign currency assets and liabilities. Any gains or losses on these
contracts are recognized in the income statement, and generally offset the
resulting gains and losses on the related balance sheet items. Metron also uses
forward exchange contracts that are designated to hedge firm purchase
commitments. Any unrealized gains or losses are deferred and realized gains or
losses adjust the carrying basis of assets acquired, principally inventory.
PROPERTY, PLANT, AND EQUIPMENT
Property, plant, and equipment is recorded at cost. Depreciation is
determined primarily by the straight-line method over the estimated useful life
of the related asset or the lease term if applicable, as follows:
<TABLE>
<S> <C>
Buildings and leasehold improvements.......................... 10 - 50 years
Machinery, equipment, vehicles and fixtures................... 3 - 17 years
</TABLE>
Land is not depreciated. Gains and losses on disposals are included in
income at amounts equal to the difference between the net book value of the
disposed assets and the proceeds received upon disposal. Repair and maintenance
costs are capitalized only if they extend the useful life of the related asset.
The Company reviews the carrying value of these assets for impairment whenever
events and circumstances indicate that the carrying value of an asset may not be
recoverable from estimated future cash flows expected to result from its use and
disposition. Where undiscounted expected cash flows are less than the carrying
value, an impairment loss is recognized for the difference between the estimated
fair value and the carrying value of an asset. No impairment of property, plant,
and equipment existed at May 31, 1999.
INTANGIBLE ASSETS
Intangible assets consist primarily of goodwill, representing the excess of
the purchase price paid over the fair value of net assets acquired in a business
combination. Goodwill is amortized in selling, general, administrative, and
other expenses over ten years, using the straight-line method. The Company
periodically reviews intangible assets for recoverability using an undiscounted
cash flow approach to assess if there is impairment. If the undiscounted cash
flows are less than the carrying value, impairment is measured by the excess of
the carrying value over the undiscounted cash flows.
INVESTMENT IN JOINT VENTURES
The Company uses the equity method to account for its joint ventures. Metron
has the ability to influence the operating policies of, but does not control its
joint ventures.
INCOME TAXES
The Company uses the asset and liability method of accounting for income
taxes. Under this method deferred income taxes are provided to reflect the net
tax effects of temporary differences between the carrying amounts of assets and
liabilities for financial reporting purposes and the amounts used for tax
purposes.
F-9
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
DEFERRED REVENUE FOR WARRANTY AND INSTALLATION
Generally, the Company warrants products sold to customers to be free from
defects in material and workmanship for up to two years and defers the portion
of equipment revenue associated with its estimate of installation and warranty
obligations. Deferred revenue includes both the estimated cost of fulfilling the
obligations for installation and warranty and the related profit.
COMMON SHARES SUBJECT TO BUY-SELL AGREEMENT
The Company has reflected under the caption "Common shares subject to
Buy-Sell Agreement" the value as of the date of original issuance of the common
shares subject to put rights at the effective date of the Amended and Restated
Buy and Sell Agreement (the "Buy-Sell Agreement"). When shares are put to the
Company, the related value is released and reclassified to common shares. If the
offering contemplated by this prospectus is consummated, the Buy-Sell Agreement
will be terminated and the value ascribed to the put rights will be reclassified
to shareholders' equity.
The unaudited pro forma consolidated balance sheet at May 31, 1999 assumes
the consummation of this offering, and reflects the value of the put rights in
shareholders' equity.
ACCOUNTING FOR STOCK OPTIONS
The Company uses the intrinsic value-based method to account for employee
stock-based compensation plans.
2. ACQUISITION OF KYSER
On July 13, 1998, pursuant to an Agreement and Plan of Merger and
Reorganization ("Merger Agreement") dated as of June 12, 1998, the Company
acquired substantially all the outstanding shares of Kyser. Under the terms of
the Merger Agreement, each outstanding share of Kyser's common stock acquired
was converted into 16.5 shares of the Company's common shares. Accordingly, the
Company issued 1,572,453 new common shares to the shareholders of Kyser. Kyser
is a stocking distributor of materials and components which markets both
high-purity and industrial-use products in Texas and five other states.
The merger has been accounted for as a pooling of interests. There were no
transactions between the Company and Kyser prior to the combination. In
conjunction with the merger, Kyser changed its fiscal year end to coincide with
Metron's.
Certain amounts for Kyser have been reclassified to conform to the financial
statement classification followed by Metron. Since the fiscal years of Metron
and Kyser prior to May 31, 1998 differ, the consolidated statements of income
combine the operations of Kyser for its fiscal year ended July 31, 1997 with the
operations of Metron for the fiscal year ended May 31, 1997. The operations of
Metron for the year ended May 31, 1998 are combined with the operations of Kyser
for both the ten-month period ended May 31, 1998, and for the two-month period
ended July 31, 1997. Thus the two-month period ended July 31, 1997 is included
both in the Kyser fiscal year ended July 31, 1997 and the consolidated statement
of income for the fiscal year ended May 31, 1998. Accordingly, the net income of
Kyser for the two-month period ended July 31, 1997 is deducted from retained
earnings. Kyser revenue and net income for the two-month period was $8,842,000
and $185,000, respectively.
F-10
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Total revenues and net income (loss) previously reported by the separate
enterprises prior to the acquisition were as follows.
<TABLE>
<CAPTION>
MAY 31
----------------------
1997 1998
---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Total revenues:
Metron.............................................................. $ 255,283 $ 224,913
Kyser............................................................... 43,293 50,111
---------- ----------
$ 298,576 $ 275,024
Net income (loss):
Metron.............................................................. $ 4,614 $ 414
Kyser............................................................... (416) 688
---------- ----------
$ 4,198 $ 1,102
---------- ----------
---------- ----------
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Land................................................................. $ 951 $ 917
Buildings and leasehold improvements................................. 4,107 4,056
Machinery, equipment, vehicles, and fixtures......................... 13,338 13,141
--------- ---------
18,396 18,114
Less accumulated depreciation........................................ 8,495 9,962
--------- ---------
Property, plant and equipment........................................ $ 9,901 $ 8,152
--------- ---------
--------- ---------
</TABLE>
Depreciation expense relating to property, plant and equipment for the years
ended May 31, 1997, 1998, and 1999 was $2,320,000, $2,474,000, and $2,617,000,
respectively.
4. INVESTMENT IN UNCONSOLIDATED JOINT VENTURES
The Company's interests in its joint ventures were as follows:
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
FSI-CME................................................................. $ 2,127 $ --
FSI-CMK................................................................. 215 --
MAP..................................................................... -- 185
--------- ---------
Investment in joint ventures............................................ $ 2,342 $ 185
--------- ---------
--------- ---------
</TABLE>
In 1995, the Company and FSI International, Inc. ("FSI"), a related party,
each acquired 50% of FSI-CME (formerly Vinylglass Ltd.). In 1998, Metron
Technology (Asia) Ltd. ("MTA"), a wholly owned subsidiary of the Company and FSI
established another joint venture in Korea, FSI-CMK. FSI-CMK
F-11
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
was owned 65% by FSI and 35% by MTA. The business of FSI-CMK is the design,
construction, installation, supply, support and servicing of chemical management
equipment for microelectronics fabrication facilities located within Korea. In
February 1999, the Company sold its interests in these joint ventures to FSI for
$2,510,000.
During fiscal year 1999, Metron Technology (United Kingdom) Ltd., a wholly
owned subsidiary of the Company and WS Atkins Plc. formed a 50/50 joint venture
Metron Atkins Partnership Limited ("MAP"). MAP provides services to the
semiconductor industry including but not limited to design and engineering of
manufacturing facilities, facilities management, and comprehensive technical
support.
Condensed combined financial information for the unconsolidated investments
in FSI-CME, FSI-CMK, and MAP are as follows:
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Current assets......................................................... $ 6,971 $ 3,771
Noncurrent assets...................................................... 1,536 --
Current liabilities.................................................... (4,540) (3,400)
Noncurrent liabilities................................................. (34) --
--------- ---------
Total shareholders' equity............................................. 3,933 371
Other shareholder's share of equity.................................... (2,059) (186)
--------- ---------
Metron's share of equity............................................... 1,874 185
Goodwill and other items (10 year life)................................ 468 --
--------- ---------
Investment in unconsolidated joint ventures............................ $ 2,342 $ 185
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Operating income (loss)........................................... $ 946 $ (1,804) $ 1,605
Net income (loss)................................................. $ 682 $ (995) $ 705
Metron's share of net income (loss)............................... $ 342 $ (437) $ 319
Amortization of goodwill and other intangible items............... (69) (60) (52)
--------- --------- ---------
Equity in net income (loss) of joint ventures..................... $ 273 $ (497) $ 267
--------- --------- ---------
--------- --------- ---------
</TABLE>
Product sales to FSI-CME for the years ended May 31, 1997, 1998, and 1999
were $1,738,000, $632,000, and $441,000, respectively. Purchases from FSI-CME
during the same periods were $17,956,000, $6,470,000, and $4,560,000,
respectively. At May 31, 1998 and 1999, amounts receivable from joint ventures
were $49,469 and $449,000, respectively, and amounts payable were $1,035,000 and
none, respectively.
F-12
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
5. SHORT-TERM BORROWINGS AND DEBT
Short-term borrowings consist of the following:
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Line of credit........................................................ $ 7,017 $ 7,669
Short-term credit facilities.......................................... 1,443 3,168
Current portion of long-term debt..................................... 311 249
--------- ---------
Short-term borrowings and current portion of long-term debt........... $ 8,771 $ 11,086
--------- ---------
--------- ---------
</TABLE>
A subsidiary of the Company has a revolving line of credit with a bank. The
line of credit provides borrowings not to exceed the lesser of $8,500,000 or a
borrowing base based upon inventory and accounts receivable, which collateralize
the line. The interest rate is 2.5% above LIBOR, and was 9.0% and 7.43% at May
31, 1998 and 1999, respectively. The line of credit is also subject to the
maintenance of certain financial ratios and minimum levels of tangible net
worth. The Company has guaranteed the line of credit.
The Company and its subsidiaries have short-term credit facilities in
various currencies with a number of banks. Weighted average interest rates on
the outstanding facilities at May 31, 1998 and 1999 were 7.2% and 6.6%,
respectively. Certain assets of subsidiaries of the Company collateralize the
facilities. At May 31, 1999, the total amount available and unutilized under the
Company's short-term borrowings was approximately $8,000,000. The Company and
its subsidiaries have guaranteed certain short-term credit facilities.
F-13
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Long-term debt consists of the following:
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Building mortgage with The Royal Bank of Scotland plc with
an interest rate of 9.24% (9.27% in 1998) until June 2001,
and thereafter at LIBOR plus 1.5% per annum until
maturity. Principal and interest are payable in quarterly
installments through April 2006. The mortgage is also
subject to the maintenance of certain financial ratios and
minimum levels of tangible net worth...................... $ 1,100 $ 953
Note payable to shareholder for purchase of retired treasury
shares. The note has an interest rate of 6.65%, payable in
annual installments until July 2002, and is collateralized
by an ESOP bond........................................... 310 248
Unsecured notes payable with principal and interest payable
quarterly. Two of the notes bear interest at the 6-month
Rome Interbank Offered Rate plus 1.75%, and one note bears
interest at the Italian Prime Rate plus 1.0%.............. 93 41
Various notes maturing through August 2005; interest rates
ranging from 3.4% to 7.5%................................. 263 210
--------- ---------
1,766 1,452
Less current portions:
Notes payable to shareholder.............................. 76 62
Long-term debt............................................ 311 249
--------- ---------
Long-term debt.............................................. $ 1,379 $ 1,141
--------- ---------
--------- ---------
</TABLE>
Future fiscal year ("FY") annual maturities of long-term debt are as
follows: FY2000, $311,000; FY2001, $218,000; FY2002, $220,000; FY2003, $217,000;
FY2004, $155,000 and thereafter, $331,000.
6. RESTRUCTURING AND MERGER COSTS
The following table summarizes the restructuring and merger costs incurred
for fiscal years 1997, 1998, and 1999.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Restructuring costs................................ $ -- $ 261 $ 1,835
Merger costs associated with the acquisition of
Kyser............................................ 258 620 715
--------- --------- ---------
Restructuring and merger costs..................... $ 258 $ 881 $ 2,550
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-14
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Restructuring costs are comprised primarily of severance costs and the early
retirement agreement ("ERA") associated with the implementation of the Company's
new organizational structure and other reductions in headcount. During fiscal
year 1998, Metron began the transition from an organizational structure based on
geography to a global organization built around the Company product lines. In
fiscal 1999, approximately $856,000 pertains to the change in the organization.
At May 31, 1999, approximately $86,000 remained as a liability of the Company.
In February 1999, the Company entered into an early retirement agreement
with one of its managing directors in connection with the termination of his
employment agreement, who had a lifetime employment agreement with the Company.
To cover the entire cost of the early retirement agreement, the Company recorded
a pre-tax charge of $979,000 in fiscal year 1999. Under the terms of the ERA,
the Managing Director resigned from his employment, and the Company agreed to
pay him a portion of his salary for the years remaining until he is eligible to
retire under the terms of his employment agreement. The Company also agreed to
provide him with certain other benefits. The present value of remaining
obligation discounted at an interest rate of 6.0% is $782,000 of which $154,000,
the current portion, is included in amounts payable to shareholders with the
remainder included in deferred credits and other long-term liabilities. The ERA
is payable monthly until March 2005.
7. RELATED PARTIES
Two of Metron's shareholders, Entegris (formerly Fluoroware) and FSI, each
own approximately 32.7% of the outstanding shares of the Company. The Company
purchases goods from these shareholders and their subsidiaries for resale in the
normal course of business under terms and conditions similar to those with
unrelated vendors. For the years ended May 31, 1997, 1998 and 1999 such
purchases totaled approximately $79,000,000, $83,400,000, and $65,300,000,
respectively. At May 31, 1998 and 1999, amounts payable to these affiliates were
$18,125,000 and $13,125,000, respectively. In addition, the Company receives
commissions from these shareholders for sales made to certain Asian customers.
For the years ended May 31, 1997, 1998 and 1999 such commissions totaled
approximately $677,000, $316,000, and $7,000, respectively. At May 31, 1998 and
1999, amounts receivable from these shareholders were $186,000 and $168,000,
respectively.
8. INCOME TAXES
The components of income tax expense for each year ended May 31 are as
follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Current:
The Netherlands.................................. $ 80 $ 117 $ (207)
Other countries.................................. 3,047 2,463 (851)
--------- --------- ---------
Total current...................................... 3,127 2,580 (1,058)
Deferred, other countries.......................... (428) (1,132) (1,156)
--------- --------- ---------
Total income taxes................................. $ 2,699 $ 1,448 $ (2,214)
--------- --------- ---------
--------- --------- ---------
</TABLE>
F-15
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
The domestic and foreign components of income before taxes for each year
ended May 31 are as follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
The Netherlands.................................... $ 360 $ 502 $ (792)
Other countries.................................... 6,537 2,048 (5,956)
--------- --------- ---------
Income before income taxes......................... $ 6,897 $ 2,550 $ (6,748)
--------- --------- ---------
--------- --------- ---------
</TABLE>
At May 31, 1999, the Company had $9,473,000 in net operating loss
carryforwards, which represented approximately $3,100,000 of tax benefit, which
may be carried forward for periods ranging from 5 years to indefinitely. A
valuation allowance of $2,506,000 has been provided against the related deferred
tax asset because it is more likely than not that Metron will not fully utilize
these tax losses.
Significant components of the Company's deferred tax assets and liabilities
are set forth below.
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Deferred tax assets:
Deferred revenue for installation and warranty............ $ 731 $ 251
Account receivable and inventory provisions............... 598 942
Unrealized foreign currency losses........................ 302 923
Accruals deductible when paid............................. 1,273 1,168
Tax loss carryforwards and other items.................... 2,261 3,264
--------- ---------
5,165 6,548
Less: Valuation allowance................................... 2,256 2,506
--------- ---------
2,909 4,042
--------- ---------
Deferred tax liabilities.................................... 91 68
--------- ---------
Net deferred tax assets recorded in consolidated balance
sheets.................................................... $ 2,818 $ 3,974
--------- ---------
--------- ---------
</TABLE>
Differences between the statutory income tax rate of The Netherlands and the
Company's effective income tax rate are reconciled as follows:
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Statutory income tax rate............................... 35.1% 35.1% (35.0)%
Increase (decrease) in taxes resulting from:
Tax rate differential in other countries.............. (5.7) (15.9) (6.5)
Current year net operating losses for which no benefit
is recognized....................................... -- 37.6 17.0
Utilization of prior year net operating losses for
which no benefit was previously recognized.......... -- (7.4) (2.3)
Amortization of Goodwill.............................. 2.1 6.9 2.5
All other............................................. 7.6 .5 (8.5)
--- --------- ---------
Effective income tax rate............................... 39.1% 56.8% (32.8)%
--- --------- ---------
--- --------- ---------
</TABLE>
F-16
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
9. CAPITAL STOCK
CHANGES IN CAPITAL SHARES
During 1998, the Company amended and restated its Articles of Association to
include, among other things, changes in the par value and in the number of
authorized shares of its common stock. The Company increased the par value of
its common shares from NLG 0.24 to NLG 0.96, and issued one new share for each 2
shares then outstanding. As a result of the stock split, the Company issued
additional common shares, and the financial statements reflect changes in par
value and the stock split for all periods presented.
AMENDED AND RESTATED BUY AND SELL AGREEMENT
In conjunction with the acquisition of Transpacific Technology Corporation,
the Company and five shareholder-employees of the Company entered into an
Amended and Restated Buy and Sell Agreement (the "Buy-Sell Agreement") effective
as of July 1995. The Buy-Sell Agreement provides for the repurchase under
certain circumstances of the outstanding shares and options of the five
shareholder-employees. Under the terms of the Buy-Sell Agreement, the
shareholder-employees have certain put rights and the Company has certain call
rights on the shares and options owned by the shareholder-employees. Until July
5, 2000, the put rights are triggered upon the occurrence of certain specified
events, namely death, permanent disability, termination of employment of the
shareholder-employee, and failure of the Company to complete a qualified initial
public offering by July 6, 2000. The Buy-Sell Agreement terminates upon a change
in control or the completion of a qualified initial public offering by the
Company.
Under the terms of the Buy-Sell Agreement, the maximum obligation of the
Company during any fiscal year is re-determined annually until the fiscal year
beginning June 1, 2000. In general, the Company's payment obligations are
subject to an annual limit equal to one half of the sum of the previous fiscal
year's net income and the non-cash flow items reported in the consolidated
financial statements. Any obligation remaining is carried forward to the
following fiscal year. At May 31, 1998 and 1999, the potential obligation to the
Company to settle the Buy-Sell Agreement rights for the shareholder-employees
amounted to approximately $9,700,000 and $9,000,000, respectively. Pursuant to
the payment cap provision of the Buy-Sell Agreement, the Company will have no
payment obligation for put rights exercised during fiscal 2000.
TREASURY SHARES
In July 1998 and May 1999, under the terms of the Buy-Sell Agreement, two
former employees exercised certain of their put rights, which required the
Company to repurchase 265,801 common shares for approximately $1,152,000.
STOCK OPTION PLAN
In fiscal 1996 the Company established an Employee Stock Option Plan to
award options to managing directors and key employees, and in fiscal 1997
established a Supervisory Directors' Stock Option Plan to award options to
supervisory directors. The two plans consist of 2,362,500 common shares
(2,250,000 shares for employees, and 112,500 for supervisory directors). The
plans require that the exercise price of options be the fair value of the common
shares at the grant date, except for 1,065,948 shares awarded at amounts below
fair value during the initial six-month period following the establishment of
the Plan. Deferred compensation expense of $1,232,000 for the 1,065,948 shares
was
F-17
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
charged to income over the vesting periods. Options generally vest over a
four-year period, and are exercisable in installments beginning one year after
the grant date.
The following pro forma information has been prepared as if the Company had
accounted for its stock options using the fair value accounting method
established by SFAS No. 123--"Accounting for Stock Based Compensation."
Additional compensation expense arising from the application of SFAS 123 has
been estimated using the minimum value method from the date of grant without
considering the volatility of the underlying stock. For purposes of the pro
forma disclosures below, additional compensation cost is amortized to expense
over the options' vesting period.
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net income (loss):
As reported...................................... $ 4,198 $ 1,102 $ (4,534)
Pro forma(a)..................................... $ 3,816 $ 761 $ (4,822)
--------- --------- ---------
--------- --------- ---------
</TABLE>
- ------------------------
(a) Based on the following assumptions for grants in fiscal years 1997, 1998,
and 1999: risk-free weighted average interest rates of 6.13%, 6.14%, and
5.16% in fiscal years 1997, 1998, and 1999, respectively; weighted average
expected option lives of 6.5 years, 5.6 years, and 4.8 years in fiscal years
1997, 1998, and 1999, respectively; and no dividend yield in each year.
There were approximately 326,000 and 45,000 shares available for future
employee awards and Director awards, respectively, at May 31, 1999. The
following table summarizes award activity:
<TABLE>
<CAPTION>
1997 1998 1999
---------------------- ---------------------- ----------------------
WEIGHTED WEIGHTED WEIGHTED
AVERAGE AVERAGE AVERAGE
EXERCISE EXERCISE EXERCISE
SHARES PRICE SHARES PRICE SHARES PRICE
--------- ----------- --------- ----------- --------- -----------
<S> <C> <C> <C> <C> <C> <C>
Outstanding, beginning of year........... 1,410,348 $ 3.60 1,557,798 $ 3.99 1,669,998 $ 4.67
Stock options granted.................... 154,950 $ 7.70 302,700 $ 8.33 446,250 $ 7.83
Stock options exercised.................. -- -- (45,000) $ 2.78 (2,200) $ 7.00
Awards canceled.......................... (7,500) $ 7.08 (145,500) $ 5.57 (169,700) $ 5.46
--------- ----- --------- ----- --------- -----
Outstanding, end of year................. 1,557,798 $ 3.99 1,669,998 $ 4.67 1,944,348 $ 5.41
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
Options exercisable at end of year....... 588,467 $ 3.51 666,244 $ 3.75 1,128,602 $ 3.91
--------- ----- --------- ----- --------- -----
--------- ----- --------- ----- --------- -----
</TABLE>
F-18
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Summary information concerning outstanding and exercisable options as of May
31, 1999 is as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE WEIGHTED WEIGHTED
RANGE OF REMAINING AVERAGE AVERAGE
EXERCISE NUMBER CONTRACTUAL EXERCISE NUMBER EXERCISE
PRICES OUTSTANDING LIFE PRICE EXERCISABLE PRICE
- -------------- ----------- ----------- ----------- ---------- -----------
<C> <C> <S> <C> <C> <C>
$0.00 - $2.78 885,948 6.1 yrs $ 2.78 824,951 $ 2.78
$2.79 - $6.16 229,650 5.9 yrs $ 6.16 175,047 $ 6.16
$6.17 - $7.00 8,400 5.5 yrs $ 7.00 4,200 $ 7.00
$7.01 - $7.83 421,500 8.9 yrs $ 7.83 8,377 $ 7.83
$7.84 - $8.00 129,600 6.0 yrs $ 8.00 49,804 $ 8.00
$8.01 - $8.33 269,250 7.5 yrs $ 8.33 66,223 $ 8.33
----------- ----------
1,944,348 1,128,602
----------- ----------
----------- ----------
</TABLE>
Market price is the fair value of the Company's common stock as determined
by the Plan Committee on the grant date. All options issued during the past
three years have an exercise price equal to the market price on the date of
grant. The weighted average fair values below have been determined using the
Minimum Value Method.
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
<S> <C> <C> <C>
Options granted............................... 154,950 302,700 446,250
Weighted average exercise price............... $ 7.70 $ 8.33 $ 7.83
Weighted average fair value................... $ 2.51 $ 2.35 $ 1.66
</TABLE>
10. EMPLOYEE BENEFITS
Most employees of the Company are covered by one of several defined
contribution retirement plans. Contributions are generally based on the
participant's compensation. The amount of pension expense charged to operating
expenses for defined contribution plans was $659,000 in fiscal 1997, $956,000 in
fiscal 1998, and $1,140,000 in fiscal 1999.
Kyser has an employee stock ownership plan ("ESOP") for its employees. Upon
the acquisition of Kyser, all Kyser shares held by the ESOP were exchanged for
shares of the Company. The subsidiary's full time employees generally become
eligible to participate after 12 months of continuous service. The cost of the
ESOP may be paid by the subsidiary or through contributions made by the
subsidiary to the ESOP in amounts determined by the Board of Directors. Shares
of common stock acquired from terminated employees by the plan and forfeitures
by terminated participants are allocated to each eligible participant account
under the plan. Participants are eligible for a distribution in the sixth year
after normal termination and in the second year after termination for
retirement, death, or disability. Participants vest in amounts allocated to them
according to a vesting schedule. Distributions of participant accounts to
participants in either cash or the Company's common stock may be made in the
event of termination, retirement, death or disability. To the extent the
participant elects to receive common stock in the event of retirement, death or
disability, and the common stock is not readily tradable in an established
market, such common stock may be put to the Company during the put option period
at the then current fair value.
F-19
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
11. FINANCIAL INSTRUMENTS
The carrying value of accounts receivable, accounts payable and long-term
debt approximate fair value. At May 31, 1999 the Company had aggregate forward
exchange contracts in various currencies as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
CONTRACT AMOUNT EXCHANGE
US $ BUY SELL RATE FAIR VALUE EXPIRATION DATE
- ----------------------- -------------------- -------------------- --------- ------------ ------------------
<S> <C> <C> <C> <C> <C>
$3,773,000 -- Singapore Dollars 1.69 $ 98,319 January 2000
$4,889,000 Japanese Yen 107.26 (1,439) March 2000
$2,022,000 Singapore Dollars 1.67 3,578 January 2000
$1,700,000 Italian Lira 1,864.90 5,492 July 1999
$500,000 British Pounds 1.63 (475) June 1999
$700,000 Deutsch Mark 1.79 (36,445) July 1999
------------
$ 69,030
------------
------------
</TABLE>
The building mortgage with the Royal Bank of Scotland plc interest rate
comprises a variable LIBOR rate, a fixed rate of 1.5%, and a regulatory bank
charge. In May 1996 the Company entered into an interest rate swap, expiring
June 2001, to convert the variable LIBOR portion of the interest rate to a fixed
interest rate of 7.72%. The interest rates at May 31, 1998 and 1999 for the
mortgage were 9.25% and 6.87%, while the interest rates for the swap were 9.27%
and 9.24%, respectively. At May 31, 1999, the notional amount for the interest
rate swap was $1,002,000 and its estimated fair value was a payable of $43,000.
12. COMMITMENTS
At May 31, 1999, Metron was committed to spending approximately $21,900,000,
principally to purchase equipment, materials, and spare parts for resale.
The Company and its subsidiaries lease certain facilities and equipment
under various operating lease agreements. Future minimum payments under
operating leases that have initial or remaining noncancelable lease terms of one
year or more consist of the following at May 31, 1999.
<TABLE>
<CAPTION>
(DOLLARS IN
FISCAL YEAR THOUSANDS)
- ------------------------------------------------------------------------ ---------------------
<S> <C>
2000.................................................................... $ 2,579
2001.................................................................... 1,906
2002.................................................................... 739
2003.................................................................... 448
2004.................................................................... 209
Thereafter.............................................................. 1,208
------
Total minimum lease payments............................................ $ 7,089
------
------
</TABLE>
The Company's rental expense for operating leases for the fiscal years ended
May 31, 1997, 1998 and 1999, was $2,919,000, $2,976,000, and $3,330,000
respectively.
F-20
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
13. ADDITIONAL SALES INFORMATION AND CONCENTRATION OF RISK
In fiscal 1997, sales to Seimens and IBM represented approximately 11.4% and
11.3%, of net revenues, respectively. In fiscal 1998 and 1999, no individual
customer represented sales of 10% or more of operating revenues.
A large portion of the Company's sales is made to a number of major publicly
owned corporations. There is a concentration of credit risk in accounts
receivable from these customers. Metron performs ongoing credit evaluations of
its customers and generally does not require collateral. Although the credit
risk associated with nonpayment from these customers is affected by conditions
or occurrences within their industry, accounts receivable from these customers
were substantially current at May 31, 1999. The Company believes that there is
no significant credit risk with respect to these receivables.
14. SEGMENT AND GEOGRAPHIC DATA
The Company implemented SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information," as of June 1, 1998. This Statement
establishes standards for the reporting of information pertaining to operating
segments in annual and in interim financial reports issued to shareholders.
Previously reported amounts are not presented to compare with operating results
for fiscal year 1999, except for net revenues. The Company is unable to restate
reported amounts in fiscal years 1997 and 1998 due to the reorganization 1999 of
its management structure to coincide with its product lines beginning in fiscal
1999.
The Company operates predominantly in the semiconductor industry. This
involves the marketing, sales, and service of semiconductor manufacturing and
test equipment and materials. Reportable segments are based on the way the
Company is organized, reporting responsibilities to the chief operating officer,
and on the nature of the products offered to customers. Reportable segments are
the equipment division (which includes equipment including certain specialized
process chemicals, and spare part sales, and equipment service), the materials
division (which includes components used in construction and maintenance), and
other which includes finance, administration and corporate functions.
The accounting policies of the segments are the same as those described in
Note 1 Summary of Significant Accounting Policies. Segment operating results are
measured based on profit (loss) before tax, adjusted if necessary, for certain
segment specific items. There are no inter-segment sales. Identifiable assets
are the Company's assets that are identified with classes of similar products or
operations in each geographic region. Corporate assets include primarily cash,
equity investments and administrative headquarters assets of the Company.
F-21
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
SEGMENT INFORMATION
<TABLE>
<CAPTION>
EQUIPMENT MATERIALS
DIVISION DIVISION OTHER TOTAL
----------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended May 31, 1997
Net revenues................................................... $ 187,944 $ 110,632 $ -- $ 298,576
Year ended May 31, 1998
Net revenues................................................... $ 151,610 $ 123,414 $ -- $ 275,024
Year ended May 31, 1999
Net revenues................................................... $ 127,420 $ 101,198 $ -- $ 228,618
Depreciation expense........................................... $ 794 $ 475 $ 1,348 $ 2,617
Interest income................................................ $ -- $ -- $ 438 $ 438
Interest expense............................................... $ -- $ -- $ 913 $ 913
Operating income (loss) before tax............................. $ 3,161 $ 8,384 $ (18,293) $ (6,748)
Assets......................................................... $ 35,424 $ 48,635 $ 15,566 $ 99,625
Capital expenditures........................................... $ 409 $ 341 $ 619 $ 1,369
</TABLE>
GEOGRAPHIC INFORMATION
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
----------------------------------
1997 1998 1999
---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Net revenues:
United States.............................................................. $ 59,884 $ 66,505 $ 54,285
Germany.................................................................... 60,639 44,425 32,059
United Kingdom............................................................. 58,645 47,483 30,952
France..................................................................... 36,512 29,393 17,701
Hong Kong.................................................................. 33,342 29,218 27,672
Singapore.................................................................. 21,148 17,155 29,000
Other nations.............................................................. 28,406 40,845 36,949
---------- ---------- ----------
Geographic totals............................................................ $ 298,576 $ 275,024 $ 228,618
---------- ---------- ----------
---------- ---------- ----------
</TABLE>
<TABLE>
<CAPTION>
1998 1999
---------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Assets:
United States................................................................................ $ 30,798 $ 28,181
Germany...................................................................................... 16,120 13,455
United Kingdom............................................................................... 22,276 14,721
Singapore.................................................................................... 9,262 25,179
Hong Kong.................................................................................... 14,302 981
Other nations................................................................................ 21,403 17,108
---------- ---------
Geographic totals.............................................................................. $ 114,161 $ 99,625
---------- ---------
---------- ---------
</TABLE>
F-22
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
15. SUPPLEMENTAL FINANCIAL INFORMATION
<TABLE>
<CAPTION>
MAY 31
--------------------
1998 1999
--------- ---------
(DOLLARS IN
THOUSANDS)
<S> <C> <C>
Other current liabilities:
Customer prepayments......................................................................... $ 2,143 $ 1,321
Accrued taxes including income taxes......................................................... 2,577 2,150
Project costs................................................................................ 840 1,677
Other........................................................................................ 1,285 2,529
--------- ---------
Total other current liabilities................................................................ $ 6,845 $ 7,677
--------- ---------
--------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Other income (expense):
Foreign exchange gain (loss)...................................................... $ (578) $ 489 $ 211
Interest income................................................................... 487 514 438
Interest expense.................................................................. (1,260) (1,110) (913)
Loss on sale of joint ventures.................................................... -- -- (140)
Miscellaneous income.............................................................. 749 36 7
--------- --------- ---------
Other income (expense).............................................................. $ (602) $ (71) $ (397)
--------- --------- ---------
--------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
YEARS ENDED MAY 31
-------------------------------
1997 1998 1999
--------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Supplemental cash flow information:
Cash payments for:
Interest.......................................................................... $ 1,312 $ 982 $ 930
Income taxes...................................................................... $ 3,210 $ 3,622 $ (604)
Noncash transactions:
Issuance of shares for license.................................................... $ 52 $ -- $ --
Deferred compensation............................................................. $ -- $ (38) $ --
</TABLE>
F-23
<PAGE>
METRON TECHNOLOGY N.V.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
16. QUARTERLY FINANCIAL DATA (UNAUDITED)
<TABLE>
<CAPTION>
FIRST SECOND THIRD FOURTH
--------- --------- --------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Year ended May 31, 1998
Net revenues........................................................ $ 61,552 $ 72,209 $ 78,249 $ 63,014
Operating income.................................................... $ 1,325 $ 158 $ 1,364 $ 271
Net income (loss)................................................... $ 886 $ (308) $ 563 $ (39)
Year ended May 31, 1999
Net revenues........................................................ $ 56,922 $ 51,296 $ 56,559 $ 63,840
Operating income (loss)............................................. $ (1,801) $ (2,595) $ (2,832) $ 610
Net income (loss)................................................... $ (1,266) $ (1,513) $ (1,899) $ 144
</TABLE>
17. RECENT ACCOUNTING PRONOUNCEMENT
In June 1998, FASB issued SFAS No. 133, ACCOUNTING FOR DERIVATIVE
INSTRUMENTS AND HEDGING ACTIVITIES, which, as amended, becomes effective for
fiscal years beginning after June 15, 2000, with early adoption encouraged. The
pronouncement requires companies to record derivatives on the balance sheet as
assets or liabilities, measured at fair value. Gains or losses resulting from
changes in the value of those derivatives would be accounted for depending on
the use of the derivative and whether it qualifies for hedge accounting. The
Company is presently analyzing this statement and the impact, if any, on the
Company's financial statements.
18. DIVIDEND RESTRICTION
Pursuant to the Company's Articles of Incorporation and Dutch law, the
Company has available for the declaration of dividends to its shareholders
approximately $23,000,000.
19. SUBSEQUENT EVENT
Prior to completion of its initial public offering pursuant to this
Prospectus, the Company intends to amend its Articles of Association to convert
from a B.V. to an N.V. under the laws of The Netherlands, to increase the number
of authorized preferred shares from 1,500,000 to 10,000,000 and the number of
authorized common shares from 23,500,000 to 40,000,000 and to remove the
mandatory reserve of $7,000,000 created in connection with the Buy-Sell
Agreement.
F-24
<PAGE>
[Photographs of selected materials and equipment marketed and sold by Metron.]
<PAGE>
- ------------------------------------------------------------
- ------------------------------------------------------------
SHARES
[LOGO]
------------
Prospectus
, 1999
-------------------
BANC OF AMERICA SECURITIES LLC
SG COWEN
U.S. BANCORP PIPER JAFFRAY
Until , 1999 (25 days after the date of this prospectus), all
dealers effecting transactions in the common shares, whether or not
participating in this distribution, may be required to deliver a prospectus.
This is in addition to the obligation of dealers to deliver a prospectus when
acting as underwriters and with respect to their unsold allotments or
subscriptions.
- ------------------------------------------------------------
- ------------------------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION
The following table sets forth the costs and expenses, other than
underwriting discounts and commissions, payable by the registrant in connection
with the distribution of the common shares being registered. All amounts are
estimated, except the SEC Registration Fee, the NASD Filing Fee and the Nasdaq
National Market Filing Fee:
<TABLE>
<S> <C>
SEC Registration Fee............................................... $ 15,985
NASD Filing Fee.................................................... 6,250
Nasdaq National Market Filing Fee.................................. *
Blue Sky Fees and Expenses......................................... *
Accounting Fees.................................................... *
Legal Fees and Expenses............................................ *
Transfer Agent and Registrar Fees.................................. *
Printing and Engraving............................................. *
Miscellaneous...................................................... *
---------
Total.......................................................... $ *
---------
---------
</TABLE>
- ------------------------
* To be supplied by amendment.
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Metron has entered into indemnification agreements with certain of its
managing directors, providing for indemnification by Metron against any
liability to which a managing director may be subject for judgments,
settlements, penalties, fees and expenses of defense (including attorney's fees,
bonds and costs of investigation), arising out of or in any way related to acts
or omissions as a member of the management board, or an executive officer, or in
any other capacity in which services are rendered to Metron or its subsidiaries.
Metron believes that the indemnification agreements will assist Metron in
attracting and retaining qualified individuals to serve as managing directors.
The agreements provide that a managing director is not entitled to
indemnification under these agreements under certain circumstances including (i)
if indemnification is expressly prohibited under applicable law and (ii) if
indemnification is expressly prohibited by Metron's articles.
Generally, under Dutch law, a director will not be held personally liable
for decisions made with reasonable business judgment, absent self dealing or, in
the event of bankruptcy, which do not qualify as clearly improper performance.
In addition, indemnification may not be available to directors or officers under
Dutch law if any act or omission by a director or officer would qualify as
willful misconduct or gross negligence (including not taking action to prevent
the consequences of improper performance by the board). Due to lack of
applicable case law, it is not clear whether indemnification is available in
case of breach of securities laws of the United States.
Under the Metron articles, except in case of willful misfeasance, bad faith
or gross negligence or improper personal benefit, every person or legal entity
who is, or has been, a managing director, supervisory director, or an officer
with the power to represent Metron, employee or agent of Metron, who is made a
party or is threatened to be made a party to any claim by virtue of such
capacity, shall be indemnified by Metron, to the fullest extent permitted under
any applicable law against (i) any and all liabilities imposed on him or it,
(ii) any and all expenses and (iii) any and all amounts paid in settlement by
him or it, in each case in connection with any such claim.
II-1
<PAGE>
ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES
Since June 1, 1996, Metron has sold and issued the following unregistered
securities (references to shares of common stock reflect a three for two stock
split on April 22, 1998):
(1) On December 12, 1996, Metron issued 7,500 common shares to D.E. Lund
in exchange for the rights to use the name Metron in Texas;
(2) On November 25, 1997, Metron issued 7,500 common shares to A. Inoue
in exchange for consulting services;
(3) On July 18, 1998, Metron issued an aggregate of 1,582,683 common
shares to the former shareholders of T.A. Kyser Co. in connection with a
merger transaction in which Kyser became a wholly-owned subsidiary of
Metron, 10,230 have since been returned to Metron in accordance with the
Agreement and Plan of Merger and Reorganization entered into a connection
with the transaction; and
(4) As of August 31, 1999, Metron has granted options to purchase
2,467,648 common shares to employees, directors and consultants pursuant to
its Employee Stock Option Plan and 1997 Supervisory Directors' Stock Option
Plan. Of these options, 426,350 shares have been canceled without being
exercised, 47,200 shares have been exercised, 45,000 shares of which have
been repurchased and 2,200 shares remain outstanding.
The sales and issuances of securities in the transactions described in
paragraphs 1 and 2 above were deemed to be exempt from registration under the
Securities Act by virtue of Section 4(2) as a transaction not involving a public
offering.
The sale and issuance of securities in the transaction described in
paragraph 3 above was deemed to be exempt from registration under the Securities
Act by virtue of Section 4(2) and Regulation D promulgated thereunder as a
transaction by an issuer not involving any public offering.
The sale and issuance of securities described in paragraph 4 above were
deemed to be exempt from registration under the Securities Act by virtue of Rule
701 promulgated thereunder.
There were no underwritten offerings employed in connection with any of the
transactions set forth in Item 15(a).
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) Exhibits
<TABLE>
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Agreement and Plan of Merger and Reorganization among Metron Technology B.V.,
Metron Acquisition Sub, Inc. and T.A. Kyser Co., dated June 12, 1998
2.2 Amendment to Agreement and Plan of Merger and Reorganization among Metron
Technology B.V., Metron Acquisition Sub, Inc. and T.A. Kyser Co., dated July
13, 1998
2.3 Joinder Agreement among certain stockholders of T.A. Kyser Co, Metron Technology
B.V. and Metron Acquisition Sub, Inc. dated July 13, 1998
3.1* Articles of Association of the Registrant
4.1* See Exhibit 3.1
5.1* Form of Opinion of Nauta Dutilh
10.1* 1997 Supervisory Directors' Stock Option Plan
10.2* Form of 1997 Supervisory Directors' Stock Option Agreement
10.3* Amended and Restated Metron Technology N.V. Employee Stock Option Plan
</TABLE>
II-2
<PAGE>
<TABLE>
<C> <S>
10.4* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in
countries other than the United States and the United Kingdom)
10.5* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in
the United States)
10.6* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in
the United Kingdom)
10.7* Aufhebungs und Ruhestandsvertrag (Cancellation and Early Retirement Agreement)
between Metron Technology (Deutschland) GmbH, Metron Technology B.V. and Udo
Jaensch dated February 2, 1999 and translation thereof
10.8 Share Purchase Agreement (CME) between FSI International, Inc. and Metron
Technology B.V. dated February 27, 1999
10.9 Share Purchase Agreement (CMK) between FSI International, Inc. and Metron
Technology B.V. dated February 27, 1999
10.10 Agreement to Terminate Joint Venture Agreements and Distribution Agreement
between FSI International, Inc. and Metron Technology B.V. dated May 18, 1999
10.11* FSI/Metron Distribution Agreement dated March 31, 1998 between FSI
International, Inc. and Metron Technology B.V.
10.12 Distribution Agreement dated July 6, 1995 between Fluoroware, Inc. (now a
wholly-owned subsidiary of Entegris, Inc.) and Metron Semiconductors Europa
B.V. (now Metron Technology N.V.)
10.13 U.S. Stocking Distributor Five-Year Agreement as of September 1, 1997 between
Fluoroware, Inc. and Kyser Company
10.14* Form of Employment Agreement among Metron Technology B.V., Metron Technology
Corporation and certain managing directors
10.15 Managing Director Service Agreement between Metron Technology (U.K.) Ltd. and
John Christopher Levett-Prinsep dated May 1, 1996.
10.16 Employment Agreement dated July 13, 1998 among T.A. Kyser Co., Metron Technology
Corporation, Metron Technology B.V. and Garry Hendricks
10.17* Metron Technology Employee Stock Purchase Plan
10.18 T.A. Kyser Co. Employee Stock Ownership Trust as amended and restated March 17,
1997
10.19 Amendment No. 1 dated July 13, 1998 to the T.A. Kyser Co. Employee Stock
Ownership Trust
10.20 T.A. Kyser Co. Employee Stock Ownership Plan as amended and restated March 17,
1997
10.21 Amendment No. 1 dated June 12, 1998 to the T.A. Kyser Co. Employee Stock
Ownership Plan
10.22 Amendment No. 2 dated July 13, 1998 to the T.A. Kyser Co. Employee Stock
Ownership Plan
10.23 Investors Rights Agreement dated July 6, 1995 among Metron Semiconductors Europa
B.V. and the Investors as defined therein
10.24 Accession Agreement dated October 15, 1998 among Metron Technology B.V., the
Original Parties as defined therein, Segal Investments, L.P., M. Segal, N.
Segal, M. Segal as trustee of the Matthew Dean Segal 1997 Trust and N. Segal
as trustee of the Matthew Dean Segal 1997 Trust
10.25 Confirmation Agreement dated October 15, 1998 among Metron Technology B.V. and
the Investors as defined in the Investor Rights Agreement of July 6, 1995
10.26 Accession Agreement dated July 13, 1998 among Metron Technology B.V., the
Stockholders and the Signing Stockholders as defined therein
10.27 Consent Agreement dated July 13, 1998 among Metron Technology B.V. and the
Investors as defined therein
</TABLE>
II-3
<PAGE>
<TABLE>
<C> <S>
10.28* Incentive Compensation Plan for Edward D. Segal FY2000
10.29* Incentive Compensation Plan for Michael A. Grandinetti FY2000
10.30* Incentive Compensation Plan for Peter V. Leigh FY2000
10.31* Incentive Compensation Plan for J. Christopher Levett-Prinsep FY2000
10.32* Incentive Compensation Plan for Keith Reidy FY2000
10.33 Amended and Restated Buy and Sell Agreement among Metron Technology B.V. and the
Significant Shareholders as defined therein, as of July 6, 1995.
21.1 List of Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, independent auditors
23.2* Consent of Nauta Dutilh (included in Exhibit 5.1)
23.3* Consent of Cooley Godward LLP
24.1 Power of Attorney (See signature pages)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
(b) Financial Statement Schedules
Metron Technology N.V., Schedule II--Valuation and Qualifying Accounts.
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide to the Underwriters
at the closing specified in the Underwriting Agreement, certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 (the "Act") may be permitted to directors, officers, and controlling
persons of the Registrant pursuant to the foregoing provisions, or otherwise,
the Registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
Registrant of expenses incurred or paid by a director, officer or controlling
person of the Registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the Registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Act, the
information omitted from the form of prospectus filed as part of this
Registration Statement in reliance upon Rule 430A and contained in a form of
prospectus filed by the Registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Act shall be deemed to be a part of this Registration
Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Act, each
post-effective amendment that contains a form of prospectus shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, Registrant has
duly caused this Registration Statement to be signed on its behalf, by the
undersigned, thereunto duly authorized, in the City of Burlingame, County of San
Mateo, State of California, on September 23, 1999.
<TABLE>
<S> <C> <C>
METRON TECHNOLOGY N.V.
By: /s/ EDWARD SEGAL
-----------------------------------------
Edward Segal
PRESIDENT AND CHIEF EXECUTIVE OFFICER
</TABLE>
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears
below constitutes and appoints Edward Segal and Peter V. Leigh, and each of
them, his or her attorneys-in-fact, each with the power of substitution, for him
or her in any and all capacities, in any and all capacities, to sign any and all
amendments to this Registration Statement (including post-effective amendments),
and to sign any registration statement for the same offering covered by this
Registration Statement that is to be effective upon filing pursuant to Rule
462(b) promulgated under the Securities Act of 1933, and all post-effective
amendments thereto, and to file the same, with exhibits thereto and other
documents in connection therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of them, full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby ratifying and
confirming all that such attorneys-in-fact, or his or their substitute or
substitutes, may lawfully do or cause to be done by virtue hereof. This Power of
Attorney may be signed in several counterparts.
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement on Form S-1 has been signed by the following persons in
the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
/s/ ROBERT R. ANDERSON
- ------------------------------ Supervisory Board Member September 23, 1999
Robert R. Anderson
/s/ JAMES E. DAUWALTER
- ------------------------------ Supervisory Board Member September 23, 1999
James E. Dauwalter
/s/ JOEL A. ELFTMANN
- ------------------------------ Supervisory Board Member September 23, 1999
Joel A. Elftmann
</TABLE>
II-5
<PAGE>
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------ -------------------------- -------------------
<C> <S> <C>
President and Chief
/s/ EDWARD D. SEGAL Executive Officer and
- ------------------------------ Managing Director September 23, 1999
Edward D. Segal (Principal Executive
Officer)
Vice President, Finance
and Chief Financial
/s/ PETER V. LEIGH Officer and Managing
- ------------------------------ Director (Principal September 23, 1999
Peter V. Leigh Financial and Accounting
Officer)
/s/ J. CHRISTOPHER
LEVETT-PRINSEP Executive Vice President,
- ------------------------------ Equipment Division and September 23, 1999
J. Christopher Levett-Prinsep Managing Director
/s/ MICHAEL A. GRANDINETTI Executive Vice President,
- ------------------------------ Materials Division and September 23, 1999
Michael A. Grandinetti Managing Director
/s/ C. GARRY HENDRICKS Vice Chairman of T.A.
- ------------------------------ Kyser Co. and Managing September 23, 1999
C. Garry Hendricks Director
/s/ KEITH REIDY
- ------------------------------ Vice President, Marketing September 23, 1999
Keith Reidy and Managing Director
</TABLE>
II-6
<PAGE>
METRON TECHNOLOGY N.V.
SCHEDULE II--VALUATION AND QUALIFYING ACCOUNTS
<TABLE>
<CAPTION>
COL. C
------------------------
COL. B ADDITIONS COL. E
------------ ------------------------ -----------
COL. A BALANCE AT CHARGED TO CHARGED TO COL. D BALANCE AT
- -------------------------------------------------- BEGINNING OF COSTS AND OTHER ----------- END OF
DESCRIPTION PERIOD EXPENSES ACCOUNTS DEDCTION PERIOD
- -------------------------------------------------- ------------ ----------- ----------- ----------- -----------
(IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
Deducted from asset accounts:
Year ended May 31, 1997:
Allowance for doubtful accounts............... $ 749 $ 1,533 $ -- $ 508 $ 1,774
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
Valuation allowance inventory................. $ 2,247 $ 2,038 $ -- $ 949 $ 3,336
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
Deducted from asset accounts:
Year ended May 31, 1998:
Allowance for doubtful accounts............... $ 1,774 $ 434 $ -- $ 1,393 $ 815
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
Valuation allowance inventory................. $ 3,336 $ 2,644 $ -- $ 1,655 $ 4,325
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
Deducted from asset accounts:
Year ended May 31, 1999:
Allowance for doubtful accounts............... $ 815 1,029 $ -- $ 532 $ 1,312
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
Inventory valuation allowance................. $ 4,325 $ 2,696 $ -- $ 1,014 $ 6,007
------------ ----------- ----------- ----------- -----------
------------ ----------- ----------- ----------- -----------
</TABLE>
S-1
<PAGE>
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
1.1* Form of Underwriting Agreement
2.1 Agreement and Plan of Merger and Reorganization among Metron Technology B.V., Metron Acquisition Sub,
Inc. and T.A. Kyser Co., dated June 12, 1998
2.2 Amendment to Agreement and Plan of Merger and Reorganization among Metron Technology B.V., Metron
Acquisition Sub, Inc. and T.A. Kyser Co., as of July 13, 1998
2.3 Joinder Agreement among certain stockholders of T.A. Kyser Co., Metron Technology B.V. and Metron
Acquisition Sub, Inc. dated July 13, 1998
3.1* Articles of Association of the Registrant
4.1* See Exhibit 3.1
5.1* Form of Opinion of Nauta Dutilh
10.1* 1997 Supervisory Directors' Stock Option Plan
10.2* Form of 1997 Supervisory Directors' Stock Option Agreement
10.3* Amended and Restated Metron Technology N.V. Employee Stock Option Plan
10.4* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in countries other than
the United States and the United Kingdom)
10.5* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in the United States)
10.6* Form of Metron Technology N.V. Employee Stock Option Agreement (for employees in the United Kingdom)
10.7* Aufhebungs und Ruhestandsvertrag (Cancellation and Early Retirement Agreement) between Metron
Technology (Deutschland) GmbH, Metron Technology B.V. and Udo Jaensch dated February 2, 1999 and
translation thereof
10.8 Share Purchase Agreement (CME) between FSI International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.9 Share Purchase Agreement (CMK) between FSI International, Inc. and Metron Technology B.V. dated
February 27, 1999
10.10 Agreement to Terminate Joint Venture Agreements and Distribution Agreement between FSI International,
Inc. and Metron Technology B.V. dated May 18, 1999
10.11* FSI/Metron Distribution Agreement dated March 31, 1998 between FSI International, Inc. and Metron
Technology B.V.
10.12 Distribution Agreement dated July 6, 1995 between Fluoroware, Inc. (now a wholly-owned subsidiary of
Entegris, Inc.) and Metron Semiconductors Europa B.V. (now Metron Technology N.V.)
10.13 U.S. Stocking Distributor Five-Year Agreement as of September 1, 1997 between Fluoroware, Inc. and
Kyser Company
10.14* Form of Employment Agreement among Metron Technology B.V., Metron Technology Corporation and certain
managing directors
10.15 Managing Director Service Agreement between Metron Technology (U.K.) Ltd. and John Christopher
Levett-Prinsep dated May 1, 1996.
10.16 Employment Agreement dated July 13, 1998 among T.A. Kyser Co., Metron Technology Corporation, Metron
Technology B.V. and Garry Hendricks
10.17* Metron Technology Employee Stock Purchase Plan
10.18 T.A. Kyser Co. Employee Stock Ownership Trust as amended and restated March 17, 1997
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
- ----------- -----------------------------------------------------------------------------------------------------
<C> <S>
10.19 Amendment No. 1 dated July 13, 1998 to the T.A. Kyser Co. Employee Stock Ownership Trust
10.20 T.A. Kyser Co. Employee Stock Ownership Plan as amended and restated March 17, 1997
10.21 Amendment No. 1 dated June 12, 1998 to the T.A. Kyser Co. Employee Stock Ownership Plan
10.22 Amendment No. 2 dated July 13, 1998 to the T.A. Kyser Co. Employee Stock Ownership Plan
10.23 Investors Rights Agreement dated July 6, 1995 among Metron Semiconductors Europa B.V. and the
investors as defined therein
10.24 Accession Agreement dated October 15, 1998 among Metron Technology B.V., the Original Parties as
defined therein, Segal Investments, L.P., M. Segal, N. Segal, M. Segal as trustee of the Matthew
Dean Segal 1997 Trust and N. Segal as trustee of the Ned Douglas Segal 1997 Trust
10.25 Confirmation Agreement dated October 15, 1998 among Metron Technology B.V. and the Investors as
defined in the Investor Rights Agreement of July 6, 1995
10.26 Accession Agreement dated July 13, 1998 among Metron Technology B.V., the Stockholders and the
Signing Stockholders as defined therein
10.27 Consent Agreement dated July 13, 1998 among Metron Technology B.V. and the Investors as defined
therein
10.28* Incentive Compensation Plan for Edward D. Segal FY2000
10.29* Incentive Compensation Plan for Michael A. Grandinetti FY2000
10.30* Incentive Compensation Plan for Peter V. Leigh FY2000
10.31* Incentive Compensation Plan for J. Christopher Levett-Prinsep FY2000
10.32* Incentive Compensation Plan for Keith Reidy FY2000
10.33 Amended and Restated Buy and Sell Agreement among Metron Technology B.V. and the Significant
Shareholders as defined therein, as of July 6, 1995
21.1 List of Subsidiaries of the Registrant
23.1 Consent of KPMG LLP, independent auditors
23.2* Consent of Nauta Dutilh (included in Exhibit 5.1)
23.3* Consent of Cooley Godward LLP
24.1 Power of Attorney (See signature pages on II-5)
27.1 Financial Data Schedule
</TABLE>
- ------------------------
* To be filed by amendment.
<PAGE>
Exhibit 2.1
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
among:
METRON TECHNOLOGY B.V.,
a Netherlands corporation;
METRON ACQUISITION SUB, INC.,
and
T.A. KYSER CO.,
a Nevada corporation
------------------------
Dated as of June 12, 1998
------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
SECTION 1. DESCRIPTION OF TRANSACTION . . . . . . . . . . . . . . . . . . . . . .1
1.1 Merger of Merger Sub into Kyser. . . . . . . . . . . . . . . . . . . .1
1.2 Effect of the Merger . . . . . . . . . . . . . . . . . . . . . . . . .2
1.3 Netherlands Corporate Law. . . . . . . . . . . . . . . . . . . . . . .2
1.4 Articles of Incorporation and Bylaws; Directors and
Officers . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
1.5 Conversion of Shares . . . . . . . . . . . . . . . . . . . . . . . . .3
1.6 Closing of Kyser's Transfer Books. . . . . . . . . . . . . . . . . . .3
1.7 Surrender of Certificates. . . . . . . . . . . . . . . . . . . . . . .4
1.8 Dissenter Shares . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.9 Tax Consequences . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.10 Accounting Treatment . . . . . . . . . . . . . . . . . . . . . . . . .6
1.11 Further Action.. . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.12 Closing. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
1.13 Deliveries at the Closing. . . . . . . . . . . . . . . . . . . . . . .6
SECTION 2. REPRESENTATIONS AND WARRANTIES OF KYSER. . . . . . . . . . . . . . . .7
2.1 Due Organization; No Subsidiaries; Etc.. . . . . . . . . . . . . . . .7
2.2 Articles of Incorporation and Bylaws; Records. . . . . . . . . . . . .8
2.3 Capitalization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . .8
2.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . .9
2.5 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.6 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.7 Bank Accounts. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.8 Receivables; Major Customers . . . . . . . . . . . . . . . . . . . . 12
2.9 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.10 Equipment, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.11 Real Property. . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.12 Proprietary Assets . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.13 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
2.14 Liabilities; Major Suppliers . . . . . . . . . . . . . . . . . . . . 16
2.15 Compliance With Legal Requirements . . . . . . . . . . . . . . . . . 17
2.16 Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . 17
i
<PAGE>
2.17 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.18 Employee and Labor Matters . . . . . . . . . . . . . . . . . . . . . 20
2.19 Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . 21
2.20 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . 24
2.21 Sale of Products; Performance of Services. . . . . . . . . . . . . . 25
2.22 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
2.23 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . 27
2.24 Certain Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . 28
2.25 Proceedings; Orders. . . . . . . . . . . . . . . . . . . . . . . . . 28
2.26 Authority; Binding Nature of Agreements; Board of Directors
Approval . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
2.27 Non-Contravention; Consents. . . . . . . . . . . . . . . . . . . . . 29
2.28 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.29 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.30 Vote Required. . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
2.31 Information Statement/Offering Memorandum. . . . . . . . . . . . . . 31
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SIGNING STOCKHOLDERS . . . . . . . 31
3.1 Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.2 Authority of Signing Stockholders; Binding Nature of
Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
3.3 Non-Contravention; Consents. . . . . . . . . . . . . . . . . . . . . 32
3.4 Ability. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
3.5 Investment Representations . . . . . . . . . . . . . . . . . . . . . 33
3.6 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB . . . . . 35
4.1 Due Organization . . . . . . . . . . . . . . . . . . . . . . . . . . 35
4.2 Articles of Association; Records . . . . . . . . . . . . . . . . . . 36
4.3 Capitalization, Etc. . . . . . . . . . . . . . . . . . . . . . . . . 37
4.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 39
4.5 Absence of Changes . . . . . . . . . . . . . . . . . . . . . . . . . 39
4.6 Title to Assets. . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.7 Receivables. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 41
4.8 Inventory. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.9 Proprietary Assets . . . . . . . . . . . . . . . . . . . . . . . . . 42
4.10 Contracts. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43
ii
<PAGE>
4.11 Liabilities; Major Suppliers . . . . . . . . . . . . . . . . . . . . 44
4.12 Compliance with Legal Requirements . . . . . . . . . . . . . . . . . 44
4.13 Governmental Authorizations. . . . . . . . . . . . . . . . . . . . . 45
4.14 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
4.15 Benefit Plans; ERISA . . . . . . . . . . . . . . . . . . . . . . . . 46
4.16 Environmental Matters. . . . . . . . . . . . . . . . . . . . . . . . 49
4.17 Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 50
4.18 Related Party Transactions . . . . . . . . . . . . . . . . . . . . . 50
4.19 Certain Payments, Etc. . . . . . . . . . . . . . . . . . . . . . . . 51
4.20 Proceedings; Orders. . . . . . . . . . . . . . . . . . . . . . . . . 51
4.21 Authority; Binding Nature of Agreement . . . . . . . . . . . . . . . 52
4.22 Non-Contravention; Consents. . . . . . . . . . . . . . . . . . . . . 53
4.23 Brokers. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.24 Accounting Matters . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.25 Valid Issuance . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.26 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.27 Stock Option Plan. . . . . . . . . . . . . . . . . . . . . . . . . . 54
4.28 Information Statement/Offering Memorandum. . . . . . . . . . . . . . 55
4.29 Purchaser Obligations Under the Kyser ESOP . . . . . . . . . . . . . 55
SECTION 5. CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . . . . . . . . 55
5.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . 55
5.2 Operation of Business. . . . . . . . . . . . . . . . . . . . . . . . 56
5.3 Notification; Updates to Kyser Disclosure Schedule . . . . . . . . . 58
5.4 No Negotiation . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
5.5 Kyser Stockholders' Meeting. . . . . . . . . . . . . . . . . . . . . 59
SECTION 6. PRE-CLOSING COVENANTS OF SIGNING STOCKHOLDERS. . . . . . . . . . . . 59
SECTION 7. PRE-CLOSING COVENANTS OF PURCHASER AND MERGER SUB. . . . . . . . . . 60
7.1 Access and Investigation . . . . . . . . . . . . . . . . . . . . . . 60
7.2 Operation of Business. . . . . . . . . . . . . . . . . . . . . . . . 60
7.3 Notification; Updates to Disclosure Schedule . . . . . . . . . . . . 62
SECTION 8. ADDITIONAL COVENANTS OF THE PARTIES. . . . . . . . . . . . . . . . . 63
8.1 Filing and Consents. . . . . . . . . . . . . . . . . . . . . . . . . 63
8.2 Confidentiality. . . . . . . . . . . . . . . . . . . . . . . . . . . 63
iii
<PAGE>
8.3 Continuity of Interest Certificates. . . . . . . . . . . . . . . . . 63
8.4 Tax Matters. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 63
8.5 Employment Agreements. . . . . . . . . . . . . . . . . . . . . . . . 63
8.6 Release. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.7 Closing Certificates . . . . . . . . . . . . . . . . . . . . . . . . 64
8.8 Prohibited Transactions. . . . . . . . . . . . . . . . . . . . . . . 64
8.9 Accession Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 64
8.10 FIRPTA Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.11 Best Efforts.. . . . . . . . . . . . . . . . . . . . . . . . . . . . 64
8.12 Tax-Free Reorganization. . . . . . . . . . . . . . . . . . . . . . . 64
8.13 Option Grants. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.14 Prohibitions Against Transfer. . . . . . . . . . . . . . . . . . . . 65
8.15 Pooling. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
8.16 Director and Officer Indemnification . . . . . . . . . . . . . . . . 66
8.17 Kyser ESOP Dissenter's Rights. . . . . . . . . . . . . . . . . . . . 66
8.18 Recommendation of Supervisory Board Members. . . . . . . . . . . . . 66
8.19 Corporate Action . . . . . . . . . . . . . . . . . . . . . . . . . . 66
8.20 Records Retention; Access Following Closing. . . . . . . . . . . . . 66
8.21 Kyser ESOP.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
8.22 Legal Opinion. . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
SECTION 9. CONDITIONS PRECEDENT TO PURCHASER'S AND MERGER SUB'S
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
9.1 Accuracy of Representations. . . . . . . . . . . . . . . . . . . . . 68
9.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 68
9.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 68
9.4 Stockholder Approval; Dissenters' Rights . . . . . . . . . . . . . . 69
9.5 Additional Documents . . . . . . . . . . . . . . . . . . . . . . . . 69
9.6 Notarial Requirements. . . . . . . . . . . . . . . . . . . . . . . . 71
9.7 Employees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.8 FIRPTA Compliance. . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.9 Securities Law Compliance. . . . . . . . . . . . . . . . . . . . . . 71
9.10 No Restraints. . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
9.11 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 71
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9.12 Proprietary Information and Inventions Agreements. . . . . . . . . . 72
9.13 No Claim Regarding Stock Ownership or Sale Proceeds. . . . . . . . . 72
9.14 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
9.15 NO PROHIBITION . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
SECTION 10. CONDITIONS PRECEDENT TO KYSER AND THE SIGNING STOCKHOLDERS'
OBLIGATION TO CLOSE . . . . . . . . . . . . . . . . . . . . . . . . . . . . 72
10.1 Accuracy of Representations. . . . . . . . . . . . . . . . . . . . . 72
10.2 Performance of Obligations . . . . . . . . . . . . . . . . . . . . . 73
10.3 Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.4 Supervisory Board Matters. . . . . . . . . . . . . . . . . . . . . . 73
10.5 Documents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
10.6 Additional Agreements. . . . . . . . . . . . . . . . . . . . . . . . 74
10.7 Kyser ESOP Matters . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.8 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . 75
10.9 No Restraints. . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.10 No Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.11 HSR Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.12 No Prohibition . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
10.13 Kyser ESOP.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 75
SECTION 11. TERMINATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.1 Termination Events . . . . . . . . . . . . . . . . . . . . . . . . . 76
11.2 Termination Procedures . . . . . . . . . . . . . . . . . . . . . . . 77
11.3 Effect of Termination. . . . . . . . . . . . . . . . . . . . . . . . 77
SECTION 12. INDEMNIFICATION, ETC.. . . . . . . . . . . . . . . . . . . . . . . . 78
12.1 Survival of Representations and Covenants. . . . . . . . . . . . . . 78
12.2 Indemnification by Stockholders Regarding Kyser
Representations and Warranties . . . . . . . . . . . . . . . . . . . 79
12.3 Threshold; Ceiling; Other Limitations. . . . . . . . . . . . . . . . 80
12.4 Indemnification by Signing Stockholders Regarding Signing
Stockholder Representations and Warranties and Covenants . . . . . . 80
12.5 Indemnification by Purchaser and Merger Sub. . . . . . . . . . . . . 81
12.6 Threshold; Ceiling . . . . . . . . . . . . . . . . . . . . . . . . . 82
12.7 Satisfaction of Indemnification Claim. . . . . . . . . . . . . . . . 83
12.8 No Contribution. . . . . . . . . . . . . . . . . . . . . . . . . . . 83
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12.9 Exclusivity of Indemnification Remedies. . . . . . . . . . . . . . . 83
12.10 Third Party Claims.. . . . . . . . . . . . . . . . . . . . . . . . . 84
12.11 Exercise of Remedies by Indemnitees. . . . . . . . . . . . . . . . . 85
12.12 Claims Between the Parties Not Involving Third Party
Claims.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
12.13 Stockholders' Agent. . . . . . . . . . . . . . . . . . . . . . . . . 87
SECTION 13. MISCELLANEOUS PROVISIONS . . . . . . . . . . . . . . . . . . . . . . 88
13.1 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . 88
13.2 Intentionally Omitted. . . . . . . . . . . . . . . . . . . . . . . . 89
13.3 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.4 Fees and Expenses. . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.5 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.6 Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 89
13.7 Publicity. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 90
13.8 Time of the Essence. . . . . . . . . . . . . . . . . . . . . . . . . 91
13.9 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.10 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
13.11 Governing Law; Venue . . . . . . . . . . . . . . . . . . . . . . . . 91
13.12 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . 92
13.13 Remedies Cumulative; Specific Performance. . . . . . . . . . . . . . 92
13.14 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
13.15 Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.16 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.17 Parties in Interest. . . . . . . . . . . . . . . . . . . . . . . . . 93
13.18 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.19 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
13.20 Acknowledgment . . . . . . . . . . . . . . . . . . . . . . . . . . . 94
13.21 No Personal Liability. . . . . . . . . . . . . . . . . . . . . . . . 94
</TABLE>
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<PAGE>
AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AGREEMENT AND PLAN OF MERGER AND REORGANIZATION is entered into
as of June 12, 1998 by and among METRON TECHNOLOGY B.V., a Netherlands
corporation ("Purchaser"), METRON ACQUISITION SUB, INC., a Nevada corporation
and a wholly owned subsidiary of Purchaser ("Merger Sub"), and T.A. KYSER
CO., a Nevada corporation ("Kyser"); and to be joined by those stockholders
of Kyser listed on Exhibit B (the "Stockholders") who join in the execution
of this Agreement by executing a Joinder Agreement (the "Joinder Agreement")
substantially in the form attached as Exhibit C (such Stockholders who
execute the Joinder Agreement, the "Signing Stockholders"). Certain
capitalized terms used in this Agreement are defined in Exhibit A.
RECITALS
A. Purchaser, Merger Sub and Kyser intend to effect a merger of
Merger Sub into Kyser in accordance with this Agreement and the Nevada
Revised Statutes (the "Merger"). Upon consummation of the Merger, Merger Sub
will cease to exist, and Kyser will become a wholly owned subsidiary of
Purchaser.
B. It is intended that the Merger qualify as a tax-free
reorganization within the meaning of Section 368(a) of the Internal Revenue
Code of 1986, as amended (the "Code"). For accounting purposes, it is
intended that the Merger be treated as a "pooling of interests" pursuant to
APB Opinion No. 16.
C. This Agreement and the Merger have been approved by the
respective boards of directors of Purchaser, Merger Sub and Kyser.
D. The stockholders of Kyser own an aggregate of 97,920.131 shares
(the "Shares") of the common stock, par value $0.01 per share, of Kyser
("Kyser Common Stock").
E. Simultaneously with the execution of this Agreement, C. Garry
Hendricks and Boyd E. Hurst, Jr. have executed the Joinder Agreement.
AGREEMENT
Purchaser, Merger Sub, Kyser and, upon execution of the Joinder
Agreement, the Signing Stockholders, intending to be legally bound, agree as
follows:
SECTION 1. DESCRIPTION OF TRANSACTION
1.1 MERGER OF MERGER SUB INTO KYSER. Upon the terms and subject to
the conditions set forth in this Agreement, at the Effective Time (as defined
in Section 1.12), Merger Sub shall be merged with and into Kyser, and the
separate existence of Merger Sub shall cease. Kyser will continue as the
surviving corporation in the Merger (the "Surviving Corporation").
<PAGE>
1.2 EFFECT OF THE MERGER. The Merger shall have the effect set
forth in this Agreement and in Section 92A.250 and other applicable
provisions of the Nevada Revised Statutes.
1.3 NETHERLANDS CORPORATE LAW.
(a) The transfer of the Shares to Purchaser at the Closing
pursuant to this Agreement and the Merger will under Nevada law create a
claim of each of the Signing Stockholders (each a "Signing Stockholder's
Claim") to receive for each Share transferred such number of shares of
Purchaser Capital Stock as set forth in Section 1.5 of this Agreement. Upon
the Closing, each of the Signing Stockholders shall waive its respective
Stockholder's Claim against acknowledgement by the Purchaser of a claim
("GELDVORDERING") of each of the Signing Stockholders against the Purchaser
equal to (i) the amount in NLG of the aggregate nominal value of the shares
of Purchaser Capital Stock to which such Signing Stockholder is entitled as
set forth above and (ii) the value of such shares of Purchaser Capital Stock
upon consummation of the transactions to be executed at Closing minus the
amount referred to in clause (i) of this sentence (each a "Monetary Claim").
At the Closing, Purchaser will issue to each of the Signing Stockholders such
number of shares of Purchaser Capital Stock to which such Signing Stockholder
is entitled as set forth in Section 1.5 of this Agreement, creating claims of
Purchaser (each a "Purchaser's Claim") to receive from each of the Signing
Stockholders (i) the aggregate nominal value of the shares of Purchaser
Capital Stock to be issued by Purchaser to each such Signing Stockholder and
(ii) the value of such shares of Purchaser Capital Stock upon consummation of
the transactions to be consummated at Closing minus the amount referred to in
clause (i) of this sentence (agreed share premium) ("BEDONGEN AGIO").
Without any further action being required, at the moment of issuance of the
shares of Purchaser Capital Stock to the Signing Stockholders, each Signing
Stockholder's Monetary Claim will be set off against ("VERREKEND MET") each
corresponding Purchaser's Claim.
(b) For the benefit of the Stockholders who are not Signing
Stockholders (the "Non-Signing Stockholders") it is further hereby agreed,
that against a waiver of each of the Non-Signing Stockholders of its
respective Stockholder's Claim by (i) signing the Waiver Declaration included
in the Letter of Transmittal attached hereto as Exhibit G (the "Waiver
Declaration") and (ii) the receipt of such Waiver Declaration by Purchaser,
Purchaser acknowledges a Monetary Claim of each such Non-Signing Stockholder
against Purchaser as set forth in Section 1.3(a) above. Upon receipt by
Purchaser of a Waiver Declaration, Purchaser will issue to the respective
Non-Signing Stockholder such number of shares of Purchaser Capital Stock to
which such Non-Signing Stockholder is entitled as set forth in Section 1.5 of
this Agreement, creating a Purchaser's Claim as set forth in Section 1.3(a)
above. Without any further action being required, at the moment of issuance
of the shares of Purchaser Capital Stock to the Non-Signing Stockholders,
each Non-Signing Stockholder's Monetary Claim will be set off against
("VERREKEND MET") each corresponding Purchaser's Claim.
1.4 ARTICLES OF INCORPORATION AND BYLAWS; DIRECTORS AND OFFICERS.
Unless otherwise determined in writing by Purchaser and Kyser prior to the
Effective Time:
2
<PAGE>
(a) the Articles of Incorporation of the Surviving
Corporation shall be amended and restated as of the Effective Time to conform
to those included in Exhibit D to this Agreement (the "Articles of Merger");
(b) the Bylaws of the Surviving Corporation shall be amended
and restated as of the Effective Time to conform to the Bylaws of Merger Sub
as in effect immediately prior to the Effective Time, which Bylaws are
attached as Exhibit E; and
(c) the directors and officers of the Surviving Corporation
immediately after the Effective Time shall be the individuals identified on
Exhibit F.
1.5 CONVERSION OF SHARES.
(a) Subject to Section 1.8, at the Effective Time, by virtue
of the Merger and without any further action on the part of Purchaser, Merger
Sub, Kyser or any Stockholder of Kyser:
(i) each share of Kyser Common Stock outstanding
immediately prior to the Effective Time shall be converted into the right to
receive 16.5 common shares of the capital stock (par value NLG 0.96 share) of
Purchaser ("Purchaser Capital Stock"); and
(ii) each share of the common stock (par value $1.00
per share) of Merger Sub outstanding immediately prior to the Effective Time
shall be converted into one share of common stock of the Surviving
Corporation.
(b) The number of common shares of Purchaser Capital Stock
into which each Share is to be converted pursuant to Section 1.5(a)(i) (as
such number may be adjusted in accordance with this Section 1.5(b) is
referred to as the "Conversion Ratio"). If, between the date of this
Agreement and the Effective Time, the outstanding shares of Kyser Common
Stock or Purchaser Capital Stock are changed into a different number or class
of shares by reason of any stock split, reverse stock split, stock dividend,
subdivision, reclassification, recapitalization, combination or similar
transaction, the Conversion Ratio shall be appropriately adjusted to reflect
such action.
(c) If any shares of Kyser Common Stock outstanding
immediately prior to the Effective Time are subject to a repurchase option,
put right under the Kyser ESOP, risk of forfeiture under the Kyser ESOP,
diversification provisions of the Kyser ESOP or other condition under any
applicable agreement with Kyser, then the shares of Purchaser Common Stock
issued in exchange for such shares of Kyser Common Stock will also be subject
to the same repurchase option, put right under the Kyser ESOP, risk of
forfeiture under the Kyser ESOP or other condition.
1.6 CLOSING OF KYSER'S TRANSFER BOOKS. At the Effective Time,
holders of certificates representing shares of Kyser's capital stock that
were outstanding immediately prior to the Effective Time shall cease to have
any rights as stockholders of Kyser, and the stock transfer books of Kyser
shall be closed with respect to all shares of such capital stock outstanding
immediately prior to the Effective Time. No further transfer of any such
shares of Kyser's capital stock shall be made on such stock transfer books
after the Effective Time. If,
3
<PAGE>
after the Effective Time, a valid certificate previously representing any of
such shares of Kyser's capital stock (a "Kyser Stock Certificate") is
presented to the Surviving Corporation or Purchaser, such Kyser Stock
Certificate shall be canceled and shall be converted as provided in Section
1.7.
1.7 SURRENDER OF CERTIFICATES; ISSUANCE OF PURCHASER CAPITAL
STOCK.
(a) At least ten days prior to the Effective Time, Purchaser
will send to the holders of Kyser Stock Certificates a letter of transmittal
substantially in the form attached hereto as Exhibit G (the "Letter of
Transmittal") and including instructions for use in effecting the surrender
of Kyser Stock Certificates in exchange for the issuance of Purchaser Capital
Stock. At or as soon as practicable after the Effective Time, upon surrender
of a Kyser Stock Certificate to Purchaser for conversion, together with a
duly executed Letter of Transmittal and evidence of such Stockholder's
identity sufficient under Netherlands Law to satisfy the requirements for
execution of a notarial deed of issuance of shares of Purchaser Capital Stock
to such Stockholder substantially in the form of Exhibit H (a "Deed of
Issuance"), which requirements shall be listed in the Letter of Transmittal,
plus a duly executed and notarized power of attorney authorizing a third
person to execute a Deed of Issuance on behalf of such holder if such holder
does not wish to execute such Deed of Issuance in person, the holder of such
Kyser Stock Certificate shall be entitled to receive such number of whole
shares of Purchaser Capital Stock that such holder has the right to receive
pursuant to the provisions of this Section 1 pursuant to a Deed of Issuance
to be executed and delivered by or on behalf of such Stockholder and
Purchaser, and the Kyser Stock Certificate so surrendered shall be canceled.
At or as soon as practicable after the Closing, and in any event no later
than twenty business days after any such surrender by a holder of Kyser Stock
Certificates and issuance of shares of Purchaser Capital Stock, Purchaser
shall deliver to each such holder an original certified notarial copy of the
Deed of Issuance between Purchaser and such holder. Until surrendered as
contemplated by this Section 1.7, each Kyser Stock Certificate shall be
deemed, from and after the Effective Time, to represent only the right to
receive upon such surrender such number of shares of Purchaser Capital Stock
as contemplated by this Section 1. If any Kyser Stock Certificate shall have
been lost, stolen or destroyed, Purchaser may, in its discretion and as a
condition precedent to the issuance of any shares of Purchaser Capital Stock,
require the owner of such lost, stolen or destroyed Kyser Stock Certificate
to provide a lost certificate affidavit and indemnity against any claim that
may be made against Purchaser or the Surviving Corporation with respect to
such Kyser Stock Certificate.
(b) No dividends or other distributions declared or made
with respect to Purchaser Capital Stock with a record date after the
Effective Time shall be paid to the holder of any unsurrendered Kyser Stock
Certificate with respect to the shares of Purchaser Capital Stock which such
holder has the right to have issued to such holder upon surrender of such
Kyser Stock Certificate, until such holder surrenders such Kyser Stock
Certificate in accordance with this Section 1.7 (at which time such holder
shall be entitled to receive from Purchaser all such dividends and
distributions and such cash payment).
(c) No fractional shares of Purchaser Capital Stock shall be
issued in connection with the Merger. In lieu of issuing fractional shares,
any Stockholder who would otherwise be entitled to receive a fraction of a
share of Purchaser Capital Stock (after
4
<PAGE>
aggregating all fractional shares of Purchaser Capital Stock issuable to such
holder) shall, upon surrender of such holder's stock certificate(s), receive
a number of whole shares of Purchaser Capital Stock determined by rounding
the number of shares of Purchaser Capital Stock such Stockholder is entitled
to receive up to the next whole share.
(d) The shares of Purchaser Capital Stock to be issued
pursuant to this Agreement and the Merger shall be characterized as
"restricted securities" for purposes of Rule 144 under the Securities Act of
1933, as amended (the "Act"), and in the event certificates are issued
representing the shares of Purchaser Capital Stock, such certificates shall
bear a legend identical or similar in effect to the following legend
(together with any other legend or legends required by applicable state
securities laws or otherwise):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933 (THE
"ACT") AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS REGISTERED UNDER THE ACT
OR UNLESS AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
ACT IS AVAILABLE."
(e) Purchaser and the Surviving Corporation shall be
entitled to deduct and withhold from any consideration payable or otherwise
deliverable to any holder or former holder of capital stock of Kyser pursuant
to this Agreement such amounts as Purchaser or the Surviving Corporation may
be required to deduct or withhold therefrom under the Code or under any
provision of state, local or foreign tax law. To the extent such amounts are
so deducted or withheld, such amounts shall be treated for all purposes under
this Agreement as having been paid to the Person to whom such amounts would
otherwise have been paid.
(f) Neither Purchaser nor the Surviving Corporation shall be
liable to any holder or former holder of capital stock of Kyser for any
shares of Purchaser Capital Stock (or dividends or distributions with respect
thereto), delivered to any public official pursuant to and in accordance with
any applicable abandoned property, escheat or similar law.
1.8 DISSENTER SHARES.
(a) Notwithstanding anything to the contrary contained in
this Agreement, any shares of capital stock of Kyser that, as of the
Effective Time, are or may become "dissenter shares" within the meaning of
Section 92A.300 et. seq. of the Nevada Revised Statutes shall not be
converted into or represent the right to receive Purchaser Capital Stock in
accordance with Section 1.5, and the holder or holders of such shares shall
be entitled only to such rights as may be granted to such holder or holders
in Section 92A.300 et. seq. of the Nevada Revised Statutes; PROVIDED,
HOWEVER, that if the status of any such shares as "dissenter shares" shall
not be perfected, or if any such shares shall lose their status as "dissenter
shares," then, as of the later of the Effective Time or the time of the
failure to perfect such status or the loss of such status, such shares shall
automatically be converted into and shall represent only the right to receive
(upon the surrender of the certificate or certificates representing such
shares) Purchaser Capital Stock in accordance with Sections 1.5 and 1.7.
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(b) Kyser shall give Purchaser (i) notice within two
business days of any written demand received by Kyser prior to the Effective
Time to require the Surviving Corporation to purchase shares of capital stock
of Kyser pursuant to Section 92A.440 of the Nevada Revised Statutes and of
any other demand, notice or instrument delivered to Kyser prior to the
Effective Time pursuant to the Nevada Revised Statutes in connection with the
Merger and (ii) the opportunity to participate in all negotiations and
proceedings with respect to any such demand, notice or instrument. Except to
the extent required by law, Kyser shall not make any payment or settlement
offer prior to the Effective Time with respect to any such demand unless
Purchaser shall have consented in writing to such payment or settlement offer.
1.9 TAX CONSEQUENCES. For federal income tax purposes, the
Merger is intended to constitute a reorganization within the meaning of
Section 368 of the Code. The parties to this Agreement hereby adopt this
Agreement as a "plan of reorganization" within the meaning of Sections
1.368-2(g) and 1.368-3(a) of the United States Treasury Regulations.
1.10 ACCOUNTING TREATMENT. For accounting purposes, the Merger is
intended to be treated as a "pooling of interests" in accordance with APB
Opinion No. 16.
1.11 FURTHER ACTION. If, at any time after the Effective Time,
any further action is reasonably determined by Purchaser or Kyser to be
necessary or desirable to effect the Merger or to vest the Surviving
Corporation with full right, title and possession of and to all rights and
property of Merger Sub and Kyser, the officers and directors of the Surviving
Corporation and Purchaser shall be fully authorized (in the name of Merger
Sub, Kyser, Purchaser and otherwise) to take such action and the Signing
Stockholders and the officers and directors of Kyser will give their full
cooperation to such action to the extent permitted by law.
1.12 CLOSING; EFFECTIVE TIME. Subject to the conditions set forth
in this Agreement, the consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place simultaneously at the offices of
Strasburger & Price, L.L.P., 901 Main Street, Suite 4300, Dallas, Texas 75202
and at the offices of Nauta Dutilh, Prinses Irenestraat 59, Amsterdam, the
Netherlands, at 9:00 a.m. (Central Standard Time) and 4:00 p.m. (Amsterdam
time) on the later of June 30, 1998 or the date five business days following
the expiration or early termination of the applicable waiting period under
the HSR Act (or at such other place or time as Purchaser and Kyser may
jointly designate); "Scheduled Closing Time" shall mean the time and date as
of which the Closing is required to take place pursuant to this Section 1.12;
and "Closing Date" shall mean the time and date as of which the Closing
actually takes place. Contemporaneously with or as promptly as practicable
after the Closing, properly executed Articles of Merger conforming to the
requirements of Section 92A.200 of the Nevada Revised Statutes shall be filed
with the Secretary of State of the State of Nevada. The Merger shall become
effective at the time such Articles of Merger are filed with and accepted by
the Secretary of State of the State of Nevada or at such later time as shall
be agreed upon between Purchaser and Kyser and specified in the Articles of
Merger (the "Effective Time").
1.13 DELIVERIES AT THE CLOSING. Each of the Signing Stockholders
agrees that it will surrender at the Closing all Kyser Stock Certificates to
Purchaser in accordance with the provisions of Section 1.7 and Purchaser
agrees that it will, at the Closing, upon such surrender of Kyser Stock
Certificates issue the appropriate number of shares of Purchaser Capital
Stock to
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each Signing Stockholder pursuant to a Deed of Issuance to be executed and
delivered by the Signing Stockholders and Purchaser at the Closing.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF KYSER
Kyser represents and warrants to and for the benefit of
Purchaser and Merger Sub as follows:
2.1 DUE ORGANIZATION; NO SUBSIDIARIES; ETC.
(a) Kyser is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and has all
necessary corporate power and authority:
(i) to conduct its business in the manner in which
its business is currently being conducted;
(ii) to own and use its assets in the manner in which
its assets are currently owned and used; and
(iii) to perform its obligations under all Kyser
Contracts except the Kyser Excluded Contracts.
(b) Except as set forth in Part 2.1(b) of the Kyser
Disclosure Schedule, Kyser has not at any time since August 1, 1995 conducted
any business under or otherwise used, for any purpose or in any jurisdiction,
any fictitious name, assumed name, trade name or other name, other than the
name "Kyser."
(c) Kyser is qualified to do business as a foreign
corporation, and is in good standing, under the laws of all jurisdictions
where the nature of its business requires such qualification, except where
the failure to be so qualified would not reasonably be expected to have a
Kyser Material Adverse Effect. Kyser is qualified to do business as a
foreign corporation, and is in good standing, in each of the jurisdictions
identified in Part 2.1(c) of the Kyser Disclosure Schedule.
(d) Part 2.1(d) of the Kyser Disclosure Schedule accurately
sets forth (i) the names of the members of Kyser's board of directors and
(ii) the names and titles of Kyser's officers. Kyser's board of directors
does not have any committees.
(e) Neither Kyser nor its stockholders has approved, or
commenced any proceeding or made any election contemplating, the dissolution
or liquidation of Kyser or the winding up or cessation of Kyser's business or
affairs.
(f) Kyser has no subsidiaries. Kyser has not at any time
since August 1, 1994 owned, beneficially or otherwise, any shares or other
securities of, or any direct or indirect interest of any nature in, any
Entity, other than passive investments in marketable securities or other
investment-grade securities.
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2.2 ARTICLES OF INCORPORATION AND BYLAWS; RECORDS.
(a) Kyser has delivered, or identified and made available,
to Purchaser and Merger Sub accurate and complete copies of:
(i) Kyser's articles of incorporation and bylaws,
including all amendments thereto;
(ii) the stock records of Kyser; and
(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or
otherwise without a meeting) of the stockholders of Kyser and the board of
directors of Kyser.
There have been no meetings or other proceedings of the stockholders of Kyser
or the board of directors of Kyser that are not fully reflected in such
minutes or other records.
(b) There are no existing material violations of any of the
provisions of Kyser's articles of incorporation or bylaws or of any
resolution adopted by Kyser's stockholders or Kyser's board of directors;
and no event has occurred, and no condition or circumstance exists, that
would reasonably be expected to (with or without notice or lapse of time)
constitute or result directly or indirectly in such a material violation.
(c) Except as set forth in Part 2.2(c) of the Kyser
Disclosure Schedule, the books of account, stockholders' register, minute
books and other records of Kyser are accurate, up-to-date and complete in all
material respects. All of the records of Kyser are in the actual possession
and direct control of Kyser or its counsel. To the Knowledge of Kyser, Kyser
has in place an adequate and appropriate system of internal controls.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Kyser consists of
1,000,000 shares of Kyser Common Stock of which 97,920.131 shares
(constituting all of the Shares) have been issued and are outstanding and
2,079.869 shares are held in Kyser's treasury.
(b) Of the Shares:
(i) Gregory M. Claeys owns of record 4,000 shares;
(ii) Rebekah A. Claeys owns of record 2,500 shares;
(iii) C. Garry Hendricks owns of record 42,500 shares;
(iv) Boyd E. Hurst, Jr. owns of record 19,000 shares;
(v) Sam F. Soules owns of record 2,000 shares; and
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(vi) as of the date of this Agreement, the Trust owns
of record 27,920.131 shares and as of the date of the Closing, Colin
Henderson, acting in his capacity as Trustee of the Trust, will own of record
27,920.131 shares.
(c) All of the Shares (i) have been duly authorized and
validly issued, (ii) are fully paid and non-assessable and (iii) have been
issued in compliance in all material respects with all applicable securities
laws and other applicable Legal Requirements. Except as set forth in Part
2.3(c) of the Kyser Disclosure Schedule, none of the Shares is subject to any
repurchase option or restriction on transfer imposed by Kyser (other than
restrictions on transfer imposed by virtue of applicable federal and state
securities laws).
(d) Except as set forth in Part 2.3(d) of the Kyser
Disclosure Schedule, there is no:
(i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire from Kyser any
shares of the capital stock or other securities of Kyser;
(ii) outstanding security, instrument or obligation
that is or may become convertible into or exchangeable for any shares of the
capital stock or other securities of Kyser;
(iii) Contract under which Kyser is or may become
obligated to sell or otherwise issue any shares of its capital stock or any
other securities except as required under the Kyser ESOP; or
(iv) condition or circumstance that would reasonably
be expected to directly or indirectly give rise to or provide a basis for the
assertion of a valid claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other
securities of Kyser except as required under the Kyser ESOP.
(e) Except as set forth in Part 2.3(e) of the Kyser
Disclosure Schedule, Kyser has never repurchased, redeemed or otherwise
reacquired any shares of its capital stock or other securities. All
securities so reacquired by Kyser were reacquired in compliance in all
material respects with the applicable provisions of the Nevada Revised
Statutes and with all other applicable Legal Requirements.
(f) Except as set forth in Part 2.3(f) of the Kyser
Disclosure Schedule, there are no outstanding put rights, preemptive rights,
registration rights or voting agreements with respect to the issued and
outstanding shares of Kyser Common Stock or any shares of capital stock of
Kyser that Kyser is committed to issue.
2.4 FINANCIAL STATEMENTS.
(a) Part 2.4(a) of the Kyser Disclosure Schedule sets forth
the following financial statements and notes thereto (collectively, the
"Kyser Financial Statements"):
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(i) the audited balance sheets of Kyser as of July
31, 1996 and 1997, and the related audited statements of income and retained
earnings and cash flows of Kyser for each of the years in the two-year period
ended July 31, 1997, together with the notes thereto and the respective
reports of Sproles Woodard L.L.P. relating thereto; and
(ii) the unaudited balance sheet of Kyser as of April
30, 1998 (the "Kyser Unaudited Interim Balance Sheet"), and the related
unaudited statements of income and retained earnings of Kyser for the nine
months then ended.
(b) All of the Kyser Financial Statements present fairly, in
all material respects, the financial position of Kyser as of the date of said
balance sheets and the results of operations and cash flows of Kyser for the
periods covered by said statements of operations and cash flows, in
accordance with GAAP consistently applied, except as otherwise disclosed
therein or in Part 2.4(b) of the Kyser Disclosure Schedule and except that
the financial statements referred to in Section 2.4(a)(ii) do not contain
footnotes and are subject to year-end adjustments, which adjustments will not
be material either individually or in the aggregate.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the
Kyser Disclosure Schedule, since April 30, 1998:
(a) there has not been any event that had a Kyser Material
Adverse Effect, and, to the Knowledge of Kyser, no event has occurred that
will, or would reasonably be expected to, have such a Kyser Material Adverse
Effect;
(b) there has not been any loss, damage or destruction to
any of Kyser's assets that exceeded $25,000 in the aggregate (whether or not
covered by insurance);
(c) Kyser has not declared, accrued, set aside or paid any
dividend or made any other distribution in respect of any shares of its
capital stock, and has not repurchased, redeemed or otherwise reacquired any
shares of its capital stock or other securities;
(d) Kyser has not sold, issued or authorized the issuance of
(i) any capital stock or other security of Kyser, (ii) any option, call,
warrant or right to acquire, or otherwise relating to, any capital stock or
any other security of Kyser or (iii) any instrument convertible into or
exchangeable for any capital stock or other security of Kyser;
(e) there has been no amendment to Kyser's articles of
incorporation or bylaws, and Kyser has not effected or been a party to any
Acquisition Transaction, recapitalization, reclassification of shares, stock
split, reverse stock split or similar transaction;
(f) Kyser has not formed any subsidiary or acquired any
equity interest or other interest in any other Entity;
(g) Kyser has not made any capital expenditure in excess of
$25,000 which is not reflected on the Kyser Unaudited Interim Balance Sheet
in accordance with GAAP, except for capital expenditures made since April 30,
1998 consistent with Kyser's past practices as reflected in the financial
statements referred to in Section 2.4(a)(i);
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(h) Kyser has not, outside the Ordinary Course of Business
(i) entered into or permitted any material amount of the assets owned or used
by it to become bound by any material Contract or (ii) amended or prematurely
terminated, or waived any material right or remedy under, any material
Contract to which it is or was a party or under which it has or had any
rights or obligations;
(i) Kyser has not (i) acquired, leased or licensed any
material right or other asset from any other Person (other than rights or
other assets acquired, leased or licensed by Kyser from other Persons in the
Ordinary Course of Business), (ii) sold or otherwise disposed of, or leased
or licensed, any material right or other asset to any other Person (other
than rights or other assets disposed of or leased or licensed by Kyser to
other Persons in the Ordinary Course of Business) or (iii) waived or
relinquished any material right (other than rights waived or relinquished by
Kyser in the Ordinary Course of Business);
(j) Kyser has not written off as uncollectible, or
established any extraordinary reserve with respect to, any account receivable
or other indebtedness in excess of $25,000 in the aggregate;
(k) Kyser has not made any pledge of any of its assets or
otherwise permitted any of its assets to become subject to any material
Encumbrance, except for pledges of assets made in the Ordinary Course of
Business and made to secure participant's put option rights under the Kyser
ESOP either directly to the participant or through the purchase of an ESOP
bond securing the participant's put option rights, and Tax liens and other
similar governmental liens or impositions securing obligations not past due;
(l) Kyser has not (i) lent money to any Person or (ii)
incurred or guaranteed any indebtedness for borrowed money in excess of
$25,000 in the aggregate;
(m) Except for Amendment Number One to the Kyser ESOP,
Amendment Number Two to the Kyser ESOP and Amendment Number One to the Trust,
Kyser has not (i) established, adopted or amended any Employee Benefit Plan
or (ii) made any profit-sharing or similar payment to any of its directors,
officers or employees;
(n) Kyser has not changed any of its methods of accounting
or accounting practices in any material respect;
(o) Kyser has not made any material Tax election outside the
Ordinary Course of Business;
(p) Kyser has not commenced or settled any Proceeding;
(q) Kyser has not entered into any transaction or taken any
other action outside the Ordinary Course of Business involving amounts in
excess of $25,000; and
(r) Except as required under the Kyser ESOP, Kyser has not
agreed or committed to take any of the actions referred to in clauses "(c)"
through "(q)" above.
2.6 TITLE TO ASSETS.
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(a) Except as set forth in Part 2.6(a) of the Kyser
Disclosure Schedule, Kyser owns, and has good and valid title to, all assets
purported to be owned by it, including:
(i) all assets reflected on the Kyser Unaudited
Interim Balance Sheet (except for assets sold or consumed by Kyser since
April 30, 1998 in the Ordinary Course of Business);
(ii) all assets acquired by Kyser since April 30, 1998
(except for assets sold or consumed by Kyser since April 30, 1998 in the
Ordinary Course of Business); and
(iii) all of Kyser's rights under the Kyser Contracts.
Except as set forth in Part 2.6(a) of the Kyser Disclosure Schedule, all of
said assets are owned by Kyser free and clear of any Encumbrances in excess
of $25,000 in the aggregate, except capital leases.
(b) Part 2.6(b) of the Kyser Disclosure Schedule identifies
all assets that are being leased or licensed to Kyser except for (i) any
equipment being leased to Kyser under a standard operating lease requiring
annual payments by Kyser of less than $25,000 and (ii) any software being
licensed to Kyser under any third party software license generally available
to the public at a total cost of less than $25,000.
2.7 BANK ACCOUNTS. Part 2.7 of the Kyser Disclosure
Schedule accurately sets forth, with respect to each account maintained by or
for the benefit of Kyser at any bank or other financial institution:
(a) the name and location of the institution at which such
account is maintained;
(b) the name in which such account is maintained and the
account number of such account;
(c) a description of such account and the purpose for which
such account is used; and
(d) the names of all individuals authorized to draw on or
make withdrawals from such account, whether such individuals are authorized
to draw on or make withdrawals from such account individually or as
co-signatories, and any other limitations on such individuals' authorization.
There are no safe deposit boxes or similar arrangements maintained by or for
the benefit of Kyser.
2.8 RECEIVABLES; MAJOR CUSTOMERS.
(a) Part 2.8(a) of the Kyser Disclosure Schedule sets forth
a copy of Kyser's regularly, internally prepared listing and aging of all
accounts receivable, notes receivable and
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other receivables of Kyser as of April 30, 1998 and is accurate and complete
in all material respects.
(b) Except as set forth in Part 2.8(b) of the Kyser
Disclosure Schedule, (i) all existing accounts receivable of Kyser (including
those accounts receivable reflected on the Kyser Unaudited Interim Balance
Sheet that have not yet been collected and those accounts receivable that
have arisen since April 30, 1998 and have not yet been collected) represent
valid obligations of customers of Kyser arising from bona fide transactions
entered into in the Ordinary Course of Business; and (ii) to the Knowledge of
Kyser, will be collected in full no later than 90 days after the respective
date on which each such receivable is due (without any material counterclaim
or setoff) net of receivables reserves reflected on the Kyser Unaudited
Interim Balance Sheet.
(c) Part 2.8(c) of the Kyser Disclosure Schedule accurately
identifies, and accurately lists the revenues received from, each customer or
other Person that accounted for (i) more than 10% the gross revenues of Kyser
in fiscal 1996, (ii) more than 10% of Kyser's gross revenues in fiscal 1997
or (iii) more than 10% of Kyser's gross revenues in the first nine months of
fiscal 1998. To the Knowledge of Kyser, except as set forth in Part 2.8(c)
of the Kyser Disclosure Schedule, no customer or other Person identified in
Part 2.8(c) of the Kyser Disclosure Schedule is considering ceasing dealing
with Kyser or otherwise reducing the volume of business transacted by such
Person with Kyser below historical levels.
2.9 INVENTORY. Part 2.9 of the Kyser Disclosure Schedule sets
forth a copy of Kyser's regularly, internally prepared listing of all
inventory (including raw materials, work in process and finished goods) of
Kyser as of May 31, 1998 and is accurate and complete in all material
respects. To the Knowledge of Kyser, except as set forth on Part 2.9 of the
Kyser Disclosure Schedule, such inventory, net of any reserves or allowances
reflected on the Kyser Unaudited Interim Balance Sheet and to the extent that
it has not been disposed of by Kyser since May 31, 1998 in the Ordinary
Course of Business:
(a) is of such quality and quantity as to be usable and
saleable by Kyser in the Ordinary Course of Business;
(b) has been valued for accounting purposes at the lower of
cost or market value with cost determined using the "moving weighted average"
method; and
(c) is free of any material defect or deficiency except for
inventory as to which Kyser is entitled to receive full reimbursement or
replacement from the supplier of such inventory.
Except as expressly stated therein, Part 2.9 of the Kyser Disclosure Schedule
does not include any inventory of principals from whom Kyser has received any
written notice or, to the Knowledge of Kyser, any oral communication
indicating that such principal is considering termination of, or intends to
terminate, its relationship with Kyser, except inventory as to which Kyser
has a right of return at a price at least equal to the gross carrying value
of such inventory as reflected on the Kyser Unaudited Interim Balance Sheet.
2.10 EQUIPMENT, ETC.
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(a) Part 2.10(a) of the Kyser Disclosure Schedule lists all
material items of equipment, furniture, fixtures, improvements and other
tangible assets (other than inventory) owned by or leased to Kyser with an
original cost of greater than $50,000.
(b) The assets identified in Part 2.10(a) of the Kyser
Disclosure Schedule, together with those assets with an original cost of less
than $50,000, are adequate in all material respects for the conduct of
Kyser's business in the manner in which such business is currently being
conducted.
Kyser's fixed asset register properly records the original cost of, and any
additions to, fixed assets of Kyser with an original cost in excess of
$25,000.
2.11 REAL PROPERTY. Except as set forth in Part 2.11 of the Kyser
Disclosure Schedule, Kyser does not own any real property or any interest in
real property, other than the leaseholds created under the real property
leases identified in Part 2.13 of the Kyser Disclosure Schedule. Part 2.11
of the Disclosure Schedule provides a brief description of the size and use
of the premises covered by said leases and the facilities located on such
premises. Kyser enjoys peaceful and undisturbed possession of such premises.
2.12 PROPRIETARY ASSETS.
(a) Except as set forth in Part 2.12(a) of the Kyser
Disclosure Schedule, there is no material Proprietary Asset that is used in
connection with Kyser's business (the "Kyser Proprietary Assets") that is not
owned by or licensed to Kyser.
(b) To the Knowledge of Kyser, none of the material
Kyser Proprietary Assets infringes or conflicts with any Proprietary Asset
owned or used by any other Person. Except as set forth in Part 2.12(b) of
the Kyser Disclosure Schedule, to the Knowledge of Kyser, Kyser is not
infringing, misappropriating or making any unlawful use of, and Kyser has not
received any notice or other communication of any actual, alleged, possible
or potential infringement, misappropriation or unlawful use of, any
Proprietary Asset owned or used by any other Person. To the Knowledge of
Kyser, except as set forth in Part 2.12(b) of the Kyser Disclosure Schedule,
no other Person is infringing, misappropriating or making any unlawful use
of, and no Proprietary Asset owned or used by any other Person infringes or
conflicts with, any Kyser Proprietary Asset.
(c) Except as set forth in Part 2.12(c) of the Kyser
Disclosure Schedule, (i) Kyser has not licensed any of the Kyser Proprietary
Assets to any Person on an exclusive basis and (ii) Kyser has not entered
into any covenant not to compete or other Contract limiting its ability to
exploit fully any of the Kyser Proprietary Assets or to transact business in
any market or geographical area or with any Person.
2.13 CONTRACTS.
(a) Part 2.13(a) of the Kyser Disclosure Schedule
identifies and provides a list of each Kyser Contract, except for any Kyser
Excluded Contract. Kyser has delivered, or identified and made available, to
Purchaser accurate and complete copies of all written Kyser
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Contracts required to be identified in Part 2.13(a) of the Kyser Disclosure
Schedule, including all amendments thereto.
(b) Each Kyser Contract required to be listed on Part
2.13(a) of the Kyser Disclosure Schedule is valid and in full force and
effect, and to the Knowledge of Kyser, is enforceable by Kyser in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors and (ii) rules of law
governing specific performance, injunctive relief and other equitable
remedies.
(c) Except as set forth in Part 2.13(c) of the Kyser
Disclosure Schedule:
(i) to the Knowledge of Kyser, no Person is in
violation or Breach in any material respect of, or declared or committed any
material existing default under, any Kyser Contract, except any Kyser
Excluded Contract;
(ii) to the Knowledge of Kyser, no event has
occurred, and no circumstance or condition exists, that will (with or without
notice or lapse of time) (A) result in a material violation or other material
Breach of any of the provisions of any Kyser Contract, except a Kyser
Excluded Contract, (B) give any Person the right to declare a material
default or exercise any material remedy under any Kyser Contract except any
Kyser Excluded Contract, (C) give any Person the right to accelerate the
maturity or performance of any Kyser Contract, except any Kyser Excluded
Contract, or (D) give any Person the right to cancel, terminate or modify any
Kyser Contract, except any Kyser Excluded Contract;
(iii) Kyser has not received any written notice
or, to the Knowledge of Kyser, any oral communication regarding any actual,
alleged, possible or potential violation or Breach of, or default under, any
Kyser Contract, except any Kyser Excluded Contract, that has not been cured;
and
(iv) Kyser has not waived any of its material
rights under any Kyser Contract, except under any Kyser Excluded Contract.
(d) Except as set forth in Part 2.13(d) of the Kyser
Disclosure Schedule:
(i) Kyser is not liable on any guaranty and
has not otherwise agreed to cause, insure or become liable for, or pledged
any of its assets to secure, the performance or payment of any outstanding
obligation or other Liability of any other Person; and
(ii) Except for the Kyser ESOP, Kyser is not a
party to or bound by (A) any joint venture agreement, partnership agreement,
profit-sharing agreement, cost-sharing agreement, loss-sharing agreement or
similar Contract or (B) any Contract that creates or grants to any Person, or
provides for the creation or grant of, any stock appreciation right, phantom
stock right or similar right or interest.
(e) To the Knowledge of Kyser, the performance of the
Kyser Contracts, except under any Kyser Excluded Contracts, in accordance
with their terms will not result in any violation of or failure to comply
with any material Legal Requirement.
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(f) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to Kyser under any Kyser Contract or
any other term or provision of any Kyser Contract, except in each case any
Kyser Excluded Contract.
(g) The Contracts identified in Part 2.13(a) of the
Kyser Disclosure Schedule and the Kyser Excluded Contracts collectively
constitute all of the Contracts necessary to enable Kyser to conduct its
business in the manner in which its business is currently being conducted.
(h) Part 2.13(h) of the Kyser Disclosure Schedule
identifies each proposed Contract as to which any bid, offer, written
proposal, term sheet or similar document has been submitted or received by
Kyser and that involves an amount in excess of $100,000, other than purchaser
orders or sales orders submitted or entered into in the Ordinary Course of
Business.
2.14 LIABILITIES; MAJOR SUPPLIERS.
(a) Except as set forth in Part 2.14(a) of the Kyser
Disclosure Schedule, or elsewhere in the Kyser Disclosure Schedule, to the
Knowledge of Kyser, Kyser has no material Liabilities, except for:
(i) Liabilities identified as such in the
"liabilities" column of the Kyser Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to
be reflected as liabilities in the "liabilities" section of a balance sheet
prepared in accordance with GAAP) or accrued salaries or other Liabilities
that have been incurred by Kyser in the Ordinary Course of Business since
April 30, 1998; and
(iii) Kyser's obligations under the Contracts
listed in Part 2.13(a) of the Disclosure Schedule and under Kyser Excluded
Contracts.
(b) Part 2.14(b) of the Kyser Disclosure Schedule:
(i) provides Kyser's regularly prepared
listing and aging (or separate list of payables older than 45 days) that is
accurate and complete in all material respects of Kyser's accounts payable as
of May 31, 1998;
(ii) provides a breakdown that is accurate and
complete in all material respects of all customer deposits and other deposits
held by Kyser as of April 30, 1998; and
(iii) provides a breakdown that is accurate and
complete in all material respects of Kyser's indebtedness for borrowed money
as of the close of business within five business days prior to the date of
this Agreement.
(c) Part 2.14(c) of the Kyser Disclosure Schedule
accurately identifies, and accurately lists the amounts paid by Kyser to,
each supplier of product to Kyser or other Person that received payments of
more than $100,000 from Kyser in each of fiscal 1996, fiscal 1997 and the
first nine months of fiscal 1998 except for salaries to employees and tax
payments.
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2.15 COMPLIANCE WITH LEGAL REQUIREMENTS.
(a) Except as set forth in Part 2.15(a) of the Kyser
Disclosure Schedule:
(i) to the Knowledge of Kyser, Kyser is, and
has at all times since August 1, 1995 been, in full compliance with each
Legal Requirement that is applicable to it or to the conduct of its business
or the ownership or use of any of its assets, except for failures to be in
compliance that would not reasonably be expected to have a Kyser Material
Adverse Effect;
(ii) to the Knowledge of Kyser, no event has
occurred, and no condition or circumstance exists, that would reasonably be
expected to (with or without notice or lapse of time) constitute or result
directly or indirectly in a violation by Kyser of, or a failure on the part
of Kyser to comply with, any Legal Requirement, except for violations or
noncompliance that would not reasonably be expected to have a Kyser Material
Adverse Effect; and
(iii) Kyser has not received at any time since
August 1, 1995 any written notice or, to the Knowledge of Kyser, any oral
communication from any Governmental Body or any other Person regarding (i)
any actual, alleged, possible or potential violation of, or failure to comply
with, any material Legal Requirement that has not been settled or resolved,
or (ii) any actual, alleged, possible or potential obligation on the part of
Kyser to undertake, or to bear all or any portion of the cost of, any cleanup
or any remedial, corrective or response action of any nature.
(b) Except for fire marshall reports with respect to
Kyser's office locations, Kyser has delivered, or identified and made
available, to Purchaser an accurate and complete copy of each report, study,
survey or similar document obtained by Kyser since January 1, 1996 to which
Kyser has access that addresses or otherwise relates to the compliance of
Kyser with, or the applicability to Kyser of, any Legal Requirement.
2.16 GOVERNMENTAL AUTHORIZATIONS.
(a) Part 2.16(a) of the Kyser Disclosure Schedule
identifies:
(i) each material Governmental Authorization
that is held by Kyser; and
(ii) each other material Governmental
Authorization that, to the Knowledge of Kyser, is held by any of Kyser's
employees and relates to or is useful in connection with Kyser's business.
Kyser has delivered or identified and made available to Purchaser accurate
and complete copies of all of the Governmental Authorizations identified in
Part 2.16(a) of the Kyser Disclosure Schedule, including all renewals thereof
and all amendments thereto. Each Governmental Authorization identified or
required to be identified in Part 2.16(a) of the Kyser Disclosure Schedule is
valid and in full force and effect.
(b) Except as set forth in Part 2.16(b) of the Kyser
Disclosure Schedule:
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(i) Kyser and its employees are, and have at
all times since August 1, 1995 been, in compliance with all of the terms and
requirements of each Governmental Authorization identified or required to be
identified in Part 2.16(a) of the Kyser Disclosure Schedule, except for any
noncompliance that would not reasonably be expected to have a Kyser Material
Adverse Effect;
(ii) no event has occurred, and no condition or
circumstance exists, that would reasonably be expected to (with or without
notice or lapse of time) (A) constitute or result directly or indirectly in a
violation of or a failure to comply with any term or requirement of any
Governmental Authorization identified or required to be identified in Part
2.16(a) of the Kyser Disclosure Schedule, except for violations or
noncompliance that would not reasonably be expected to have a Kyser Material
Adverse Effect or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, termination or modification of any
Governmental Authorization identified or required to be identified in Part
2.16(a) of the Kyser Disclosure Schedule, except where such event would not
reasonably be expected to have a Kyser Material Adverse Effect;
(iii) Since January 1, 1996, Kyser has not
received, and, to the Knowledge of Kyser, no employee of Kyser has received,
any written notice or, to the Knowledge of Kyser, any oral communication from
any Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any material Governmental Authorization by Kyser that has not
been cured or (B) any actual, proposed, possible or potential revocation,
withdrawal, suspension, cancellation, termination or modification of any
material Governmental Authorization of Kyser that has not been resolved; and
(iv) all applications due to be filed for the
renewal of the Governmental Authorizations required to be identified in Part
2.16(a) of the Kyser Disclosure Schedule have been duly filed on a timely
basis with the appropriate Governmental Bodies, and each other notice or
filing required to have been given or made with respect to such Governmental
Authorizations has been duly given or made on a timely basis with the
appropriate Governmental Body.
(c) The Governmental Authorizations identified in
Part 2.16(a) of the Kyser Disclosure Schedule constitute all of the material
Governmental Authorizations necessary (i) to enable Kyser to conduct its
business in the manner in which its business is currently being conducted and
(ii) to permit Kyser to own and use its assets in the manner in which they
are currently owned and used.
2.17 TAX MATTERS.
(a) Each material Tax required to have been paid by
Kyser (whether pursuant to any Tax Return or otherwise) has been duly paid in
full on a timely basis. Any Tax required to have been withheld or collected
by Kyser, including with respect to employees, has been duly withheld and
collected; and (to the extent required) each such Tax has been paid to the
appropriate Governmental Body.
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(b) Part 2.17(b) of the Kyser Disclosure Schedule
accurately identifies all Tax Returns required to be filed by or on behalf of
Kyser with any Governmental Body ("Kyser Returns") with respect to any
taxable period ending on or before the Closing Date that have not been filed
as of the date of the Agreement. Except as set forth on Part 2.17 of the
Kyser Disclosure Schedule, all Kyser Returns required to be filed on or prior
to the Closing Date (i) have been or will be filed when due (taking into
account filed extensions), and (ii) have been, or will be when filed,
accurately and completely prepared in compliance in all material respects
with all applicable Legal Requirements. All amounts shown on the Kyser
Returns to be due on or before the Closing Date, and all amounts otherwise
payable on or before the Closing Date in connection with the Kyser Returns
due to be filed on or before the Closing Date, have been or will be paid on
or before the Closing Date. Kyser has delivered, or identified and made
available, to Purchaser accurate and complete copies of all Kyser Returns
filed since July 31, 1992.
(c) Except as set forth in Part 2.17(c) of the Kyser
Disclosure Schedule, the Kyser Financial Statements accrue in all material
respects all actual and contingent liabilities for Taxes with respect to all
periods through the dates thereof in accordance with GAAP. Kyser will accrue,
in the Ordinary Course of Business, reserves adequate for the payment of all
Taxes for the period from April 30, 1998 through the Closing Date, and Kyser
will disclose the dollar amount of such reserves to Purchaser on or prior to
the Closing Date.
(d) Except as set forth in Part 2.17(d) of the Kyser
Disclosure Schedule, no Kyser Return relating to income Taxes that has been
filed with respect to any period ended on or after July 31, 1992 has been
examined and audited by any Governmental Bodies. Part 2.17(d) of the Kyser
Disclosure Schedule accurately identifies each tax examination or tax audit
of any Kyser Return relating to income taxes (or any other taxes in excess of
$50,000) that has been conducted since July 31, 1992, and Kyser has delivered
to Purchaser accurate and complete copies of all audit reports and similar
documents (to which Kyser has access) relating to such Kyser Returns. Except
as set forth in Part 2.17(d) of the Kyser Disclosure Schedule, no extension
or waiver of the limitation period applicable to any of the Kyser Returns has
been granted (by Kyser or any other Person), and no such extension or waiver
has been requested from Kyser.
(e) Except as set forth in Part 2.17(e) of the Kyser
Disclosure Schedule, (i) no claim or other Proceeding is pending or, to the
Knowledge of Kyser, has been threatened against or with respect to Kyser in
respect of any Tax, and (ii) there are no unsatisfied material Liabilities
for Taxes (including liabilities for interest, additions to tax and penalties
thereon and related expenses) with respect to any notice of deficiency or
similar document received by Kyser. Kyser has not entered into or become
bound by any agreement or consent pursuant to Section 341(f) of the Code.
Kyser has not been, and Kyser will not be, required to include any material
adjustment in taxable income for any Tax period (or portion thereof) pursuant
to Section 481 of the Code or any comparable provision under state or foreign
Tax laws as a result of transactions or events occurring, or accounting
methods employed, prior to the Closing.
(f) There is no compensatory agreement, plan,
arrangement or other Contract with respect to the performance of services by
any employee or independent contractor or former employee or independent
contractor of Kyser that, individually or collectively, could give rise
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directly or indirectly to the payment of any amount that would be a
nondeductible expense pursuant to Section 280G of the Code. Kyser is not,
and has never been, a party to or bound by any Tax indemnity agreement, Tax
sharing agreement, Tax allocation agreement or similar Contract.
2.18 EMPLOYEE AND LABOR MATTERS.
(a) Part 2.18(a) of the Kyser Disclosure Schedule
accurately sets forth, as of a date within ten days prior to the date of this
Agreement, with respect to each employee of Kyser (including any employee of
Kyser who is on a leave of absence or on layoff status):
(i) the name of such employee and the date as
of which such employee was originally hired by Kyser;
(ii) such employee's title, and a summary
description of such employee's duties and responsibilities to the extent such
employee's title is not descriptive of such employee's position;
(iii) the aggregate dollar amount of the
compensation (including wages, salary, commissions, director's fees, fringe
benefits, bonuses, profit-sharing payments and other payments or benefits of
any type) received by such employee from Kyser with respect to services
performed in calendar 1997 and any increase in such employee's compensation
in calendar 1998 in excess of 5%;
(iv) such employee's annualized base
compensation as of the date of this Agreement;
(v) each Kyser Current Benefit Plan in which
such employee participates; and
(vi) to the Knowledge of Kyser, any material
Governmental Authorization that is held by such employee and that relates to
or is useful in connection with Kyser's business.
There has been no material change to the information set forth in Part
2.18(a) of the Kyser Disclosure Schedule since the date as of which
information is presented in Part 2.18(a) of the Disclosure Schedule except in
the Ordinary Course of Business.
(b) Except as set forth in Part 2.18(b) of the Kyser
Disclosure Schedule, there is no employee of Kyser who is not fully available
to perform work because of disability or other leave.
(c) Part 2.18(c) of the Kyser Disclosure Schedule
identifies each Kyser Current Benefit Plan and each Kyser Past Benefit Plan
in effect since August 1, 1995, and any other Kyser Plans currently in
effect. Kyser does not have any material Liability under any Kyser Past
Benefit Plan that is not disclosed in Part 2.18(c) of the Kyser Disclosure
Schedule.
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(d) Part 2.18(d) of the Kyser Disclosure Schedule
identifies each former employee of Kyser who is receiving or is scheduled to
receive (or whose spouse or other dependent is receiving or is scheduled to
receive) any benefits under any Kyser Plan relating to such former employee's
employment with Kyser; and Part 2.18(d) of the Kyser Disclosure Schedule
accurately describes in all material respects such benefits.
(e) Except as set forth in Part 2.18(e) of the Kyser
Disclosure Schedule, Kyser is not a party to or bound by any employment
agreement or any union contract, collective bargaining agreement or similar
Contract.
(f) Except as set forth in Part 2.18(f) of the Kyser
Disclosure Schedule, the employment of each of Kyser's employees is
terminable by Kyser at will. Except as set forth in Part 2.18(f) of the
Kyser Disclosure Schedule, Kyser never prepared or delivered to employees any
employee manuals or handbooks or other similar materials relating to the
employment of the current and former employees of Kyser that subject Kyser to
any material Liability.
(g) To the Knowledge of Kyser, except as set forth on
Part 2.18(g) of the Kyser Disclosure Schedule:
(i) no employee of Kyser intends to terminate
his or her employment with Kyser for reasons other than retirement, death or
legal disability;
(ii) no employee of Kyser has received an offer
that is currently outstanding to join a business that may be competitive with
Kyser's business; and
(iii) no employee of Kyser is a party to or is
bound by any confidentiality agreement, noncompetition agreement or other
Contract (with any Person) that may have a material adverse effect on (A) the
performance by such employee of any of his or her current duties or
responsibilities as an employee of Kyser or (B) Kyser's business or
operations as currently conducted.
(h) Kyser is not engaged, and since August 1, 1995
has not engaged, in any unfair labor practice of any nature. Since August 1,
1995, there has not been any slowdown, work stoppage, labor dispute or union
organizing activity, or any similar activity or dispute, at Kyser affecting
Kyser or any of its employees. There is not now pending, and to the
Knowledge of Kyser, no Person has threatened to commence, any slowdown, work
stoppage, labor dispute or union organizing activity or any similar activity
or dispute at Kyser with respect to Kyser or any of its employees. To the
Knowledge of Kyser, no event has occurred, and no condition or circumstance
exists, that would reasonably be expected to directly or indirectly give rise
to or provide a basis for the commencement of any such slowdown, work
stoppage, labor dispute or union organizing activity or any similar activity
or dispute.
2.19 BENEFIT PLANS; ERISA.
(a) Except as set forth in the Kyser Disclosure
Schedule, Kyser has not since August 1, 1997 provided or made available any
fringe benefit to any of its employees with a value in excess of $5,000 per
year.
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(b) No Kyser Plan:
(i) provides or provided any benefit
guaranteed by the Pension Benefit Guaranty Corporation;
(ii) is or was a "multiemployer plan" as
defined in Section 4001(a)(3) of ERISA; or
(iii) except for Kyser's legal obligation to
repurchase shares from a participant exercising his or her put option rights
under the Kyser ESOP, is or was subject to the minimum funding standards of
Section 412 of the Code or Section 302 of ERISA.
There is no Person that (by reason of common control or otherwise) is or has
at any time been treated together with Kyser as a single employer within the
meaning of Section 414 of the Code.
(c) Kyser has delivered, or identified and made
available, to Purchaser, with respect to each Kyser Current Benefit Plan:
(i) an accurate and complete copy of such
Kyser Plan and all amendments thereto (including any amendment that is
scheduled to take effect in the future);
(ii) an accurate and complete copy of each
material Contract (including any trust agreement, funding agreement, service
provider agreement, insurance agreement, investment management agreement or
recordkeeping agreement) relating to such Kyser Plan;
(iii) an accurate and complete copy of any
material description, summary, notification, report or other document that
has been furnished to any employee of Kyser with respect to such Kyser Plan;
(iv) an accurate and complete copy of any
material form, report, registration statement or other document that has been
filed with or submitted to any Governmental Body with respect to such Kyser
Plan; and
(v) an accurate and complete copy of any
determination letter, application requiring a favorable determination letter,
IRS or Department of Labor audit or other material document that has been
issued by, or that has been received by Kyser from, any Governmental Body
with respect to such Kyser Plan.
(d) Kyser has delivered or identified and made
available to Purchaser all of the following documents in Kyser's possession
with respect to each Kyser Past Benefit Plan in effect since August 1, 1995:
(i) an accurate and complete copy of such
Kyser Plan and all amendments thereto (including any amendment that is
scheduled to take effect in the future);
(ii) an accurate and complete copy of each
material Contract (including any trust agreement, funding agreement, service
provider agreement, insurance
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agreement, investment management agreement or recordkeeping agreement)
relating to such Kyser Past Benefit Plan;
(iii) an accurate and complete copy of any
material description, summary, notification, report or other document that
has been furnished to any employee of Kyser with respect to such Kyser Past
Benefit Plan;
(iv) an accurate and complete copy of any
material form, report, registration statement or other document that has been
filed with or submitted to any Governmental Body with respect to such Kyser
Past Benefit Plan; and
(v) an accurate and complete copy of any
determination letter, IRS or Department of Labor audit or other material
document that has been issued by, or that has been received by Kyser from,
any Governmental Body with respect to such Kyser Past Benefit Plan.
(e) To the Knowledge of Kyser, (i) each Kyser Current
Benefit Plan is being operated and administered in compliance in all material
respects with the provisions thereof, and (ii) each Kyser Current Benefit
Plan has at all times been operated and administered in compliance in all
material respects with the provisions thereof. Each contribution or other
payment that is required to have been accrued or made under or with respect
to any Kyser Current Benefit Plan has been duly accrued or made by Kyser on a
timely basis, in all material respects.
(f) To the Knowledge of Kyser, (i) each Kyser Current
Benefit Plan complies and is being operated and administered in compliance in
all material respects with, and (ii) each Kyser Plan has at all times
complied and been operated and administered in compliance in all material
respects with, all applicable reporting, disclosure and other requirements of
ERISA and the Code and all other applicable Legal Requirements. Except as
reflected in the Kyser Disclosure Schedule, including the Kyser Financial
Statements, (i) Kyser has not since July 31, 1992 incurred any material
Liability to the Internal Revenue Service or any other Governmental Body with
respect to any Kyser Plan and (ii) to the Knowledge of Kyser, no event has
occurred, and no condition or circumstance exists, that would reasonably be
expected to (with or without notice or lapse of time) give rise directly or
indirectly to any such material Liability. To the Knowledge of Kyser, Kyser
and any Person that is or was an administrator or fiduciary of any Kyser Plan
(or that acts or has acted as an agent of Kyser or any such administrator or
fiduciary), has not engaged in any transaction and has not otherwise acted or
failed to act in a manner that has subjected or would reasonably be expected
to subject Kyser to any material Liability for Breach of any fiduciary duty
or any other duty. (A) Neither the Kyser ESOP nor any hospitalization,
medical or dental insurance plan currently maintained by Kyser, and no person
that is or was an administrator or fiduciary of the Kyser ESOP or any
hospitalization, medical or dental insurance plan currently maintained by
Kyser (or that acts or has acted as an agent of any such administrator or
fiduciary) and (B) to the Knowledge of Kyser, no other Kyser Plan, and no
Person that is or was an administrator or fiduciary of any other Kyser Plan
(or that acts or has acted as an agent of any such administrator or
fiduciary):
(i) has engaged in a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of the Code;
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(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA; or
(iii) has taken any action that (A) may subject such Kyser
Plan or such Person to any material Tax, penalty or Liability relating to any
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code or (B) may directly or indirectly give rise to or serve as a
basis for the assertion (by any employee or by any other Person) of any valid
claim that would subject Kyser to any material Liability under, on behalf of or
with respect to such Kyser Plan other than in the ordinary course of the
administration of such Kyser Plan or as disclosed in the Kyser Disclosure
Schedule.
(g) No material inaccurate or misleading representation,
statement or other communication has been made or directed (in writing or
otherwise) to any current or former employee of Kyser that may directly or
indirectly give rise to or serve as a basis for the assertion of any valid claim
that would subject Kyser to any material Liability (i) with respect to such
employee's participation, eligibility for benefits, vesting, benefit accrual or
coverage under any Kyser Plan or with respect to any other matter relating to
any Kyser Plan, or (ii) with respect to any proposal or intention on the part of
Kyser to establish or sponsor any Employee Benefit Plan or to provide or make
available any fringe benefit or other benefit of any nature.
(h) Except as set forth in Part 2.19(h) of the Kyser Disclosure
Schedule, Kyser has not advised any of its employees (in writing or otherwise)
that it intends to establish or sponsor any Employee Benefit Plan or to provide
or make available any material fringe benefit of any nature in the future.
(i) To the knowledge of Kyser, none of the Transactions will
violate Section 406 of ERISA or Section 4975 of the Code or other applicable
Legal Requirements with respect to any Kyser Plan.
2.20 ENVIRONMENTAL MATTERS.
(a) Kyser is not liable or potentially liable for any material
response cost or natural resource damages under Section 107(a) of CERCLA, or
under any other so-called "superfund" or "superlien" law or similar Legal
Requirement, at or with respect to any site.
(b) Kyser is and has at all times been in compliance with all
applicable Environmental Laws, except for failures to be in compliance that
would not reasonably be expected to have a Kyser Material Adverse Effect. Kyser
possesses all material permits and other material Governmental Authorizations
required under applicable Environmental Laws, and Kyser is and has at all times
been in compliance with the terms and requirements of all such Governmental
Authorizations, except for failures to be in compliance that would not
reasonably be expected to have a Kyser Material Adverse Effect. Except as set
forth in Part 2.20(b) of the Kyser Disclosure Schedule, Kyser has never
received, and to the Knowledge of Kyser, no current or prior owner of any
property leased or controlled by Kyser has ever received, any written notice or,
to the Knowledge of Kyser, any oral communication from any Governmental Body or
other Person regarding any actual, alleged, possible or potential material
Liability on the part of Kyser arising from or relating to the presence,
generation, manufacture, production,
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transportation, importation, use, treatment, refinement, processing,
handling, storage, discharge, release, emission or disposal of any Hazardous
Material that has not already been paid or resolved. No Person has ever
commenced or threatened to commence any contribution action or other
Proceeding against Kyser in connection with any such actual, alleged,
possible or potential material Liability; and to the Knowledge of Kyser, no
event has occurred, and no condition or circumstance exists, that would
reasonably be expected to directly or indirectly give rise to, or result in
Kyser becoming subject to, any such material Liability.
(c) Except as set forth in Part 2.20(c) of the Disclosure
Schedule, to the Knowledge of Kyser, since August 1, 1995, Kyser has not
generated, manufactured, produced, transported, imported, used, treated,
refined, processed, handled, stored, discharged, released or disposed of any
Hazardous Material (whether lawfully or unlawfully). Except as set forth in
Part 2.20(c) of the Kyser Disclosure Schedule, to the Knowledge of Kyser, since
August 1, 1995, Kyser has not permitted any Hazardous Material to be generated,
manufactured, produced, used, treated, refined, processed, handled, stored,
discharged, released or disposed of (whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that
is, or that has at any time been, owned by, leased to, controlled by or used by
Kyser;
(ii) in or into any surface water, groundwater, soil or
air associated with or adjacent to any such real property; or
(iii) in or into any well, pit, pond, lagoon, impoundment,
ditch, landfill, building, structure, facility, improvement, installation,
equipment, pipe, pipeline, vehicle or storage container that is or was located
on or beneath the surface of any such real property or that is or has at any
time been owned by, leased to, controlled by or used by Kyser.
(d) Except as set forth in Part 2.20(d) of the Kyser Disclosure
Schedule, to the Knowledge of Kyser, all property that is owned by, leased to,
controlled by or used by Kyser, and all surface water, groundwater, soil and air
associated with or adjacent to such property:
(i) is free of any Hazardous Material and any harmful
chemical or physical conditions; and
(ii) is free of any environmental contamination of any
nature.
(e) To the Knowledge of Kyser, there is no storage tank that is
located on or beneath the surface of any real property owned by, leased to,
controlled by or used by Kyser.
(f) All material Governmental Authorizations currently held by
Kyser pursuant to Environmental Laws are identified in Part 2.16(a) of the Kyser
Disclosure Schedule.
2.21 SALE OF PRODUCTS; PERFORMANCE OF SERVICES. Except as set forth
in Part 2.21 of the Kyser Disclosure Schedule, no customer or other Person
has since August 1, 1995, asserted or, to the knowledge of Kyser, threatened
to assert any claim against Kyser (other than warranty claims or returns in
the Ordinary Course of Business) that resulted in a Liability of Kyser in
excess of $25,000 that is not reflected in the Kyser Financial Statements (i)
under or based upon
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any warranty provided by or on behalf of Kyser or (ii) under or based upon
any other warranty relating to any product sold by Kyser or any services
performed by Kyser. To the Knowledge of Kyser, no event has occurred, and no
condition or circumstance exists, that would reasonably be expected to (with
or without notice or lapse of time) directly or indirectly give rise to or
serve as a basis for the assertion of any such claim, other than a claim that
does not exceed $25,000 or warranty claims or returns arising in the Ordinary
Course of Business.
2.22 INSURANCE.
(a) Part 2.22(a) of the Kyser Disclosure Schedule accurately
sets forth, with respect to each insurance policy maintained by or at the
expense of, or for the direct or indirect benefit of, Kyser:
(i) the name of the insurance carrier that issued such
policy and the policy number of such policy;
(ii) a brief description of the coverage provided by such
policy; and
(iii) the annual premium payable with respect to such
policy, and the cash value (if any) of such policy.
Kyser has identified and made available at its offices a description of all
claims that exceed $25,000 per claim that have been asserted in the past since
August 1, 1995 with respect to each policy identified in Part 2.22(a) of the
Kyser Disclosure Schedule. Part 2.22(a) of the Kyser Disclosure Schedule also
identifies (1) each pending application for insurance that has been submitted by
or on behalf of Kyser, and (2) each self-insurance or similar risk-sharing
arrangement affecting Kyser or any of its assets. Kyser has delivered to or
identified and made available to Purchaser accurate and complete copies of all
of the insurance policies identified in Part 2.22(a) of the Kyser Disclosure
Schedule (including the latest renewals thereof and all endorsements thereto)
and all of the pending applications identified in Part 2.22(a) of the Kyser
Disclosure Schedule.
(b) Each of the policies identified in Part 2.22(a) of the
Kyser Disclosure Schedule (except for those as to which Kyser has indicated in
Part 2.22(a) of the Disclosure Schedule that it has filed a pending application)
is valid and in full force and effect. All of the information contained in the
applications submitted in connection with said policies was (at the times said
applications were submitted) accurate and complete in all material respects, and
all premiums and other amounts due with respect to said policies have been paid
in full on a timely basis except where the failure to pay such premium, on a
timely basis would not reasonably be expected to have a Kyser Material Adverse
Effect. The nature, scope and dollar amounts of the insurance coverage provided
by said policies are reasonable in the judgment of Kyser to adequately insure
Kyser in accordance with reasonable commercial practices.
(c) Except as set forth in Part 2.22(c) of the Kyser Disclosure
Schedule, (i) there is no pending claim by Kyser under or based upon any of the
policies identified in Part 2.22(a) of the Kyser Disclosure Schedule that
exceeds $25,000 per claim; and (ii) to the Knowledge of Kyser, no condition or
circumstance exists and no event has occurred, that would
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reasonably be expected to (with or without notice or lapse of time) directly
or indirectly give rise to or serve as a basis for any material claim by
Kyser under any of such policies.
(d) Except as set forth in Part 2.22(d) of the Kyser Disclosure
Schedule, Kyser has not received:
(i) any written notice or, to the Knowledge of Kyser,
any oral communication regarding the actual or possible cancellation or
invalidation of any of the policies identified in Part 2.22(a) of the Kyser
Disclosure Schedule that has not been rescinded or regarding any actual or
possible adjustment in the amount of the premiums payable with respect to any of
said policies as currently in effect; or
(ii) any written notice or, to the Knowledge of Kyser,
any oral communication regarding any actual or possible refusal of coverage with
respect to any currently pending claim of Kyser under, or any actual or possible
rejection of any currently pending claim of Kyser under, any of the policies
identified in Part 2.22(a) of the Kyser Disclosure Schedule; or
(iii) any indication that the issuer of any of the
policies identified in Part 2.22(a) of the Kyser Disclosure Schedule may be
unwilling or unable to perform any of its obligations thereunder.
2.23 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.23
of the Kyser Disclosure Schedule, cross-referenced to elsewhere in the Kyser
Disclosure Schedule or reflected in the Kyser Financial Statements and except
for claims for employee compensation, benefits and reimbursement of expenses
in the Ordinary Course of Business:
(a) no Related Party of Kyser has, and no Related Party of
Kyser has at any time since August 1, 1995 had, any direct or indirect interest
of any nature in any material asset used in or otherwise relating to the
business of Kyser;
(b) no Related Party of Kyser is, or has at any time since
August 1, 1995 been, indebted to Kyser for more than $25,000;
(c) since August 1, 1995, no Related Party of Kyser has entered
into, or has had any direct or indirect financial interest in, any material
Contract, transaction or business dealing of any nature involving Kyser;
(d) no Related Party of Kyser is competing, or has at any time
since August 1, 1995 competed, directly or indirectly, with Kyser in any market
served by Kyser;
(e) no Related Party of Kyser has asserted or threatened to
assert any material claim or right against Kyser; and
(f) to the Knowledge of Kyser, no event has occurred, and no
condition or circumstance exists, that would reasonably be expected to (with or
without notice or lapse of time) directly or indirectly give rise to or serve as
a basis for any material claim or right in favor of any Related Party of Kyser
against Kyser.
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2.24 CERTAIN PAYMENTS, ETC. Neither any officer of Kyser nor, to
the Knowledge of Kyser, any other employee or agent of Kyser or other Person
acting for or on behalf of Kyser, has at any time, directly or indirectly:
(a) used any corporate funds of Kyser (i) to make any unlawful
political contribution or gift or for any other unlawful purpose relating to any
political activity, (ii) to make any unlawful payment to any governmental
official or employee, or (iii) to establish or maintain any unlawful or
unrecorded fund or account of any nature;
(b) made any payoff, influence payment, bribe, kickback or
unlawful payment to any Person;
(c) made any unlawful payment to any Person, or unlawfully
provided any material favor or anything of material value (whether in the form
of property or services, or in any other form) to any Person, for the purpose of
obtaining or paying for (i) favorable treatment in securing business, or (ii)
any other special concession; or
(d) agreed, committed, offered or attempted to take any of the
actions described in clauses "(a)" through "(c)" above.
2.25 PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.25(a) of the Kyser Disclosure
Schedule, there is no pending Proceeding, and to the Knowledge of Kyser, no
Person has threatened to commence any Proceeding:
(i) against Kyser or with respect to any of the assets
owned or used by Kyser; or
(ii) against Kyser, that challenges, or that may have the
effect of preventing, delaying, making illegal or otherwise interfering with,
the Merger or any of the other Transactions.
Except as set forth in Part 2.25(a) of the Kyser Disclosure Schedule, to the
Knowledge of Kyser, no material event has occurred, and no material claim,
dispute or other condition or circumstance exists, that would reasonably be
expected to give rise to or serve as a basis for the commencement of any such
Proceeding.
(b) Except as set forth in Part 2.25(b) of the Kyser Disclosure
Schedule, no Proceeding has been commenced by or against Kyser since August 1,
1995.
(c) Kyser has identified and made available to Purchaser
accurate and complete copies of all pleadings to which Kyser has access that
relate to the Proceedings required to be identified in Parts 2.25(a) and (b) of
the Kyser Disclosure Schedule.
(d) Except as set forth in Part 2.25(d) of the Kyser Disclosure
Schedule, there is no material Order to which Kyser, or any of the assets owned
or used by Kyser, is subject.
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(e) To the Knowledge of Kyser, no officer or employee of Kyser
is subject to any material Order that prohibits such officer or employee from
engaging in or continuing any conduct, activity or practice relating to Kyser's
business.
(f) To the Knowledge of Kyser, there is no proposed Order that,
if issued or otherwise put into effect, (i) would reasonably be expected to have
a Kyser Material Adverse Effect, or (ii) would reasonably be expected to have
the effect of preventing, delaying, making illegal or otherwise interfering with
any of the Transactions.
2.26 AUTHORITY; BINDING NATURE OF AGREEMENTS; BOARD OF DIRECTORS
APPROVAL.
(a) Kyser has the requisite corporate power and authority to
enter into and to perform its obligations under this Agreement.
(b) Subject to approval thereof by the Stockholders, the
execution, delivery and performance by Kyser of this Agreement have been duly
authorized by all necessary corporate action on the part of Kyser.
(c) This Agreement constitutes the legal, valid and binding
obligation of Kyser, enforceable against Kyser in accordance with its terms,
subject to (i) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(d) The Board of Directors of Kyser (at a meeting duly called
and held) has (i) unanimously determined that the Merger is advisable and fair
and in the best interests of Kyser and its Stockholders, (ii) unanimously
approved the execution, delivery and performance of this Agreement by Kyser and
unanimously approved the Merger, and (iii) unanimously directed that this
Agreement and the Merger be submitted for consideration by the Stockholders at
the Kyser Stockholders' Meeting (as defined in Section 5.5).
2.27 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part
2.27 of the Kyser Disclosure Schedule, neither the execution and delivery of
any of the Transactional Agreements by Kyser, nor the consummation or
performance by Kyser of the Merger or any of the other Transactions, will
directly or indirectly (with or without notice or lapse of time):
(a) contravene, conflict with or result in a violation of
(i) any of the provisions of Kyser's articles of incorporation or bylaws or
(ii) any resolution adopted by Kyser's stockholders or Kyser's board of
directors;
(b) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any material
Legal Requirement (other than any Excluded Legal Requirement) or Order to which
Kyser, or any of the assets owned or used by Kyser, is subject;
(c) materially contravene, conflict with or result in a
violation of any of the terms or requirements of, or give any Governmental Body
the right to revoke, withdraw, suspend, cancel, terminate or modify, any
material Governmental Authorization that is held by
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Kyser or any of its employees that relates to Kyser's business or to any of
the assets owned or used by Kyser;
(d) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any Kyser Contract
except any Kyser Excluded Contract;
(e) give any Person the right to (i) declare a default or
exercise any remedy under any Kyser Contract except any Kyser Excluded Contract,
(ii) accelerate the maturity or performance of any Kyser Contract except any
Kyser Excluded Contract or (iii) cancel, terminate or modify any Kyser Contract
other than any Kyser Excluded Contract; or
(f) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by Kyser that would reasonably
be expected to have a Kyser Material Adverse Effect.
Except as set forth in Part 2.27 of the Kyser Disclosure Schedule or as required
under the HSR Act or any applicable state securities or "blue sky laws," and
except for receipt of the approval of its board of directors and Stockholders,
Kyser was not, is not and will not be required to make any filing with or give
any notice to, or to obtain any Consent from, any Person in connection with its
execution and delivery of any of the Transactional Agreements or the
consummation or performance of any of the Transactions, except for (i) Consents
which if not obtained would not reasonably be expected to cause a Kyser Material
Adverse Effect and (ii) filings, notices and Consents required to be obtained
under the laws of The Netherlands (including without limitation filings, notices
and Consents under the Wet toezicht effectenverkeer 1995 (the "WTE"), the Wet op
de ondernemingsraden (the "WOR") and the SER Fusiegedragsregels 1975 (the
"Merger Code") or under the laws of any other jurisdiction in which Kyser does
not have employees or operating facilities.
2.28 BROKERS. Except as set forth in Part 2.28 of the Kyser
Disclosure Schedule, Kyser has not agreed or become obligated to pay, and has
not taken any action that would result in any Person claiming to be entitled
to receive, any brokerage commission, finder's fee or similar commission or
fee in connection with any of the Transactions.
2.29 ACCOUNTING MATTERS. To the Knowledge of Kyser, neither
Kyser nor any of its affiliates has taken or agreed to, or plans to, take any
action that would prevent Purchaser from accounting for the Merger as a
"pooling of interests" in accordance with APB Opinion No. 16; provided,
however, that no action or matter disclosed in the Kyser Disclosure Schedule
or required by the Transactional Agreements shall be deemed to constitute a
breach or violation of this Section 2.29.
2.30 VOTE REQUIRED. Under the Nevada Revised Statutes and the
Articles of Incorporation of Kyser, the affirmative vote of holders of a
majority of the shares of Kyser Common Stock outstanding on the record date
for the Kyser Stockholders' Meeting (as defined in Section 5.5) (the
"Required Vote") is the only vote of the holders of any class or series of
Kyser's capital stock necessary to adopt and approve this Agreement, the
Merger and the other Transactions. As required under the Kyser ESOP, with
respect to the Merger and other related matters brought before the
Stockholders: (i) the Participants of the Kyser ESOP have the right to
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direct Colin M. Henderson, in his capacity as Trustee of the Kyser ESOP, to
vote vested and non-vested Shares allocated to the Participant's Accounts
("Allocated ESOP Stock") and (ii) the Trustee will vote all of the Shares
held in the Unallocated Employer Securities Account (as defined in Section
1.45 of the Kyser ESOP) and all Allocated ESOP Stock that Participants of the
Kyser ESOP either do not direct or do not properly and timely direct as
described in (i) above.
2.31 INFORMATION STATEMENT/OFFERING MEMORANDUM. None of the
information supplied or to be supplied by or on behalf of Kyser for inclusion
in the Disclosure Document, will, at the time the Disclosure Document is
mailed to the Stockholders of Kyser or at the time of the Kyser Stockholders'
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 the light of the circumstances under which they are
made, not misleading.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF SIGNING STOCKHOLDERS
As of the date of the signing of the Joinder Agreement, except where
limited to a specific Signing Stockholder, each Signing Stockholder severally
represents and warrants to and for the benefit of Purchaser and Merger Sub as
follows:
3.1 SHARES. Such Signing Stockholder has delivered to Purchaser
an accurate and complete copy of the stock certificate representing such
Signing Stockholder's Shares.
3.2 AUTHORITY OF SIGNING STOCKHOLDERS; BINDING NATURE OF
AGREEMENTS.
(a) (i) Such Signing Stockholder has the requisite right, power
and capacity to enter into and to perform such Signing Stockholder's obligations
under each of the Transactional Agreements to which such Signing Stockholder is
or may become a party; (ii) this Agreement constitutes the legal, valid and
binding obligation of such Signing Stockholder, enforceable against such Signing
Stockholder in accordance with its terms, subject to (A) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(B) rules of law governing specific performance, injunctive relief and other
equitable remedies; and (iii) upon the execution of each of the other
Transactional Agreements at the Closing, each of such other Transactional
Agreements to which such Signing Stockholder becomes a party will constitute the
legal, valid and binding obligation of such Signing Stockholder, and will be
enforceable against such Signing Stockholder in accordance with its terms,
subject to (A) laws of general application relating to bankruptcy, insolvency
and the relief of debtors, and (B) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(b) (i) The spouse of such Signing Stockholder, if applicable,
has the requisite right, power and capacity to execute and deliver and to
perform his or her obligations under the Spousal Consent being executed by him
or her; and (ii) such Spousal Consent constitutes such spouse's legal, valid and
binding obligation, enforceable against such spouse in accordance with its
terms, subject to (A) laws of general application relating to bankruptcy,
insolvency and the relief of debtors, and (B) rules of law governing specific
performance, injunctive relief and other equitable remedies.
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(c) Subject to the distribution of the Participant Directive,
Participant Directive Statement and the Disclosure Document to the Participants
of the Kyser ESOP, and in compliance with Section 8.11 of the Kyser ESOP and as
otherwise expressly stated herein, Colin M. Henderson, as directed Trustee (the
"Trustee") of the Kyser ESOP, represents and warrants to and for the benefit of
Purchaser that (i) the Trustee is the sole trustee of the Trust; (ii) the
Trustee has delivered to Purchaser a complete and correct copy of the trust
agreement for the Trust, including all amendments thereto; (iii) subject to his
receipt of the investment direction from the Investment Manager (as defined in
the Kyser ESOP) the Trustee has full power and authority, under the trust
agreement for the Trust and otherwise, to enter into this Agreement on behalf of
the Trust and to perform the obligations of the Trust hereunder; (iv) subject to
his receipt of the investment direction from the Investment Manager (as defined
in the Kyser ESOP), the execution, delivery and performance of this Agreement by
the Trustee under the Trust does not require any further authorization from the
beneficiaries of the Trust, any committee appointed pursuant to Section 9.01 of
the Kyser ESOP to administer the Kyser ESOP (the "ESOP Committee" or any other
Persons and (v) the execution, delivery and performance of the Trust's
obligations under this Agreement and the consummation of the Merger do not
contravene, conflict with or result in a violation of any provision of the
Trust.
3.3 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 3.3
of the Signing Stockholder Disclosure Schedule, neither the execution and
delivery of any of the Transactional Agreements by such Signing Stockholder,
nor the consummation or performance by such Signing Stockholder of any of the
Transactions to which it is a party, will directly or indirectly (with or
without notice or lapse of time):
(a) contravene, conflict with or result in a violation of, or
give any Governmental Body or other Person the right to challenge any of the
Transactions or to exercise any remedy or obtain any relief under, any material
Legal Requirement or Order to which such Signing Stockholder is subject; or
(b) contravene, conflict with or result in a violation or
Breach of or a default under any provision of, or give any Person the right to
declare a default under, any material Contract to which such Signing Stockholder
is a party or by which such Signing Stockholder is bound.
Except as set forth in Part 3.3 of the Signing Stockholder Disclosure Schedule,
such Signing Stockholder was not, is not and will not be required to make any
filing with or give any notice to, or to obtain any material Consent from, any
Person in connection with the execution and delivery of any of the Transactional
Agreements or the consummation or performance of any of the Transactions.
3.4 ABILITY.
(a) Except as set forth in Part 3.4 of the Signing Stockholder
Disclosure Schedule, such Signing Stockholder:
(i) has not (A) at any time since August 1, 1995 made a
general assignment for the benefit of creditors, (B) at any time since August 1,
1995 filed, or had filed
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against such Signing Stockholder, any bankruptcy petition or similar filing,
(C) at any time since August 1, 1995 suffered the attachment or other
judicial seizure of all or a substantial portion of such Signing
Stockholder's assets, (D) at any time since August 1, 1995 admitted in
writing such Signing Stockholder's inability to pay such Signing
Stockholder's debts as they become due, or (E) taken or been the subject of
any action that may have an adverse effect on such Signing Stockholder's
ability to comply with or perform any of such Signing Stockholder's covenants
or obligations under any of the Transactional Agreements; and
(ii) is not subject to any Order that would have a
material adverse effect on such Signing Stockholder's ability to comply with or
perform any of such Signing Stockholder's covenants or obligations under any of
the Transactional Agreements.
(b) (i) There is no Proceeding pending, and to the Knowledge of
such Signing Stockholder no Person has threatened to commence any Proceeding
against such Signing Stockholder, that would reasonably be expected to have a
material adverse effect on the ability of such Signing Stockholder to comply
with or perform any of such Signing Stockholder's covenants or obligations under
any of the Transactional Agreements; and (ii) to the Knowledge of such Signing
Stockholder, no event has occurred, and no claim, dispute or other condition or
circumstance exists, that would reasonably be expected to give rise to or serve
as a basis for the commencement of any such Proceeding.
3.5 INVESTMENT REPRESENTATIONS.
(a) Such Signing Stockholder is aware (i) that the Purchaser
Capital Stock to be issued to such Signing Stockholder in the Merger will not be
registered and will not be issued pursuant to a registration statement under the
Act, but will instead be issued in reliance on the exemption from registration
set forth in Section 4(2) of the Act and in Rule 506 under the Act and (ii) that
neither the Merger nor the issuance of such Purchaser Capital Stock has been
approved or reviewed by the Securities and Exchange Commission (the "SEC") or by
any other governmental agency.
(b) Such Signing Stockholder is aware that (i) because the
Purchaser Capital Stock to be issued in the Merger will not be registered under
the Act, such Purchaser Capital Stock cannot be resold unless such Purchaser
Capital Stock is registered under the Act or unless an exemption from
registration is available; and (ii) (A) except as expressly provided in the
Investor Rights Agreement to which such Signing Stockholder shall become a party
pursuant to the Accession Agreement attached as Exhibit W-1 hereto, Purchaser
will be under no obligation to file a registration statement with respect to the
Purchaser Capital Stock to be issued to such Signing Stockholder in the Merger;
and (B) the provisions of Rule 144 under the Act, if applicable, will permit
resale of the Purchaser Capital Stock to be issued to such Signing Stockholder
in the Merger only under limited circumstances, and such Purchaser Capital Stock
must be held by such Signing Stockholder for at least one year before it can be
sold pursuant to Rule 144 unless transferred pursuant to Section 3.05 of the
Trust or Article X of the Kyser ESOP.
(c) The Purchaser Capital Stock to be issued to such Signing
Stockholder in the Merger will be acquired by such Signing Stockholder for
investment and for his, her or its
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own account, and not with a view to, or for resale in connection with, any
unregistered distribution thereof.
(d) If Rebekah H. Claeys and Samuel F. Soules become Signing
Stockholders, each represents and warrants to and for the benefit of Purchaser
that he or she has appointed a purchaser representative (each, a "Stockholder
Representative") to act as his or her purchaser representative in connection
with his, her or its evaluation of the merits and risks of the Merger and such
Signing Stockholder's investment in Purchaser Capital Stock. Such Signing
Stockholder further acknowledges to and for the benefit of Purchaser that he or
she has read and understands the Disclosure Document (as defined below)
(including the exhibits thereto) and has had the opportunity to meet with his or
her Stockholder Representative for the purpose of discussing the merits and
risks of the Merger and such Signing Stockholder's proposed investment in
Purchaser Capital Stock.
(e) With respect to Signing Stockholders executing a Joinder
Agreement after the date of this Agreement, such Signing Stockholder has
received, reviewed and considered the Information Statement/Offering Memorandum
with respect to the Merger and the transactions contemplated by this Agreement
(the "Disclosure Document").
(f) Such Signing Stockholder has been given the opportunity:
(i) to ask questions of, and to receive answers from, persons acting on behalf
of Kyser and Purchaser concerning the terms and conditions of the Merger and
the contemplated issuance of Purchaser Capital Stock in the Merger, and the
business, properties, prospects and financial condition of Kyser and Purchaser;
and (ii) to obtain any additional information (to the extent Kyser or Purchaser
possesses such information or is able to acquire it without unreasonable effort
or expense and without breach of confidentiality obligations) requested to
verify the accuracy of the information set forth in the Disclosure Document.
(g) (i) Such Signing Stockholder either alone or with his or
her Stockholder Representative is knowledgeable, sophisticated and experienced
in making, and is qualified to make, decisions with respect to investments in
securities presenting investment decisions like that involved in such Signing
Stockholder's contemplated investment in the Purchaser Capital Stock to be
issued in the Merger; (ii) such Signing Stockholder understands and has fully
considered the risks of acquiring and owning Purchaser Capital Stock and further
understands that: (A) an investment in Purchaser Capital Stock is a speculative
investment which involves a high degree of risk; and (B) there are substantial
restrictions on the transferability of the Purchaser Capital Stock to be issued
in the Merger, and, accordingly, it may not be possible for such Signing
Stockholder to liquidate his, her or its investment in such Purchaser Capital
Stock (in whole or in part) in the case of emergency; and (iii) such Signing
Stockholder is able to hold the Purchaser Capital Stock that he, she or it is to
receive in the Merger for a substantial period of time except where the Kyser
ESOP and Trust do not so permit.
(h) Purchaser will rely on his, her or its representations and
warranties set forth in this Section 3.5 for purposes of determining his, her or
its suitability as an investor in Purchaser Capital Stock and for purposes of
confirming the availability of an exemption from the registration requirements
of the Act.
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3.6 ACKNOWLEDGMENT. Purchaser acknowledges and agrees that (i)
the representations of the Signing Stockholders in this Section 3 are several
and not joint, and (ii) nothing in Section 3.5 shall modify or limit any
representation or warranty of Purchaser or Merger Sub.
SECTION 4. REPRESENTATIONS AND WARRANTIES OF PURCHASER AND MERGER SUB
Purchaser and Merger Sub jointly and severally represent and warrant, to
and for the benefit of Kyser and the Signing Stockholders, as follows:
4.1 DUE ORGANIZATION.
(a) Purchaser is a limited liability corporation ("Besloten
Vennootschap met beperkte aansprakelijkheid") duly organized and validly
existing under the laws of the Netherlands and has all necessary corporate power
and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted;
(ii) to own and use its assets in the manner in which its
assets are currently owned and used; and
(iii) to perform its obligations under all Purchaser
Contracts except the Purchaser Excluded Contracts.
(b) Each of the Purchaser Entities other than Purchaser is a
corporation or organization duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization as listed on
Part 4.3(e) of the Purchaser Disclosure Schedule, and has all necessary power
and authority:
(i) to conduct its business in the manner in which its
business is currently being conducted;
(ii) to own and use its assets in the manner in which its
assets are currently owned and used; and
(iii) to perform its obligations under all Purchaser
Contracts to which it is a party,
in each case except where failure to be so organized, existing and in good
standing or to have such power and authority would not reasonably be expected to
have a Purchaser Material Adverse Effect.
(c) The Purchaser Entities are each qualified to do business as
foreign corporations, and are in good standing, under the laws of all
jurisdictions where the nature of their business requires such qualification,
except where the failure to be so qualified would not reasonably be expected to
have a Purchaser Material Adverse Effect.
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(d) Purchaser and its business are duly registered under number
39039113 with the Commercial Register for Flevoland, and the extract regarding
Purchaser included in Part 4.1 of the Purchaser Disclosure Schedule is true and
correct in all respects.
(e) None of the Purchaser Entities nor any of their
stockholders has approved, or commenced any proceeding or made any election
contemplating, the dissolution or liquidation of any of the Purchaser Entities
or the winding up or cessation of the business or affairs of any Purchaser
Entity.
(f) The Purchaser is not and has not been party to any merger
procedure (FUSIE) as described in Article 2:309 of the Dutch Civil Code (the
"CC").
(g) Without limiting the generality of Section 4.1(e), no
resolution, decision, order or petition to dissolve or liquidate Purchaser has
been issued or adopted, no petition for the bankruptcy (FAILLISSEMENT) or
suspension of payments (SURSEANCE VAN BETALING) of Purchaser has been filed, no
receiver (CURATOR or BEWINDVOERDER) has been appointed over Purchaser or any of
its assets and no attachment (BESLAG) has been made of any of the assets of
Purchaser.
4.2 ARTICLES OF ASSOCIATION; RECORDS.
(a) Purchaser has delivered, or identified and made available,
to Kyser accurate and complete copies of:
(i) the articles of association of Purchaser, as
presently in force;
(ii) the shareholders' register of Purchaser; and
(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or otherwise
without a meeting) of the shareholders of Purchaser, the Supervisory Board of
Purchaser and the Managing Board of Purchaser.
There have been no meetings or other proceedings of the shareholders of
Purchaser, the Supervisory Board of Purchaser or the Managing Board of
Purchaser, or any committee of the Supervisory Board of Purchaser or the
Managing Board of Purchaser, that are not fully reflected in such minutes or
other records.
(b) There are no existing material violations of any of the
provisions of Purchaser's articles of association or of any resolution adopted
by Purchaser's shareholders or Supervisory Board or Managing Board. To the
Knowledge of Purchaser, there are no existing violations of any material
provisions of the articles of incorporation, bylaws or similar organizational
documents of the other Purchaser Entities; and no event has occurred, and no
condition or circumstance exists, that would reasonably be expected to (with or
without notice or lapse of time) constitute or result directly or indirectly in
such a material violation.
(c) The books of account, shareholders register, minute books
and other records of Purchaser and Merger Sub are accurate, up-to-date and
complete in all material respects. All of the records of Purchaser and Merger
Sub are in the actual possession and direct
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control of Purchaser or its counsel. To the Knowledge of Purchaser and Merger
Sub, Purchaser and Merger Sub have in place an adequate and appropriate
system of internal controls.
(d) Purchaser has delivered, or identified and made available,
to Kyser accurate and complete copies of:
(i) the articles of incorporation of Merger Sub, as
presently in force;
(ii) the shareholders' register of Merger Sub; and
(iii) the minutes and other records of the meetings and
other proceedings (including any actions taken by written consent or otherwise
without a meeting) of the shareholders of Merger Sub and the Board of Directors
of Merger Sub.
There have been no meetings or other proceedings of the shareholders of Merger
Sub, or the Board of Directors of Merger Sub, or any committee of the Board of
Directors of Merger Sub, that are not fully reflected in such minutes or other
records.
(e) There are no existing material violations of any of the
provisions of Merger Sub's articles of incorporation or of any resolution
adopted by Merger Sub's shareholders or Board.
(f) No resolution to amend the Articles of Association of
Purchaser has been adopted.
(g) The shareholders' register of Purchaser referenced in Part
4.3(a) of the Purchaser Disclosure Schedule is accurate, up-to-date and complete
in all material respects.
4.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of Purchaser consists of
23,500,000 common shares of Purchaser Capital Stock and 1,500,000 preference
shares of capital stock, each having a par value of NLG 0.96 per share, of which
in accordance with GAAP and applicable SEC rules and regulations 8,800,385
common shares are issued and outstanding and held of record as set forth in Part
4.3(a) of the Purchaser Disclosure Schedule. No preference shares of Purchaser
are issued or outstanding. Purchaser has 4,976 shares of treasury stock. The
authorized capital stock of Merger Sub consists of 25,000 shares of Common
Stock, $1.00 par value, of which 100 shares are issued and outstanding and held
of record by Purchaser.
(b) Except as set forth in Part 4.3(b) of the Purchaser
Disclosure Schedule, there is no:
(i) outstanding subscription, option, call, warrant or
right (whether or not currently exercisable) to acquire from any Purchaser
Entity any shares of the capital stock or other securities of any Purchaser
Entity or Merger Sub;
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(ii) outstanding security, instrument or obligation that
is or may become convertible into or exchangeable for any shares of the capital
stock or other securities of any Purchaser Entity or Merger Sub;
(iii) Contract under which any Purchaser Entity is or may
become obligated to sell or otherwise issue or purchase any shares of its
capital stock or any other securities; or
(iv) condition or circumstance that would reasonably be
expected to directly or indirectly give rise to or provide a basis for the
assertion of a valid claim by any Person to the effect that such Person is
entitled to acquire or receive any shares of capital stock or other securities
of any Purchaser Entity.
(c) All of the issued and outstanding shares of Purchaser
Capital Stock and Merger Sub capital stock (i) have been duly authorized and
validly issued, (ii) are fully paid and non-assessable and (iii) have been
issued in compliance in all material respects with all applicable securities
laws and other applicable Legal Requirements. Except as set forth in Part
4.3(c) of the Purchaser Disclosure Schedule, none of such shares is, and none
of the shares of Purchaser Capital Stock to be issued to the Stockholders in
the Merger shall be, subject to any repurchase option or restriction on
transfer imposed by Purchaser or any Legal Requirement (other than
restrictions on transfer imposed by virtue of (i) applicable Netherlands,
U.S. federal and state securities laws summarized in the Disclosure Document
or (ii) Purchaser's Articles of Association).
(d) Except as set forth in Part 4.3(d) of the Purchaser
Disclosure Schedule, there are no outstanding put rights, preemptive rights,
registration rights or voting agreements with respect to the issued and
outstanding shares of Purchaser Capital Stock or any other shares of capital
stock of Purchaser or Merger Sub.
(e) Except as set forth in Part 4.3(e) of the Purchaser
Disclosure Schedule, Purchaser does not own, beneficially or otherwise, any
shares or other securities of, or any direct or indirect interest of any
nature in, any Entity, other than passive investments in marketable
securities or other investment-grade securities. With the exception of the
outstanding capital stock of Purchaser, (i) all of the outstanding capital
stock of each Purchaser Entity is owned of record and beneficially by one or
more of the Purchaser Entities, free and clear of all Encumbrances, (ii)
there are no outstanding put rights, preemptive rights, registration rights
or voting agreements with respect to any shares of capital stock of any of
the Purchaser Entities or any shares of capital stock that any Purchaser
Entity is committed to issue, and (iii) all shares of capital stock of all of
the other Purchaser Entities have been authorized and validly issued, fully
paid and nonassessable.
(f) No depositary receipts (CERTIFICATEN) have been issued with
respect to any shares of Purchaser Common Stock.
(g) No one, with the exception of the shareholders of Purchaser
listed in Part 4.3(a) of the Disclosure Schedule, in their respective capacities
as such shareholders, has
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any right to distributions arising out of the profit, reserves and/or
liquidation balance of Purchaser.
4.4 FINANCIAL STATEMENTS.
(a) Part 4.4 of the Purchaser Disclosure Schedule sets forth
the following financial statements and notes thereto (collectively, the
"Purchaser Financial Statements"):
(i) the audited consolidated balance sheets of the
Purchaser Entities as of May 31, 1996 and 1997, and the related audited
consolidated statements of income and shareholders' equity and cash flows of the
Purchaser Entities for each of the years in the two-year period ended May 31,
1997 together with the notes thereto and the report of KPMG Peat Marwick LLP
relating thereto;
(ii) the unaudited consolidated balance sheet of the
Purchaser Entities as of February 28, 1998 (the "Purchaser Unaudited Interim
Balance Sheet"), and the related unaudited consolidated statements of income and
shareholders' equity and cash flows of the Purchaser Entities for the nine
months then ended; and
(iii) the unaudited consolidated balance sheet of the
Purchaser Entities as of March 31, 1998, and the related unaudited consolidated
statements of income and shareholders' equity of the Purchasers Entities for the
ten months then ended.
(b) All of the Purchaser Financial Statements present fairly,
in all material respects, the financial position of the Purchaser Entities as of
the date of said balance sheets and the results of operations and, as
applicable, cash flows of the Purchaser Entities for the periods covered by said
statements of operations and, as applicable, cash flows, in accordance with GAAP
consistently applied, except as otherwise disclosed therein or in Part 4.4 of
the Purchaser Disclosure Schedule and except that the financial statements
referred to in Sections 4.4(a)(ii) and 4.4(a)(iii) do not contain footnotes and
are subject to year-end adjustments, which adjustments will not be material
either individually or in the aggregate.
4.5 ABSENCE OF CHANGES. Except as set forth in Part 4.5 of the
Purchaser Disclosure Schedule, since February 28, 1998:
(a) there has not been any event that had a Purchaser Material
Adverse Effect and, to the Knowledge of Purchaser or Merger Sub, no event has
occurred that will, or would reasonably be expected to, have a Purchaser
Material Adverse Effect;
(b) there has not been any loss, damage or destruction to any
of the Purchaser Entities' assets that exceeded $180,000 in the aggregate
(whether or not covered by insurance);
(c) neither Purchaser nor Merger Sub has declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or has repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
(d) none of the Purchaser Entities has sold, issued or
authorized the issuance of (i) any capital stock or other security, (ii) any
option, call, warrant or right to acquire, or
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otherwise relating to, any capital stock or any other security or (iii) any
instrument convertible into or exchangeable for any capital stock or other
security;
(e) there has been no amendment to Purchaser's articles of
association or the articles of incorporation or similar governing document of
any of the other Purchaser Entities, and none of the Purchaser Entities has
effected or been a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(f) none of the Purchaser Entities has formed any subsidiary or
acquired any equity interest or other interest in any other Entity, other than a
Purchaser Entity listed in Part 4.3(e) of the Purchaser Disclosure Schedule;
(g) none of the Purchaser Entities has made any capital
expenditure in excess of $180,000 which is not reflected on the Purchaser
Unaudited Interim Balance Sheet in accordance with GAAP, except for capital
expenditures made since February 28, 1998 consistent with the Purchaser
Entities' past practices as reflected in the financial statements referred to in
Section 4.4(a)(i);
(h) none of the Purchaser Entities has (i) entered into or
permitted any material amount of the assets owned or used by it to become bound
by any Purchaser Contract outside the Ordinary Course of Business or (ii)
outside the Ordinary Course of Business materially and adversely amended or
prematurely terminated, or waived any material right or remedy under, any
material Contract to which it is or was a party or under which it has or had any
rights or obligations;
(i) none of the Purchaser Entities has (i) acquired, leased or
licensed any material right or other asset from any other Person (other than
rights or other assets acquired, leased or licensed by the Purchaser Entities
from other Persons in the Ordinary Course of Business), (ii) sold or otherwise
disposed of, or leased or licensed, any material right or other asset to any
other Person (other than rights or other assets disposed of or leased or
licensed by the Purchaser Entities to other Persons in the Ordinary Course of
Business), or (iii) waived or relinquished any material right (other than rights
waived or relinquished by the Purchaser Entities in the Ordinary Course of
Business);
(j) none of the Purchaser Entities has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness in excess of $180,000 in the aggregate;
(k) none of the Purchaser Entities has made any pledge of any
of its assets or otherwise permitted any of its assets to become subject to any
material Encumbrance, except for pledges of assets made in the Ordinary Course
of Business and Tax liens and other similar governmental liens or impositions
securing obligations not past due;
(l) none of the Purchaser Entities has (i) lent money to any
Person or (ii) incurred or guaranteed any indebtedness for borrowed money in
excess of $180,000 in the aggregate;
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(m) none of the Purchaser Entities has (i) established, adopted
or amended any Employee Benefit Plan or (ii) made any profit-sharing or similar
payment to any of its directors, officers or employees;
(n) Purchaser has not changed any of its methods of accounting
or accounting practices in any material respect or the application of such
methods or practices to any other Purchaser Entity;
(o) none of the Purchaser Entities has made any material Tax
election outside the Ordinary Course of Business;
(p) none of the Purchaser Entities has commenced or settled any
Proceeding;
(q) none of the Purchaser Entities has entered into any
transaction or taken any other action outside the Ordinary Course of Business
involving amounts in excess of $72,000; and
(r) none of the Purchaser Entities has agreed or committed to
take any of the actions referred to in clauses "(c)" through "(q)" above.
4.6 TITLE TO ASSETS. Except as set forth in Part 4.6 of the
Purchaser Disclosure Schedule, each Purchaser Entity owns, and has good and
valid title to, all assets purported to be owned by such Purchaser Entity,
including:
(a) all assets reflected on the Purchaser Unaudited Interim
Balance Sheet (except for assets sold or consumed by the Purchaser Entities
since February 28, 1998 in the Ordinary Course of Business);
(b) all assets acquired by the Purchaser Entities since
February 28, 1998 (except for assets sold or consumed by the Purchaser Entities
since February 28, 1998 in the Ordinary Course of Business); and
(c) all of the rights of the Purchaser Entities under the
Purchaser Contracts.
Except as set forth in Part 4.6 of the Purchaser Disclosure Schedule or pursuant
to security interests granted by the Purchaser Entities to secure indebtedness
reflected on the Purchaser Financial Statements, all of said assets are owned by
the Purchaser Entities free and clear of any Encumbrances in excess of $180,000
in the aggregate, except capital leases.
4.7 RECEIVABLES. All existing accounts receivable of the
respective Purchaser Entities (including those accounts receivable reflected
on the Purchaser Unaudited Interim Balance Sheet that have not yet been
collected and those accounts receivable that have arisen since February 28,
1998 and have not yet been collected) (i) represent valid obligations of
customers of the respective Purchaser Entities arising from bona fide
transactions entered into in the Ordinary Course of Business and (ii) to the
Knowledge of Purchaser, will be collected no later than 90 days after the
respective date on which each such receivable is due (without any material
counterclaim or setoff), net of receivables reserves reflected on the
Purchaser Unaudited Interim Balance Sheet.
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4.8 INVENTORY. Except as set forth in Part 4.8 of the Purchaser
Disclosure Schedule, to the Knowledge of Purchaser, net of any reserves or
allowances reflected on the Purchaser Unaudited Interim Balance Sheet, all of
the existing inventory of the Purchaser Entities (including all inventory
that is reflected on the Purchaser Unaudited Interim Balance Sheet and that
has not been disposed of by the Purchaser Entities since February 28, 1998 in
the Ordinary Course of Business):
(a) is of such quality and quantity as to be usable and
saleable by the Purchaser Entities in the Ordinary Course of Business;
(b) has been valued for accounting purposes at the lower of
cost or market value; and
(c) is free of any material defect or deficiency except for
inventory as to which the Purchaser Entities are entitled to receive full
reimbursement or replacement from the supplier of such inventory.
Except as expressly stated therein, Part 4.8 of the Purchaser Disclosure
Schedule does not include any inventory of principals from whom any of the
Purchaser Entities has received any written notice or, to the Knowledge of
Purchaser, any oral communication indicating that such principal is
considering termination of, or intends to terminate, its relationship with
such Purchaser Entity, except inventory as to which such Purchaser Entity has
a right of return at a price at least equal to the gross carrying value of
such inventory as reflected on the Purchaser Unaudited Interim Balance Sheet.
4.9 PROPRIETARY ASSETS.
(a) Except as set forth in Part 4.9(a) of the Purchaser
Disclosure Schedule, there is no material Proprietary Asset that is used in
connection with the Purchaser Entities' business (the "Purchaser Proprietary
Assets") that is not owned by or licensed to any of the Purchaser Entities.
(b) To the Knowledge of Purchaser and Merger Sub, none of
the material Purchaser Proprietary Assets infringes or conflicts with any
Proprietary Asset owned or used by any other Person. Except as set forth in
Part 4.9(b) of the Purchaser Disclosure Schedule, to the Knowledge of
Purchaser and Merger Sub, none of the Purchaser Entities is infringing,
misappropriating or making any unlawful use of, and none of the Purchaser
Entities has received any notice or other communication of any actual,
alleged, possible or potential infringement, misappropriation or unlawful use
of, any Proprietary Asset owned or used by any other Person. To the Knowledge
of Purchaser and Merger Sub, except as set forth in Part 4.9(b) of the
Purchaser Disclosure Schedule, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset
owned or used by any other Person infringes or conflicts with, any Purchaser
Proprietary Asset.
(c) Except as set forth in Part 4.9(c) of the Purchaser
Disclosure Schedule, (i) none of the Purchaser Entities has licensed any of the
Purchaser Proprietary Assets to any Person on an exclusive basis and (ii) none
of the Purchaser Entities has entered into any covenant not to
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compete or Contract limiting its ability to exploit fully any of the
Purchaser Proprietary Assets or to transact business in any market or
geographical area or with any Person.
4.10 CONTRACTS.
(a) Part 4.10 of the Purchaser Disclosure Schedule
identifies and provides an accurate and complete list of all Purchaser
Contracts except the Purchaser Excluded Contracts, including all amendments
thereto.
(b) Each Purchaser Contract required to be listed pursuant
to Section 4.10(a) is valid and in full force and effect, and to the
Knowledge of Purchaser and Merger Sub, is enforceable by the Purchaser Entity
which is a party to such Contract in accordance with its terms, subject to
(i) laws of general application relating to bankruptcy, insolvency and the
relief of debtors and (ii) rules of law governing specific performance,
injunctive relief and other equitable remedies.
(c) Except as set forth in Part 4.10(c) of the Purchaser
Disclosure Schedule:
(i) to the Knowledge of Purchaser and Merger Sub, no
Person is in violation or Breach of in any material respect of, or has declared
or committed any material existing default under, any Purchaser Contract except
any Purchaser Excluded Contract;
(ii) to the Knowledge of Purchaser and Merger Sub, no
event has occurred, and no circumstance or condition exists, that will (with or
without notice or lapse of time) (A) result in a material violation or other
material Breach of any of the provisions of any Purchaser Contract except any
Purchaser Excluded Contract, (B) give any Person the right to declare a material
default or exercise any material remedy under any Purchaser Contract except any
Purchaser Excluded Contract, (C) give any Person the right to accelerate the
maturity or performance of any Purchaser Contract except any Purchaser Excluded
Contract, or (D) give any Person the right to cancel, terminate or modify any
Purchaser Contract except any Purchaser Excluded Contract;
(iii) none of the Purchaser Entities has received any
written notice or, to the Knowledge of Purchaser or Merger Sub, any oral
communication regarding any actual, alleged, possible or potential violation or
Breach of, or default under, any Purchaser Contract except any Purchaser
Excluded Contract that has not been cured; and
(iv) none of the Purchaser Entities has waived any of its
rights under any Purchaser Contract except under any Purchaser Excluded
Contract.
(d) Except as set forth in Part 4.10(d) of the Purchaser
Disclosure Schedule:
(i) none of the Purchaser Entities is liable on any
guaranty or has otherwise agreed to cause, insure or become liable for, or
pledged any of its assets to secure, the performance or payment of any
outstanding obligation or other Liability of any other Person, including without
limitation declarations referred to in Article 403, section 1, sub f, of the CC;
and
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(ii) none of the Purchaser Entities is a party to or
bound by (A) any joint venture agreement, partnership agreement, profit-sharing
agreement, cost-sharing agreement, loss-sharing agreement or similar Contract or
(B) any Contract that creates or grants to any Person, or provides for the
creation or grant of, any stock appreciation right, phantom stock right or
similar right or interest.
(e) To the Knowledge of Purchaser and Merger Sub, the
performance of the Purchaser Contracts in accordance with their terms will not
result in any violation of or failure to comply with any material Legal
Requirement. Without limiting the generality of the foregoing, to the Knowledge
of Purchaser, none of the Purchaser Contracts required to be made available to
Kyser pursuant to Section 4.10(a) is in violation of any national or European
competition law.
(f) No Person is renegotiating, or has the right to
renegotiate, any amount paid or payable to any of the Purchaser Entities under
any Purchaser Contract or any other term or provision of any Purchaser Contract,
except in each case any Purchaser Excluded Contract.
4.11 LIABILITIES; MAJOR SUPPLIERS.
(a) Except as set forth in Part 4.11(a) of the Purchaser
Disclosure Schedule, or elsewhere in the Purchaser Disclosure Schedule, to the
Knowledge of Purchaser, none of the Purchaser Entities have any material
Liabilities, except for:
(i) Liabilities identified as such in the "liabilities"
column of the Purchaser Unaudited Interim Balance Sheet;
(ii) accounts payable (of the type required to be
reflected as liabilities in the "liabilities" section of a balance sheet
prepared in accordance with GAAP) or accrued salaries or other Liabilities
that have been incurred by the Purchaser Entities in the Ordinary Course of
Business since February 28, 1998; and
(iii) the Purchaser Entities' obligations under the
Contracts required to be listed pursuant to Section 4.10(a) and under the
Purchaser Excluded Contracts.
(b) Part 4.11(b) of the Purchaser Disclosure Schedule provides
a breakdown that is accurate and complete in all material respects of the
Purchaser Entities' indebtedness for borrowed money as of February 28, 1998.
4.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Except as set forth in
Part 4.12 of the Purchaser Disclosure Schedule:
(a) to the Knowledge of Purchaser and Merger Sub, each of the
Purchaser Entities is, and has at all times since June 1, 1995 been, in full
compliance with each Legal Requirement that is or was applicable to it or to the
conduct of its business or the ownership or use of any of its assets, except for
failures to be in compliance that would not reasonably be expected to have a
Purchaser Material Adverse Effect;
(b) to the Knowledge of Purchaser and Merger Sub, no event has
occurred, and no condition or circumstance exists, that would reasonably be
expected to (with or without
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notice or lapse of time) constitute or result directly or indirectly in a
violation by any of the Purchaser Entities of, or a failure on the part of
any of the Purchaser Entities to comply with, any Legal Requirement, except
for violations or noncompliance that would not reasonably be expected to have
a Purchaser Material Adverse Effect; and
(c) none of the Purchaser Entities has received at any time
since June 1, 1995 any written notice or, to the Knowledge of Purchaser and
Merger Sub, any oral communication from any Governmental Body or any other
Person regarding (i) any actual, alleged, possible or potential violation of, or
failure to comply with, any material Legal Requirement, or (ii) any actual,
alleged, possible or potential obligation on the part of any of the Purchaser
Entities to undertake, or to bear all or any portion of the cost of, any cleanup
or any remedial, corrective or response action of any nature.
4.13 GOVERNMENTAL AUTHORIZATIONS. Except as set forth in Part
4.13 of the Purchaser Disclosure Schedule:
(a) each of the Purchaser Entities and its employees are, and
have at all times since June 1, 1995 been, in compliance with all of the terms
and requirements of each material Governmental Authorization of any of the
Purchaser Entities, except for any noncompliance that would not reasonably be
expected to have a Purchaser Material Adverse Effect;
(b) no event has occurred, and no condition or circumstance
exists, that would reasonably be expected to (with or without notice or lapse of
time) (A) constitute or result directly or indirectly in a violation of or a
failure to comply with any term or requirement of any material Governmental
Authorization of any of the Purchaser Entities, except for violations or
noncompliance that would not reasonably be expected to have a Purchaser Material
Adverse Effect or (B) result directly or indirectly in the revocation,
withdrawal, suspension, cancellation, termination or modification of any such
Governmental Authorization except where such event would not reasonably be
expected to have a Purchaser Material Adverse Effect; and
(c) Since January 1, 1996, none of the Purchaser Entities has
ever received, and, to the Knowledge of Purchaser and Merger Sub, no employee of
any of the Purchaser Entities has ever received, any written notice or, to the
Knowledge of Purchaser and Merger Sub, any oral communication from any
Governmental Body or any other Person regarding (A) any actual, alleged,
possible or potential violation of or failure to comply with any term or
requirement of any material Governmental Authorization by any of the Purchaser
Entities that has not been cured or (B) any actual, proposed, possible or
potential revocation, withdrawal, suspension, cancellation, termination or
modification of any material Governmental Authorization of any of the Purchaser
Entities that has not been resolved.
4.14 TAX MATTERS.
(a) The Purchaser Financial Statements fully accrue all actual
and contingent liabilities of the Purchaser Entities on a consolidated basis for
Taxes with respect to all periods through the dates thereof in accordance with
GAAP.
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(b) Except as set forth in Part 4.14(b) of the Purchaser
Disclosure Schedule, no claim or other Proceeding is pending or has been
threatened against or with respect to any of the Purchaser Entities in respect
of any Tax.
(c) Each material Tax required to have been paid by any of the
Purchaser Entities (whether pursuant to any Tax Return or otherwise) has been
duly paid in full or on a timely basis. Any Tax required to have been withheld
or collected by any of the Purchaser Entities, including with respect to
employees, has been duly withheld and collected; and (to the extent required)
each such Tax has been paid to the appropriate Governmental Body.
(d) All Tax Returns required to be filed by or on behalf of
any of the Purchaser Entities with any Governmental Body with respect to any
taxable period ending on or before the Closing Date ("Purchaser Returns") and
required to be filed on or prior to the Closing Date: (i) have been or will
be filed when due, and (ii) have been, or will be when filed, accurately and
completely prepared in compliance in all material respects with all
applicable Legal Requirements. All amounts shown on the Purchaser Returns to
be due on or before the Closing Date, and all amounts otherwise payable in
connection with the Purchaser Returns due to be filed on or before the
Closing Date, have been or will be paid on or before the Closing Date.
Purchaser has delivered, or identified and made available, to Kyser accurate
and complete copies of all Purchaser Returns filed since July 31, 1994.
(e) Except as set forth in Part 4.14(e) of the Purchaser
Disclosure Schedule, no Purchaser Return relating to income Taxes that has been
filed with respect to any period ended on or after July 31, 1992 has been or is
currently being examined and audited by any Governmental Bodies. Except as set
forth in Part 4.14(e) of the Purchaser Disclosure Schedule, no extension or
waiver of the limitation period applicable to any of the Purchaser Returns has
been granted (by Purchaser or any other Person), and no such extension or waiver
has been requested from any Purchaser Entity.
(f) There are no unsatisfied material Liabilities for Taxes
(including liabilities for interest, additions to tax and penalties thereon and
related expenses) with respect to any notice of deficiency or similar document
received by any Purchaser Entity.
(g) Purchaser is a corporation for U.S. tax purposes.
(h) At the time of the Merger, the tests set forth in the
United States Treasury Regulation Section 1.367(a)-3(c)(3), which are
collectively referred to therein as the "active trade or business test," will be
satisfied with respect to the Merger and the transfers described in this
Agreement as effects of the Merger.
(i) Purchaser now owns and holds, and immediately before the
Merger will own and hold, all of the issued and outstanding shares of the
capital stock of Merger Sub.
4.15 BENEFIT PLANS; ERISA.
(a) No Purchaser Entity has any Liability with respect to any
Purchaser Plan, except as reflected in the Purchaser Financial Statements. Part
4.15(a) of the Purchaser
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Disclosure Schedule identifies all Purchaser Plans under which any employee
of any Purchaser Entity in the United States is entitled to receive benefits.
(b) No Purchaser Plan:
(i) provides or provided any benefit guaranteed by the
Pension Benefit Guaranty Corporation or similar Governmental Body of the
jurisdiction of any Purchaser Entity;
(ii) is or was a "multiemployer plan" as defined in
Section 4001(a)(3) of ERISA; or
(iii) is or was subject to the minimum funding standards
of Section 412 of the Code or Section 302 of ERISA or similar Governmental Body
of the jurisdiction of any Purchaser Entity.
There is no Person that (by reason of common control or otherwise) is or has at
any time been treated together with a Purchaser Entity as a single employer
within the meaning of Section 414 of the Code or similar Governmental Body of
the jurisdiction of any Purchaser Entity.
(c) Purchaser has delivered, or identified and made available,
to Kyser, with respect to each Purchaser Current Benefit Plan under which any
employee of any Purchaser Entity in the United States is entitled to receive
benefits:
(i) an accurate and complete copy of such Purchaser Plan
and all amendments thereto (including any amendment that is scheduled to take
effect in the future);
(ii) an accurate and complete copy of each material
Contract (including any trust agreement, funding agreement, service provider
agreement, insurance agreement, investment management agreement or recordkeeping
agreement) relating to such Purchaser Plan;
(iii) an accurate and complete copy of any material
description, summary, notification, report or other document that has been
furnished to any employee of any Purchaser Entity in the United States with
respect to such Purchaser Plan;
(iv) an accurate and complete copy of any material form,
report, registration statement or other document that has been filed with or
submitted to any Governmental Body with respect to such Purchaser Plan; and
(v) an accurate and complete copy of any determination
letter, IRS or Department of Labor audit or other material document that has
been issued by, or that has been received by Purchaser from, any Governmental
Body with respect to such Purchaser Plan.
(d) To the Knowledge of Purchaser, Merger Sub and the
fiduciaries and Representatives of Purchaser, each Purchaser Current Benefit
Plan is being operated and administered in compliance in all material respects
with the provisions thereof, and each Purchaser Plan has at all times been
operated and administered in compliance in all material
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respects with the provisions thereof. Each contribution or other payment
that is required to have been accrued or made under or with respect to any
Purchaser Plan has been duly accrued and made by a Purchaser Entity on a
timely basis.
(e) To the Knowledge of Purchaser, Merger Sub and the
fiduciaries and Representatives of Purchaser, each Purchaser Current Benefit
Plan complies and is being operated and administered in compliance in all
material respects with, and each Purchaser Plan has at all times complied and
been operated and administered in compliance in all material respects with,
all applicable reporting, disclosure and other requirements of ERISA and the
Code and all other applicable Legal Requirements. Except as reflected in the
Purchaser Disclosure Schedule, no Purchaser Entity has incurred any material
Liability to the Internal Revenue Service or any other Governmental Body with
respect to any Purchaser Plan; and to the Knowledge of Purchaser, Merger Sub
and the fiduciaries and Representatives of Purchaser, no event has occurred,
and no condition or circumstance exists, that would reasonably be expected to
(with or without notice or lapse of time) give rise directly or indirectly to
any such material Liability. To the Knowledge of Purchaser, Merger Sub and
the fiduciaries and Representatives of Purchaser, none of the Purchaser
Entities, nor any Person that is or was an administrator or fiduciary of any
Purchaser Plan (or that acts or has acted as an agent of any of the Purchaser
Entities or any such administrator or fiduciary), has engaged in any
transaction or has otherwise acted or failed to act in a manner that has
subjected or would reasonably be expected to subject any of the Purchaser
Entities to any Liability for Breach of any fiduciary duty or any other duty.
(A) No Metron Employee Benefit Plan currently maintained by any Purchaser
Entity, and no person that is or was an administrator or fiduciary of any
Metron Employee Benefit Plan currently maintained by any Purchaser Entity (or
that acts or has acted as an agent of any such administrator or fiduciary)
and (B) to the Knowledge of Purchaser, no other Purchaser Plan, and no Person
that is or was an administrator or fiduciary of any other Purchaser Plan (or
that acts or has aced as an agent of any such administrator or fiduciary):
(i) has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Code or other applicable
similar Legal Requirements;
(ii) has failed to perform any of the responsibilities or
obligations imposed upon fiduciaries under Title I of ERISA or other applicable
Legal Requirements; or
(iii) has taken any action that (A) may subject such
Purchaser Plan or such Person to any Tax, penalty or Liability relating to any
"prohibited transaction" within the meaning of Section 406 of ERISA or Section
4975 of the Code or (B) may directly or indirectly give rise to or serve as a
basis for the assertion (by any employee or by any other Person) of any claim
under, on behalf of or with respect to such Purchaser Plan.
(f) To the Knowledge of Purchaser and Merger Sub, none of the
Transactions will violate Section 406 of ERISA or Section 4975 of the Code or
other applicable Legal Requirements with respect to any Purchaser Plan.
(g) The Purchaser Entities have not taken any action that (i)
will subject the Kyser ESOP, the Trustee, the Investment Manager, Kyser or the
ESOP Committee to any Tax,
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penalty or Liability relating to any "prohibited transaction" or (ii) would
give rise to or serve as a basis for the assertion by any beneficiary of the
Trust or by any other Person of any claim relating to any "prohibited
transaction."
4.16 ENVIRONMENTAL MATTERS.
(a) None of the Purchaser Entities is liable or potentially
liable for any material response cost or natural resource damages under Section
107(a) of CERCLA, or under any other so-called "superfund" or "superlien" law or
similar Legal Requirement, at or with respect to any site.
(b) Each of the Purchaser Entities is and has at all times been
in compliance with all applicable Environmental Laws, except for failures to be
in compliance that would not reasonably be expected to have a Purchaser Material
Adverse Effect. The Purchaser Entities possess all material permits and other
material Governmental Authorizations required under applicable Environmental
Laws, and each of the Purchaser Entities is and has at all times been in
compliance with the terms and requirements of all such Governmental
Authorizations, except for failures to be in compliance that would not
reasonably be expected to have a Purchaser Material Adverse Effect. Except as
set forth in Part 4.16 of the Purchaser Disclosure Schedule, none of the
Purchaser Entities has ever received, and to the Knowledge of Purchaser, no
current or prior owner of any property leased or controlled by any of the
Purchaser Entities has ever received, any written notice or, to the Knowledge of
Purchaser, any oral communication from any Governmental Body or other Person
regarding any actual, alleged, possible or potential material Liability on the
part of Purchaser arising from or relating to the presence, generation,
manufacture, production, transportation, importation, use, treatment,
refinement, processing, handling, storage, discharge, release, emission or
disposal of any Hazardous Material that has not already been paid or resolved.
No Person has ever commenced or threatened to commence any contribution action
or other Proceeding against any of the Purchaser Entities in connection with any
such actual, alleged, possible or potential material Liability; and to the
Knowledge of Purchaser, no event has occurred, and no condition or circumstance
exists, that would reasonably be expected to directly or indirectly give rise
to, or result in any of the Purchaser Entities becoming subject to, any such
material Liability.
(c) Except as set forth in Part 4.16(c) of the Purchaser
Disclosure Schedule, to the Knowledge of Purchaser and Merger Sub, since June 1,
1995 none of the Purchaser Entities has generated, manufactured, produced,
transported, imported, used, treated, refined, processed, handled, stored,
discharged, released or disposed of any Hazardous Material (whether lawfully or
unlawfully). Except as set forth in Part 4.16(c) of the Purchaser Disclosure
Schedule, to the Knowledge of Purchaser, since June 1, 1995 none of the
Purchaser Entities has permitted any Hazardous Material to be generated,
manufactured, produced, used, treated, refined, processed, handled, stored,
discharged, released or disposed of (whether lawfully or unlawfully):
(i) on or beneath the surface of any real property that
is, or that has at any time been, owned by, leased to, controlled by or used by
any of the Purchaser Entities;
(ii) in or into any surface water, groundwater, soil or
air associated with or adjacent to any such real property; or
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(iii) in or into any well, pit, pond, lagoon, impoundment,
ditch, landfill, building, structure, facility, improvement, installation,
equipment, pipe, pipeline, vehicle or storage container that is or was located
on or beneath the surface of any such real property or that is or has at any
time been owned by, leased to, controlled by or used by any of the Purchaser
Entities.
(d) Except as set forth in Part 4.16 of the Purchaser
Disclosure Schedule, to the Knowledge of Purchaser, all property that is owned
by, leased to, controlled by or used by any of the Purchaser Entities, and all
surface water, groundwater, soil and air associated with or adjacent to such
property:
(i) is free of any Hazardous Material and any harmful
chemical or physical conditions; and
(ii) is free of any environmental contamination of any
nature.
(e) To the Knowledge of Purchaser and Merger Sub, there is no
storage tank that is located on or beneath the surface of any real property
owned by, leased to, controlled by or used by any of the Purchaser Entities.
4.17 INSURANCE.
(a) Each of the Purchaser Entities' insurance policies is valid
and in full force and effect. All of the information contained in the
applications submitted in connection with said policies was (at the times said
applications were submitted) accurate and complete in all material respects, and
all premiums and other amounts due with respect to said policies have been paid
in full on a timely basis except where the failure to pay such premium, on a
timely basis would not reasonably be expected to have a Purchaser Material
Adverse Effect. The nature, scope and dollar amounts of the insurance coverage
provided by said policies are reasonable in the judgment of Purchaser and Merger
Sub to adequately insure the Purchaser Entities in accordance with reasonable
commercial practices.
(b) Except as set forth in Part 4.17(b) of the Purchaser
Disclosure Schedule, (i) there is no pending claim under or based upon any of
the Purchaser Entities' insurance policies; and (ii) to the Knowledge of
Purchaser and Merger Sub, no condition or circumstance exists and no event has
occurred, that would reasonably be expected to (with or without notice or lapse
of time) directly or indirectly give rise to or serve as a basis for any
material claim under any of such policies.
4.18 RELATED PARTY TRANSACTIONS. Except as set forth in
Part 4.18 of the Purchaser Disclosure Schedule or in the Purchaser Financial
Statements and except for claims for employee compensation, benefits and
reimbursement of expenses in the Ordinary Course of Business:
(a) no Related Party of any Purchaser Entity has, and no
Related Party of any Purchaser Entity has at any time since June 1, 1995 had,
any direct or indirect interest of any nature in any material asset used in or
otherwise relating to the business of Purchaser;
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(b) no Related Party of any Purchaser Entity is, or has at any
time since June 1, 1995 been, indebted to any Purchaser Entity for more than
$180,000;
(c) since June 1, 1995, no Related Party of any Purchaser
Entity has entered into, or has had any direct or indirect financial interest
in, any material Contract, transaction or business dealing of any nature
involving any Purchaser Entity;
(d) no Related Party of any Purchaser Entity is competing, or
has at any time since June 1, 1995 competed, directly or indirectly, with any
Purchaser Entity in any market served by any Purchaser Entity;
(e) no Related Party of any Purchaser Entity has asserted or
threatened to assert any material claim or right against any Purchaser Entity;
and
(f) to the Knowledge of any Purchaser Entity, no event has
occurred, and no condition or circumstance exists, that would reasonably be
expected to (with or without notice or lapse of time) directly or indirectly
give rise to or serve as a basis for any material claim or right in favor of any
Related Party of any Purchaser Entity against any Purchaser Entity.
4.19 CERTAIN PAYMENTS, ETC. None of the Purchaser Entities, nor any
officer, employee or agent of the Purchaser Entities or other Person acting
for or on behalf of any of the Purchaser Entities, has at any time, directly
or indirectly:
(a) used any corporate funds of any of the Purchaser Entities
(i) to make any unlawful political contribution or gift or for any other
unlawful purpose relating to any political activity, (ii) to make any unlawful
payment to any governmental official or employee, or (iii) to establish or
maintain any unlawful or unrecorded fund or account of any nature;
(b) made any payoff, influence payment, bribe, kickback or
unlawful payment to any Person;
(c) made any unlawful payment to any Person, or unlawfully
provided any material favor or anything of material value (whether in the form
of property or services, or in any other form) to any Person, for the purpose of
obtaining or paying for (i) favorable treatment in securing business, or (ii)
any other special concession; or
(d) agreed, committed, offered or attempted to take any of the
actions described in clauses "(a)" through "(c)" above.
4.20 PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 4.20(a) of the Purchaser
Disclosure Schedule, there is no pending Proceeding, and to the Knowledge of
Purchaser or Merger Sub, no Person has threatened since June 1, 1995 to commence
any Proceeding: (i) against any Purchaser Entity or any of the assets owned or
used by any Purchaser Entity or (ii) against any Purchaser Entity that
challenges or that may have the effect of preventing, delaying, making illegal
or otherwise interfering with any of the Transactions. Except as set forth in
Part 4.20(a) of the Purchaser Disclosure Schedule, to the Knowledge of Purchaser
and Merger Sub, no event has occurred, and
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no material claim, dispute or other condition or circumstance exists, that
would reasonably be expected to give rise to or serve as a basis for the
commencement of any such Proceeding.
(b) Except as set forth in Part 4.20(b) of the Purchaser
Disclosure Schedule, no Proceeding has been commenced against any of the
Purchaser Entities since June 1, 1995.
(c) Purchaser has identified and made available to Kyser
accurate and complete copies of all pleadings to which the Purchaser Entities
have access that relate to the Proceedings required to be identified in
Parts 4.20(a) and (b) of the Purchaser Disclosure Schedule.
(d) There is no material Order to which any of the Purchaser
Entities or any of the assets owned or used by any of the Purchaser Entities is
subject.
(e) To the Knowledge of Purchaser and Merger Sub, no officer or
employee of any of the Purchaser Entities is subject to any material Order that
prohibits such officer or employee from engaging in or continuing any conduct,
activity or practice relating to any Purchaser Entity's business.
(f) To the Knowledge of Purchaser and Merger Sub, there is no
proposed Order that, if issued or otherwise put into effect, (i) would
reasonably be expected to have a Purchaser Material Adverse Effect or (ii) would
reasonably be expected to have the effect of preventing, delaying, making
illegal or otherwise interfering with any of the Transactions.
4.21 AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) Each of Purchaser and Merger Sub has the requisite
corporate power and authority to enter into and perform its respective
obligations under each of the Transactional Agreements to which it is or is to
become a party at Closing.
(b) The execution, delivery and performance by each of
Purchaser and Merger Sub of each of the Transactional Agreements to which it is
or is to become a party at Closing have been duly authorized by all necessary
corporate action on the part of the Purchaser Entities.
(c) This Agreement constitutes the legal, valid and binding
obligation of Purchaser and Merger Sub, enforceable against Purchaser and Merger
Sub in accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules of
law governing specific performance, injunctive relief and other equitable
remedies.
(d) Upon the execution of each of the other Transactional
Agreements at the Closing, each of such other Transactional Agreements to which
Purchaser or Merger Sub becomes a party will constitute the legal, valid and
binding obligation of Purchaser and Merger Sub, as the case may be, and will be
enforceable against Purchaser and Merger Sub, as the case may be, in accordance
with its terms, subject to (i) laws of general application relating to
bankruptcy, insolvency and the relief of debtors, and (ii) rules of law
governing specific performance, injunctive relief and other equitable remedies.
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(e) The Board of Directors and Shareholders of Merger Sub (by
written consent) unanimously approved the Merger.
4.22 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part
4.22 of the Purchaser Disclosure Schedule, neither the execution and delivery of
any of the Transactional Agreements by Purchaser or Merger Sub, nor the
consummation or performance by Purchaser or Merger Sub of the Merger or any of
the other Transactions, will directly or indirectly (with or without notice or
lapse of time):
(a) contravene, conflict with or result in a violation of
(i) any of the provisions of Purchaser's articles of association; (ii) any of
the provisions of Merger Sub's Articles of Incorporation or Bylaws; (iii) any
resolution adopted by Purchaser's shareholders or Purchaser's Managing Board or
Supervisory Board; or (iv) any resolution adopted by Merger Sub's stockholders
or board of directors;
(b) materially contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of the Transactions or to exercise any remedy or obtain any relief
under, any material Legal Requirement or Order to which any of the Purchaser
Entities or any of the assets owned or used by any of the Purchaser Entities is
subject;
(c) contravene, conflict with or result in a violation of any
of the terms or requirements of, or give any Governmental Body the right to
revoke, withdraw, suspend, cancel, terminate or modify, any material
Governmental Authorization that is held by any of the Purchaser Entities, or any
of their employees that relates to any of the Purchaser Entities' businesses or
to any of the assets owned or used by any of the Purchaser Entities;
(d) contravene, conflict with or result in a violation or
Breach of, or result in a default under, any provision of any Purchaser Contract
except any Purchaser Excluded Contract;
(e) give any Person the right to (i) declare a default or
exercise any remedy under any Purchaser Contract except a Purchaser Excluded
Contract, (ii) accelerate the maturity or performance of any Purchaser Contract
except a Purchaser Excluded Contract or (iii) cancel, terminate or modify any
Purchaser Contract except a Purchaser Excluded Contract; or
(f) result in the imposition or creation of any Encumbrance
upon or with respect to any asset owned or used by any of the Purchaser Entities
that would reasonably be expected to have a Purchaser Material Adverse Effect.
Except as may be required under the HSR Act, a notification to be made to the
Dutch Securities Board (STICHTING TOEZICHT EFFECTENVERKEER) pursuant to
section 3, paragraph 1 of the Act on the Supervision of the Securities Trade
(WET TOEZICHT EFFECTENVERKEER 1995) and article 3 of the Exemption Regulation
(VRIJSTELLINGSREGELING WET TOEZICHT EFFECTENVERKEER 1995), and as may be
required under state securities or "blue sky" laws, none of the Purchaser
Entities was, is or will be required to make any filing with or give any notice
to, or to obtain any Consent from, any Person in connection with its execution
and delivery of any of the Transactional Agreements or the consummation or
performance of any of the Transactions, except for Consents which, if not
obtained, would not reasonably be expected to cause a Purchaser Material Adverse
Effect.
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Without limiting the generality of the foregoing, no filing, notice or
Consent is required under the WTE (other than the aforementioned notification
to be made to the Dutch Securities Board), the WOR or the Merger Code in
connection with Purchaser's execution and delivery of the Transactional
Agreements or the consummation or performance of any of the Transactions.
4.23 BROKERS. None of the Purchaser Entities has agreed or
become obligated to pay, or taken any action that might result in any Person
claiming to be entitled to receive, any brokerage commission, finder's fee or
similar commission or fee in connection with any of the Transactions.
4.24 ACCOUNTING MATTERS. To the Knowledge of Purchaser and
Merger Sub, neither Purchaser, Merger Sub nor any of its affiliates has taken or
agreed to, or plans to, take any action that would prevent Purchaser from
accounting for the Merger as a "pooling of interests" under APB Opinion No. 16.
4.25 VALID ISSUANCE. The issuance by Purchaser to the
Stockholders of the shares of Purchaser Capital Stock to be issued in the Merger
has been duly authorized by all requisite corporate action on the part of
Purchaser. The Purchaser Capital Stock to be issued in the Merger will, when
issued after the Effective Time in accordance with the provisions of this
Agreement, be validly issued, fully paid and nonassessable and will be issued in
compliance with all applicable legal requirements.
(a) All preemptive rights with respect to such issuance of
shares of Purchaser Capital Stock have been validly excluded or waived.
(b) The offering, issuance and sale of the shares of Purchaser
Capital Stock to be issued by Purchaser complies with all applicable
requirements of the WTE. Without limiting the generality of the foregoing, no
prospectus complying with the requirements of Article 3, paragraph 2, sub b of
the WTE, is required to be made generally available in connection with such
issuance, offer or sale, and all statements required to be submitted to the
supervising authority have been timely submitted.
(c) All formalities of book 2 of the CC in connection with the
issuance of such shares have been duly complied with or will be duly complied
with prior to the Closing.
4.26 EMPLOYEES. All claims arising from former contracts of
employment with any Purchaser Entity have been settled or met. To the Knowledge
of Purchaser and Merger Sub, there is no person previously employed by any
Purchaser Entity who now has or in the future may have a reasonable basis for
contesting a dismissal or notice thereof given to him by any Purchaser Entity.
4.27 STOCK OPTION PLAN.
(a) Purchaser has previously made available to Kyser and the
Signing Stockholders a true and correct copy of the "Metron Semiconductors
Europa B.V. Employee Stock Option Plan" (the "Plan"). The Plan is in full
force and effect and constitutes the valid and binding obligation of
Purchaser vis-a-vis any Employee ( as defined in the Plan) who validly enters
into a Stock Option Agreement with Purchaser, enforceable against Purchaser in
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accordance with its terms, subject to (i) laws of general application
relating to bankruptcy, insolvency and the relief of debtors, and (ii) rules
of law governing specific performance, injunctive relief and other equitable
remedies.
(b) Each grant of an option to employees of Kyser to acquire
shares of Purchaser Capital Stock pursuant to the Plan which will be made on or
after Closing as set forth in Section 8.13 has been duly authorized by all
necessary corporate action on the part of Purchaser and each agreement to be
entered into by Purchaser evidencing the grant of such option as provided in
Article 6 of the Plan will when executed and delivered by Purchaser at the
Closing constitute the valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with its terms subject to (i) laws of general
application relating to bankruptcy, insolvency and the relief of debtors, and
(ii) rules of law governing specific performance, injunctive relief and other
equitable remedies. All preemptive rights with respect to the grant of such
options, and the issuance of shares of Purchaser Capital Stock upon exercise of
such options, have been duly excluded or waived.
(c) Upon exercise of any option referred to in this Section
4.27 in accordance with its terms, and payment to Purchaser of the exercise
price for the shares of Purchaser Capital Stock issuable upon exercise of such
option in accordance with the terms of such option, the shares of Purchaser
Capital Stock issued upon exercise of such option will be validly issued, fully
paid and non-assessable.
4.28 INFORMATION STATEMENT/OFFERING MEMORANDUM. None of the
information supplied or to be supplied by or on behalf of Purchaser or Merger
Sub for inclusion in the Disclosure Document, will, at the time the
Disclosure Document is mailed to the Stockholders of Kyser or at the time of
the Kyser Stockholders' 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 the light of the
circumstances under which they are made, not misleading.
4.29 PURCHASER OBLIGATIONS UNDER THE KYSER ESOP. Each share of
Purchaser Capital Stock held by the Trust pursuant to the terms of the Kyser
ESOP immediately after Closing has been duly authorized by all necessary
corporate action on the part of Purchaser, and the terms of the Kyser ESOP and
Trust constitute the valid and binding obligation of Purchaser, enforceable
against Purchaser in accordance with the terms of the Kyser ESOP and Trust.
SECTION 5. CERTAIN COVENANTS
5.1 ACCESS AND INVESTIGATION. At all times during the
Pre-Closing Period:
(a) Kyser shall provide Purchaser and its Representatives with
reasonable access, during normal business hours and upon reasonable prior
notice, to Kyser's Representatives, personnel and assets and to information
reasonably requested such as existing books, records, Tax Returns, work papers
and other documents and information relating to Kyser;
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(b) Kyser shall provide Purchaser with such copies of existing
books, records, Tax Returns, work papers and other documents and information
relating to Kyser as Purchaser may reasonably request in good faith; and
(c) Kyser shall compile and provide Purchaser with such
additional financial, operating and other data and information regarding Kyser
as Purchaser may reasonably request in good faith. Without limiting the
generality of the foregoing, during the Pre-Closing Period, Kyser shall promptly
provide Purchaser with copies of:
(i) all material operating and financial reports
prepared by Kyser for its senior management, including (A) copies of the
unaudited monthly balance sheets of Kyser and the related unaudited monthly
income statements of operations prepared for Kyser senior management and (B)
copies of any sales forecasts, marketing plans, development plans, discount
reports, write-off reports, hiring reports and capital expenditure reports
prepared for Kyser senior management;
(ii) any written materials or communications sent by or
on behalf of Kyser to its stockholders generally in their capacities as such or
to any of the beneficiaries of the Trust in their capacities as such;
(iii) any material notice, document or other communication
sent by or on behalf of Kyser to any party to any Kyser Contract or sent to
Kyser by any party to any Kyser Contract (other than any communication that is
of the type sent in the Ordinary Course of Business);
(iv) any material notice, report or other document filed
with or sent to any Governmental Body in connection with the Merger or any of
the other transactions contemplated by this Agreement; and
(v) any material notice, report or other document
received by Kyser from any Governmental Body.
5.2 OPERATION OF BUSINESS. During the Pre-Closing Period,
except (i) as contemplated by this Agreement, (ii) as expressly described in the
Kyser Disclosure Schedule, (iii) as required by the Kyser ESOP or (iv) with the
express written consent of Purchaser (which consent shall not be unreasonably
withheld):
(a) Kyser shall conduct its operations exclusively in the
Ordinary Course of Business and in a substantially similar manner as such
operations have been conducted prior to the date of this Agreement;
(b) Kyser shall use its Best Efforts to preserve intact its
current business organization, keeps available the services of its current
officers and employees and maintains its relations and good will with suppliers,
customers, landlords, creditors, licensors, licensees, employees and other
Persons having business relationships with Kyser;
(c) Kyser shall use its Best Efforts to keep in full force all
insurance policies identified in Part 2.22(a) of the Kyser Disclosure Schedule;
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(d) Kyser shall immediately notify Purchaser of any inquiry,
proposal or offer received by Kyser, or of which Kyser has Knowledge, from any
Person relating to any Acquisition Transaction with respect to Kyser;
(e) INTENTIONALLY OMITTED;
(f) Except as may be required by the terms of the Kyser ESOP,
Kyser shall not (i) declare, accrue, set aside or pay any dividend or make any
other distribution in respect of any shares of its capital stock, or (ii)
repurchase, redeem or otherwise reacquire any shares of its capital stock;
(g) Kyser shall not sell or otherwise issue any shares of
capital stock or any other securities;
(h) Kyser shall not amend its articles of incorporation or
bylaws, and shall not effect any recapitalization, reclassification of shares,
stock split, reverse stock split or similar transaction;
(i) Kyser shall not form any subsidiary or acquire any equity
interest or other interest in any other Entity;
(j) Kyser shall not make any capital expenditure (which term
does not include inventory purchases), except for any capital expenditure
that is made in the Ordinary Course of Business and that does not exceed
$25,000 (in addition, once Kyser has made aggregate capital expenditures
during the Pre-Closing Period that exceed $100,000, it must seek Purchaser's
consent for any additional capital expenditures in increments of $25,000);
(k) Kyser shall not (i) materially and adversely amend any
Kyser Contract or (ii) enter into or permit any of the assets owned or used by
Kyser to become bound by any Contract, except in each such case for any Kyser
Excluded Contract;
(l) Kyser shall (i) not lend money to any Person and (ii) use
its Best Efforts not to incur, assume or otherwise become subject to any
Liability, other than in the Ordinary Course of Business;
(m) except for Amendment Number Two to the Kyser ESOP and
Amendment Number One to the Trust, Kyser shall not (i) amend any Kyser Plan,
(ii) establish or adopt any Employee Benefit Plan, or (iii) except as currently
accrued or scheduled to accrue pursuant to arrangements currently in effect, pay
or agree to pay any bonus or make any profit-sharing or similar payment to, or
increase the amount of the wages, salary, commissions, fringe benefits or other
compensation or remuneration payable to, any of its directors, officers or
employees which exceed $10,000 to any director, officer or employee;
(n) Kyser shall not (i) change any of its methods of accounting
or accounting practices in any material respect or (ii) take any action that
would preclude Purchaser from accounting for the Merger as a "pooling of
interests" in accordance with APB Opinion No. 16; provided, however, that no
action or matter disclosed in the Kyser Disclosure Schedule or
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required by the Transactional Agreements shall be deemed to constitute a
breach or violation of this covenant;
(o) Kyser shall not make any material Tax election outside the
Ordinary Course of Business;
(p) Kyser shall not commence any Proceeding outside the
Ordinary Course of Business;
(q) Kyser shall not enter into any transaction or take any
other action outside the Ordinary Course of Business;
(r) Kyser shall use its Best Efforts not to enter into any
transaction or take any other action that would cause or constitute a material
Breach of any representation or warranty made by Kyser in this Agreement; and
(s) Kyser shall not agree, commit or offer (in writing or
otherwise) to take any of the actions described in clauses "(f)" through "(r)"
of this Section 5.2.
5.3 NOTIFICATION; UPDATES TO KYSER DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, Kyser shall promptly notify
Purchaser in writing of:
(i) the discovery by Kyser of any event, condition, fact
or circumstance that occurred or existed on or prior to the date of this
Agreement and that caused or constitutes a material Breach of any representation
or warranty made by Kyser or, after execution of the Joinder Agreement, any of
the Signing Stockholders in this Agreement;
(ii) the discovery by Kyser of any event, condition, fact
or circumstance that occurs, arises or exists after the date of this Agreement
and that would cause or constitute a material Breach of any representation or
warranty made by Purchaser, Kyser or, after execution of the Joinder Agreement,
any of the Signing Stockholders in this Agreement if (A) such representation or
warranty had been made as of the time of the occurrence, existence or discovery
of such event, condition, fact or circumstance (except for representations and
warranties that expressly speak as of a specified date), or (B) such event,
condition, fact or circumstance had occurred, arisen or existed on or prior to
the date of this Agreement;
(iii) the discovery by Kyser of any material Breach of any
covenant or obligation of Purchaser, Kyser or, after execution of the Joinder
Agreement, any of the Signing Stockholders pursuant to this Agreement; and
(iv) the discovery by Kyser of any event, condition, fact
or circumstance that makes the timely satisfaction of any of the conditions set
forth in Section 9 or Section 10 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 5.3(a) requires any change in the
Kyser Disclosure Schedule, or if
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any such event, condition, fact or circumstance would require such a change
assuming the Kyser Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance (except for representations and warranties that expressly speak
as of a specified date), then Kyser shall promptly deliver to Purchaser an
update to the Kyser Disclosure Schedule specifying such change. No such
update shall be deemed to supplement or amend the Kyser Disclosure Schedule
for the purpose of (i) determining the accuracy as of the date of this
Agreement of any of the representations and warranties made by Kyser or after
execution of the Joinder Agreement, any of the Signing Stockholders in this
Agreement or (ii) determining whether any of the conditions set forth in
Section 9 has been satisfied.
5.4 NO NEGOTIATION. During the Pre-Closing Period, each of
Kyser and each of the Signing Stockholders severally agrees not to directly or
indirectly:
(a) solicit or encourage the initiation of any inquiry,
proposal or offer from any Person (other than Purchaser) relating to any
Acquisition Transaction with respect to Kyser; or
(b) participate in any discussions or negotiations with, or
provide any non-public information to, any Person (other than Purchaser)
relating to any Acquisition Transaction with respect to Kyser.
5.5 KYSER STOCKHOLDERS' MEETING. Kyser shall, in accordance
with its articles of incorporation and bylaws and the applicable requirements of
the Nevada Revised Statutes, call and hold a special meeting of its stockholders
for the purpose of permitting the stockholders of Kyser to consider and to vote
upon the Merger and this Agreement (the "Kyser Stockholders' Meeting"). The
Kyser Stockholders' Meeting will be held as promptly as practicable and in any
event within forty five (45) days after the date of this Agreement. Kyser shall
ensure that the Kyser Stockholders' Meeting is called, noticed, convened, held
and conducted in compliance with all applicable Legal Requirements. Kyser shall
cause a copy of the Disclosure Document to be delivered to each stockholder of
Kyser who is entitled to vote at the Kyser Stockholders' Meeting. Gregory M.
Claeys, C. Garry Hendricks and Boyd E. Hurst, Jr. shall cause all shares of the
capital stock of Kyser that are owned, of record, by such Persons on the record
date for the Kyser Stockholders' Meeting to be voted in favor of the Merger and
this Agreement at such meeting.
SECTION 6. PRE-CLOSING COVENANTS OF SIGNING STOCKHOLDERS
Each Signing Stockholder severally agrees that, during the Pre-Closing
Period:
(a) such Signing Stockholder shall not directly or indirectly
sell or otherwise transfer, or offer, agree or commit (in writing or otherwise)
to sell or otherwise transfer, any of the Shares held by such Signing
Stockholder or any interest in or right relating to any of such Shares unless
required under the Kyser ESOP;
(b) such Signing Stockholder shall not permit, offer, agree or
commit (in writing or otherwise) to permit, any of the Shares held by such
Signing Stockholder to become
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subject, directly or indirectly, to any Encumbrance other than under the
terms of the Kyser ESOP or the Encumbrances listed on Part 3.1 of the Signing
Stockholders' Disclosure Schedule;
(c) such Signing Stockholder shall not take any action that
would (i) cause or constitute a Breach of any representation or warranty made by
such Signing Stockholder in this Agreement or in the Signing Stockholder Closing
Certificate or (ii) preclude Purchaser from accounting for the Merger as a
"pooling of interests" under APB Opinion No. 16; provided, however, that no
action or matter disclosed in the Kyser Disclosure Schedule or the Signing
Stockholders' Disclosure Schedule or required by the Transactional Agreements
shall be deemed to constitute a breach or violation of this covenant; and
(d) such Signing Stockholder shall not agree, commit or offer
(in writing or otherwise) to take any of the actions described in clauses (a)
through (c) of this Section 6 unless required by the Kyser ESOP.
SECTION 7. PRE-CLOSING COVENANTS OF PURCHASER AND MERGER SUB
7.1 ACCESS AND INVESTIGATION. Purchaser and Merger Sub shall
ensure that, at all times during the Pre-Closing Period:
(a) the Purchaser Entities and their Representatives provide
Kyser, the Signing Stockholders and their Representatives with reasonable
access, during normal business hours and upon reasonable prior notice, to
Purchaser's and Merger Sub's Representatives, personnel and assets and to
information reasonably requested such as existing books, records, Tax Returns,
work papers and other documents and information relating to the Purchaser
Entities;
(b) Purchaser, Merger Sub and their Representatives provide
Kyser with such copies of existing books, records, Tax Returns, work papers and
other documents and information relating to the Purchaser Entities as Kyser or
the Signing Stockholders may reasonably request in good faith; and
(c) Purchaser, Merger Sub and their Representatives compile and
provide Kyser with such additional financial, operating and other data and
information regarding any of the Purchaser Entities as Kyser, the Signing
Stockholders or their respective Representatives may reasonably request in good
faith. Without limiting the generality of the foregoing, during the Pre-Closing
Period, Purchaser and Merger Sub shall promptly provide Kyser with copies of any
material notice, report or other document filed with or sent to any Governmental
Body in connection with the Merger or any of the other transactions contemplated
by this Agreement.
7.2 OPERATION OF BUSINESS. Purchaser and Merger Sub shall ensure
that, during the Pre-Closing Period, except (i) as contemplated by this
Agreement, (ii) as expressly described in the Purchaser Disclosure Schedule
or (iii) with the express written consent of Kyser, which consent shall not
be unreasonably withheld:
(a) each of the Purchaser Entities conducts its operations
exclusively in the Ordinary Course of Business and in a substantially similar
manner as such operations have been conducted prior to the date of this
Agreement;
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(b) Purchaser does not (i) declare, accrue, set aside or pay
any dividend or make any other distribution in respect of any shares of its
capital stock, or (ii) repurchase, redeem or otherwise reacquire any shares of
its capital stock;
(c) None of the Purchaser Entities sells or otherwise issues
any shares of capital stock or any other securities of Purchaser, or cooperates
with the issuance of depositary receipts (CERTIFICATEN) for any shares of
capital stock of Purchaser, in each case (other than option grants in the
Ordinary Course of Business) except pursuant to obligations outstanding on the
date of this Agreement as described in Part 4.3(b) of the Purchaser Disclosure
Schedule;
(d) Purchaser does not amend its articles of association,
Merger Sub does not amend its articles of incorporation, and no Purchaser Entity
effects or becomes a party to any Acquisition Transaction, recapitalization,
reclassification of shares, stock split, reverse stock split or similar
transaction;
(e) none of the Purchaser Entities forms any subsidiary or
acquires any equity interest or other interest in any other Entity;
(f) none of the Purchaser Entities makes any capital
expenditure, except for capital expenditures that are made in the Ordinary
Course of Business and that do not exceed $180,000;
(g) none of the Purchaser Entities materially and adversely
amends any Purchaser Contract, or enters into or permits any material amount of
the assets owned or used by it to become bound by any Contract, except in each
case for any Purchaser Excluded Contract;
(h) none of the Purchaser Entities (i) lends money to any
Person or (ii) incurs, assumes or otherwise becomes subject to any Liability,
except for liabilities (of the type required to be reflected in the
"liabilities" section of a balance sheet prepared in accordance with GAAP)
incurred in the Ordinary Course of Business;
(i) none of the Purchaser Entities amends, establishes or
adopts any Employee Benefit Plan, or pays or agrees to pay any bonus or makes
any profit-sharing or similar payment to, or increases the amount of the wages,
salary, commissions, fringe benefits or other compensation or remuneration
payable to, any of its directors, officers or employees other than in the
Ordinary Course of Business;
(j) none of the Purchaser Entities (i) changes any of its
methods of accounting or accounting practices in any material respect or
(ii) takes any action that, to the Knowledge of Purchaser or Merger Sub, would
preclude Purchaser from accounting for the Merger as a "pooling of interests" in
accordance with APB Opinion No. 16;
(k) none of the Purchaser Entities makes any material Tax
election outside the Ordinary Course of Business;
(l) none of the Purchaser Entities enters into any transaction
or takes any other action outside the Ordinary Course of Business;
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(m) none of the Purchaser Entities enters into any transaction
or takes any other action that would cause or constitute a Breach of any
representation or warranty made by Purchaser in this Agreement;
(n) all of the Purchaser Entities preserve intact their current
business organization, keep available the services of their current officers and
employees and maintain their relations and good will with suppliers, customers,
landlords, creditors, licensors, licensees, employees and other Persons having
business relationships with the Purchaser Entities;
(o) Purchaser shall use its Best Efforts to keep in full force
all insurance policies currently in effect with respect to the Purchaser
Entities or to obtain a comparable replacement policy with respect to any
insurance policy that ceases to be in force; and
(p) none of the Purchaser Entities agrees, commits or offers
(in writing or otherwise) to take any of the actions described in clauses "(b)"
through "(m)" of this Section 7.2.
7.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, Purchaser and Merger Sub
shall promptly notify Kyser in writing of:
(i) the discovery by Purchaser or Merger Sub of any
event, condition, fact or circumstance that occurred or existed on or prior to
the date of this Agreement and that caused or constitutes a Breach of any
representation or warranty made by Purchaser, Merger Sub, Kyser or any Signing
Stockholder in this Agreement;
(ii) the discovery by Purchaser or Merger Sub of any
event, condition, fact or circumstance that occurs, arises or exists after the
date of this Agreement and that would cause or constitute a Breach of any
representation or warranty made by Kyser, any Signing Stockholder Purchaser or
Merger Sub in this Agreement if (A) such representation or warranty had been
made as of the time of the occurrence, existence or discovery of such event,
condition, fact or circumstance (except for representations and warranties that
expressly speak as of a specified date) or (B) such event, condition, fact or
circumstance had occurred, arisen or existed on or prior to the date of this
Agreement;
(iii) the discovery by Purchaser or Merger Sub of any
Breach of any covenant or obligation of Purchaser, Kyser any Signing Stockholder
or Merger Sub; and
(iv) the discovery by Purchaser or Merger Sub of any
event, condition, fact or circumstance that makes the timely satisfaction of any
of the conditions set forth in Section 9 or Section 10 impossible or unlikely.
(b) If any event, condition, fact or circumstance that is
required to be disclosed pursuant to Section 7.3(a) requires any change in
the Purchaser Disclosure Schedule, or if any such event, condition, fact or
circumstance would require such a change assuming the Purchaser Disclosure
Schedule were dated as of the date of the occurrence, existence or discovery
of such event, condition, fact or circumstance, then Purchaser and Merger Sub
shall promptly deliver to Kyser and the Signing Stockholders an update to the
Purchaser Disclosure
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Schedule specifying such change. No such update shall be deemed to
supplement or amend the Purchaser Disclosure Schedule for the purpose of (i)
determining the accuracy as of the date of this Agreement of any of the
representations and warranties made by Purchaser or Merger Sub in this
Agreement or (ii) determining whether any of the conditions set forth in
Section 10 has been satisfied.
SECTION 8. ADDITIONAL COVENANTS OF THE PARTIES
8.1 FILING AND CONSENTS. As promptly as practicable after the
execution of this Agreement, each party to this Agreement (a) shall make all
filings (if any) and give all notices (if any) required to be made and given
by such party in connection with the Merger and the other transactions
contemplated by this Agreement, and (b) shall use his, her or its Best
Efforts to obtain each Consent (if any) required to be obtained (pursuant to
any applicable Legal Requirement or Contract, or otherwise) by such party in
connection with the Merger or any of the other transactions contemplated by
this Agreement. Kyser, Purchaser and Merger Sub shall promptly deliver to
the other a copy of each such filing made, each such notice given and each
such Consent obtained by the delivering party during the Pre-Closing Period.
8.2 CONFIDENTIALITY. During the Pre-Closing Period, except as
required by law, no press release or public announcement concerning the
Transactions shall be issued, given, made or otherwise disseminated by Kyser
or any of the Signing Stockholders without the approval of Purchaser, and no
press release or public announcement concerning the Transactions shall be
issued, given, made or otherwise disseminated by Purchaser or Merger Sub
without the approval of Kyser. The confidentiality agreements between Kyser
and Purchaser, dated as of February 27, 1997 (the "Confidentiality
Agreements"), shall continue in full force and effect. During the
Pre-Closing Period, if a party is required by law to make any disclosure
regarding the Transactions, such party shall advise the other parties, at
least five business days before making such disclosure, of the nature and
content of the intended disclosure.
8.3 CONTINUITY OF INTEREST CERTIFICATES. Each Signing
Stockholder shall execute and deliver to Kyser at or prior to Closing a
Continuity of Interest Certificate in substantially the form of Exhibit I-2.
8.4 TAX MATTERS. At or prior to the Closing, (a) Kyser shall
execute and deliver to Cooley Godward LLP and to Strasburger & Price, L.L.P.
a tax representation letter in substantially the form of Exhibit X and Kyser
shall also deliver Continuity of Interest Certificates executed by each of
the Signing Stockholders in substantially the form of Exhibit I-2 (which will
be used in connection with the legal opinions contemplated by Sections 9.5(l)
and 10.5(e)) and (b) Purchaser shall execute and deliver to Cooley Godward
LLP and to Strasburger & Price, L.L.P. a tax representation letter in
substantially the form of Exhibit Y (which will be used in connection with
the legal opinions contemplated by Sections 9.5(l) and 10.5(e)).
8.5 EMPLOYMENT AGREEMENTS. At or prior to the Closing, Gregory
M. Claeys and Kyser shall execute and deliver to Purchaser an Employment
Agreement substantially in the form of Exhibit K, C. Garry Hendricks and
Kyser shall execute and deliver to Purchaser an Employment Agreement
substantially in the form of Exhibit L, Boyd E. Hurst, Jr. and Kyser shall
execute and deliver to Purchaser an Employment Agreement substantially in the
form of
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Exhibit M and Jean Benham and Kyser shall execute and deliver to Purchaser an
Employment Agreement substantially in the form of Exhibit N.
8.6 RELEASE. At or prior to the Closing, each Signing
Stockholder shall execute and deliver to Purchaser a Release substantially in
the form of Exhibit O-1 or O-2, as applicable.
8.7 CLOSING CERTIFICATES. At or prior to the Closing, Kyser and
each Signing Stockholder shall execute and deliver to Purchaser the
certificates required by Section 9.5(n) and (o), respectively.
8.8 PROHIBITED TRANSACTIONS. The Purchaser Entities shall not
take any action that (i) will subject the Kyser ESOP, the Trustee, the
Investment Manager, Kyser or the ESOP Committee to any Tax, penalty or
Liability relating to any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code or (ii) would give rise to
or serve as a legal basis for the assertion by any participant or beneficiary
of the Trust or by any other Person of any claim relating to any such
"prohibited transaction."
8.9 ACCESSION AGREEMENT. At or prior to the Closing, Purchaser
and each Signing Stockholder shall execute and deliver the Accession
Agreement substantially in the form of Exhibit W-1.
8.10 FIRPTA MATTERS. At the Closing, (a) Kyser shall deliver to
Purchaser a statement (in such form as may be reasonably requested by counsel
to Purchaser) conforming to the requirements of Section 1.897 - 2(h)(1)(i) of
the United States Treasury Regulations, and (b) Kyser shall mail to the
Internal Revenue Service the notification required under Section 1.897 -
2(h)(2) of the United States Treasury Regulations.
8.11 BEST EFFORTS. During the Pre-Closing Period, (a) Kyser and
the Signing Stockholders severally agree to use their respective Best Efforts
to cause the conditions set forth in Section 9 to be satisfied, and (b)
Purchaser and Merger Sub shall use their Best Efforts to cause the conditions
set forth in Section 10 to be satisfied.
8.12 TAX-FREE REORGANIZATION. Purchaser, Merger Sub and Kyser
shall take no action during the Pre-Closing Period or at or at any time after
the Closing (i) that results in the Merger failing to qualify as a
reorganization under Sections 368(a)(1)(A) and 368(a)(2)(E) of the Code or
(ii) results in any exchange of Shares by any of the Stockholders for shares
of Purchaser Capital Stock in the Merger being treated as a taxable exchange
or taxable sale of such Shares, either as required to be reported on any Tax
Return, as required to be reported on any amended Tax Return, or as adjusted
pursuant to any audit or examination of any Tax Return by a Governmental
Body. Purchaser, Merger Sub and Kyser agree that Kyser will satisfy all
reporting and disclosure requirements applicable to Kyser, and that Purchaser
and Merger Sub will satisfy all reporting and disclosure requirements
applicable to Purchaser and Merger Sub, that are imposed under the Code, the
United States Treasury Regulations or published guidance from the United
States Internal Revenue Service necessary to preserve the nontaxability to
all of the Stockholders of each conversion of Shares held by any of the
Stockholders into shares of Purchaser Capital Stock in the Merger, including
without limitation proper filing by Kyser of the statement required under
United States Treasury Regulation Section 1.367(a)-3(c)(6), proper
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compilation and filing by Kyser of the information required under United
States Treasury Regulation Section 1.367(a)-3(c)(7), and prompt reporting to
each Stockholder by Kyser, Purchaser and Merger Sub regarding any disposition
of any property that is in violation of this Agreement because it would cause
recognition of gain under any gain recognition agreements filed by any of the
Stockholders pursuant to the requirements of United States Treasury
Regulation Section 1.367(a)-3(c)(1)(iii) as required so that the conversion
of Shares into shares of Purchaser Capital Stock in the Merger will not be
subject to gain recognition by reason of the application of the provisions of
Section 367 of the Code.
8.13 OPTION GRANTS. Effective as of the Closing, Purchaser shall
cause certain employees of Kyser to be granted as of the Closing Date options
to acquire shares of Purchaser Capital Stock at an exercise price per share
equal to the Fair Market Value per Share of Purchaser Capital Stock, subject
to vesting and other terms and conditions applicable to grants under
Purchaser's Employee Stock Option Plan. The number of shares subject to such
options and the allocation of such shares among employees of Kyser shall be
consistent with Purchaser's prior practices with respect to option grants to
its existing employees.
8.14 PROHIBITIONS AGAINST TRANSFER. Each Signing Stockholder, to
the extent permitted by law, severally covenants and agrees that such Signing
Stockholder shall not effect any sale, transfer or other disposition or
pledge or hypothecation of any of the Purchaser Capital Stock that he, she or
it is to receive in the Merger unless such sale, transfer or other
disposition or pledge or hypothecation is in compliance with applicable Dutch
securities laws and:
(a) such sale, transfer or other disposition has been
registered under the Act;
(b) such sale, transfer or other disposition is made in
conformity with the requirements of Rule 144 under the Act, as evidenced by a
broker's letter and a representation letter executed by such Signing Stockholder
(reasonably satisfactory in form and content to Purchaser) stating that such
requirements have been met;
(c) such sale, transfer or other disposition is otherwise
exempt from registration under the Act;
(d) an authorized representative of the SEC shall have rendered
written advice to such Signing Stockholder to the effect that the SEC would take
no action, or that the staff of the SEC would not recommend that the SEC take
action, with respect to such sale, transfer or other disposition, and a copy of
such written advice and all other related communications with the SEC shall have
been delivered to Purchaser; or
(e) such sale, transfer or other disposition is made pursuant
to the terms of the Kyser ESOP.
8.15 POOLING. After Closing, the transactions contemplated by
this Agreement shall be accounted for by Purchaser as a pooling of interests
under APB Opinion No. 16. Purchaser shall publish financial results covering at
least thirty days of post-Merger combined operations as soon as reasonably
practicable but in no event later than October 30, 1998.
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8.16 DIRECTOR AND OFFICER INDEMNIFICATION. Purchaser and Merger
Sub covenant and agree that, from and after Closing, it shall cause Kyser to
indemnify, hold harmless and advance expenses to each Person who is or was a
director and/or officer of Kyser, a member of the ESOP Committee or a
trustees or other fiduciaries of the Trust or the Kyser ESOP, with respect to
any Proceeding, Liability or claim arising out of or relating to such Person
serving or having served in any such capacity prior to the Effective Time, to
the extent that such Person is entitled to such indemnification, hold
harmless and expense advances pursuant to and in accordance with (i) the
provisions of the articles of incorporation or bylaws of Kyser as in effect
at the Closing, (ii) Nevada law, (iii) any written indemnification agreement
disclosed in the Kyser Disclosure Schedule, and/or (iv) the provisions of the
Kyser ESOP or the Trust as in effect at the Closing.
8.17 KYSER ESOP DISSENTER'S RIGHTS. Unless (i) the Trustee or
Investment Manager of the Kyser ESOP determines in the exercise of his or its
fiduciary duties under ERISA to vote against the Merger or exercise and
perfect dissenters' rights under Section 78,300 ET AL. of the Nevada Revised
Statutes with respect to the shares of Kyser Common Stock held of record by
the Trust, (ii) the required action under this covenant would result in a
violation of the terms of the Kyser ESOP or the Trust or (iii) the required
action under this covenant would result in a prohibited transaction under
Section 406 of ERISA or Section 4975 of the Code, the Trustee will not
provide the written consent ("Written Consent") of the stockholder of record
required by Section 92A.400(2) of the Nevada Revised Statutes in the event a
participant in the Kyser ESOP ("Participant") desires to exercise dissenters'
rights under Section 78,300 ET AL. of the Nevada Revised Statutes in such
Participant's individual capacity with respect to all or part of his or her
shares of Kyser Common Stock allocated to his or her accounts under the Kyser
ESOP and allocated to his or her participant employer securities account (as
defined in the Kyser ESOP) under the Kyser ESOP if such Written Consent would
result in the failure to satisfy the conditions to Closing set forth in
Section 9.4(a) of this Agreement.
8.18 RECOMMENDATION OF SUPERVISORY BOARD MEMBERS. Prior to the
Closing, Purchaser shall procure the adoption of a resolution of Purchaser's
Supervisory Board as referred to in Section 10.4. The next general meeting
of the shareholders of Metron shall be held no later than December 31, 1998.
8.19 CORPORATE ACTION. Prior to the Closing, the Purchaser shall
take all such corporate action (including without limitation the adoption of
appropriate resolutions of Purchaser's Supervisory Board) as shall be
necessary to ensure that the representations and warranties of the Purchaser
contained in Sections 4.25(a) and 4.27(b) are true and correct at the Closing.
8.20 RECORDS RETENTION; ACCESS FOLLOWING CLOSING.
(a) Purchaser, Kyser and the Signing Stockholders agree that so
long as any books, records and files, including Tax Records relating to the
business of Kyser (collectively, the "Business Records") retained by the Signing
Stockholders, or the Business Records retained by Kyser or delivered to the
control of the Purchaser pursuant to this Agreement, remain in existence and
available, each party (considering for purposes of this Section 8.20, the
Signing Stockholders (one or more) as one party, and the Purchaser and Kyser as
the other party) (at its expense) shall have the right upon prior notice to
inspect and make copies of the same at any
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time during business hours for any proper purpose. Each party shall
undertake reasonable measures to (i) preserve in good order the Business
Records retained by such party, (ii) not destroy or allow the destruction of
any such Business Records without first offering in writing to deliver them
to the other party, (iii) each retain and provide the other party with any
records or other information relating to liability for Taxes, and (iv) each
provide the other party with any final determination of any such amount
required to be shown on any Tax Return of the other party for any period.
Without limiting the generality of the foregoing, each party shall retain
until the expiration of the applicable statutory period of limitations
(including any extensions) complete copies of all Tax Returns, supporting
work schedules and other books and records or information (collectively, "Tax
Records") delivered to such party, or retained by such party, pursuant to
this Agreement which are relevant to the Tax Returns of Kyser for all tax
periods or portions thereof ending on or before the Closing Date.
(b) Kyser and Purchaser, on the one hand, and each of the
Signing Stockholders, on the other hand, agree to furnish or cause to be
furnished to the other, upon request, as promptly as practicable, such
information and assistance (including access to Business Records) relating to
Kyser as is reasonably necessary for the preparation of any Tax Return, claim
for refund or audit, or the prosecution or defense of any claim, suit or
Proceeding relating to any proposed adjustment of Taxes.
8.21 KYSER ESOP. Purchaser covenants that from and after the
Closing, (i) the Supervisory Board of Purchaser shall take all subsequent
necessary actions to approve (x) all distributions and transfers of Purchaser
Capital Stock held by the Trust to Participants and beneficiaries designated
in accordance with the Kyser ESOP at the times required under the Kyser ESOP
and (y) all purchases of the Purchaser Capital Stock from the Trustee of the
Trust and Participants and beneficiaries of the Kyser ESOP at the times
required by the Kyser ESOP, subject to the requirements of Section 2:207 of
the CC being met at such times and (ii) Purchaser and Kyser shall take all
such corporate action as shall be necessary to comply with the provisions of
Section 10.13 of this Agreement.
8.22 LEGAL OPINION. In the event any shares Purchaser Capital
Stock are issued by Purchaser to any Stockholder(s) in connection with the
Merger after the Closing Date as a result of the failure by such
Stockholder(s) to deliver the Letter of Transmittal and documents identified
in the Letter of Transmittal prior to the Closing Date, at the time of
issuance of such shares, Purchaser shall deliver to the Stockholder to whom
such shares are issued an opinion of Nauta Dutilh or other reputable
Netherlands counsel that such shares have been validly issued and are fully
paid in compliance with Netherlands law.
SECTION 9. CONDITIONS PRECEDENT TO PURCHASER'S AND MERGER SUB'S OBLIGATION
TO CLOSE.
Purchaser's and Merger Sub's obligation to consummate the Merger,
Purchaser's obligation to issue shares of Purchaser Capital Stock and to take
the other actions required to be taken by Purchaser at the Closing is subject to
the satisfaction, at or prior to the Closing, of each of the following
conditions (any of which may be waived by Purchaser, in whole or in part, in
accordance with Section 13.14):
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9.1 ACCURACY OF REPRESENTATIONS. Each of the Kyser Specified
Representations shall have been accurate in all respects as of the date of
this Agreement and shall be accurate in all respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time (except that
representations and warranties made as of a particular date must be accurate
in all respects as of that date), without giving effect to any update to the
Kyser Disclosure Schedule. Each of the other representations and warranties
of Kyser contained in this Agreement shall have been accurate in all material
respects as of the date of this Agreement and all such representations and
warranties shall be accurate in all material respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time (except that
representations and warranties made as of a particular date must be accurate
in all material respects as of that date), without giving effect to (a) any
Kyser Material Adverse Effect or any other qualification by the words
"material," or "materially" or "in all material respects" contained or
incorporated directly or indirectly in such representations and warranties or
(b) any update to the Kyser Disclosure Schedule delivered after the date
hereof. For purposes of determining whether representations and warranties
of Kyser shall have been accurate as of the date of this Agreement, any
inaccuracies therein that shall have been cured (without such cure resulting
or being reasonably expected to result in a Kyser Material Adverse Effect)
shall be disregarded. Each of the Signing Stockholder Specified
Representations of each Signing Stockholder shall have been accurate in all
respects as of the date of the execution of the Joinder Agreement by such
Signing Stockholder and shall be accurate in all respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time (except that
representations and warranties made as of a particular date must be accurate
in all respects as of that date), without giving effect to any update to the
Signing Stockholder Disclosure Schedule delivered by such Signing Stockholder
after the date of the execution of the Joinder Agreement by such Signing
Stockholder. Each of the other representations and warranties of each
Signing Stockholder contained in this Agreement shall have been accurate in
all material respects as of the date of the execution of the Joinder
Agreement by such Signing Stockholder, and all such representations and
warranties shall be accurate in all material respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time (except that
representations and warranties made as of a particular date must be accurate
in all material respects as of that date), without giving effect to (a) any
qualification by the words "material," or "materially" or "in all material
respects" contained or incorporated directly or indirectly in such
representations and warranties or (b) any update to a Signing Stockholder
Disclosure Schedule delivered by such Signing Stockholder after the date of
the execution of the Joinder Agreement by such Signing Stockholder. For
purposes of determining whether representations and warranties of a Signing
Stockholder shall have been accurate as of the date of the execution of the
Joinder Agreement by such Signing Stockholder, any inaccuracies therein that
shall have been cured shall be disregarded.
9.2 PERFORMANCE OF OBLIGATIONS. Each covenant or obligation that
Kyser or any of the Signing Stockholders is required to comply with or to
perform pursuant to this Agreement at or prior to the Closing shall have
been duly complied with and performed in all material respects.
9.3 CONSENTS. All Consents required to be obtained in connection
with the Merger and the other transactions contemplated by this Agreement
(including the Consents identified in Part 2.27 of the Kyser Disclosure
Schedule) except Consents related to the agreements identified on Exhibit
2.13(a) to the Kyser Disclosure Schedule shall have been obtained and shall
be in full
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force and effect except where failure to obtain such Consents would not
reasonably be expected to have a Kyser Material Adverse Effect.
9.4 STOCKHOLDER APPROVAL; DISSENTERS' RIGHTS.
(a) The Agreement shall have been duly adopted and the Merger
shall have been duly approved by the Required Vote.
(b) Holders of no more than the lesser of (i) five percent of
the outstanding number of Kyser Common Stock or (ii) the number of outstanding
Kyser Common Stock that is one less than the number of shares of Kyser Common
Stock that would cause the condition specified in paragraph 47b of APB Opinion
No. 16 not to be satisfied, shall have validly exercised and perfected
dissenters' rights with respect to the Merger.
9.5 ADDITIONAL DOCUMENTS. Purchaser and Merger Sub shall have
received at or prior to the Closing the following agreements and documents,
each of which shall be in full force and effect as of the Scheduled Closing
Time:
(a) copies of the Kyser Stock Certificates and Letters of
Transmittal representing the Shares of the Signing Stockholders, together with
the other documents required by Section 1.7;
(b) Noncompetition Agreements substantially in the form of
Exhibit J and Affiliate Agreements substantially in the form of Exhibit I-1 and
Continuity of Interest Certificates substantially in the form of Exhibit I-2,
executed by each of Gregory M. Claeys, C. Garry Hendricks and Boyd E. Hurst,
Jr., and an Affiliate Agreement in the form of Exhibit I-1 and Continuity of
Interest certificate in the form of Exhibit I-2, executed by Colin Henderson, as
Trustee of the Trust;
(c) an Employment Agreement substantially in the form of
Exhibit K, executed by Gregory M. Claeys;
(d) an Employment Agreement substantially in the form of
Exhibit L, executed by C. Garry Hendricks;
(e) an Employment Agreement substantially in the form of
Exhibit M, executed by Boyd E. Hurst, Jr.;
(f) an Employment Agreement substantially in the form of
Exhibit N, executed by Jean Benham;
(g) a Release substantially in the form of Exhibit O-1 or O-2,
as applicable, executed by each of the Signing Stockholders;
(h) the FIRPTA statement referred to in Section 8.10, executed
by Kyser;
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(i) estoppel certificates, each dated as of a date subsequent
to the date of this Agreement in form and substance satisfactory to Purchaser
and Kyser, executed by the Persons identified on Exhibit P;
(j) a legal opinion of Strasburger & Price, L.L.P., addressed
to Purchaser, dated as of the Closing Date, substantially in the form of Exhibit
Q;
(k) a legal opinion of Boswell & Kober, P.C., dated as of the
Closing Date, substantially in the form of Exhibit R;
(l) a legal opinion of Cooley Godward LLP addressed to
Purchaser, dated as of the Closing Date, to the effect that the Merger will
constitute a reorganization within the meaning of Section 368 of the Code (it
being understood that, in rendering such opinion, Cooley Godward LLP may rely
upon the tax representation letters referred to in Section 8.4);
(m) a letter from KPMG Peat Marwick LLP, dated as of the
Closing Date and addressed to Purchaser, reasonably satisfactory in form and
substance to Purchaser, confirming KPMG Peat Marwick LLP's concurrence with
management that no condition exists that would preclude Purchaser from
accounting for the Merger as a "pooling of interests" in accordance with GAAP,
APB Opinion No. 16 and all published rules, regulations and policies of the SEC;
(n) a certificate executed by Kyser and containing the
representation and warranty of Kyser that (i) each of the Kyser Specified
Representations is accurate in all respects as of the Closing Date as if made on
the Closing Date (except that representations and warranties made as of a
particular date must be accurate in all respects as of that date), and that each
of the other representations and warranties of Kyser set forth in this Agreement
is accurate in all material respects as of the Closing Date as if made on the
Closing Date (except that representations and warranties made as of a particular
date must be accurate in all material respects as of that date), in each case
giving effect to any update to the Kyser Disclosure Schedule delivered to
Purchaser at or prior to the Closing and (ii) Kyser has performed in all
material respects all of its obligations under this Agreement required to be
performed at or prior to Closing (the "Kyser Closing Certificate");
(o) a certificate executed by each Signing Stockholder and
containing the representation and warranty of such Signing Stockholder that (i)
each of the Signing Stockholder Specified Representations of such Signing
Stockholder is accurate in all respects as of the Closing Date as if made on the
Closing Date (except that representations and warranties made as of a particular
date must be accurate in all respects as of that date), and that each of the
other representations and warranties of such Signing Stockholder set forth in
this Agreement as evidenced by execution of the Joinder Agreement is accurate in
all material respects as of the Closing Date as if made on the Closing Date
(except that representations and warranties made as of a particular date must be
accurate in all material respects as of that date), in each case giving effect
to any update to the Signing Stockholder Disclosure Schedule delivered to
Purchaser at or prior to the Closing; and (ii) such Signing Stockholder has
performed in all material respects all of his, her or its obligations under this
Agreement required to be performed at or prior to Closing (the "Signing
Stockholders' Closing Certificates");
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(p) Joinder Agreements executed by each of Gregory M. Claeys,
C. Garry Hendricks, Boyd E. Hurst, Jr. and Colin Henderson, as Trustee of the
Trust;
(q) documentation reasonably acceptable to Purchaser indicating
that the Shares held by the Trust on the date hereof have been validly
transferred to Colin Henderson, as Trustee of the Trust; and
(r) such other documents as Purchaser or Merger Sub may
reasonably request in good faith for the purpose of (i) evidencing the accuracy
of any representation or warranty made in this Agreement by Kyser or any of the
Signing Stockholders, (ii) evidencing the compliance by Kyser or any of the
Signing Stockholders with, or the performance by Kyser or any of the Signing
Stockholders of, any covenant or obligation set forth in this Agreement,
(iii) evidencing the compliance with any applicable federal or state securities
law applicable to the Merger, (iv) evidencing the satisfaction of any condition
set forth in this Section 9 or (v) otherwise facilitating the consummation or
performance of any of the Transactions.
9.6 NOTARIAL REQUIREMENTS. The civil law notary of Nauta Dutilh
in Amsterdam who has been retained by the Purchaser for the issuance of the
shares of Purchaser Capital Stock to be issued in the Merger shall have
received from the Signing Stockholders all powers of attorney and other
documents and information necessary to execute the Deeds of Issuance with
respect to those shares, including a legal opinion acceptable to the civil
law notary delivered on behalf of the Trust to the effect that the Trust is
duly represented by Colin M. Henderson as Trustee and has authority to hold
shares of Purchaser Capital Stock.
9.7 EMPLOYEES. Between the date of this Agreement and the
Closing Date, not more than 10 employees of Kyser shall have ceased to be
employed by, or expressed an intention to terminate their employment with,
Kyser.
9.8 FIRPTA COMPLIANCE. Kyser shall have filed or mailed for
filing or, contemporaneous with the Closing, shall file or mail for filing,
with the Internal Revenue Service the notification referred to in Section
8.10.
9.9 SECURITIES LAW COMPLIANCE. All applicable requirements of
Rule 506 under the Act and any applicable state securities laws shall have
been satisfied, unless failure to satisfy such requirements is solely as a
result of the failure of Purchaser to take such reasonable actions as are
necessary to satisfy the requirements of Rule 506.
9.10 NO RESTRAINTS. No temporary restraining order, preliminary
or permanent injunction or other Order preventing the consummation of the
Merger shall have been issued by any court of competent jurisdiction and
remain in effect, and there shall not be any Legal Requirement enacted or
deemed applicable to the Merger that makes consummation of the Merger illegal.
9.11 NO PROCEEDINGS. No Person shall have commenced or threatened
to commence any Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or any of the other
Transactions or seeking to prohibit the Merger.
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9.12 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
employee of Kyser, and each consultant to Kyser, shall have executed and
delivered to Kyser a proprietary information and inventions agreement in
substantially the form of Exhibit J.
9.13 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. No
Person (other than the Stockholders on the terms stated herein) shall have
made or threatened any claim asserting that such Person (a) may be the holder
or the beneficial owner of, or may have the right to acquire or to obtain
beneficial ownership of, any capital stock or other securities of Kyser or
(b) may be entitled to all or any portion of the Purchaser Capital Stock to
be issued pursuant to this Agreement.
9.14 HSR ACT. The waiting period under the HSR Act applicable to
the Merger shall have expired or been terminated.
9.15 NO PROHIBITION. Neither the consummation nor the performance
of any the Transactions will, directly or indirectly (with or without notice
or lapse of time), contravene or conflict with or result in a violation of,
or cause Purchaser, Merger Sub or any Person affiliated with Purchaser or
Merger Sub to suffer any material adverse consequence under, any applicable
Legal Requirement or Order of which Purchaser or Merger Sub does not have
Knowledge as of the date of this Agreement.
SECTION 10. CONDITIONS PRECEDENT TO KYSER AND THE SIGNING STOCKHOLDERS'
OBLIGATION TO CLOSE.
Kyser's and each Signing Stockholder's obligation to consummate
the Merger and to take the other actions required to be taken by Kyser and the
Signing Stockholders at the Closing is subject to the satisfaction, at or prior
to the Closing, of each of the following conditions (any of which may be waived
by Kyser and by the holders of a majority of the Shares, in whole or in part, in
accordance with Section 13.14):
10.1 ACCURACY OF REPRESENTATIONS. Each of the Purchaser Specified
Representations shall have been accurate in all respects as of the date of
this Agreement and shall be accurate in all respects as of the Scheduled
Closing Time as if made at the Scheduled Closing Time (except that
representations and warranties made as of a particular date must be accurate
in all respects as of that date), without giving effect to any update to the
Purchaser Disclosure Schedule. Each of the other representations and
warranties of Purchaser and Merger Sub contained in this Agreement shall have
been accurate in all material respects as of the date of this Agreement and
shall be accurate in all material respects as of the Scheduled Closing Time
as if made at the Scheduled Closing Time (except that representations and
warranties made as of a particular date must be accurate in all material
respects as of that date), without giving effect to (i) any "Purchaser
Material Adverse Effect" or any other qualification by the words "material,"
"materially" or "in all material respects" contained or incorporated directly
or indirectly in such representations and warranties or (ii) any update to
the Purchaser Disclosure Schedule delivered after the date hereof. For
purposes of determining whether representations and warranties shall have
been accurate as of the date of this Agreement, any inaccuracies therein that
shall have been cured (without such cure resulting or being reasonably
expected to result in a Purchaser Material Adverse Effect) shall be
disregarded.
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10.2 PERFORMANCE OF OBLIGATIONS. Each covenant or obligation that
Purchaser or Merger Sub was required to comply with or to perform pursuant to
this Agreement at or prior to the Closing shall have been complied with and
performed in all material respects.
10.3 CONSENTS. All Consents required to be obtained in connection
with the Merger and the other transactions contemplated by this Agreement
(including the Consents identified in Part 4.22 of the Purchaser Disclosure
Schedule) shall have been obtained and shall be in full force and effect
except where failure to obtain such Consents would not reasonably be expected
to have a Purchaser Material Adverse Effect.
10.4 SUPERVISORY BOARD MATTERS.
(a) The Supervisory Board of Purchaser shall have adopted a
resolution increasing the number of members of the Managing Board of Purchaser
to seven and at the next general meeting of shareholders of Purchaser, the
Managing Board of Purchaser shall recommend that C. Garry Hendricks be elected
as a Managing Director B (DIRECTEUR B) of Purchaser at such meeting. Until such
election, C. Garry Hendricks shall have the right to attend all meetings of
Purchaser's Managing Board in a nonvoting capacity, and in connection therewith,
Purchaser shall give C. Garry Hendricks copies of all notices, minutes, consents
and other materials, financial or otherwise, which Purchaser provides to its
Managing Board.
(b) The Supervisory Board of Purchaser shall have adopted a
resolution approving all necessary actions and shall take all subsequent
necessary actions to approve (i) all distributions and transfers of Purchaser
Capital Stock held by the Trust to Participants and beneficiaries designated in
accordance with the Kyser ESOP at the times required under the Kyser ESOP,
provided such distributions and transfers take place within 3 months of the date
of the adoption of the resolution and prior notice thereof is provided to the
Supervisory Board; and (ii) all purchases of Purchaser Capital Stock from the
Trustee of the Trust and Participants and beneficiaries of the Kyser ESOP at the
times required by the Kyser ESOP, subject to the requirements of Section 2:207
of the CC being met at such times.
10.5 DOCUMENTS. Kyser and the Signing Stockholders shall have
received the following agreements and documents, each of which shall be in
full force and effect.
(a) Reserved;
(b) a legal opinion of Cooley Godward LLP, addressed to Kyser
and the Stockholders, dated as of the Closing Date, in substantially the form of
Exhibit T;
(c) a legal opinion of Nauta Dutilh, addressed to Kyser and the
Stockholders, dated as of the Closing Date, in substantially the form of Exhibit
U;
(d) a legal opinion of Woodburn & Wedge, addressed to Kyser and
the Stockholders, dated as of the Closing Date, in substantially the form of
Exhibit V;
(e) a legal opinion of Strasburger & Price, L.L.P., addressed
to Kyser and the Stockholders, dated as of the Closing Date, to the effect that
the Merger will constitute a reorganization within the meaning of Section 368 of
the Code; provided, however, that Cooley
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Godward LLP shall be entitled to render such opinion to Kyser and the
Stockholders in the event that Strasburger & Price, L.L.P. does not deliver
such opinion (it being understood that, in rendering such opinion,
Strasburger & Price, L.L.P. or Cooley Godward LLP, as applicable, may rely
upon the tax representation letters referred to in Section 8.4);
(f) an Accession Agreement substantially in the form of
Exhibit W-1, executed by Purchaser and a Consent Agreement substantially in
the form of Exhibit W-2, executed by Purchaser and each of the Investors (as
defined in the Investor Rights Agreement);
(g) a certificate executed by Purchaser and Merger Sub and
containing the representation and warranty of Purchaser and Merger Sub that
(i) each of the Purchaser Specified Representations is accurate in all
respects as of the Closing Date as if made on the Closing Date (except that
representations and warranties made as of a particular date must be accurate
in all respects as of that date), and that each of the other representations
and warranties of Purchaser and Merger Sub set forth in this Agreement is
accurate in all material respects as of the Closing Date as if made on the
Closing Date (except that representations and warranties made as of a
particular date must be accurate in all material respects as of that date),
in each case giving effect to any update to the Purchaser Disclosure Schedule
delivered to Kyser and the Signing Stockholders at or prior to the Closing
and (ii) Purchaser and Merger Sub have performed in all material respects all
of their obligations under this Agreement required to be performed at or
prior to Closing (the "Purchaser's Closing Certificate");
(h) such other documents as Kyser or any Signing Stockholder
may reasonably request in good faith for the purpose of (i) evidencing the
accuracy of any representation or warranty made by Purchaser or Merger Sub in
this Agreement, (ii) evidencing the compliance by Purchaser and Merger Sub
with, or the performance by Purchaser and Merger Sub of, any covenant or
obligation set forth in this Agreement, (iii) evidencing the compliance with
any applicable foreign, U.S. federal or state securities law, (iv) evidencing
the satisfaction of any condition set forth in this Section 10 or (v)
otherwise facilitating the consummation or performance of any of the
Transactions;
(i) a copy of a letter from KPMG Peat Marwick LLP, dated as
of the Closing Date and addressed to Purchaser, confirming KPMG Peat Marwick
LLP's concurrence with management that no condition exists that would
preclude Purchaser from accounting for the Merger as a "pooling of interests"
in accordance with GAAP, APB Opinion No. 16 and all published rules,
regulations and policies of the SEC;
(j) a copy of a letter from Price Waterhouse dated as of the
Closing Date, addressed to Purchaser, with respect to the Netherlands tax
consequences of the Merger, in a form to be agreed between Purchaser and
Kyser; and
(k) Amendment Number Two to the Kyser ESOP and Amendment
Number One to the Trust, executed by Metron.
10.6 ADDITIONAL AGREEMENTS. The following Agreements shall have
been executed and delivered by Kyser and shall be in full force and effect:
(a) an Employment Agreement substantially in the form of
Exhibit K;
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(b) an Employment Agreement substantially in the form of
Exhibit L;
(c) an Employment Agreement substantially in the form of
Exhibit M; and
(d) an Employment Agreement substantially in the form of
Exhibit N.
10.7 KYSER ESOP MATTERS. Colin M. Henderson, in his individual
capacity as Trustee of the Trust (or his qualified successor), and Strategic
Investment Counsel Corporation, as Investment Manager of the Trust (or its
qualified successor), shall have entered into written agreements satisfactory
to Kyser to serve in such capacities for a period ending on the earlier to
occur of: (1) twenty four (24) months after the Closing Date or (2) the date
on which the shares of Purchaser Capital Stock issued to the Kyser ESOP in
the Merger are listed or quoted on a United States national securities
exchange (which term shall include the Nasdaq National Market), and are
"readily tradable" (as defined in the Code); and Purchaser shall have agreed
in writing satisfactory to the Trustee that if Colin M. Henderson or
Strategic Investment Counsel Corporation resigns or is properly removed as
the Trustee or Investment Manager, respectively, during such period,
Purchaser will appoint a qualified independent Trustee or Investment Manager
to serve and Amendment Number One to the Trust in such capacities for the
remainder of such period. Amendment Number Two to the Kyser ESOP shall have
been executed and delivered by the parties thereto and shall by its terms
become effective as of the Effective Time.
10.8 INTENTIONALLY OMITTED.
10.9 NO RESTRAINTS. No temporary restraining order, preliminary or
permanent injunction or other Order preventing the consummation of the Merger
shall have been issued by any court of competent jurisdiction and remain in
effect, and there shall not be any Legal Requirement enacted or deemed
applicable to the Merger that makes consummation of the Merger illegal.
10.10 NO PROCEEDINGS. No Person shall have commenced or threatened
to commence any Proceeding challenging or seeking the recovery of a material
amount of damages in connection with the Merger or any of the other
Transactions or seeking to prohibit or limit the exercise by any of the
Signing Stockholders of any material right pertaining to his, her or its
ownership of stock of Purchaser.
10.11 HSR ACT. The waiting period under the HSR Act applicable to
the Merger shall have expired or been terminated.
10.12 NO PROHIBITION. Neither the consummation nor the performance
of any of the Transactions will, directly or indirectly (with or without
notice or lapse of time), contravene or conflict with or result in a
violation of, or cause any Signing Stockholder or any Person affiliated with
any Signing Stockholder to suffer any adverse consequence under, any
applicable Legal Requirement or Order of which any Signing Stockholder does
not have Knowledge as of the date of this Agreement.
10.13 KYSER ESOP. To the extent Purchaser is prohibited by
applicable law from satisfying the repurchase obligations as set forth under
the Kyser ESOP, Purchaser shall use its Best Efforts to timely obtain an
alternate purchaser for the shares of Purchaser Capital Stock
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required to be purchased from the Trustee of the Trust and Participants and
beneficiaries of the Kyser ESOP.
SECTION 11. TERMINATION
11.1 TERMINATION EVENTS. Regardless of whether the Kyser
Stockholders' Meeting has been held and the Required Vote has been obtained,
this Agreement may be terminated prior to the Closing:
(a) by Purchaser or Merger Sub if (i) there is a material
Breach of any representation and warranty, covenant or obligation of Kyser or
any of the Signing Stockholders pursuant to this Agreement that is not cured
on or prior to the earlier of July 15, 1998 and five (5) days after written
notice thereof by Purchaser to Kyser and the Signing Stockholders, or (ii)
Purchaser or Merger Sub reasonably determines that the timely satisfaction of
any condition set forth in Section 9 has become impossible (other than as a
result of any Breach of any representation and warranty of Purchaser or
Merger Sub in this Agreement or any failure on the part of Purchaser or
Merger Sub to comply with or perform their covenants and obligations under
this Agreement) and Purchaser has not waived such Breach or condition;
(b) by Kyser if (i) there is a material Breach of any
representation and warranty, covenant or obligation of Purchaser or Merger
Sub pursuant to this Agreement that is not cured on or prior to the earlier
of July 15, 1998 and five (5) days after written notice thereof by Kyser to
Purchaser, or (ii) Kyser reasonably determines that the timely satisfaction
of any condition set forth in Section 10 has become impossible (other than as
a result of any Breach of any representation and warranty of Kyser or any
Signing Stockholder in this Agreement or any failure on the part of Kyser or
any of the Signing Stockholders to comply with or perform any of their
respective covenants or obligations set forth in this Agreement) and Kyser
has not waived such Breach or condition;
(c) by Purchaser or Merger Sub if the Merger shall not have
been consummated by 5:00 p.m. (Pacific Time) on August 31, 1998 (other than
as a result of any Breach of any representation or warranty of Purchaser or
Merger Sub in this Agreement or any failure on the part of Purchaser or
Merger Sub to comply with or perform any of their covenants and obligations
under this Agreement) or at such other time Purchaser and Kyser may jointly
designate;
(d) by Kyser if the Merger shall not have been consummated
by 5:00 p.m. (Pacific Time) on August 31, 1998 (other than as a result of any
Breach of any representation or warranty of Kyser or any Signing Stockholder
in this Agreement or any failure on the part of Kyser or any of the Signing
Stockholders to comply with or perform any of their respective covenants or
obligations set forth in this Agreement) or at such other time Purchaser and
Kyser may jointly designate;
(e) by either Purchaser or Kyser if a court of competent
jurisdiction or other Governmental Body shall have issued a final
nonappealable order, decree or ruling, or shall have taken any other action,
having the effect of permanently restraining, enjoining or otherwise
prohibiting the Merger;
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(f) by either Purchaser or Kyser if (i) the Kyser
Stockholders' Meeting shall have been held and (ii) this Agreement and the
Merger shall not have been adopted and approved at such meeting by the
Required Vote; provided, however, that (1) Purchaser shall not be permitted
to terminate this Agreement pursuant to this Section 11.1(f) if the failure
of Kyser's Stockholders to adopt and approve this Agreement and the Merger at
the Kyser Stockholders' Meeting is attributable to a failure on the part of
Purchaser or Merger Sub to perform any material obligations required to have
been performed by Purchaser or Merger Sub under this Agreement and (2) Kyser
shall not be permitted to terminate this Agreement pursuant to this Section
11.1(f) if the failure of Kyser's Stockholders to adopt and approve this
Agreement and the Merger at the Kyser Stockholders' Meeting is attributable
to a failure on the part of Kyser to perform any material obligation required
to have been performed by Kyser under this Agreement; or
(g) by the mutual written consent of Purchaser, Merger Sub
and Kyser.
11.2 TERMINATION PROCEDURES. If Purchaser or Merger Sub wishes to
terminate this Agreement pursuant to Section 11.1(a), Purchaser and Merger
Sub shall deliver to Kyser a written notice stating that Purchaser or Merger
Sub is terminating this Agreement and setting forth a brief description of
the basis on which Purchaser or Merger Sub is terminating this Agreement. If
Kyser wishes to terminate this Agreement pursuant to Section 11.1(b),
11.1(d), 11.1(e) or 11.1(f), Kyser shall deliver to Purchaser a written
notice stating that Kyser is terminating this Agreement and setting forth a
brief description of the basis on which Kyser is terminating this Agreement.
11.3 EFFECT OF TERMINATION. If this Agreement is terminated
pursuant to Section 11.1, this Agreement and all Liabilities and obligations
of the parties under this Agreement shall terminate and shall be void and
have no effect and no party hereto shall have any Liability of any kind
under, pursuant to or with respect to this Agreement, the termination hereof
or any of the Transactions; provided, however, that:
(a) (i) if Purchaser terminates this Agreement as a result
of an intentional and material Breach of a representation and warranty or
covenant of Kyser or any Signing Stockholder in this Agreement, Purchaser
shall be entitled to recover, as its sole and exclusive remedy, damages from
Kyser equal to the reasonable and documented out-of-pocket expenses and costs
incurred by Purchaser in connection with this Agreement and the transactions
in an amount not to exceed $750,000 and (ii) if Kyser terminates this
Agreement as a result of an intentional and material Breach of a
representation and warranty or covenant of Purchaser or Merger Sub in this
Agreement, Kyser and the Signing Stockholders, collectively, shall be
entitled to recover, as their sole and exclusive remedy, damages from
Purchaser and Merger Sub equal to the reasonable and documented out-of-pocket
expenses and costs incurred by Kyser and the Signing Stockholders in
connection with this Agreement and the Transactions in an amount not to
exceed $750,000;
(b) the parties shall, in all events, remain bound by and
continue to be subject to the provisions set forth in Section 13 (except for
Sections 13.3, 13.8 and 13.20); and
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(c) the parties shall, in all events, remain bound by and
continue to be subject to Section 8.2.
SECTION 12. INDEMNIFICATION, ETC.
12.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations and warranties made by Kyser, the
Signing Stockholders, Purchaser and Merger Sub in this Agreement (including
without limitation the representations and warranties set forth in Sections
2, 3 and 4) shall survive the Closing and shall expire on the earlier of (i)
the date of issuance of an audit report with respect to financial statements
which both contain combined operations of Purchaser and Kyser and include the
Closing Date or (ii) ninety (90) days after the Closing Date (the "Expiration
Date"); provided, however, that (x) notwithstanding the foregoing, the Kyser
Specified Representations (other than Section 2.4), the Signing Stockholder
Specified Representations and the Purchaser Specified Representations (other
than Section 4.4) shall survive the Closing for the applicable statute of
limitations and (y) if, at any time prior to the expiration of a
representation or warranty made by Kyser or any of the Signing Stockholders,
any Purchaser Indemnitee (acting in good faith) delivers to a Signing
Stockholder obligated to provide indemnity under this Section 12 in respect
of such representation or warranty a written notice that complies with the
applicable provision of Sections 12.10 or 12.12 alleging the existence of a
Breach of such representation and warranty and asserting a claim for recovery
under Sections 12.2 or 12.4 based on such alleged inaccuracy or other Breach,
then the claim asserted in such notice shall survive against the Signing
Stockholder to whom such notice was delivered until such time as such claim
is fully and finally resolved and (z) if, at any time prior to the expiration
of a representation or warranty made by Purchaser or Merger Sub, any
Stockholder Indemnitee (acting in good faith) delivers to Purchaser a written
notice that complies with the applicable provision of Sections 12.10 or 12.12
alleging the existence of a Breach of such representation and warranty and
asserting a claim for recovery under Section 12.5 based on such alleged
inaccuracy or other Breach, then the claim asserted in such notice shall
survive until such time as such claim is fully and finally resolved.
(b) Notwithstanding anything in this Agreement, from and after
the Closing, any matter which has been accurately disclosed by Kyser or any of
the Signing Stockholders in the Kyser Disclosure Schedule or the Signing
Stockholder Disclosure Schedule or any update to either of the foregoing
delivered to Purchaser at or prior to Closing, or in the Kyser Closing
Certificate or any of the Signing Stockholders' Closing Certificates, (i) shall
be deemed accepted by Purchaser and Merger Sub and (ii) shall not form the basis
of any claim for Damages or any other remedy by any Purchaser Indemnitee against
any of the Signing Stockholders. Notwithstanding anything in this Agreement,
from and after the Closing, any matter which has been accurately disclosed by
Purchaser or Merger Sub in the Purchaser Disclosure Schedule or any update
thereto delivered to Kyser or to the Signing Stockholders at or prior to
Closing, or in the Purchaser Closing Certificate, (i) shall be deemed accepted
by Kyser and the Signing Stockholders and (ii) shall not form the basis of any
claim for Damages or any other remedy by any of the Stockholder Indemnitees
against Purchaser.
(c) For purposes of this Agreement: (i) each statement or other
item of information set forth in the Kyser Disclosure Schedule or in the Kyser
Closing Certificate shall
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be deemed to be a representation and warranty made by Kyser in this
Agreement; (ii) each statement or other item of information set forth in the
Signing Stockholder Disclosure Schedule or in any of the Signing
Stockholders' Closing Certificates shall be deemed to be a representation and
warranty in this Agreement made by the Signing Stockholder to whom such
statement or item of information relates; and (iii) each statement or other
item of information set forth in the Purchaser Disclosure Schedule or in the
Purchaser Closing Certificate shall be deemed to be a representation and
warranty made by Purchaser and Merger Sub in this Agreement.
12.2 INDEMNIFICATION BY STOCKHOLDERS REGARDING KYSER REPRESENTATIONS
AND WARRANTIES.
(a) To the extent permitted by applicable law, but subject
to the terms and limitations set forth in this Section 12, from and after the
Effective Time, the Stockholders, pro rata based on their respective
ownership of the Shares, shall hold harmless and indemnify each of the
Purchaser Indemnitees from and against, and shall compensate and reimburse
each of the Purchaser Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Purchaser Indemnitees or to
which any of the Purchaser Indemnitees may otherwise become subject at any
time (regardless of whether or not such Damages relate to any third-party
claim) and which arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any Breach at Closing of any representation or
warranty made by Kyser in this Agreement (except with respect to Section
2.31, without giving effect to any Kyser Material Adverse Effect
qualification or to the words "material," "materially" or "in all material
respects" contained or incorporated directly or indirectly in such
representation or warranty but giving effect to any update to the Kyser
Disclosure Schedule delivered by Kyser to Purchaser or Merger Sub at or prior
to the Closing);
(ii) any Breach of any covenant of Kyser in this
Agreement which covenant by its terms, is to be performed in full by Kyser
prior to the Closing; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Purchaser Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) The Stockholders acknowledge and agree that, if there is
any Breach of any representation, warranty or other provision relating to Kyser
or Kyser's business, condition, assets, liabilities, operations, financial
performance or net income (or any aspect or portion thereof), and Kyser incurs
Damages as a result of such Breach, then Purchaser itself shall be deemed, by
virtue of its direct or indirect ownership of common stock of Kyser, to have
incurred such Damages as a result of such Breach or Liability. Nothing
contained in this Section 12.2(b) shall have the effect of (i) limiting the
circumstances under which Purchaser may otherwise be deemed to have incurred
Damages for purposes of this Agreement, (ii) limiting the other types of
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Damages that Purchaser may be deemed to have incurred (whether in connection
with any such Breach or Liability or otherwise), or (iii) limiting the rights
of Kyser or any of the other Purchaser Indemnitees under this Section 12.2.
Nothing in this Agreement shall be deemed to provide that more than one
Purchaser Indemnitee shall be entitled to recover Damages from the
Stockholders with respect to the same Breach or alleged Breach of the type
referred to in clauses (i) and (ii) of Section 12.2(a).
12.3 THRESHOLD; CEILING; OTHER LIMITATIONS.
(a) Subject to Section 12.3(c) and Section 12.3(d), the
Stockholders shall not be required to make any payment pursuant to Section
12.2 or, with respect to Signing Stockholders, 12.4 until such time as the
total amount of all Damages that have been directly or indirectly suffered or
incurred by any one or more of the Purchaser Indemnitees, or to which any one
or more of the Purchaser Indemnitees has or have otherwise become subject,
exceeds $150,000 in the aggregate. At such time as the total amount of such
Damages exceeds $150,000 in the aggregate, the Purchaser Indemnitees shall be
entitled to be indemnified (on the terms stated in this Section 12) only
against the portion of such Damages exceeding $150,000.
(b) Subject to Section 12.3(c), the maximum aggregate
liability of all of the Stockholders under Sections 12.2(a) and 12.4(a) shall
be limited to $1,011,633.
(c) The limitations on the Stockholders' obligations that
are set forth in Sections 12.3(a) and 12.3(b) shall not apply to: (i) any
Breach of the Kyser Specified Representations (other than a Breach of Section
2.4) or, with respect to Signing Stockholders, the Signing Stockholder
Specified Representations. In addition, the limitations on any Signing
Stockholder's obligations that are set forth in Sections 12.3(a) and 12.3(b)
shall not apply to Damages arising out of a Breach of a representation,
warranty or covenant if (i) Kyser or any of the Signing Stockholders had
Knowledge of such Breach as of the Closing and (ii) such Breach was not
disclosed to Purchaser or Merger Sub at or prior to Closing.
(d) Notwithstanding anything in this Agreement, (i) each
Stockholder's aggregate liability with respect to any Damages recoverable
pursuant to Section 12.2 shall not exceed such Stockholder's pro rata portion
of such Damages after application of the limitations contained in this
Section 12, based on the respective number of Shares owned by such
Stockholder immediately prior to the Closing and (ii) the maximum aggregate
liability of any Stockholder under this Section 12 or otherwise in respect of
the Merger shall be limited to 8% of the shares of Purchaser Capital Stock
received by such Stockholder pursuant to this Agreement and the Merger.
(e) No Stockholder shall have any liability to any Purchaser
Indemnitee as a result of the Breach by another Stockholder of any
representation, warranty, covenant or obligation of such other Stockholder in
this Agreement or otherwise.
12.4 INDEMNIFICATION BY SIGNING STOCKHOLDERS REGARDING SIGNING
STOCKHOLDER REPRESENTATIONS AND WARRANTIES AND COVENANTS.
(a) To the extent permitted by applicable law but subject to
the terms and limitations set forth in this Section 12, from and after the
Closing Date, each Signing
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Stockholder severally agrees to hold harmless and indemnify each of the
Purchaser Indemnitees from and against, and shall compensate and reimburse
each of the Purchaser Indemnitees for, any Damages which are directly or
indirectly suffered or incurred by any of the Purchaser Indemnitees or to
which any of the Purchaser Indemnitees may otherwise become subject at any
time (regardless of whether or not such Damages relate to any third-party
claim) and which arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any Breach at Closing of any representation or
warranty made by such Signing Stockholder in this Agreement (without giving
effect to any qualification by the words "material," "materially" or "in all
material respects" contained or incorporated directly in such representation
or warranty but giving effect to any update to the Signing Stockholders'
Disclosure Schedule delivered by the Signing Stockholders to Purchaser or
Merger Sub at or prior to the Closing);
(ii) any Breach of any covenant or obligation of such
Signing Stockholder in this Agreement which covenant or obligation, by its
terms, is to be performed in full by such Signing Stockholder; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Purchaser Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) The Signing Stockholders acknowledge and agree that, in
the event of the occurrence of any Purchaser Indemnified Matter, then
Purchaser shall be deemed, by virtue of its ownership of Kyser Common Stock,
to have incurred Damages as a result of such Purchaser Indemnified Matter.
Nothing contained in this Section 12.4(b) shall have the effect of (i)
limiting the circumstances under which Purchaser may otherwise be deemed to
have incurred Damages for purposes of this Agreement, (ii) limiting the other
types of Damages that Purchaser may be deemed to have incurred (whether in
connection with any such Breach or Liability or otherwise) or (iii) limiting
the rights of Kyser or any of the other Purchaser Indemnitees under this
Section 12.4. Nothing in this Agreement shall be deemed to provide that more
than one Purchaser Indemnitee shall be entitled to recover Damages from any
Signing Stockholder with respect to the same Breach or alleged Breach of the
type referred to in clauses (i) and (ii) of Section 12.4(a).
12.5 INDEMNIFICATION BY PURCHASER AND MERGER SUB.
(a) To the extent permitted by applicable law, but subject to
the terms and limitations of this Section 12, from and after the Effective Time,
Purchaser and Merger Sub, jointly and severally, shall hold harmless and
indemnify each of the Stockholder Indemnitees from and against, and shall
compensate and reimburse each of the Stockholder Indemnitees for, any Damages
which are directly or indirectly suffered or incurred by any of the Stockholder
Indemnitees or to which any of the Stockholder Indemnitees may otherwise become
subject at
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any time (regardless of whether or not such Damages relate to any third-party
claim) and which arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any Breach at Closing of any representation or
warranty made by Purchaser or Merger Sub in this Agreement (except with
respect to Section 4.28, without giving effect to any Purchaser Material
Adverse Effect qualification or any other qualification by the words
"material," "materially" or "in all material respects" contained directly in
such representation or warranty but giving effect to any update to the
Purchaser Disclosure Schedule delivered by Purchaser and Merger Sub to Kyser
at or prior to the Closing);
(ii) any Breach of any covenant or obligation of
Purchaser or Merger Sub in this Agreement which covenant or obligation, by
its terms, is to be performed in full by Purchaser or Merger Sub prior to
Closing; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Stockholder Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) Each of Purchaser and Merger Sub acknowledges and agrees
that, in the event of the occurrence of a Stockholder Indemnified Matter,
then the Signing Stockholders shall be deemed, by virtue of their direct or
indirect ownership of Purchaser Capital Stock, to have incurred Damages as a
result of such Breach, inaccuracy, misrepresentation or omission.
12.6 THRESHOLD; CEILING.
(a) Subject to Section 12.6(c), Purchaser and Merger Sub
shall not be required to make any indemnification payment pursuant to Section
12.5 until such time as the total amount of all Damages that have been
directly or indirectly suffered or incurred by any one or more of the
Stockholder Indemnitees, or to which any one or more of the Stockholder
Indemnitees has or have otherwise become subject, exceeds $650,000 in the
aggregate. At such time as the total amount of such Damages exceeds $650,000
in the aggregate, the Stockholder Indemnitees shall be entitled to be
indemnified (on the terms stated in this Section 12) only against the portion
of such Damages exceeding $650,000.
(b) Subject to Section 12.6(c), the maximum liability of
Purchaser and Merger Sub under Section 12.5(a) shall be limited to $1,011,633.
(c) The limitations on the Purchaser's and Merger Sub's
indemnification obligations that are set forth in Sections 12.6(a) and
12.6(b) shall not apply to any Breach of the Purchaser Specified
Representations other than a Breach of Section 4.4. In addition, the
limitations on Purchaser's and Merger Sub's obligations that are set forth in
Sections 12.6(a) and 12.6(b) shall not apply to Damages arising out of a
Breach of a representation, warranty or covenant if (i) Purchaser or Merger
Sub had Knowledge of such Breach as of the Closing and (ii) such Breach was
not disclosed to Kyser at or prior to Closing.
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12.7 SATISFACTION OF INDEMNIFICATION CLAIM. In the event any
Signing Stockholder, Purchaser or Merger Sub shall have any liability (for
indemnification or otherwise) to any indemnitee under this Section 12, such
Signing Stockholder, Purchaser or Merger Sub shall satisfy such liability by
delivering (or, in the case of indemnity by Purchaser or Merger Sub, issuing
and delivering) to such indemnitee the number of shares of Purchaser Capital
Stock determined by dividing (a) the aggregate dollar amount of such
liability by (b) the Fair Market Value per Share of Purchaser Capital Stock
subject to adjustment if after the date of this Agreement the outstanding
shares of Purchaser Capital Stock are changed into a different number or
class of shares by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination or similar
transaction.
12.8 NO CONTRIBUTION. Except for rights and claims reserved as
provided in Section 2(d) of the Release signed by each Signing Stockholder at
Closing, the form of which is attached hereto as Exhibit O, from and after
the Effective Time each Signing Stockholder waives, and acknowledges and
agrees that such Signing Stockholder shall not have and shall not exercise or
assert or attempt to exercise or assert, any right of contribution or right
of indemnity or any other right or remedy against Kyser in connection with
any indemnification obligation to which such Signing Stockholder may become
subject under this Section 12.
12.9 EXCLUSIVITY OF INDEMNIFICATION REMEDIES.
(a) To the fullest extent permitted by applicable law from
and after the Effective Time, except with respect to fraud claims and claims
under applicable securities laws, the indemnification remedies and other
remedies provided in this Section 12 or in Section 13.13 shall be the
exclusive remedies of the Purchaser Indemnitees for the Breach of any
representation, warranty, covenant or obligation by Kyser or any Signing
Stockholder in this Agreement (without limiting the rights of the parties
under any other agreement), and shall be in lieu of any rights the Purchaser
Indemnitees otherwise may have under law or in equity to seek or obtain
Damages or any other remedy against the Signing Stockholders with respect to
any such Breaches, all of which other rights and remedies each of the
Purchaser Indemnitees hereby waives.
(b) To the fullest extent permitted by applicable law from
and after the Effective Time, except with respect to fraud claims and claims
under applicable securities laws, the indemnification remedies and other
remedies provided in this Section 12 or in Section 13.13 shall be the
exclusive remedies of the Stockholder Indemnitees for the Breach of any
representation, warranty, covenant or obligation by Purchaser in this
Agreement (without limiting the rights of the parties under any other
agreement), and shall be in lieu of any rights the Stockholder Indemnitees
otherwise may have under law or in equity to seek or obtain Damages or any
other remedy against Purchaser and Merger Sub with respect to any such
Breaches, all of which other rights and remedies each of the Stockholder
Indemnitees hereby waives.
(c) Notwithstanding Section 12.9(a) or 12.9(b), nothing in
this Section 12 shall limit or adversely affect any right or remedy of any
party hereto with respect to any Breach or alleged Breach by another party
hereto of any covenant or obligation in this Agreement or in any of the other
Transactional Agreements, which covenant or obligation by its terms is to be
performed or complied with at or after Closing.
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12.10 THIRD PARTY CLAIMS.
(a) Any party seeking indemnification under this Section 12
(an "indemnified party") in connection with any claim or Proceeding asserted
by a third party which is reasonably likely to result in a claim for
indemnification under Section 12 of this Agreement shall provide notice to
the indemnifying party of any such claim or Proceeding, provided that any
notice to the Stockholders with respect to a claim pursuant to Section 12.2
may be properly made by Purchaser to the Agent.
(b) If a third party asserts that an indemnified person is
liable to such third party for a monetary or other obligation which may
constitute or result in Damages for which such indemnified person may be
entitled to indemnification pursuant to Section 12 of this Agreement, and
such indemnified person reasonably determines that it has a valid business
reason to fulfill such obligation, then: (i) such indemnified person may
make a claim against the indemnifying party for indemnification pursuant to
Section 12; and (ii) such indemnified person shall be reimbursed, in
accordance with the provisions hereof, for any such Damages for which it is
entitled to indemnification pursuant to Section 12.
(i) Within 20 days after delivery of any notification
contemplated by Section 12.10(a), the indemnifying party may, subject to the
provisions of Section 12.10(c)(ii), upon written notice thereof to the
indemnified party, assume control of the defense of such claim or Proceeding
with counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party. If the indemnifying party does not assume control
of such defense, the indemnified party shall control such defense. The party
not controlling such defense may participate therein at its own expense;
provided that if the indemnifying party assumes control of such defense and
if independent counsel for the indemnified party reasonably concludes that it
and the indemnifying party have conflicting interests with respect to such
claim or Proceeding, the reasonable fees and expenses of counsel to the
indemnified party incurred in connection with the defense of such claim or
Proceeding shall be considered Damages for purposes of this Agreement. The
party controlling such defense shall keep the other party advised of the
status of such claim or Proceeding and the defense thereof and shall consider
in good faith recommendations made by the other party with respect thereto.
(ii) Prior to settling or compromising any claim or
Proceeding, the indemnifying party shall consult with, and duly take into
account the interests of, the indemnified party. The indemnifying party
shall provide the indemnified party with at least ten business days' advance
written notice of any settlement or compromise of a claim or Proceeding that
the indemnifying party intends to accept, and the indemnifying party shall
not agree to any settlement of any claim or Proceeding without the prior
written consent of the indemnified party, which consent shall not be
unreasonably withheld. Likewise, the indemnifying party shall not be liable
for any settlement of any claim or Proceeding entered into without the prior
written consent of the indemnifying party, which consent shall not be
unreasonably withheld. It is expressly agreed that it shall be construed as
reasonable hereunder for an indemnified party to withhold its consent unless
such settlement provides for full and unconditional release of such party
from any and all liabilities and obligations of any nature whatsoever with
respect to such claim or Proceeding.
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(iii) In the event that the indemnified party withholds
its consent to a settlement under Section 12.10(c)(ii), and such consent has
been unreasonably withheld (taking into consideration the final sentence of
Section 12.10(c)(ii)), the indemnifying party shall not settle or compromise
such claim or Proceeding on the terms proposed, and the indemnified party
shall assume control of the claim or Proceeding. In such event, the
indemnified party shall hold harmless and indemnify the indemnifying party to
the extent (A) the indemnifying party's indemnity obligations are increased
as a result of the failure of such claim or Proceeding to be settled or
compromised as proposed in the offer that was acceptable to the indemnifying
party (the "Original Offer") and (B) the indemnifying party is required to
pay any Damages with respect to such claim or Proceeding in excess of the
amount the indemnifying party would otherwise have incurred under the
Original Offer; PROVIDED, HOWEVER, that the indemnifying party shall remain
liable in any event up to the amount proposed in the Original Offer. If,
however, any Damages paid with respect to such claim or Proceeding, or any
compromise or settlement of such claim or Proceeding, shall be less than the
amount proposed in the Original Offer, then the indemnifying party shall
indemnify the indemnified party for the payment of Damages of such compromise
or settlement subject to the limitations set forth in this Section 12.
(iv) Notwithstanding any of the foregoing, if a claim
or Proceeding relates to a matter which, if adversely determined, would (A)
have a material adverse impact on Purchaser's liability in another Proceeding
which is not subject to indemnification hereunder, (B) have a material
adverse impact on the future conduct of Purchaser or its affiliates' business
or operations on a continuing basis; or (C) have a material adverse impact on
Purchaser or its affiliates' tax or accounting positions on a continuing
basis, then Purchaser shall have the right to defend, contest, settle and
otherwise control the resolution of any such claim or Proceeding, with one
counsel selected by Purchaser and reasonably satisfactory to the indemnifying
party; provided, however, that the Stockholders shall have the same rights of
participation and same right to consent to a settlement provided to an
indemnified party under the foregoing provisions of this Section 12.10(c).
12.11 EXERCISE OF REMEDIES BY INDEMNITEES.
(a) No Purchaser Indemnitee (other than Purchaser or any
successor thereto or assign thereof) shall be permitted to assert any
indemnification claim or exercise any other remedy under this Agreement
unless Purchaser (or any successor thereto or assign thereof) shall have
consented to the assertion of such indemnification claim or the exercise of
such other remedy.
(b) No Stockholder Indemnitee (other than Agent or any
successor thereto or assign thereof) shall be permitted to assert any
indemnification claim or exercise any other remedy under this Agreement
unless the Stockholder Indemnitee entitled to indemnification (or any
successor thereto or assign thereof) shall have consented to the assertion of
such indemnification claim or the exercise of such other remedy.
12.12 CLAIMS BETWEEN THE PARTIES NOT INVOLVING THIRD PARTY CLAIMS.
(a) Subject to the terms and limitations set forth in this
Section 12, if at any time or from time to time an indemnified party seeks to
make indemnification claims against an
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indemnifying party for amounts due to such indemnified party pursuant to
Section 12 not arising out of a claim or proceeding asserted or brought by a
third party covered by Section 12.12, it shall duly deliver to the
indemnified party a notice (a "Notice") setting forth:
(i) the specific representation, warranty or covenant
in the Agreement alleged to have been Breached by the indemnifying party;
(ii) a summary of the facts and circumstances giving
rise to the alleged Breach of such representation, warranty or covenant by
the indemnifying party; and
(iii) a description of, and a reasonable estimate of
the total amount of, the Damages actually incurred or expected to be incurred
by the indemnified party as a result of such alleged Breach.
If a Notice relates to an alleged Breach of a representation or
warranty in this Agreement and such Notice shall not have been delivered to
the indemnifying party on or prior to the Expiration Date (or, if later, the
date on which such representation or warranty expires as stated in Section
12.1(a)), then such Notice shall not be deemed to have been delivered and
shall be of no force or effect. A Notice by Purchaser or Merger Sub with
respect to a claim for indemnification pursuant to Section 12.2 shall be
deemed to have been delivered to the Stockholders if such Notice is delivered
by Purchaser or Merger Sub to the Agent and to the Trustee of the Trust.
(b) Within twenty (20) days after the delivery of a Notice
in accordance with Section 12.12(a), the indemnifying party may, in its sole
discretion, deliver to the indemnified party who delivered the Notice a
written notice (the "Response Notice") containing (i) a statement
substantially to the effect that the indemnification claim described in such
Notice is not being disputed, (ii) a statement substantially to the effect
that a portion of the dollar amount of Damages set forth in such Notice is
being disputed (specifying the dollar amount of the portion that is not being
disputed) or (iii) a statement substantially to the effect that the entire
dollar amount of Damages set forth in such Notice is being disputed. (Any
portion of the dollar amount of such Damages that is not being disputed shall
be referred to in this Agreement as the "Undisputed Amount," and the
remaining portion of such Damages shall be referred to in this Agreement as
the "Disputed Amount.") If no Response Notice is delivered within twenty (20)
days after the delivery of a Notice to an indemnifying party, then the
indemnifying party shall be deemed not to be disputing the Damages described
in the Notice.
(c) If (i) an indemnifying party is disputing all or any
portion of the dollar amount of the Damages set forth in a Notice, and (ii)
within forty five (45) days after the delivery of a Notice by an indemnified
party to an indemnifying party in accordance with Section 12.12(a), the
parties do not reach agreement with respect to the dispute, then the
indemnification claim or claims described in such Notice shall be referred to
an arbitrator chosen jointly by the indemnified party and the indemnifying
party. If the indemnified party and the indemnifying party do not agree on
the selection of an arbitrator within ten (10) days after the expiration of
the forty five (45) day period referred to in this Section 12.12(c), either
the indemnified party or the indemnifying party may submit the matter in
dispute for resolution pursuant to a binding arbitration proceeding under
Judicial Arbitration & Mediation
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Services/Endispute, Inc. ("JAMS"). The venue for such arbitration proceeding
shall be Dallas, Texas. Subject to the terms and limitations set forth in
this Section 12, (i) the arbitrator's fees and other related expenses of any
arbitration under this Agreement (such as expenses for transcripts of the
arbitration proceedings) shall be borne by the parties to the arbitration in
such proportions as shall be determined by the arbitrator, or if there is no
such determination, then such fees and other expenses shall be borne equally
by the parties to the arbitration, (ii) the arbitrator shall have the
authority to make an award specifying the dollar amount (if any) representing
the portion of the Disputed Amount that is to be awarded to the indemnified
party, but shall have no right to grant special, punitive or exemplary
damages or indirect or consequential damages or to grant any form of
equitable relief and (iii) the determination of the arbitrator as to the
dollar amount (if any) representing the portion of the Disputed Amount that
is payable shall be conclusive and binding upon the parties hereto and
judgment may be entered thereon in any court having jurisdiction thereof.
12.13 STOCKHOLDERS' AGENT.
(a) The Stockholders, except for the Trustee of the Trust,
individually and collectively, hereby irrevocably nominate, constitute and
appoint C. Garry Hendricks as the agent and true and lawful representative
and attorney-in-fact of the Stockholders (the "Agent"), with full power of
substitution, to act in the name, place and stead of the Stockholders, and as
the only person authorized to take any action required, authorized or
contemplated by this Section 12, in respect of any claim made pursuant to
Section 12.2 of this Agreement (the "Indemnification Obligations"),
including, without limitation, any settlement, compromise or defense of the
Indemnification Obligations, C. Garry Hendricks hereby accepts his
appointment as Agent.
(b) The Stockholders, except for the Trustee of the Trust,
hereby grant to the Agent full authority to take or omit to take any action,
and execute, deliver, acknowledge, certify and file on behalf of the
Stockholders (in the name of any or all of the Stockholders or otherwise),
except for the Trustee of the Trust, any and all documents, that the Agent
may, in his sole discretion, determine to be necessary, desirable or
appropriate, in such forms and containing such provisions as the Agent may,
in his sole discretion, determine to be appropriate with respect to the
Indemnification Obligations. Notwithstanding anything to the contrary
contained in any of the Transactional Agreements:
(i) Purchaser shall be entitled to deal exclusively
with the Agent and the Trustee of the Trust on all matters relating to the
Indemnification Obligations; and
(ii) with respect to the Indemnification Obligations,
each Purchaser Indemnitee shall be entitled to rely conclusively (without
further evidence of any kind whatsoever) on any document executed or
purported to be executed on behalf of any Signing Stockholder (other than the
Trustee of the Trust) by the Agent, and on any other action taken or
purported to be taken on behalf of any Stockholder (other than the Trustee of
the Trust) by the Agent, as fully binding upon such Stockholder.
(c) The Stockholders, except for the Trustee of the Trust,
recognize and intend that the power of attorney granted in Section 12.13(a):
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(i) is coupled with an interest and is irrevocable;
(ii) may be delegated by the Agent; and
(iii) shall survive the death, disability or legal
incapacity of each of the Stockholders.
(d) The Agent shall receive and deliver notices on behalf of
the Stockholders, except for the Trustee of the Trust, and take all such
action as he may deem necessary, appropriate, permitted or advisable to be
taken by or on behalf of the Stockholders, except for the Trustee of the
Trust, under this Section 12 in order to consent to, pay, contest, arbitrate,
litigate or settle any claim or alleged claims asserted with respect to the
Indemnification Obligations, upon receipt of instructions from a majority of
the Stockholders other than the Trustee of the Trust (based on the number of
Shares held immediately prior to Closing). The Agent shall not be personally
liable to the other Stockholders for any action taken, suffered or omitted by
him in good faith and believed by him to be authorized by the Stockholders
under this Section 12.13.
(e) In acting as the representative of the Stockholders, the
Agent may rely upon, and shall be protected in acting or refraining from
acting upon, an opinion of counsel, certificate of auditors or other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, arbitrator's award, appraisal, bond or other paper or
document reasonably believed by him to be genuine and to have been signed or
presented by the proper party or parties. The Agent may consult with counsel
and any advice of such counsel shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted by him in
such capacity in good faith and in accordance with such opinion of counsel.
The Agent may perform his duties as Agent either directly or by or through
his agents or attorneys and the Agent shall not be responsible to the other
Stockholders for any misconduct or negligence on the part of any agent or
attorney appointed with reasonable care by the Agent hereunder.
(f) Within ten days after receiving notice of the death or
incapacity of the Agent, the Stockholders shall by majority vote other than
the Trustee of the Trust (based on the number of Shares held immediately
prior to Closing) appoint a successor to fill the vacancy. The Stockholders
(other than the Trustee of the Trust) may by such majority vote remove the
Agent with or without cause and appoint a successor, provided that notice
thereof is given by the new Agent to each of the other parties hereto. The
Agent may resign if, and only if, he is simultaneously replaced with a
substitute Agent. Any Agent appointed from time to time hereunder who is not
also a Stockholder must be reasonably acceptable to Purchaser. If for any
reason there is no Agent at any time, all references herein to the Agent
shall be deemed to refer to the Stockholders.
(g) The Agent shall serve as such without compensation, but
all expenses incurred by the Agent in connection with the performance of his
duties as Agent shall be borne and paid by the Stockholders (other than the
Trustee of the Trust) pro rata in accordance with their respective ownership
of Shares immediately prior to Closing.
SECTION 13. MISCELLANEOUS PROVISIONS
13.1 INTENTIONALLY OMITTED.
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13.2 Intentionally Omitted.
13.3 Further Assurances. Each party hereto shall execute and/or
cause to be delivered to each other party hereto such instruments and other
documents, and shall take such other actions, as such other party may
reasonably request (prior to, at or after the Closing) for the purpose of
carrying out or evidencing any of the Transactions.
13.4 FEES AND EXPENSES. Subject to Section 12 and Section 13.5 or
as otherwise provided in any of the Transactional Agreements, each party to
this Agreement shall bear and pay all fees, costs and expenses (including
legal fees and accounting fees) that have been incurred or that are incurred
in the future by such party in connection with the transactions contemplated
by this Agreement, including all fees, costs and expenses incurred by such
party in connection with or by virtue of:
(a) the negotiation, preparation and review of any term
sheet or similar document relating to any of the Transactions;
(b) the investigation and review conducted by Purchaser,
Merger Sub and their Representatives with respect to Kyser's business (and
the furnishing of information to Purchaser, Merger Sub and their
Representatives in connection with such investigation and review);
(c) the negotiation, preparation and review of this
Agreement (including the disclosure schedules), the other Transactional
Agreements and all certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the Transactions;
(d) the preparation and submission of any filing or notice
required to be made or given in connection with any of the Transactions, and
the obtaining of any Consent required to be obtained in connection with any
of the Transactions; and
(e) the consummation and performance of the Transactions.
Kyser shall pay the reasonable fees, costs and expenses of Strasburger &
Price, L.L.P., Boswell & Kober P.C., Houthoff and Sproles Woodard LLP.
Purchaser acknowledges that Purchaser shall pay the filing fee in connection
with filing the required notifications under the HSR Act.
13.5 ATTORNEYS' FEES. Except for actions or proceedings related to
claims for indemnification pursuant to Section 12 of this Agreement, which
are governed by Section 12 of this Agreement, if any legal action or other
legal proceeding relating to any of the Transactional Agreements or the
enforcement of any provision of any of the Transactional Agreements is
brought against any party hereto, the prevailing party shall be entitled to
recover reasonable attorneys' fees, costs and disbursements (in addition to
any other relief to which the prevailing party may be entitled).
13.6 NOTICES. Any notice or other communication required or
permitted to be delivered to any party under this Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered or certified mail, by courier or express
delivery service or by telecopier) to the address or telecopier number set
forth beneath
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the name of such party below (or to such other address or telecopier number
as such party shall have specified in a written notice given to the other
parties hereto):
if to Kyser:
T.A. Kyser Co.
2019 McKenzie, Suite 150
Carrollton, TX 75006
Attention: Chief Executive Officer
Telecopier: (972) 241-6298
with a copy (which shall not constitute notice to Kyser)
to:
Patrick Owens, Esq.
Strasburger & Price, L.L.P.
902 Main Street, Suite 4300
Dallas, TX 75202
Telecopier: (214) 651-4330
if to any of the Signing Stockholders, in accordance with the
notice provisions contained in the Joinder Agreement:
if to Purchaser or Merger Sub:
Metron Technology B.V.
1350 Old Bayshore Highway, Suite 360
Burlingame, CA 94010
Attention: Chief Executive Officer
Telecopier: (650) 373-1135
WITH A COPY TO:
Alan C. Mendelson, Esq.
Suzanne Sawochka Hooper, Esq.
Cooley Godward LLP
Five Palo Alto Square
3000 El Camino Real
Palo Alto, CA 94306
Telecopier: (650) 857-0663
The addresses set forth in Section 13.6 for Kyser and Merger Sub constitute
the addresses of such parties, as constituent entities in the Merger,
required to be set forth herein pursuant to Section 92A.100, Nevada Revised
Statutes.
13.7 PUBLICITY. Without limiting the generality of anything
contained in Section 8.2, on and at all times after the Closing Date, except
as required by law:
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(a) no press release or public announcement concerning the
Transactions shall be issued, given, made or otherwise disseminated by Kyser
or any of the Signing Stockholders without the approval of Purchaser, and no
press release or public announcement concerning the Transactions shall be
issued, given, made or otherwise disseminated by Purchaser without the
approval of Kyser, and the parties hereto shall continue to keep the
existence and terms of this Agreement and the other Transactional Agreements
strictly confidential;
(b) each Signing Stockholder shall keep strictly
confidential, and shall not use or disclose to any other Person, any
non-public document or other information in such Signing Stockholder's
possession that relates directly or indirectly to the business of Kyser,
Purchaser, Merger Sub or any affiliate of Purchaser; and
(c) if a party is required by law to make any disclosure
regarding the Transactions, such party shall advise the other parties, using
its Best Efforts to do so at least five business days before making such
disclosure, of the nature and content of the intended disclosure.
13.8 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
13.9 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
13.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
13.11 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with,
and governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to
this Agreement or the enforcement of any provision of this Agreement shall be
brought or otherwise commenced in any state or federal court located in
Dallas County, Texas. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in Dallas County,
Texas (and each appellate court located in the State of Texas) in connection
with any such legal proceeding;
(ii) agrees that each such state and federal court
located in the State of Texas shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any such
state or federal court located in the State of Texas, any claim that such
party is not subject personally to the jurisdiction of such court, that such
legal proceeding has been brought in an inconvenient forum, that the venue of
such
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proceeding is improper or that this Agreement or the subject matter of this
Agreement may not be enforced in or by such court.
(c) Each Signing Stockholder agrees that, if any Proceeding
is commenced against any Purchaser Indemnitee by any Person in or before any
court or other tribunal anywhere in the world, then such Purchaser Indemnitee
may proceed against such Signing Stockholder in such court or other tribunal
with respect to any indemnification claim or other claim arising directly or
indirectly from or relating directly or indirectly to such Proceeding or any
of the matters alleged therein or any of the circumstances giving rise
thereto. Purchaser agrees that, if any Proceeding is commenced against any
Stockholder Indemnitee by any Person in or before any court or other tribunal
anywhere in the world, then such Stockholder Indemnitee may proceed against
Purchaser in such court or other tribunal with respect to any indemnification
claim or other claim arising directly or indirectly from or relating directly
or indirectly to such Proceeding or any of the matters alleged therein or any
of the circumstances giving rise thereto.
13.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon:
Kyser and its successors and assigns (if any); the Signing Stockholders and
their respective personal representatives, executors, administrators,
estates, heirs, successors and assigns (if any); and Purchaser, Merger Sub
and its successors and assigns (if any). This Agreement shall inure to the
benefit of: Kyser; the Signing Stockholders; Purchaser; Merger Sub; the other
Purchaser Indemnitees (subject to Section 12.11); the Stockholder Indemnitees
(subject to Section 12.11); and the respective personal representatives,
executors, administrators, estate, heirs, successors and assigns (if any) of
the foregoing. The parties may freely assign any or all of their rights (but
not their obligations) under this Agreement (including their indemnification
rights under Section 12), in whole or in part, to any other Person without
obtaining the consent or approval of any other party hereto or of any other
Person; provided, however, that the assigning party shall remain liable for
all liabilities and obligations of the assigning party under this Agreement.
13.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE. Except as set forth
in Section 12, the rights and remedies of the parties hereto shall be
cumulative (and not alternative). The parties to this Agreement agree that,
in the event of any Breach or threatened Breach by any party to this
Agreement of any covenant, obligation or other provision set forth in this
Agreement for the benefit of any other party to this Agreement, such other
party shall be entitled (in addition to any other remedy that may be
available to it under the terms hereof) to (i) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (ii) an injunction restraining
such Breach or threatened Breach, and that no party shall be required to
provide any bond or other security in connection with any such decree, Order
or injunction or in connection with any related action or Proceeding.
13.14 WAIVER.
(a) No failure on the part of any Person to exercise any
power, right, privilege or remedy under this Agreement, and no delay on the
part of any Person in exercising any power, right, privilege or remedy under
this Agreement, shall operate as a waiver of such power, right, privilege or
remedy; and no single or partial exercise of any such power, right, privilege
or
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remedy shall preclude any other or further exercise thereof or of any other
power, right, privilege or remedy.
(b) No Person shall be deemed to have waived any claim
arising out of this Agreement, or any power, right, privilege or remedy under
this Agreement, unless the waiver of such claim, power, right, privilege or
remedy is expressly set forth in a written instrument duly executed and
delivered on behalf of such Person; and any such waiver shall not be
applicable or have any effect except in the specific instance in which it is
given.
13.15 AMENDMENTS. This Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of all of the parties.
13.16 SEVERABILITY. In the event that any provision of this
Agreement, or the application of any such provision to any Person or set of
circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of this Agreement, and the
application of such provision to Persons or circumstances other than those as
to which it is determined to be invalid, unlawful, void or unenforceable,
shall not be impaired or otherwise affected and shall continue to be valid
and enforceable to the fullest extent permitted by law.
13.17 PARTIES IN INTEREST. Subject to Section 13.12 and except for
the provisions of Section 12 hereof, none of the provisions of this Agreement
is intended to provide any rights or remedies to any Person other than the
parties hereto and their respective personal representatives, executors,
administrators, estate, heirs, successors and permitted assigns (if any).
13.18 ENTIRE AGREEMENT. The Transactional Agreements set forth the
entire understanding of the parties relating to the subject matter thereof
and supersede all prior agreements and understandings among or between any of
the parties relating to the subject matter thereof except that the
Confidentiality Agreements shall continue in full force and effect.
13.19 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context
requires: the singular number shall include the plural, and vice versa; the
masculine gender shall include the feminine and neuter genders; the feminine
gender shall include the masculine and neuter genders; and the neuter gender
shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction
to the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in this
Agreement to "Sections" and "Exhibits" are intended to refer to Sections of
this Agreement and Exhibits to this Agreement.
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13.20 ACKNOWLEDGMENT. Purchaser, Merger Sub and Kyser each
acknowledge that C. Garry Hendricks will enter into a gain recognition
agreement pursuant to the requirements of United States Treasury Regulation
Section 1.367(a)-3(c)(1))(iii) as required so that the conversion of his
Shares into shares of Purchaser Capital Stock in the Merger will not be
subject to gain recognition under Section 367(a)(1) of the Code.
13.21 NO PERSONAL LIABILITY. None of the directors, officers,
representatives, agents or legal counsel of any party, in their capacity as
such, shall have any liability in Damages, rescission or otherwise to any
other party under or account of this Agreement or any of the Transactions.
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The parties hereto have caused this Agreement to be executed and
delivered as of the date set forth above.
"PURCHASER": METRON TECHNOLOGY B.V.,
a Netherlands corporation
By: \s\ Ed Segal
---------------------------
Name: Ed Segal
-------------------------
Title: President & CEO
------------------------
"MERGER SUB": METRON ACQUISITION SUB, INC.,
a Nevada corporation
By: \s\ Ed Segal
---------------------------
Name: Ed Segal
-------------------------
Title: President
------------------------
"KYSER": T.A. KYSER CO.,
a Nevada corporation
By: \s\ C. Garry Hendricks
---------------------------
Name:
-------------------------
Title:
------------------------
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Exhibit 2.2
AMENDMENT TO AGREEMENT AND PLAN OF MERGER AND REORGANIZATION
THIS AMENDMENT (the "Amendment") to the Agreement and Plan of
Merger and Reorganization, dated as of June 12, 1998 by and among METRON
TECHNOLOGY B.V., a Netherlands corporation ("Purchaser"), METRON ACQUISITION
SUB, INC., a Nevada corporation and a wholly owned subsidiary of Purchaser
("Merger Sub"), T.A. KYSER CO., a Nevada corporation ("Kyser") and certain
stockholders of Kyser (the "Stockholders") who previously joined in the
execution of the Merger Agreement by executing a Joinder Agreement (the "Joinder
Agreement") is entered into as of July 13, 1998 by and among Purchaser, Merger
Sub, Kyser and the Stockholders. Capitalized terms not specifically defined
herein shall have the meanings ascribed to them in the Merger Agreement.
AGREEMENT
Purchaser, Merger Sub, Kyser and the Signing Stockholders, intending to
be legally bound, agree as follows:
1. Section 12 of the Merger Agreement is hereby amended and replaced in
its entirety with the following:
SECTION 12. INDEMNIFICATION, ETC.
12.1 SURVIVAL OF REPRESENTATIONS AND COVENANTS.
(a) The representations and warranties made by Kyser, the Signing
Stockholders, Purchaser and Merger Sub in this Agreement (including without
limitation the representations and warranties set forth in Sections 2, 3 and
4) shall survive the Closing and shall expire on the earlier of (i) the date
of issuance of an audit report with respect to financial statements which
both contain combined operations of Purchaser and Kyser and include the
Closing Date or (ii) ninety (90) days after the Closing Date (the "Expiration
Date"); provided, however, that (w) notwithstanding the foregoing, the Kyser
Specified Representations (other than Section 2.4), the Signing Stockholder
Specified Representations and the Purchaser Specified Representations (other
than Section 4.4) shall survive the Closing for the applicable statute of
limitations, (x) if, at any time prior to the expiration of a representation
or warranty made by Kyser, any Purchaser Indemnitee (acting in good faith)
delivers to the Agent a written notice that complies with the applicable
provision of Sections 12.10 or 12.12 alleging the existence of a Breach of
such representation or warranty and asserting a claim for recovery under
Section 12.2 based on such alleged inaccuracy or other Breach, then the claim
asserted in such notice shall survive against the Identified Stockholders
until such time as such claim is fully and finally resolved, (y) if, at any
time prior to the expiration of a representation or warranty made by any of
the Signing Stockholders, any Purchaser Indemnitee (acting in good faith)
delivers to a Signing Stockholder obligated to provide indemnity under this
Section 12 in respect of such representation or warranty a written notice
that complies with the applicable provision of Sections 12.10 or 12.12
alleging the existence of a Breach of such representation and warranty and
asserting a claim for recovery under Section 12.4 based on such alleged
inaccuracy or other
1.
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Breach, then the claim asserted in such notice shall survive against the
Signing Stockholder to whom such notice was delivered until such time as such
claim is fully and finally resolved and (z) if, at any time prior to the
expiration of a representation or warranty made by Purchaser or Merger Sub,
any Stockholder Indemnitee (acting in good faith) delivers to Purchaser a
written notice that complies with the applicable provision of Sections 12.10
or 12.12 alleging the existence of a Breach of such representation and
warranty and asserting a claim for recovery under Section 12.5 based on such
alleged inaccuracy or other Breach, then the claim asserted in such notice
shall survive until such time as such claim is fully and finally resolved.
(b) Notwithstanding anything in this Agreement, from and after the
Closing, any matter which has been accurately disclosed by Kyser or any of
the Signing Stockholders in the Kyser Disclosure Schedule or the Signing
Stockholder Disclosure Schedule or any update to either of the foregoing
delivered to Purchaser at or prior to Closing, or in the Kyser Closing
Certificate or any of the Signing Stockholders' Closing Certificates, (i)
shall be deemed accepted by Purchaser and Merger Sub and (ii) shall not form
the basis of any claim for Damages or any other remedy by any Purchaser
Indemnitee against any of the Identified Stockholders or Signing
Stockholders, as the case may be. Notwithstanding anything in this Agreement,
from and after the Closing, any matter which has been accurately disclosed by
Purchaser or Merger Sub in the Purchaser Disclosure Schedule or any update
thereto delivered to Kyser or to the Signing Stockholders at or prior to
Closing, or in the Purchaser Closing Certificate, (i) shall be deemed
accepted by Kyser and the Signing Stockholders and (ii) shall not form the
basis of any claim for Damages or any other remedy by any of the Stockholder
Indemnitees against Purchaser.
(c) For purposes of this Agreement: (i) each statement or other item
of information set forth in the Kyser Disclosure Schedule or in the Kyser
Closing Certificate shall be deemed to be a representation and warranty made
by Kyser in this Agreement; (ii) each statement or other item of information
set forth in the Signing Stockholder Disclosure Schedule or in any of the
Signing Stockholders' Closing Certificates shall be deemed to be a
representation and warranty in this Agreement made by the Signing Stockholder
to whom such statement or item of information relates; and (iii) each
statement or other item of information set forth in the Purchaser Disclosure
Schedule or in the Purchaser Closing Certificate shall be deemed to be a
representation and warranty made by Purchaser and Merger Sub in this
Agreement.
12.2 INDEMNIFICATION BY IDENTIFIED STOCKHOLDERS REGARDING KYSER
REPRESENTATIONS AND WARRANTIES.
(a) To the extent permitted by applicable law, but subject to the
terms and limitations set forth in this Section 12, from and after the
Effective Time, the Identified Stockholders, pro rata based on their
respective ownership of the Shares, shall hold harmless and indemnify each of
the Purchaser Indemnitees from and against, and shall compensate and
reimburse each of the Purchaser Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Purchaser
Indemnitees or to which any of the Purchaser Indemnitees may otherwise become
subject at any time (regardless of whether or not such Damages relate to any
third-party claim) and which arise directly or indirectly from or as a direct
or indirect result of, or are directly or indirectly connected with:
2.
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(i) any Breach at Closing of any representation or warranty
made by Kyser in this Agreement (except with respect to Section 2.31, without
giving effect to any Kyser Material Adverse Effect qualification or to the
words "material," "materially" or "in all material respects" contained or
incorporated directly or indirectly in such representation or warranty but
giving effect to any update to the Kyser Disclosure Schedule delivered by
Kyser to Purchaser or Merger Sub at or prior to the Closing);
(ii) any Breach of any covenant of Kyser in this Agreement
which covenant by its terms, is to be performed in full by Kyser prior to the
Closing; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Purchaser Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) The Identified Stockholders acknowledge and agree that, if there
is any Breach of any representation, warranty or other provision relating to
Kyser or Kyser's business, condition, assets, liabilities, operations,
financial performance or net income (or any aspect or portion thereof), and
Kyser incurs Damages as a result of such Breach, then Purchaser itself shall
be deemed, by virtue of its direct or indirect ownership of common stock of
Kyser, to have incurred such Damages as a result of such Breach or Liability.
Nothing contained in this Section 12.2(b) shall have the effect of (i)
limiting the circumstances under which Purchaser may otherwise be deemed to
have incurred Damages for purposes of this Agreement, (ii) limiting the other
types of Damages that Purchaser may be deemed to have incurred (whether in
connection with any such Breach or Liability or otherwise), or (iii) limiting
the rights of Kyser or any of the other Purchaser Indemnitees under this
Section 12.2. Nothing in this Agreement shall be deemed to provide that more
than one Purchaser Indemnitee shall be entitled to recover Damages from the
Identified Stockholders with respect to the same Breach or alleged Breach of
the type referred to in clauses (i) and (ii) of Section 12.2(a).
(c) It is acknowledged and agreed that the Purchaser Indemnitees'
rights and remedies with respect to Damages related to the Soules Claims
[and Excluded Claims] (as defined in the letter agreement dated as July 13,
1998 by and among Purchaser, Kyser and the Identified Stockholders (as
amended, the "Letter Agreement")) shall be pursuant to the Letter Agreement
exclusively, and that the Purchaser Indemnitees shall have no rights or
remedies with respect to any such Damages pursuant to this Agreement.
12.3 THRESHOLD; CEILING; OTHER LIMITATIONS.
(a) Subject to Section 12.3(c) and Section 12.3(d), the Identified
Stockholders shall not be required to make any payment pursuant to Section
12.2 and the Signing Stockholders shall not be required to make any payment
pursuant to Section 12.4, until such time as the total amount of all Damages
that have been directly or indirectly suffered or incurred by any one or more
of the Purchaser Indemnitees, or to which any one or more of the Purchaser
Indemnitees has or have otherwise become subject, exceeds $150,000 in the
aggregate. At such time as the
3.
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total amount of such Damages exceeds $150,000 in the aggregate, the Purchaser
Indemnitees shall be entitled to be indemnified (on the terms stated in this
Section 12) only against the portion of such Damages exceeding $150,000.
(b) Subject to Section 12.3(c), the maximum aggregate liability of
all of the Stockholders under Sections 12.2(a) and 12.4(a) shall be limited
to $1,011,633, of which the maximum aggregate liability of the Identified
Stockholders under Section 12.2(a) shall be $676,694.
(c) The limitations on the Stockholders' obligations that are set
forth in Sections 12.3(a) and 12.3(b) shall not apply to: (i) with respect to
the Identified Stockholders, any Breach of the Kyser Specified
Representations (other than a Breach of Section 2.4) or, with respect to
Signing Stockholders, any Breach of the Signing Stockholder Specified
Representations. In addition, (i) the limitations on any Identified
Stockholder's obligations that are set forth in Sections 12.3(a) and 12.3(b)
shall not apply to Damages arising out of a Breach of a representation,
warranty or covenant if (A) Kyser or any of the Identified Stockholders had
Knowledge of such Breach as of the Closing and (B) such Breach was not
disclosed to Purchaser or Merger Sub at or prior to Closing, and (ii) the
limitations on any Signing Stockholder's obligations that are set forth in
Sections 12.3(a) shall not apply to Damages arising out of a Breach of a
representation, warranty or covenant if (A) the applicable Signing
Stockholder had knowledge of such Breach as of the Closing and (B) such
Breach was not disclosed to Purchaser or Merger Sub at or prior to Closing.
(d) Notwithstanding anything in this Agreement, (i) each Identified
Stockholder's aggregate liability with respect to any Damages recoverable
pursuant to Section 12.2 shall not exceed such Identified Stockholder's pro
rata portion of such Damages after application of the limitations contained
in this Section 12, based on the respective number of Shares owned by such
Stockholder immediately prior to the Closing and (ii) the maximum aggregate
liability of any Stockholder under this Section 12 or otherwise in respect of
the Merger shall be limited to 8% of the shares of Purchaser Capital Stock
received by such Stockholder pursuant to this Agreement and the Merger. Each
Identified Stockholder's pro rata portion of Damages pursuant to Section 12.2
shall be based on his pro rata portion of all of the Shares outstanding
immediately prior to the Merger.
(e) No Stockholder shall have any liability to any Purchaser
Indemnitee as a result of the Breach by another Stockholder of any
representation, warranty, covenant or obligation of such other Stockholder in
this Agreement or otherwise.
12.4 INDEMNIFICATION BY SIGNING STOCKHOLDERS REGARDING SIGNING STOCKHOLDER
REPRESENTATIONS AND WARRANTIES AND COVENANTS.
(a) To the extent permitted by applicable law but subject to the
terms and limitations set forth in this Section 12, from and after the
Closing Date, each Signing Stockholder severally agrees to hold harmless and
indemnify each of the Purchaser Indemnitees from and against, and shall
compensate and reimburse each of the Purchaser Indemnitees for, any Damages
which are directly or indirectly suffered or incurred by any of the Purchaser
Indemnitees or to which any of the Purchaser Indemnitees may otherwise become
subject at any
4.
<PAGE>
time (regardless of whether or not such Damages relate to any third-party
claim) and which arise directly or indirectly from or as a direct or indirect
result of, or are directly or indirectly connected with:
(i) any Breach at Closing of any representation or warranty
made by such Signing Stockholder in this Agreement (without giving effect to
any qualification by the words "material," "materially" or "in all material
respects" contained or incorporated directly in such representation or
warranty but giving effect to any update to the Signing Stockholders'
Disclosure Schedule delivered by the Signing Stockholders to Purchaser or
Merger Sub at or prior to the Closing);
(ii) any Breach of any covenant or obligation of such Signing
Stockholder in this Agreement which covenant or obligation, by its terms, is
to be performed in full by such Signing Stockholder prior to Closing; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Purchaser Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) The Signing Stockholders acknowledge and agree that, in the
event of the occurrence of any Purchaser Indemnified Matter, then Purchaser
shall be deemed, by virtue of its ownership of Kyser Common Stock, to have
incurred Damages as a result of such Purchaser Indemnified Matter. Nothing
contained in this Section 12.4(b) shall have the effect of (i) limiting the
circumstances under which Purchaser may otherwise be deemed to have incurred
Damages for purposes of this Agreement, (ii) limiting the other types of
Damages that Purchaser may be deemed to have incurred (whether in connection
with any such Breach or Liability or otherwise) or (iii) limiting the rights
of Kyser or any of the other Purchaser Indemnitees under this Section 12.4.
Nothing in this Agreement shall be deemed to provide that more than one
Purchaser Indemnitee shall be entitled to recover Damages from any Signing
Stockholder with respect to the same Breach or alleged Breach of the type
referred to in clauses (i) and (ii) of Section 12.4(a).
12.5 INDEMNIFICATION BY PURCHASER AND MERGER SUB.
(a) To the extent permitted by applicable law, but subject to the
terms and limitations of this Section 12, from and after the Effective Time,
Purchaser and Merger Sub, jointly and severally, shall hold harmless and
indemnify each of the Stockholder Indemnitees from and against, and shall
compensate and reimburse each of the Stockholder Indemnitees for, any Damages
which are directly or indirectly suffered or incurred by any of the
Stockholder Indemnitees or to which any of the Stockholder Indemnitees may
otherwise become subject at any time (regardless of whether or not such
Damages relate to any third-party claim) and which arise directly or
indirectly from or as a direct or indirect result of, or are directly or
indirectly connected with:
5.
<PAGE>
(i) any Breach at Closing of any representation or warranty made by
Purchaser or Merger Sub in this Agreement (except with respect to Section
4.28, without giving effect to any Purchaser Material Adverse Effect
qualification or any other qualification by the words "material,"
"materially" or "in all material respects" contained or incorporated directly
or indirectly in such representation or warranty but giving effect to any
update to the Purchaser Disclosure Schedule delivered by Purchaser and Merger
Sub to Kyser at or prior to the Closing);
(ii) any Breach of any covenant or obligation of Purchaser or
Merger Sub in this Agreement which covenant or obligation, by its terms, is
to be performed in full by Purchaser or Merger Sub prior to Closing; or
(iii) any (A) Proceeding brought by a third-party as
contemplated by Section 12.10 arising out of any Breach or alleged Breach of
the type referred to in clause (i) or (ii) above, or (B) arbitration or other
Proceeding brought by a Stockholder Indemnitee as allowed by Section 12.12 or
pursuant to Section 13.13 for the purpose of enforcing any of its rights
under this Section 12 or Section 13.13 in respect of any Breach or alleged
Breach of the type referred to in clause (i) or (ii) above.
(b) Each of Purchaser and Merger Sub acknowledges and agrees that,
in the event of the occurrence of a Stockholder Indemnified Matter, then the
Signing Stockholders shall be deemed, by virtue of their direct or indirect
ownership of Purchaser Capital Stock, to have incurred Damages as a result of
such Breach, inaccuracy, misrepresentation or omission.
12.6 THRESHOLD; CEILING.
(a) Subject to Section 12.6(c), Purchaser and Merger Sub shall not
be required to make any indemnification payment pursuant to Section 12.5
until such time as the total amount of all Damages that have been directly or
indirectly suffered or incurred by any one or more of the Stockholder
Indemnitees, or to which any one or more of the Stockholder Indemnitees has
or have otherwise become subject, exceeds $650,000 in the aggregate. At such
time as the total amount of such Damages exceeds $650,000 in the aggregate,
the Stockholder Indemnitees shall be entitled to be indemnified (on the terms
stated in this Section 12) only against the portion of such Damages exceeding
$650,000.
(b) Subject to Section 12.6(c), the maximum liability of Purchaser
and Merger Sub under Section 12.5(a) shall be limited to $1,011,633.
(c) The limitations on the Purchaser's and Merger Sub's
indemnification obligations that are set forth in Sections 12.6(a) and
12.6(b) shall not apply to any Breach of the Purchaser Specified
Representations other than a Breach of Section 4.4. In addition, the
limitations on Purchaser's and Merger Sub's obligations that are set forth in
Sections 12.6(a) and 12.6(b) shall not apply to Damages arising out of a
Breach of a representation, warranty or covenant if (i) Purchaser or Merger
Sub had Knowledge of such Breach as of the Closing and (ii) such Breach was
not disclosed to Kyser at or prior to Closing.
12.7 SATISFACTION OF INDEMNIFICATION CLAIM. In the event any Identified
Stockholder, any Signing Stockholder, Purchaser or Merger Sub shall have any
liability (for indemnification or otherwise) to any indemnitee under this
Section 12, such Identified Stockholder, Signing
6.
<PAGE>
Stockholder, Purchaser or Merger Sub shall satisfy such liability by
delivering (or, in the case of indemnity by Purchaser or Merger Sub, issuing
and delivering) to such indemnitee the number of shares of Purchaser Capital
Stock determined by dividing (a) the aggregate dollar amount of such
liability by (b) the Fair Market Value per Share of Purchaser Capital Stock
subject to adjustment if after the date of this Agreement the outstanding
shares of Purchaser Capital Stock are changed into a different number or
class of shares by reason of any stock dividend, subdivision,
reclassification, recapitalization, split-up, combination or similar
transaction.
12.8 NO CONTRIBUTION. Except for rights and claims reserved as provided in
Section 2(d) of the Release signed by each Signing Stockholder at Closing, the
form of which is attached hereto as Exhibit O, from and after the Effective Time
each Signing Stockholder waives, and acknowledges and agrees that such Signing
Stockholder shall not have and shall not exercise or assert or attempt to
exercise or assert, any right of contribution or right of indemnity or any other
right or remedy against Kyser in connection with any indemnification obligation
to which such Signing Stockholder may become subject under this Section 12.
12.9 EXCLUSIVITY OF INDEMNIFICATION REMEDIES.
(a) To the fullest extent permitted by applicable law from and after
the Effective Time, except with respect to fraud claims and claims under
applicable securities laws, the indemnification remedies and other remedies
provided in this Section 12 or in Section 13.13 shall be the exclusive
remedies of the Purchaser Indemnitees for the Breach of any representation,
warranty, covenant or obligation by Kyser or any Signing Stockholder in this
Agreement (without limiting the rights of the parties under any other
agreement), and shall be in lieu of any rights the Purchaser Indemnitees
otherwise may have under law or in equity to seek or obtain Damages or any
other remedy against the Identified Stockholders or the Signing Stockholders,
as the case may be, with respect to any such Breaches, all of which other
rights and remedies each of the Purchaser Indemnitees hereby waives.
Notwithstanding the foregoing, nothing in this Agreement shall be deemed to
affect the Letter Agreement, which shall remain in full force and effect.
(b) To the fullest extent permitted by applicable law from and after
the Effective Time, except with respect to fraud claims and claims under
applicable securities laws, the indemnification remedies and other remedies
provided in this Section 12 or in Section 13.13 shall be the exclusive
remedies of the Stockholder Indemnitees for the Breach of any representation,
warranty, covenant or obligation by Purchaser in this Agreement (without
limiting the rights of the parties under any other agreement), and shall be
in lieu of any rights the Stockholder Indemnitees otherwise may have under
law or in equity to seek or obtain Damages or any other remedy against
Purchaser and Merger Sub with respect to any such Breaches, all of which
other rights and remedies each of the Stockholder Indemnitees hereby waives.
(c) Notwithstanding Section 12.9(a) or 12.9(b), nothing in this
Section 12 shall limit or adversely affect any right or remedy of any party
hereto with respect to any Breach or alleged Breach by another party hereto
of any covenant or obligation in this Agreement or in any of the other
Transactional Agreements, which covenant or obligation by its terms is to be
performed or complied with at or after Closing.
7.
<PAGE>
12.10 THIRD PARTY CLAIMS.
(a) Any party seeking indemnification under this Section 12 (an
"indemnified party") in connection with any claim or Proceeding asserted by a
third party which is reasonably likely to result in a claim for
indemnification under Section 12 of this Agreement shall provide notice to
the indemnifying party of any such claim or Proceeding, provided that any
notice to the Identified Stockholders with respect to a claim pursuant to
Section 12.2 may be properly made by Purchaser to the Agent.
(b) If a third party asserts that an indemnified person is liable to
such third party for a monetary or other obligation which may constitute or
result in Damages for which such indemnified person may be entitled to
indemnification pursuant to Section 12 of this Agreement, and such
indemnified person reasonably determines that it has a valid business reason
to fulfill such obligation, then: (i) such indemnified person may make a
claim against the indemnifying party for indemnification pursuant to Section
12; and (ii) such indemnified person shall be reimbursed, in accordance with
the provisions hereof, for any such Damages for which it is entitled to
indemnification pursuant to Section 12.
(c) (i) Within 20 days after delivery of any notification
contemplated by Section 12.10(a), the indemnifying party may, subject to the
provisions of Section 12.10(c)(ii), upon written notice thereof to the
indemnified party, assume control of the defense of such claim or Proceeding
with counsel selected by the indemnifying party and reasonably satisfactory
to the indemnified party. If the indemnifying party does not assume control
of such defense, the indemnified party shall control such defense. The party
not controlling such defense may participate therein at its own expense;
provided that if the indemnifying party assumes control of such defense and
if independent counsel for the indemnified party reasonably concludes that
the indemnified party and the indemnifying party have conflicting interests
with respect to such claim or Proceeding, the reasonable fees and expenses of
counsel to the indemnified party incurred in connection with the defense of
such claim or Proceeding shall be considered Damages for purposes of this
Agreement. The party controlling such defense shall keep the other party
advised of the status of such claim or Proceeding and the defense thereof and
shall consider in good faith recommendations made by the other party with
respect thereto.
(ii) Prior to settling or compromising any claim or Proceeding,
the indemnifying party shall consult with, and duly take into account the
interests of, the indemnified party. The indemnifying party shall provide the
indemnified party with at least ten business days' advance written notice of
any settlement or compromise of a claim or Proceeding that the indemnifying
party intends to accept, and the indemnifying party shall not agree to any
settlement of any claim or Proceeding without the prior written consent of
the indemnified party, which consent shall not be unreasonably withheld.
Likewise, the indemnifying party shall not be liable for any settlement of
any claim or Proceeding entered into without the prior written consent of the
indemnifying party, which consent shall not be unreasonably withheld. It is
expressly agreed that it shall be construed as reasonable hereunder for an
indemnified party to withhold its consent unless such settlement provides for
full and unconditional release of such party from any and all liabilities and
obligations of any nature whatsoever with respect to such claim or Proceeding.
8.
<PAGE>
(iii) In the event that the indemnified party withholds its consent
to a settlement under Section 12.10(c)(ii), and such consent has been
unreasonably withheld (taking into consideration the final sentence of
Section 12.10(c)(ii)), the indemnifying party shall not settle or compromise
such claim or Proceeding on the terms proposed, and the indemnified party
shall assume control of the claim or Proceeding. In such event, the
indemnified party shall hold harmless and indemnify the indemnifying party to
the extent (A) the indemnifying party's indemnity obligations are increased
as a result of the failure of such claim or Proceeding to be settled or
compromised as proposed in the offer that was acceptable to the indemnifying
party (the "Original Offer") and (B) the indemnifying party is required to
pay any Damages with respect to such claim or Proceeding in excess of the
amount the indemnifying party would otherwise have incurred under the
Original Offer; PROVIDED, HOWEVER, that the indemnifying party shall remain
liable in any event up to the amount proposed in the Original Offer. If,
however, any Damages paid with respect to such claim or Proceeding, or any
compromise or settlement of such claim or Proceeding, shall be less than the
amount proposed in the Original Offer, then the indemnifying party shall
indemnify the indemnified party for the payment of Damages of such compromise
or settlement subject to the limitations set forth in this Section 12.
(iv) Notwithstanding any of the foregoing, if a claim or Proceeding
relates to a matter which, if adversely determined, would (A) have a material
adverse impact on Purchaser's liability in another Proceeding which is not
subject to indemnification hereunder, (B) have a material adverse impact on
the future conduct of Purchaser or its affiliates' business or operations on
a continuing basis; or (C) have a material adverse impact on Purchaser or its
affiliates' tax or accounting positions on a continuing basis, then Purchaser
shall have the right to defend, contest, settle and otherwise control the
resolution of any such claim or Proceeding, with one counsel selected by
Purchaser and reasonably satisfactory to the indemnifying party; provided,
however, that the Stockholders shall have the same rights of participation
and same right to consent to a settlement provided to an indemnified party
under the foregoing provisions of this Section 12.10(c).
12.11 EXERCISE OF REMEDIES BY INDEMNITEES.
(a) No Purchaser Indemnitee (other than Purchaser or any successor
thereto or assign thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless Purchaser (or
any successor thereto or assign thereof) shall have consented to the
assertion of such indemnification claim or the exercise of such other remedy.
(b) No Stockholder Indemnitee (other than the Signing Stockholders
or, in the case of the Identified Stockholders, the Agent or any successor
thereto or assign thereof) shall be permitted to assert any indemnification
claim or exercise any other remedy under this Agreement unless the
Stockholder Indemnitee entitled to indemnification (or any successor thereto
or assign thereof) shall have consented to the assertion of such
indemnification claim or the exercise of such other remedy.
12.12 CLAIMS BETWEEN THE PARTIES NOT INVOLVING THIRD PARTY CLAIMS.
9.
<PAGE>
(a) Subject to the terms and limitations set forth in this Section
12, if at any time or from time to time an indemnified party seeks to make
indemnification claims against an indemnifying party for amounts due to such
indemnified party pursuant to Section 12 not arising out of a claim or
proceeding asserted or brought by a third party covered by Section 12.10, it
shall duly deliver to the indemnified party a notice (a "Notice") setting
forth:
(i) the specific representation, warranty or covenant in the
Agreement alleged to have been Breached by the indemnifying party;
(ii) a summary of the facts and circumstances giving rise to
the alleged Breach of such representation, warranty or covenant by the
indemnifying party; and
(iii) a description of, and a reasonable estimate of the total
amount of, the Damages actually incurred or expected to be incurred by the
indemnified party as a result of such alleged Breach.
If a Notice relates to an alleged Breach of a representation or
warranty in this Agreement and such Notice shall not have been delivered to the
indemnifying party on or prior to the Expiration Date (or, if later, the date on
which such representation or warranty expires as stated in Section 12.1(a)),
then such Notice shall not be deemed to have been delivered and shall be of no
force or effect. A Notice by Purchaser or Merger Sub with respect to a claim for
indemnification pursuant to Section 12.2 shall be deemed to have been delivered
to the Identified Stockholders if such Notice is delivered by Purchaser or
Merger Sub to the Agent.
(b) Within twenty (20) days after the delivery of a Notice in
accordance with Section 12.12(a), the indemnifying party may, in its sole
discretion, deliver to the indemnified party who delivered the Notice a
written notice (the "Response Notice") containing (i) a statement
substantially to the effect that the indemnification claim described in such
Notice is not being disputed, (ii) a statement substantially to the effect
that a portion of the dollar amount of Damages set forth in such Notice is
being disputed (specifying the dollar amount of the portion that is not being
disputed) or (iii) a statement substantially to the effect that the entire
dollar amount of Damages set forth in such Notice is being disputed. (Any
portion of the dollar amount of such Damages that is not being disputed shall
be referred to in this Agreement as the "Undisputed Amount," and the
remaining portion of such Damages shall be referred to in this Agreement as
the "Disputed Amount.") If no Response Notice is delivered within twenty (20)
days after the delivery of a Notice to an indemnifying party, then the
indemnifying party shall be deemed not to be disputing the Damages described
in the Notice.
(c) If (i) an indemnifying party is disputing all or any portion of
the dollar amount of the Damages set forth in a Notice, and (ii) within forty
five (45) days after the delivery of a Notice by an indemnified party to an
indemnifying party in accordance with Section 12.12(a), the parties do not
reach agreement with respect to the dispute, then the indemnification claim
or claims described in such Notice shall be referred to an arbitrator chosen
jointly by the indemnified party and the indemnifying party. If the
indemnified party and the indemnifying party do not agree on the selection of
an arbitrator within ten (10) days after the expiration of the forty five
(45) day period referred to in this Section 12.12(c), either the indemnified
party or the indemnifying party may submit the matter in dispute for
resolution
10.
<PAGE>
pursuant to a binding arbitration proceeding under Judicial Arbitration &
Mediation Services/Endispute, Inc. ("JAMS"). The venue for such arbitration
proceeding shall be Dallas, Texas. Subject to the terms and limitations set
forth in this Section 12, (i) the arbitrator's fees and other related
expenses of any arbitration under this Agreement (such as expenses for
transcripts of the arbitration proceedings) shall be borne by the parties to
the arbitration in such proportions as shall be determined by the arbitrator,
or if there is no such determination, then such fees and other expenses shall
be borne equally by the parties to the arbitration, (ii) the arbitrator shall
have the authority to make an award specifying the dollar amount (if any)
representing the portion of the Disputed Amount that is to be awarded to the
indemnified party, but shall have no right to grant special, punitive or
exemplary damages or indirect or consequential damages or to grant any form
of equitable relief and (iii) the determination of the arbitrator as to the
dollar amount (if any) representing the portion of the Disputed Amount that
is payable shall be conclusive and binding upon the parties hereto and
judgment may be entered thereon in any court having jurisdiction thereof.
12.13 IDENTIFIED STOCKHOLDERS' AGENT.
(a) The Identified Stockholders, individually and collectively,
hereby irrevocably nominate, constitute and appoint C. Garry Hendricks as the
agent and true and lawful representative and attorney-in-fact of the
Identified Stockholders (the "Agent"), with full power of substitution, to
act in the name, place and stead of the Identified Stockholders, and as the
only person authorized to take any action required, authorized or
contemplated by this Section 12, in respect of any claim made pursuant to
Section 12.2 of this Agreement (the "Indemnification Obligations"),
including, without limitation, any settlement, compromise or defense of the
Indemnification Obligations. C. Garry Hendricks hereby accepts his
appointment as Agent.
(b) The Identified Stockholders, hereby grant to the Agent full
authority to take or omit to take any action, and execute, deliver,
acknowledge, certify and file on behalf of the Identified Stockholders (in
the name of any or all of the Identified Stockholders or otherwise), any and
all documents, that the Agent may, in his sole discretion, determine to be
necessary, desirable or appropriate, in such forms and containing such
provisions as the Agent may, in his sole discretion, determine to be
appropriate with respect to the Indemnification Obligations. Notwithstanding
anything to the contrary contained in any of the Transactional Agreements:
(i) Purchaser shall be entitled to deal exclusively with the
Agent on all matters relating to the Indemnification Obligations; and
(ii) with respect to the Indemnification Obligations, each
Purchaser Indemnitee shall be entitled to rely conclusively (without further
evidence of any kind whatsoever) on any document executed or purported to be
executed on behalf of any Identified Stockholder by the Agent, and on any
other action taken or purported to be taken on behalf of any Identified
Stockholder by the Agent, as fully binding upon such Identified Stockholder.
(c) The Identified Stockholders, recognize and intend that the power
of attorney granted in Section 12.13(a):
11.
<PAGE>
(i) is coupled with an interest and is irrevocable;
(ii) may be delegated by the Agent; and
(iii) shall survive the death, disability or legal incapacity
of each of the Identified Stockholders.
(d) The Agent shall receive and deliver notices on behalf of the
Identified Stockholders and take all such action as he may deem necessary,
appropriate, permitted or advisable to be taken by or on behalf of the
Identified Stockholders under this Section 12 in order to consent to, pay,
contest, arbitrate, litigate or settle any claim or alleged claims asserted
with respect to the Indemnification Obligations, upon receipt of instructions
from a majority of the Identified Stockholders (based on the number of Shares
held by the Identified Stockholders immediately prior to Closing). The Agent
shall not be personally liable to the other Identified Stockholders for any
action taken, suffered or omitted by him in good faith and believed by him to
be authorized by the Identified Stockholders under this Section 12.13.
(e) In acting as the representative of the Identified Stockholders,
the Agent may rely upon, and shall be protected in acting or refraining from
acting upon, an opinion of counsel, certificate of auditors or other
certificate, statement, instrument, opinion, report, notice, request,
consent, order, arbitrator's award, appraisal, bond or other paper or
document reasonably believed by him to be genuine and to have been signed or
presented by the proper party or parties. The Agent may consult with counsel
and any advice of such counsel shall be full and complete authorization and
protection in respect to any action taken or suffered or omitted by him in
such capacity in good faith and in accordance with such opinion of counsel.
The Agent may perform his duties as Agent either directly or by or through
his agents or attorneys and the Agent shall not be responsible to the other
Identified Stockholders for any misconduct or negligence on the part of any
agent or attorney appointed with reasonable care by the Agent hereunder.
(f) Within ten days after receiving notice of the death or
incapacity of the Agent, the Identified Stockholders shall by majority vote
(based on the number of Shares held by the Identified Stockholders
immediately prior to Closing) appoint a successor to fill the vacancy. The
Identified Stockholders may by such majority vote remove the Agent with or
without cause and appoint a successor, provided that notice thereof is given
by the new Agent to each of the other parties hereto. The Agent may resign
if, and only if, he is simultaneously replaced with a substitute Agent. Any
Agent appointed from time to time hereunder who is not also an Identified
Stockholder must be reasonably acceptable to Purchaser. If for any reason
there is no Agent at any time, all references herein to the Agent shall be
deemed to refer to the Identified Stockholders.
(g) The Agent shall serve as such without compensation, but all
expenses incurred by the Agent in connection with the performance of his
duties as Agent shall be borne and paid by the Identified Stockholders pro
rata in accordance with their respective ownership of Shares immediately
prior to Closing.
12.
<PAGE>
2. References to "Signing Stockholders" contained in Section 8.20 of the Merger
Agreement shall be deemed to be references to "the Signing Stockholders and the
Identified Stockholders, as the case may be,".
3. The first sentence of Section 13.12 shall be modified by inserting after the
phrase "Kyser and its successors and assigns (if any);" the following phrase:
"the Identified Stockholders and their respective personal representatives,
executors, administrators, estates, heirs, successors and assigns (if any);" and
the second sentence shall be modified by inserting after the phrase "Kyser;" the
following phrase: "the Identified Stockholders;".
4. Exhibit A to the Merger Agreement shall be revised to add the following:
IDENTIFIED STOCKHOLDERS. "Identified Stockholders" shall mean Gregory
M. Claeys, C. Garry Hendricks and Boyd E. Hurst, Jr.
LETTER AGREEMENT. "Letter Agreement" shall have the meaning specified
in Section 12.2(c).
5. All references in the Merger Agreement to the "Agreement" shall be deemed to
refer to the Merger Agreement as amended by this Amendment. Other than as
specified above, the terms and conditions of the Merger Agreement shall remain
unchanged and in full force and effect.
13.
<PAGE>
IN WITNESS THEREOF, the parties hereto have caused this Amendment to be
executed and delivered as of the date set forth above.
"PURCHASER": METRON TECHNOLOGY B.V.,
a Netherlands corporation
By: /s/ Edward Segal
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
"MERGER SUB": METRON ACQUISITION SUB, INC.,
a Nevada corporation
By: /s/ Edward Segal
----------------------------------
Name:
-------------------------------
Title:
-------------------------------
"KYSER": T.A. KYSER CO.,
a Nevada corporation
By: /s/ C. Garry Hendricks
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
"STOCKHOLDERS": GREGORY M. CLAEYS
/s/ Gregory M. Claeys
-------------------------------------
REBEKAH A. CLAEYS
/s/ Rebekah A. Claeys
-------------------------------------
14.
<PAGE>
C. GARRY HENDRICKS
/s/ C. Garry Hendricks
-------------------------------------
BOYD E. HURST, JR.
/s/ Boyd E. Hurst, Jr.
-------------------------------------
COLIN M. HENDERSON, AS TRUSTEE
OF THE T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP
TRUST (AS AMENDED AND
RESTATED, EFFECTIVE MARCH 17,
1997)
/s/ Colin M. Henderson
-------------------------------------
15.
<PAGE>
Exhibit 2.3
JOINDER AGREEMENT
THIS JOINDER AGREEMENT (the "Joinder Agreement") is entered into as of July
13, 1998 by the stockholder or stockholders ("Stockholders") of the common
stock, par value $.01 per share, of T.A. KYSER CO., a Nevada corporation
("Kyser"), who execute this Joinder Agreement for the purpose of joining as
Signing Stockholders that certain Agreement and Plan of Merger and
Reorganization (the "Merger Agreement") dated June 12, 1998 by and among METRON
TECHNOLOGY B.V., a Netherlands corporation ("Purchaser"), METRON ACQUISITION
SUB, INC., a Nevada corporation and a wholly owned subsidiary of Purchaser
("Merger Sub"), and Kyser. Certain capitalized terms used in this Joinder
Agreement are defined in the Merger Agreement.
RECITALS
A. Purchaser, Merger Sub and Kyser have entered into the Merger Agreement
to effect a merger of Merger Sub with and into Kyser in accordance with the
Merger Agreement (the "Merger"). Upon consummation of the Merger, Merger Sub
will cease to exist, Kyser will become a wholly-owned subsidiary of Purchaser,
and the Stockholders of Kyser will be issued capital stock of Purchaser (the
"Purchaser Capital Stock").
B. The Stockholders signing below (the "Signing Stockholders") intend to
join into the Merger Agreement on the terms and conditions specified in this
Joinder Agreement and the Merger Agreement.
AGREEMENT
Signing Stockholders, intending to be legally bound, agree as follows:
SECTION 1. JOINDER TO MERGER AGREEMENT
1.1 JOINDER TO MERGER AGREEMENT. Upon the terms and subject to the
conditions set forth in this Joinder Agreement, as of the date set forth below
opposite each Signing Stockholder's signature, such Signing Stockholder agrees
to join into and be bound by the terms of the Merger Agreement, joining such
Merger Agreement as a "Signing Stockholder" as defined in the Merger Agreement.
SECTION 2. NOTICES
2.1 Any notices to the Signing Stockholders under this Joinder Agreement
or pursuant to Section 13.6 of the Merger Agreement shall be sent to the address
set forth below opposite such Signing Stockholder's name (or to such other
address or telecopier number as such party shall have specified in a written
notice given to the other parties hereto and the other parties to the Merger
Agreement).
<PAGE>
SECTION 3. SIGNING STOCKHOLDER DISCLOSURE SCHEDULE
3.1 SIGNING STOCKHOLDER DISCLOSURE SCHEDULE. Attached as Exhibits A-1,
A-2, A-3, A-4, A-5 and A-6 are a Signing Stockholder Disclosure Schedule for
each of the Stockholders. If any such Stockholder executes this Joinder
Agreement, and becomes a Signing Stockholder, each such disclosure schedule
modifies the representations and warranties of such Signing Stockholder
contained in the Merger Agreement.
SECTION 4. SPOUSAL CONSENT
4.1 SPOUSAL CONSENT. The spouse of each Signing Stockholder, if any,
executes this Joinder Agreement for the purpose of the following (collectively,
the "Spousal Consent"):
(a) consenting to and approving the execution, delivery and performance by
the undersigned's spouse of the Transactional Agreements to be executed and
delivered by the undersigned's spouse, including (i) the Merger Agreement, (ii)
the Release, (iii) the Noncompetition Agreement, (iv) the Signing Stockholders'
Closing Certificate, (v) the Accession Agreement and (vi) the Employment
Agreement, if any, to be executed and delivered by the undersigned's spouse at
the Closing;
(b) consenting to and approving (i) the Merger pursuant to the Agreement
as a result of which the Shares held by the undersigned's spouse will be
converted into shares of Purchaser Capital Stock and (ii) the consummation of
the Transactions;
(c) agreeing that, upon consummation of the Merger, the undersigned's
entire interest (including, without limitation, the undersigned's entire
community property interest), if any, in the Shares shall be converted into the
right to receive shares of Purchaser Capital Stock (without the necessity of any
further signature or action on the part of, or any notice to, the undersigned);
(d) representing and warranting that, at the Closing, the undersigned will
not have assigned or transferred to any Person, any interest in, or any right or
claim against or with respect to, any of the Shares;
(e) agreeing that the undersigned will not assign or transfer (and will
not purport, commit, offer, agree or attempt to assign or transfer), to any
Person, any interest in, or any right to claim against or with respect to, any
of the Shares, other than as contemplated under the Merger Agreement; provided,
however, that this clause (e) shall be void and of no effect upon any
termination of the Merger Agreement;
(f) agreeing to execute and deliver any document, and to take any other
action, that Purchaser may reasonably request for the purpose of facilitating,
consummating at Closing or evidencing any of the Transactions to which the
undersigned's spouse is a party;
(g) representing and warranting that the undersigned has had the
opportunity to obtain legal advice from counsel of the undersigned's own
choosing, as to the undersigned's legal rights and as to the legal effect of the
Spousal Consent; and
<PAGE>
(h) agreeing that the representations, warranties, covenants, obligations
and other provisions set forth in this Spousal Consent shall survive the
Closing, notwithstanding any investigation conducted with respect thereto or any
Knowledge of Purchaser or Merger Sub, but shall automatically terminate and be
void and of no effect in the event of any termination of the Merger Agreement.
<PAGE>
The parties hereto have caused this Joinder Agreement to be executed and
delivered and to be effective, with respect to any Signing Stockholder, as of
the date set forth below opposite such Signing Stockholder's signature.
<TABLE>
<CAPTION>
Address: Date of Execution:
<S> <C> <C>
7/7/98 \s\ Gregory M. Claeys
----------------------------
Gregory M. Claeys
\s\ Marilyn Jan Claeys
----------------------------
Spouse of Gregory M. Claeys
(For the purposes specified in
Section 4)
Address: Date of Execution:
July 7, 1998 \s\ Rebekah A. Claeys
----------------------------
Rebekah A. Claeys
none
----------------------------
Spouse of Rebekah A. Claeys
(For the purposes specified in
Section 4)
Address: Date of Execution:
6-12-98 \s\ C. Garry Hendricks
Spouse 7-9-98 ----------------------------
C. Garry Hendricks
\s\ Judith K. Hendricks
----------------------------
Spouse of C. Garry Hendricks
(For the purposes specified in
Section 4)
Address: Date of Execution:
6-12-98 \s\ Boyd E. Hurst, Jr.
Spouse 7-9-98 ----------------------------
Boyd E. Hurst, Jr.
\s\ Cynthia Hurst
----------------------------
Spouse of Boyd E. Hurst, Jr.
(For the purposes specified in
Section 4)
<PAGE>
Address: Date of Execution:
- --------------------
- -------------------- ------------------
- -------------------- ----------------------------
Sam F. Soules
----------------------------
Spouse of Sam F. Soules.
(For the purposes specified in
Section 4)
Address: Date of Execution:
7/10/98 \s\ Colin M. Henderson
----------------------------
Colin M. Henderson, as Trustee
of the T.A. Kyser Company
cc: Mr. John Kober Employee Stock Ownership
Boswell & Kober Trust (As Amended and
Restated, Effective March 17,
1997)
</TABLE>
<PAGE>
Exhibit 10.8
SHARE PURCHASE AGREEMENT
(CME)
This Agreement, effective as of the 27th day of February, 1999 by and
among FSI INTERNATIONAL, INC. ("FSI"), a Minnesota corporation, and METRON
TECHNOLOGY B.V., a corporation incorporated under the laws of the Netherlands
("Metron").
RECITALS
WHEREAS, Metron is the sole registered and beneficial owner of 6,309
shares of the issued and outstanding capital stock (the "Shares") of FSI
Chemical Management Europe Limited ("CME");
WHEREAS, FSI desires to acquire ownership from Metron of all the Shares
and Metron desires to sell such Shares;
WHEREAS, FSI and Metron upon the completion of the transfer of the
Shares intend that the Joint Venture Agreement dated December 31, 1996 between
Metron and FSI shall terminate and be of no further force and effect and the
Distribution Agreement between Metron and CME shall terminate and be of no
further force and effect (it being recognized that Metron and FSI are subject to
a Distribution Agreement entered into as of March 31, 1998) and that Metron's
representative, Chris Levett-Prinsep, shall resign as a Director of CME;
NOW, THEREFORE in consideration of the above recitals and of the mutual
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
1. CONTRIBUTIONS OF SHARES. Subject to the terms and conditions set
forth in this Agreement, and in reliance on the representations and
warranties contained herein, Metron hereby agrees to sell and transfer to FSI
with full title guarantee, and FSI agrees to purchase from Metron the Shares
in exchange for Two Million Two Hundred Thousand Dollars $2,200,000 (U.S.
Dollars) to be delivered at Closing (as defined below).
2. REPRESENTATIONS AND WARRANTIES OF METRON. Metron represents and
warrants to FSI as follows:
2.1 ORGANIZATION AND AUTHORIZATION. Metron has the corporate
power and authority to execute, deliver, and perform this Agreement and the
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by the Supervisory
Board of Metron.
2.2 OWNERSHIP OF SHARES. Metron owns the Shares and such
ownership is free and clear of any agreements, liens, encumbrances, or other
restrictions which would in any way impair its right to transfer and deliver
to FSI good title to the Shares, including all rights which now are or at any
time after the date hereof become attached to them including any dividend or
other distribution declared, paid, or created after the date hereof. Each of
the Shares is duly issued, validly registered, fully paid, and non-assessable.
<PAGE>
2.3 CAPITALIZATION. The issued share capital of CME is as set forth
in Schedule 1 of this Agreement. There are no outstanding subscriptions,
options, rights, warrants, convertible securities, or other commitments or
agreements obligating CME to issue or allot any additional shares of any
class from its authorized share capital. No person or entity, other than FSI,
has any rights with respect to the Shares that may be made effective by
reason of Metron's entry into this Agreement or the transfer of the Shares.
2.4 LITIGATION AND PROCEEDINGS. There is no legal action, suit, or
governmental proceeding or investigation pending or, to the best knowledge of
Metron, threatened against Metron or its Shares which in any way adversely
affects or prevents the sale and delivery of the Shares to FSI hereunder. To
the best knowledge of Metron, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation
pending or threatened, against or affecting CME, any of its businesses,
assets, or financial condition.
2.5 NO CONFLICTS AND CONSENTS. The execution, delivery, and
performance of this Agreement by Metron will not result in a breach or
violation by Metron of, or constitute a default by Metron under, any
agreement, instrument, or order to which Metron is a party or by which Metron
is bound. No consent of any third party is required in connection with the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby. Except as may be set forth in Schedule 2 of
this Agreement, to the best knowledge of Metron, the execution, delivery, and
performance of this Agreement by Metron will not result in a breach or
violation by CME under any agreement, instrument, or order to which it is
party or by which it is bound.
2.6 FULL DISCLOSURE. Metron has disclosed in writing to FSI all
information of which it is aware regarding CME, the disclosure of which could
reasonably be expected to affect the willingness of FSI to purchase the
Shares or the price at or the terms upon which FSI would be willing to
purchase them. No representation or warranty of Metron contained herein
contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein not misleading.
3. SURVIVAL OF METRON'S REPRESENTATIONS AND WARRANTIES
3.1 RIGHTS CONTINUE. The rights and remedies of FSI in respect
of the foregoing warranties in Section 2 (the "Warranties") shall continue
and subsist and not be affected by Closing or by FSI rescinding or failing to
rescind this Agreement or by any other event or matter whatsoever except a
specific and duly authorized written waiver or release by FSI.
3.2 DEFICIENCIES. Without prejudice to any other remedy
available to FSI or its ability to claim damages on any basis which is
available to it by reason of any of the Warranties being untrue or misleading
or being breached, Metron undertakes with FSI (for itself and as trustee for
CME) that it shall, at the direction of FSI, pay to FSI, the Company, or (in
the case of liability to another person which has not been discharged) the
person to whom the liability has been incurred an amount equal to any
deficiency or liability of the Company concerned which arises from any of the
Warranties being untrue, misleading, or breached and
2.
<PAGE>
which would not have existed or arisen if the Warranty in question had not
been untrue, misleading, or breached plus an amount equal to the reasonable
costs and expenses incurred by FSI in connection therewith.
3.3 WAIVER OF CLAIMS AGAINST CME. Metron waives and may not
enforce a right which it may have against CME or a director, officer, or
employee of or to CME in respect to a misrepresentation, inaccuracy, or
omission in or from information or advice supplied or given by any such
persons for the purpose of assisting Metron to give any of the Warranties.
4. REPRESENTATIONS AND WARRANTIES OF FSI. FSI represents and
warrants to Metron as follows:
4.1 ORGANIZATION AND AUTHORIZATION. FSI is a corporation duly
organized, validly existing, and in good standing under the laws of Minnesota
and has the corporate power and authority to execute, deliver, and perform
this Agreement and the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly
authorized by its Board of Directors.
4.2 LITIGATION AND PROCEEDINGS. There is no legal action or
suit or governmental proceeding or investigation pending or, to the knowledge
of FSI threatened, which in any way adversely affects or prevents the
purchase by FSI of the Shares from Metron.
4.3 NO CONFLICTS AND CONSENTS. The execution, delivery, and
performance of this Agreement by FSI will not result in a breach or violation
by FSI, or constitute a default by FSI under any agreement, instrument, or
order to which FSI is a party or by which FSI is bound. No consent of any
third party is required in connection with the execution and delivery of this
Agreement by FSI and the performance by FSI of the transactions contemplated
hereby.
4.4 FULL DISCLOSURE. No representation or warranty of FSI
contained herein contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein not
misleading.
4.5 FSI WARRANTIES. The representations and warranties of FSI
contained herein shall not expire at Closing.
5. PROTECTIVE COVENANTS
5.1 NON-COMPETE. Metron covenants with FSI (for itself and as
trustee of CME) that neither Metron nor any member of its group (and "group"
shall have the meaning assigned to it in Section 207 of the Financial
Services Act 1986) will:
(a) for a period of three (3) years from Closing (whether
alone or jointly or as manager, adviser, consultant, or agent for another
person or with another and whether directly or indirectly) carry on, be
engaged, or concerned in any business carrying on business in the territories
listed in Exhibit B, Part I to that certain Distribution Agreement entered
into as of March 31, 1998 between Metron and FSI which is competitive or
likely to be competitive with the business of CME as carried on at Closing; or
3.
<PAGE>
(b) for a period of two (2) years from Closing induce or
attempt to induce any person who was within the period of two (2) years prior
to Closing a supplier or customer of CME to cease to supply, or to restrict
or vary the terms of supply, to CME; or
(c) for a period of two (2) years from Closing induce or
attempt to induce any person who is at Closing an employee occupying a senior
or managerial position to leave the employment of CME; or
(d) make use of or (except as required by law or any
competent regulatory body) disclose or divulge to any third party any
information of a secret or confidential nature relating to the business of
CME or its customers or suppliers; or
(e) use or authorize any other person to use any
trademark, service mark, or trade name used in the business of CME at Closing
or any other name or mark intended or likely to be confused with such a
trademark, service mark, or trade name.
5.2 ENFORCEABILITY OF COVENANTS. Each of the restrictions in
each paragraph or subclause above shall be enforceable independently of each
of the others and its validity shall not be affected if any of the others is
invalid; if any of those restrictions is void but would be valid if some part
of the restrictions were deleted the restriction in question shall apply with
such modification as may be necessary to make it valid.
5.3 REASONABLENESS. Metron acknowledges that the above
provisions of this clause are no more extensive than is reasonable to protect
FSI as the purchaser of the Shares.
6. CLOSING. Closing shall occur promptly following the signing of
this agreement at the offices of FSI in Chaska, Minnesota. At Closing, Metron
shall deliver to FSI the share certificates representing the Shares and duly
executed Stock Transfer Form transferring the Shares to FSI together with a
power of attorney in respect of the voting rights attaching to the Shares as
per Schedule 5, a certificate of Metron's Supervisory Board approving the
transaction; the resignation of Chris Levett-Prinsep per Schedule 3; and FSI
shall wire transfer to Metron the amount of Two Million Two Hundred Thousand
Dollars $2,200,000. Immediately following Closing, the Board of Directors
shall hold a meeting and transact hereto to approve the business set forth in
the Minutes attached hereto to as Schedule 4.
In addition, at Closing, Metron and FSI shall execute whatever
documentation that FSI reasonably determines is necessary for the parties to
terminate the Joint Venture Agreement between FSI and Metron and the
Distribution Agreement between Metron Technology and FSI Metron Europe Limited
(now known as CME) and in consideration of the mutual covenants contained in
this agreement FSI and Metron hereby fully and finally release and forever
discharge the other from any and all outstanding claims and causes of action,
directly or indirectly relating to or arising out of or otherwise connected with
the Joint Venture Agreement.
Following Closing, FSI and Metron agree that they will strive to
identify any obligations that exist between CME and Metron and take appropriate
action to resolve or eliminate such obligations. In addition, Metron will
provide all assistance necessary for FSI to record the change in ownership or
complete the matters expressly contemplated by this Agreement.
4.
<PAGE>
7. EXPENSES. All transfer taxes, filing fees, and other registration
expenses incurred as a result of the sale and purchase of the Shares,
including, without limitation, applicable stamp duties imposed under the laws
of Great Britain or Minnesota ("Expenses") shall be borne by FSI; any such
Expenses due under Dutch law or any income taxes of Metron due by reason of
the sale of the Shares shall be borne by Metron. Each party is responsible
for its own legal fees associated with this transaction.
8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
adhere to the benefit of the parties hereto and their respective heirs,
representatives, successors, and assigns and the benefit of each of the
obligations, undertakings, and warranties undertaken or given by Metron may
be assigned to the purchaser or transferee of the Shares or successor to the
business who may enforce them as if it had been named in this Agreement as
FSI.
9. POST-CLOSING ADJUSTMENTS. Metron and FSI acknowledge and agree
that the price to be paid for the Shares has been established by reference to
the monthly financial statements of CME for the period ending January 31,
1999. Metron and FSI recognize that at the completion of the fiscal year-end
there may be adjustments to CME's annual financial statements whether by the
Company or by CME's auditors. In the event any of those adjustments are based
upon or affect the January 31, 1999 financial statements, the parties agree
that the purchase price should be adjusted pro rata to reflect any such
adjustments. FSI agrees to notify Metron within ten (10) days following the
issuance of the audited financial results for the fiscal year-ending May 31,
1999 of the completion of the audit. Metron and FSI also agree that unless
adjustments exceed in the aggregate Twenty-Five Thousand Dollars ($25,000)
there shall be no revisions to the purchase price and in no event shall the
purchase price be adjusted by more than Five Hundred Thousand Dollars
($500,000). The notice of the audit completion from FSI shall also state
whether there is an adjustment in the purchase price and if the adjustment is
to Metron's benefit, and subject to the limitations above, shall pay such
amount to Metron. Any request for payment of an adjustment from Metron shall
be made in writing by FSI accompanied by sufficient detail to substantiate
the adjustment and contain a certification by CME's auditors that the
adjustment is appropriate. Metron shall repay such amount within ten (10)
days of its receipt of the notice of adjustment from FSI or in lieu thereof
FSI may offset such amount against any obligations that FSI may then
currently have to Metron.
10. ONGOING RESPONSIBILITY FOR TAXES. As Metron and FSI are
currently fifty (50%) percent owners each of CME and as the tax obligations
of CME may require adjustments in the future, FSI and Metron agree that in
the event CME becomes obligated to pay a tax obligation which arises by
reference to any event on or before Closing (including the combined result of
two or more events, the first of which occurred on or before Closing) and
during the period of time that Metron was the owner of the Shares of CME and
such tax obligation (i) was not provided for in CME's accounts for the
financial year ended 31 May 1998 (the "Accounts"); or (ii) arises as a result
of a loss, reduction or modification of a relief included as an asset in the
Accounts or taken into account in reducing or eliminating any provision for
tax which appears or but for such relief would have appeared in the Accounts;
or (iii) would have arisen under items (i) or (ii) above but for the use of a
relief accruing after Closing; or (iv) any tax which would have been repaid
to the Company but for the loss, reduction, set-off or cancellation of any
right to repayment of tax in consequence of an event occurring on or before
Closing (including the combined result of two or more events, the first of
which occurred on or before Closing) to the
5.
<PAGE>
extent that such repayment has been taken into account in the Accounts; then
Metron agrees it will be liable for one-half of the additional tax, to the
extent the additional tax in the aggregate exceeds Twenty-Five Thousand
Dollars ($25,000), in an amount not to exceed Two Hundred Fifty Thousand
Dollars ($250,000). Metron and FSI further agree that Metron shall promptly
pay any such amounts to FSI following written notice to Metron of the
liability and supporting documentation. Metron shall have no liability under
this clause 10 to the extent that the liability of CME to pay such tax arises
as a result of a voluntary act or omission by FSI or CME after Closing
otherwise than in the normal course of business which could reasonably have
been avoided, save where such act or omission is a result of a legally
binding obligation of CME entered into prior to Closing. If any payment
pursuant to this clause is subject to tax in the hands of the recipient then
the sum payable shall be increased by such amount as will ensure that, after
payment of tax, FSI or CME, as the case may be, receives a net sum equal to
the sum which it would otherwise received had the payment not been subject to
tax. Conversely, if following Closing there is a reduction in the tax
obligations of CME from that reflected in the Accounts for that portion of
the 1999 fiscal year for which Metron was owner of the Shares, then FSI shall
promptly pay Metron one-half of such reduction to the extent the aggregate
reduction exceeds Twenty-Five Thousand Dollars ($25,000), but in no event
more than Two Hundred Fifty Thousand Dollars ($250,000).
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement
of the parties hereto with respect to the transactions covered hereby and
there are no representations, warranties, agreements, undertakings, or
conditions, express or implied, between the parties hereto relating to the
subject matter hereof, except as set forth herein.
12. FURTHER ASSURANCES. At any time after Closing Metron shall at
its own expense execute all such documents and do such acts and things as FSI
may reasonably require for the purpose of vesting in FSI or its nominee the
full legal and beneficial title of the Shares and giving to FSI the full
benefit of this agreement.
13. HEADINGS. The headings in this agreement shall not affect its
interpretation.
14. NOTICES. Any notice or other document to be served under this
agreement may be delivered or sent by post or facsimile process to the party
to be served as follows:
(a) to Metron at
Metron Technology Corporation
1350 Old Bayshore Highway, Suite 360
Burlingame, California 94010
Fax: 650-373-1135
marked for the attention
of the Chief Financial Officer
6.
<PAGE>
(b) to FSI at
FSI International, Inc.
322 Lake Hazeltine Drive
Chaska, Minnesota 55318-1096
Fax: 612-448-1300
marked for the attention
of the General Counsel
or at such other address or fax number as may be notified to the other in
accordance with this clause. Any notice or other document sent by post shall be
sent by prepaid first class recorded delivery post (if within the United
Kingdom) or by prepaid airmail (if elsewhere).
In proving service of a notice or document it shall be sufficient to
prove that delivery was made or that the envelope containing the notice or
document was properly addressed and posted (either by prepaid first class
recorded delivery post or by prepaid airmail, as the case may be) or that the
fax was properly addressed and dispatched, as the case may be.
15. GOVERNING LAW AND JURISDICTION. This Agreement shall be
construed and enforced in accordance with the laws of England and FSI and
Metron hereby irrevocably submit to non-exclusive jurisdiction of the English
courts.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
shall constitute but one instrument.
(Remainder of this page intentionally left blank.)
7.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as a Deed as of the date first above written.
FSI INTERNATIONAL, INC. METRON TECHNOLOGY B.V.
By: /s/ Patricia M. Hollister By: /s/ Ed Segal
---------------------------- ----------------------------
Ed Segal
Its: CFO and Corporate Controller Its: Managing Director
----------------------------
8.
<PAGE>
Exhibit 10.9
SHARE PURCHASE AGREEMENT
(CMK)
This Agreement, effective as of the 27th day of February, 1999 by and among
FSI INTERNATIONAL, INC. ("FSI"), a Minnesota corporation, and METRON TECHNOLOGY
B.V., a corporation incorporated under the laws of the Netherlands ("Metron").
RECITALS
WHEREAS, Metron is the sole registered and beneficial owner of 94,185
shares of the issued and outstanding capital stock (the "Shares") of FSI
Chemical Management Company-Korea, Ltd. ("CMK");
WHEREAS, FSI desires to acquire ownership from Metron of all the Shares and
Metron desires to sell such Shares;
WHEREAS, FSI and Metron upon the completion of the transfer of the Shares
intend that the Joint Venture Agreement relating to CMK between Metron and FSI
shall terminate and be of no further force and effect and that Metron's
representative, John Peter Thompson, shall resign as a Director of CMK;
NOW, THEREFORE in consideration of the above recitals and of the mutual
covenants and agreements contained in this Agreement, the parties hereby agree
as follows:
1. CONTRIBUTIONS OF SHARES. Subject to the terms and conditions set
forth in this Agreement, and in reliance on the representations and warranties
contained herein, Metron hereby agrees to sell and transfer to FSI with full
title guarantee, and FSI agrees to purchase from Metron the Shares in exchange
for Three Hundred Ten Thousand Dollars ($310,000) (U.S. Dollars) to be delivered
at Closing (as defined below).
2. REPRESENTATIONS AND WARRANTIES OF METRON. Metron represents and
warrants to FSI as follows:
2.1 ORGANIZATION AND AUTHORIZATION. Metron has the corporate power
and authority to execute, deliver, and perform this Agreement and the execution
and delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by the Supervisory Board of
Metron.
2.2 OWNERSHIP OF SHARES. Metron owns the Shares and such ownership
is free and clear of any agreements, liens, encumbrances, or other restrictions
which would in any way impair its right to transfer and deliver to FSI good
title to the Shares, including all rights which now are or at any time after the
date hereof become attached to them including any dividend or other distribution
declared, paid, or created after the date hereof. Each of the Shares is duly
issued, validly registered, fully paid, and non-assessable.
2.3 CAPITALIZATION. The issued share capital of CMK is as set forth
in Schedule 1 of this Agreement. There are no outstanding subscriptions,
options, rights, warrants,
1.
<PAGE>
convertible securities, or other commitments or agreements obligating CMK to
issue or allot any additional shares of any class from its authorised share
capital. No person or entity, other than FSI, has any rights with respect to
the Shares that may be made effective by reason of Metron's entry into this
Agreement or the transfer of the Shares.
2.4 LITIGATION AND PROCEEDINGS. There is no legal action, suit,
or governmental proceeding or investigation pending or, to the best knowledge
of Metron, threatened against Metron or its Shares which in any way adversely
affects or prevents the sale and delivery of the Shares to FSI hereunder. To
the best knowledge of Metron, there is no suit, action, arbitration, or
legal, administrative, or other proceeding or governmental investigation
pending or threatened, against or affecting CMK, any of its businesses,
assets, or financial condition.
2.5 NO CONFLICTS AND CONSENTS. The execution, delivery, and
performance of this Agreement by Metron will not result in a breach or
violation by Metron of, or constitute a default by Metron under, any
agreement, instrument, or order to which Metron is a party or by which Metron
is bound. No consent of any third party is required in connection with the
execution and delivery of this Agreement and the performance of the
transactions contemplated hereby. Except as may be set forth in Schedule 2
of this Agreement, to the best knowledge of Metron, the execution, delivery,
and performance of this Agreement by Metron will not result in a breach or
violation by CMK under any agreement, instrument, or order to which it is
party or by which it is bound.
2.6 FULL DISCLOSURE. Metron has disclosed in writing to FSI all
information of which it is aware regarding CMK, the disclosure of which could
reasonably be expected to affect the willingness of FSI to purchase the Shares
or the price at or the terms upon which FSI would be willing to purchase them.
No representation or warranty of Metron contained herein contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein not misleading.
3. SURVIVAL OF METRON'S REPRESENTATIONS AND WARRANTIES
3.1 RIGHTS CONTINUE. The rights and remedies of FSI in respect of
the foregoing warranties in Section 2 (the "Warranties") shall continue and
subsist and not be affected by Closing or by FSI rescinding or failing to
rescind this Agreement or by any other event or matter whatsoever except a
specific and duly authorized written waiver or release by FSI.
3.2 DEFICIENCIES. Without prejudice to any other remedy available to
FSI or its ability to claim damages on any basis which is available to it by
reason of any of the Warranties being untrue or misleading or being breached,
Metron undertakes with FSI (for itself and as trustee for CMK) that it shall, at
the direction of FSI, pay to FSI, the Company, or (in the case of liability to
another person which has not been discharged) the person to whom the liability
has been incurred an amount equal to any deficiency or liability of the Company
concerned which arises from any of the Warranties being untrue, misleading, or
breached and which would not have existed or arisen if the Warranty in question
had not been untrue,
2.
<PAGE>
misleading, or breached plus an amount equal to the reasonable costs and
expenses incurred by FSI in connection therewith.
3.3 WAIVER OF CLAIMS AGAINST CMK. Metron waives and may not enforce a
right which it may have against CMK or a director, officer, or employee of or to
CMK in respect to a misrepresentation, inaccuracy, or omission in or from
information or advice supplied or given by any such persons for the purpose of
assisting Metron to give any of the Warranties.
4. REPRESENTATIONS AND WARRANTIES OF FSI. FSI represents and warrants to
Metron as follows:
4.1 ORGANIZATION AND AUTHORIZATION. FSI is a corporation duly
organized, validly existing, and in good standing under the laws of Minnesota
and has the corporate power and authority to execute, deliver, and perform this
Agreement and the execution and delivery of this Agreement and the consummation
of the transactions contemplated hereby have been duly authorized by its Board
of Directors.
4.2 LITIGATION AND PROCEEDINGS. There is no legal action or suit or
governmental proceeding or investigation pending or, to the knowledge of FSI
threatened, which in any way adversely affects or prevents the purchase by FSI
of the Shares from Metron.
4.3 NO CONFLICTS AND CONSENTS. The execution, delivery, and
performance of this Agreement by FSI will not result in a breach or violation by
FSI, or constitute a default by FSI under any agreement, instrument, or order to
which FSI is a party or by which FSI is bound. No consent of any third party is
required in connection with the execution and delivery of this Agreement by FSI
and the performance by FSI of the transactions contemplated hereby.
4.4 FULL DISCLOSURE. No representation or warranty of FSI contained
herein contains any untrue statement of a material fact or omits to state any
material fact necessary to make the statements herein not misleading.
4.5 FSI WARRANTIES. The representations and warranties of FSI
contained herein shall not expire at Closing.
5. PROTECTIVE COVENANTS
5.1 NON-COMPETE. Metron covenants with FSI (for itself and as
trustee of CMK) that neither Metron nor any member of its group including its
subsidiaries will:
(a) for a period of three (3) years from Closing (whether alone
or jointly or as manager, adviser, consultant, or agent for another person or
with another and whether directly or indirectly) carry on, be engaged, or
concerned in any business carrying on business in the territories listed in
Exhibit B, Part 1 to that certain Distribution Agreement entered into as of
March 31, 1998 between Metron and FSI which is competitive or likely to be
competitive with the business of CMK as carried on at Closing; or
3.
<PAGE>
(b) for a period of two (2) years from Closing induce or attempt
to induce any person who was within the period of two (2) years prior to Closing
a supplier or customer of CMK to cease to supply, or to restrict or vary the
terms of supply, to CMK; or
(c) for a period of two (2) years from Closing induce or attempt
to induce any person who is at Closing an employee occupying a senior or
managerial position to leave the employment of CMK; or
(d) make use of or (except as required by law or any competent
regulatory body) disclose or divulge to any third party any information of a
secret or confidential nature relating to the business of CMK or its customers
or suppliers; or
(e) use or authorize any other person to use any trademark,
service mark, or trade name used in the business of CMK at Closing or any other
name or mark intended or likely to be confused with such a trademark, service
mark, or trade name.
5.2 ENFORCEABILITY OF COVENANTS. Each of the restrictions in each
paragraph or subclause above shall be enforceable independently of each of the
others and its validity shall not be affected if any of the others is invalid;
if any of those restrictions is void but would be valid if some part of the
restrictions were deleted the restriction in question shall apply with such
modification as may be necessary to make it valid.
5.3 REASONABLENESS. Metron acknowledges that the above provisions of
this clause are no more extensive than is reasonable to protect FSI as the
purchaser of the Shares.
6. CLOSING. Closing shall occur promptly following the signing of this
agreement at the offices of FSI in Chaska, Minnesota. At Closing, Metron shall
deliver to FSI the share certificates representing the Shares, a certificate of
Metron's Supervisory Board approving the transaction; the resignation of John
Peter Thompson per Schedule 3; and FSI shall wire transfer to Metron the amount
of Three Hundred Ten Thousand Dollars ($310,000).
In addition, at Closing, Metron and FSI shall execute whatever
documentation that FSI reasonably determines is necessary for the parties to
terminate the Joint Venture Agreement between FSI and Metron and in
consideration of the mutual covenants contained in this agreement FSI and Metron
hereby fully and finally release and forever discharge the other from any and
all outstanding claims and causes of action, directly or indirectly relating to
or arising out of or otherwise connected with the Joint Venture Agreement.
Following Closing, FSI and Metron agree that they will strive to identify
any obligations that exist between CMK and Metron and take appropriate action to
resolve or eliminate such obligations. In addition, Metron will provide all
assistance necessary for FSI to record the change in ownership or complete the
matters expressly contemplated by this Agreement. Metron will cooperate with
FSI and provide all assistance with regard to FSI's efforts to make all
necessary governmental filings for the transaction contemplated by this
Agreement.
7. EXPENSES. All transfer taxes, filing fees, and other registration
expenses incurred as a result of the sale and purchase of the Shares, including,
without limitation, applicable stamp duties imposed under the laws of Korea or
Minnesota ("Expenses") shall be borne by FSI; any
4.
<PAGE>
such Expenses due under Dutch law or any income taxes of Metron due by reason
of the sale of the Shares shall be borne by Metron. Each party is
responsible for its own legal fees associated with this transaction.
8. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
adhere to the benefit of the parties hereto and their respective heirs,
representatives, successors, and assigns and the benefit of each of the
obligations, undertakings, and warranties undertaken or given by Metron may be
assigned to the purchaser or transferee of the Shares or successor to the
business who may enforce them as if it had been named in this Agreement as FSI.
9. POST-CLOSING ADJUSTMENTS: Metron and FSI acknowledge and agree that
the price to be paid for the Shares has been established by reference to the
monthly financial statements of CMK for the period ending January 31, 1999.
Metron and FSI recognize that at the completion of the fiscal year-end there may
be adjustments to CMK's annual financial statements whether by the Company or by
CMK's auditors. In the event any of those adjustments are based upon or affect
the January 31, 1999 financial statements, the parties agree that the purchase
price should be adjusted prorata to reflect any such adjustments. FSI agrees to
notify Metron within ten (10) days following the issuance of the audited
financial results for the fiscal year-ending May 31, 1999 of the completion of
the audit. Metron and FSI also agree that unless adjustments exceed in the
aggregate Ten Thousand Dollars ($10,000) there shall be no revisions to the
purchase price and in no event shall the purchase price be adjusted by more than
Two Hundred Thousand Dollars ($200,000). The notice of the audit completion
from FSI shall also state whether there is an adjustment in the purchase price
and if the adjustment is to Metron's benefit, and subject to the limitations
above, shall pay such amount to Metron. Any request for such adjustment from
Metron shall be made in writing by FSI accompanied by sufficient detail to
substantiate the adjustment and contain a certification by CMK's auditors that
the adjustment is appropriate. Metron shall repay such amount within ten (10)
days of its receipt of the notice of adjustment from FSI or in lieu thereof FSI
may offset such amount against any obligations that FSI may then currently have
to Metron.
10. ONGOING RESPONSIBILITY FOR TAXES. As Metron and FSI are the primary
shareholders of CMK and as the tax obligations of CMK may require adjustments in
the future, FSI and Metron agree that in the event CMK becomes obligated to pay
a tax obligation which arises by reference to any event on or before Closing
(including the combined result of two or more events, the first of which
occurred on or before Closing) and during the period of time that Metron was the
owner of the Shares of CMK and such tax obligation (i) was not provided for in
CMK's accounts for the financial year ended 31 May 1998 (the "Accounts"); or
(ii) arises as a result of a loss, reduction or modification of a relief
included as an asset in the Accounts or taken into account in reducing or
eliminating any provision for tax which appears or but for such relief would
have appeared in the Accounts; or (iii) would have arisen under items (i) or
(ii) above but for the use of a relief accruing after Closing; or (iv) any tax
which would have been repaid to the Company but for the loss, reduction, set-off
or cancellation of any right to repayment of tax in consequence of an event
occurring on or before Closing (including the combined result of two or more
events, the first of which occurred on or before Closing) to the extent that
such repayment has been taken into account in the Accounts; then Metron agrees
it will be liable for thirty-five percent (35%) of the additional tax, to the
extent the additional tax in the aggregate exceeds Ten Thousand Dollars
($10,000), in an amount not to exceed One Hundred Thousand Dollars
5.
<PAGE>
($100,000). Metron and FSI further agree that Metron shall promptly pay any
such amounts to FSI following written notice to Metron of the liability and
supporting documentation. Metron shall have no liability under this clause
10 to the extent that the liability of CMK to pay such tax arises as a result
of a voluntary act or omission by FSI or CMK after Closing otherwise than in
the normal course of business which could reasonably have been avoided, save
where such act or omission is a result of a legally binding obligation of CMK
entered into prior to Closing. If any payment pursuant to this clause is
subject to tax in the hands of the recipient then the sum payable shall be
increased by such amount as will ensure that, after payment of tax, FSI or
CMK, as the case may be, receives a net sum equal to the sum which it would
otherwise received had the payment not been subject to tax. Conversely, if
following Closing there is a reduction in the tax obligations of CMK from
that reflected in the Accounts for that portion of the 1999 fiscal year for
which Metron was owner of the Shares, then FSI shall promptly pay Metron
sixty-five percent (65%) of such reduction to the extent the aggregate
reduction exceeds Ten Thousand Dollars ($10,000), but in no event more than
One Hundred Thousand Dollars ($100,000).
11. ENTIRE AGREEMENT. This Agreement contains the entire agreement of the
parties hereto with respect to the transactions covered hereby and there are no
representations, warranties, agreements, undertakings, or conditions, express or
implied, between the parties hereto relating to the subject matter hereof,
except as set forth herein.
12. FURTHER ASSURANCES. At any time after Closing Metron shall at its own
expense execute all such documents and do such acts and things as FSI may
reasonably require for the purpose of vesting in FSI or its nominee the full
legal and beneficial title of the Shares and giving to FSI the full benefit of
this agreement.
13. HEADINGS. The headings in this agreement shall not affect its
interpretation.
14. NOTICES. Any notice or other document to be served under this
agreement may be delivered or sent by post or facsimile process to the party to
be served as follows:
(a) to Metron at
Metron Technology Corporation
1350 Old Bayshore Highway, Suite 360
Burlingame, California 94010
Fax: 650-373-1135
marked for the attention
of the Chief Financial Officer
(b) to FSI at
FSI International, Inc.
322 Lake Hazeltine Drive
Chaska, Minnesota 55318-1096
Fax: 612-448-1300
marked for the attention
of the General Counsel
6.
<PAGE>
or at such other address or fax number as may be notified to the other in
accordance with this clause. Any notice or other document sent by post shall be
sent by prepaid first class recorded delivery post (if within Korea) or by
prepaid airmail (if elsewhere).
In proving service of a notice or document it shall be sufficient to prove
that delivery was made or that the envelope containing the notice or document
was properly addressed and posted (either by prepaid first class recorded
delivery post or by prepaid airmail, as the case may be) or that the fax was
properly addressed and dispatched, as the case may be.
15. GOVERNING LAW AND JURISDICTION. This Agreement shall be construed and
enforced in accordance with the laws of Korea and FSI and Metron hereby
irrevocably submit to non-exclusive jurisdiction of the Korean courts.
16. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute but one instrument.
(REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK.)
7.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
a Deed as of the date first above written.
FSI INTERNATIONAL, INC. METRON TECHNOLOGY B.V.
By: \s\ Patricia M. Holliser By: \s\ Ed Segal
------------------------------- ---------------------------------
Ed Segal
Its: CFO and Corprate Controller Its: Managing Director
-------------------------------
8.
<PAGE>
Exhibit 10.10
AGREEMENT
TO
TERMINATE
JOINT VENTURE AGREEMENTS
AND
DISTRIBUTION AGREEMENT
This Agreement made effective as of the Tuesday, May 18, 1999, by and
between FSI International, Inc. ("FSI") and Metron Technology, B.V.
("Metron").
RECITALS
WHEREAS, FSI and Metron entered into Joint Venture Agreements (as more
fully described below) relating to the formation and/or acquisition of FSI
Metron Europe, Ltd., now known as FSI Chemical Management Europe, Ltd.
("CME"), and FSI Chemical Management Company-Korea, Ltd. ("CMK");
WHEREAS, FSI has purchased from Metron, Metron's interest in each of CME
and CMK pursuant to Share Purchase Agreements effective February 27, 1999.
WHEREAS, pursuant to each of those Share Purchase Agreements, Metron and
FSI agreed to execute whatever documentation that FSI reasonably determined
is necessary for the parties to terminate the respective Joint Venture
Agreement and in the case of CME, to also terminate the Distribution
Agreement between CME and Metron.
WHEREAS, at closing the appropriate termination documents were not
signed by the respective parties and therefore this agreement has been
prepared to reflect the obligations contained in the respective Share
Purchase Agreements.
NOW, THEREFORE, pursuant to the terms of the Share Purchase Agreements
and the mutual covenants and promises which follow, the parties agree as
follows:
1. Pursuant to the terms of the Share Purchase Agreement (CMK)
effective as of February 27, 1999, by and among FSI and Metron, the parties
hereby agree that effective upon execution of this agreement, the Joint
Venture Agreement (July 1997) ("CMK Agreement"), relating to the formation of
CMK is hereby terminated and each party hereby fully and finally releases and
forever discharges the other from any and all outstanding claims and causes
of action directly or indirectly related to or arising out of or otherwise
connected with the CMK Agreement.
2. Pursuant to the terms of the Share Purchase Agreement (CME)
effective as of February 27, 1999, by and among FSI and Metron, the parties
hereby agree that effective upon execution of this agreement, the Joint
Venture Agreement dated December 31,1996, relating to the formation of CME
("CME Agreement") is hereby terminated and each party hereby fully and
finally releases and forever discharges the other from any and all
outstanding claims and causes
1.
<PAGE>
of action directly or indirectly related to or arising out of or otherwise
connected with the CME Agreement.
3. FSI, as sole shareholder of CME, and Metron, hereby agree that the
Distribution Agreement between Metron and FSI Metron Europe, Ltd. dated
December 31, 1996, is hereby terminated, and FSI as Sole Shareholder on
behalf of CME, and Metron hereby fully and finally releases and forever
discharges the other from claims and causes of actions directly or indirectly
relating to or arising out of or otherwise in connection with the
Distribution Agreement.
4. This agreement shall be binding upon and adhere to the benefit of
the parties hereto and their respective heirs, representatives, successors,
and assigns and the benefit of each of the obligations, undertakings and
warranties undertaken or given by Metron may be assigned to the purchaser on
transferee of FSI's ownership interest in each of CME and CMK and may enforce
them as if it had been named in this agreement as FSI.
5. This Agreement contains the entire agreement of the parties with
respect to the transactions covered hereby and there are no representations
or warranties, agreements or undertakings or conditions express or implied
between the parties hereto relating to subject matter hereof except as set
forth herein.
6. This Agreement shall be construed and enforced in accordance with
the laws of Minnesota. FSI and Metron hereby irrevocably submit to the
nonexclusive jurisdiction of the state or federal courts of Minnesota.
7. This agreement may be executed in two or more counterparts and a
facsimile signature shall be deemed an original and each such counterpart
shall also be deemed an original, but all of which shall constitute but one
instrument.
FSI International, Inc. Metron Technology, B. V.
Its: \s\ Patricia M. Hollister By: \s\ Michael A. Grandinetti
----------------------------- -----------------------------
Its: CFO & Corporate Controller By: Managing Director "B"
----------------------------- -----------------------------
By: \s\ Peter V. Leigh
-----------------------------
By: Managing Director B
-----------------------------
FSI International, Inc.,
as Sole Shareholder of
FSI Chemical Management Europe, Ltd.
By: \s\ Dale M. Pescatrue
-----------------------------
Its: President, Chemical Management Division
---------------------------------------
2.
<PAGE>
Exhibit 10.12
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made and entered into on this 6th day of July, 1995,
by and between FLUOROWARE, INC., a corporation organized and existing under the
laws of Minnesota, U.S.A., with its principal place of business at Chaska,
Minnesota, (U.S.A.) (hereafter "Supplier") and Metron Semiconductors Europa
B.V., a limited liability company organized and existing under the laws of The
Netherlands, with its principal place of business at Almere, The Netherlands
(hereafter "Distributor").
WHEREAS, Supplier designs, manufactures and sells products for use, in
the semiconductor industry, which Products are more particularly described in
Exhibit A attached hereto (the "Products"), and wishes to expand its market for
the Products in the geographical areas set forth in Exhibit B attached hereto
(the "Territories");
WHEREAS, Distributor has served as Supplier's distributor under various
distribution agreements dating back to 1975;
WHEREAS, Distributor wishes to assign this Agreement to those of its
subsidiaries and affiliates in the respective Territories as more particularly
described in Exhibit B;
WHEREAS, Supplier wishes to appoint Distributor and Distributor wishes
to accept such appointment, as the independent, exclusive distributor of the
Products in the Territories on the terms and conditions set forth herein; and
NOW, THEREFORE, Supplier and Distributor agree as follows:
1. APPOINTMENT OF DISTRIBUTOR, TERMS OF PRODUCT SALES.
1.1 Subject to all of the terms and conditions of this Agreement,
Supplier hereby appoints Distributor, and Distributor hereby accepts such
appointment, as the exclusive, independent distributor of the Products in the
Territories. Supplier may, however, sell Products to third parties for use in
the Territories on a representative basis, provided that Supplier shall pay
Distributor a commission with respect to such sales equal to ten percent
(10%) of the applicable sales list price of the Products. In certain
representative sales of Products, Supplier may allocate the commission
between Distributor and a third party, such allocation determined by Supplier
on an equitable basis and based on services performed by Distributor with
respect to such Products, consistent with past practice between Supplier and
Distributor. Moreover, Supplier shall not be prohibited from establishing
technical or support offices or organizations in the Territories, provided
that such offices or organizations may not engage in sales of the Products.
1.2 With the exception of Supplier's Critical Fluid Management
products, or such other products as agreed to by Supplier and Distributor,
Supplier shall sell the Products to Distributor at Supplier's current U.S.
domestic sales list prices, less Distributor's discount, as provided in
Exhibit A. Supplier's Critical Fluid Management products shall be sold
through Fluoroware GmbH to Distributor at Supplier's current GmbH sales list
price less Distributor's discount, as provided in Exhibit A. Supplier may
change its sales list prices upon sixty (60) days' advance written notice to
Distributor.
1.
<PAGE>
1.3 Distributor shall have the right of first refusal to act as
distributor in the Territories and under the terms of this Agreement for any
modified, revised, up-dated or replacement products sold by Supplier and
related to the Products. Supplier shall notify Distributor immediately of any
such products.
1.4 Sales to the Distributor will be invoiced on an open account
basis. Sales invoices will be due for payment sixty (60) days after shipment
of the Products. A late payment penalty may be applied to late payments for
Products accepted by Distributor or Distributor's customers, without prior
written approval by Supplier. Such penalty shall be equal to the lesser of
the following interest rates in effect on the date the payment was due: (i)
two points plus the prime interest rate as announced by Harris Trust and
Savings Bank, and (ii) three points plus the statutory default late payment
interest rate under the laws of the Netherlands applicable to distribution
agreements.
1.5 Supplier shall retain title to the Products and bear the risk of
loss until delivery to the carrier, F.O.B. Supplier's factory or distribution
center, at which time title shall pass and the risk of loss shall be borne by
Distributor (or Distributor's customers). Provided, however, that beginning
September 1, 1996, Supplier and Distributor shall implement procedures to
provide for Supplier to retain title to the Products and bear the risk of
loss until delivery F.O.B. at Distributor's warehouse (or the place of
acceptance by Distributor's customer). In any event, Distributor (or
Distributor's customers) shall, directly or indirectly, bear the cost of any
customs duties, taxes, shipping and handling costs, and insurance with
respect to the shipment of the Products.
1.6 Notwithstanding the general rule provided in Section 1.5 above,
Supplier and Distributor may negotiate and arrange for certain sales of
Products pursuant to terms under which either: (i) Supplier shall retain
title to the Products and bear the risk of loss until delivery, F.O.B.
Distributor's warehouse (or the place of acceptance by Distributor's
customer), or (ii) Supplier shall retain title to the Products and bear the
risk of loss until delivery to the carrier, F.O.B. Supplier's factory or
distribution center.
2. OBLIGATIONS AND COVENANTS OF SUPPLIER.
2.1 Supplier will use its best efforts to comply with Distributor's
request for the means of shipping the Products as specified in Distributor's
orders and shall use its best efforts to notify Distributor in the event that
Supplier is unable to comply with such request. Supplier shall not send
partial shipments of Distributor's orders unless Distributor agrees in
advance.
2.2 Absent extraordinary circumstances and subject to written
agreement by Supplier and Distributor (such agreement which shall not be
unreasonably withheld), Supplier shall not sell the Products directly to
customers in the Territories and shall refer to Distributor in a timely
manner all orders and inquiries relating to the Products originating from
within or outside the Territories to the extent such orders or inquiries
relate to Products destined for use within the Territories.
2.3 In negotiation or renegotiation of any agreement with any of its
other distributors, agents or employees subsequent to the date of this
Agreement, Supplier will insist upon a
2.
<PAGE>
covenant that such other distributor, agent or employee will not seek
customers or establish a branch or maintain any distribution outlet in the
Territories.
2.4 Supplier will, from time to time, supply Distributor, at
Supplier's cost, with a reasonable quantity of promotional materials in the
English language, such as literature, catalogs and other advertising
materials relating to the Products. Such promotional materials shall also be
translated in the native language of the country to which the Products are
shipped if required by applicable law.
2.5 Supplier will provide Distributor with reasonable numbers of the
Products for Distributor to use as samples and demonstration models. The
supply of the Products under this provision shall be on a consignment basis
only.
2.6 Supplier will conduct technical seminars and provide training
for sales or services related to the Products for the benefit of
Distributor's employees. Each party shall be responsible for the expenses
(including the cost of transportation, meals and lodging) incurred by its own
employees attending such seminars or training.
2.7 Supplier will, from time to time, and at its own cost (including
the cost of salaries and lodging for Supplier's employees), participate in
international trade shows for promoting the Products in the Territories
pursuant to agreement by Supplier and Distributor.
2.8 Supplier will use its best efforts to assist Distributor to
facilitate any import processing by providing Distributor with all required
documents and information.
2.9 Supplier agrees to comply with all applicable export control
laws and regulations relating to the Products. Supplier will also use its
best efforts to provide information necessary for Distributor to comply with
all applicable export control laws and regulations relating to the Products.
2.10 Supplier's warranties with respect to the Products are set
forth in the Exhibits C-1, C-2, C-3 and C-4 which are attached hereto and
incorporated herein by reference. Such warranties may be amended,
supplemented or replaced by Supplier, provided that Supplier provides
Distributor with sixty (60) days' prior written notice of such amended,
supplemented or replacement warranties.
2.11 Without Distributor's prior written consent, Supplier will not
use, reproduce, disclose or otherwise make available to any person, other
than Supplier's employees or agents who have a need to know such information,
any and all information, written or oral, which is disclosed by Distributor
to Supplier, identified as confidential information and not generally
available to the public. The term "confidential information" shall not
include information provided by Distributor to Supplier exclusively for the
purpose of soliciting potential and actual sales of the Products. In
addition, the term "confidential information" shall not include any
information that is or becomes known to the public through no fault of
Supplier.
2.12 Supplier shall accept for credit any inventory of spares or
equipment which is obsolete, provided that Distributor shall review its
inventory on an annual basis for the purpose of determining obsolescence, and
Supplier may refuse any Products held by Distributor for more
3.
<PAGE>
than twelve (12) months. Supplier shall accept such obsolete equipment or
spares within six (6) months after written notice of obsolescence by
Distributor. Moreover, Supplier shall accept for credit or refund any
consumable Products that are in the original packaging and in good, saleable
condition as determined by Supplier. Supplier's credit or refund shall be
pursuant to agreement between Supplier and Distributor. Distributor shall pay
all costs of custom duties, insurance, shipping and handling costs for
returned Products.
2.13 During the term of any warranty made by Supplier with respect
to any Product sold by Distributor, Supplier shall maintain an adequate
inventory of spare parts for such Product.
2.14 Upon delivery of each Product by Supplier to Distributor,
Supplier shall supply Distributor or its customers with adequate
documentation for purposes of servicing and trouble-shooting such Product.
Such documentation shall comply with any applicable law. The cost of any such
manuals and documentation shall be included in the price of the Product under
Section 1.2 of this Agreement.
3. OBLIGATIONS AND COVENANTS OF DISTRIBUTOR.
3.1 Distributor will use its best efforts to market and sell the
Products in the Territories.
3.2 Except as otherwise required by law, Distributor will market and
sell the Products without removing or altering any labels, trade names,
trademarks, notices, labels, serial numbers or other identifying marks,
symbols or legends affixed to any of the Products or their containers or
packages.
3.3 Supplier shall not be liable under any warranties made by
Distributor with respect to any of the Products which exceed the warranties
made by Supplier. Supplier may modify any warranties upon reasonable notice
to Distributor, provided, however, that such amended warranties will not
apply to Products sold or Products which Distributor has entered into a
contract to sell but which have not yet delivered.
3.4 Without Supplier's prior written consent, Distributor shall not
use, produce or disclose or otherwise make available to any person, other
than Distributor's employees or agents who have a need to know such
information for the performance of its obligations hereunder, any and all
information written or oral, which is disclosed by Supplier to Distributor,
identified as confidential information and not generally available to the
public. The term "confidential information" shall not include information
provided by Supplier to Distributor exclusively for the purpose of soliciting
potential and actual sales of the Products. In addition, the term
"confidential information" shall not include any information that is or
becomes known to the public through no fault of Distributor.
3.5 Distributor shall furnish to Supplier, upon Supplier's
reasonable requests from time to time, reports including, but not limited to,
actual and forecast sales, market conditions and competitive activity.
4.
<PAGE>
3.6 Distributor will, from time to time, and at its own cost
(including the cost of salaries and lodging for Distributor's employees),
participate in international trade shows for promoting the Products in the
Territories pursuant to agreement by Supplier and Distributor.
3.7 Distributor shall use its best efforts to install and service
any Products during any applicable warranty period. Distributor may contract
with other individuals or business entities to assist Distributor in
installing and servicing the Products, provided that such individuals or
business entities: (i) have adequate training to install and service the
Products, and (ii) agree in writing that they will not compete with Supplier
by selling any products or equipment in the Territories during the term of
this Agreement, to the extent that such products or equipment are similar in
function to any Products sold by Supplier.
4. TERM AND TERMINATION.
4.1 Unless and until sooner terminated as provided for herein, this
Agreement shall continue for a term of three (3) years commencing on July 1,
1995 and will be deemed automatically renewed thereafter for one or more
additional terms of two (2) years and on the same conditions.
4.2 This Agreement may be terminated by either party upon providing
the other party with written notice of termination more than twelve (12)
months prior to expiration of the applicable term, i.e., more than twelve
(12) months prior to expiration of the initial three-year term or more than
twelve (12) months prior to expiration of an ensuing two-year extension.
4.3 In the event of a breach of any material provision of this
Agreement, this Agreement may be terminated upon ninety (90) days' written
notice given by the nonbreaching party to the other party, which notice shall
specify the breach on which the termination is based, provided, however, that
in such event this Agreement shall continue in full force and effect without
regard to such notice if the other party cures the breach specified in the
notice within the said 90-day period.
4.4 This Agreement will terminate immediately upon the occurrence of
any of the following events:
(a) All or any substantial part of the property of either party
shall be condemned, seized or otherwise appropriated, or the custody or
control of such property shall be assumed by any person or agency acting or
purporting to act under authority of any government (de jure or de facto) or
either party shall have been prevented from exercising normal managerial
control over all or any substantial part of its property by any such person
or agency; or
(b) Either party shall (i) apply for or consent to the
appointment of a receiver, trustee or liquidator for its business or of all
or any substantial part of its assets, or (ii) be unable, or admit in writing
its inability, to pay its debts as they mature, (iii) make a general
assignment for the benefit of creditors, (iv) be adjudicated a bankrupt or
insolvent, or (v) file a voluntary petition in bankruptcy or a petition or an
answer seeking reorganization or an arrangement with creditors or seeking to
take advantage of any insolvency law, or file an answer admitting the
material allegations of a petition filed against either party in any
bankruptcy, reorganization or
5.
<PAGE>
insolvency proceeding, or take corporate action for the purpose of effecting
any of the foregoing; or
(c) An order, judgment or decree shall be entered without the
application, approval or consent of the subject party by any court of
competent jurisdiction, approving a petition seeking reorganization of the
party or appointing a receiver, trustee or liquidator of its business or of
all or any substantial part of its assets; or
(d) An order or notice shall be published by any government or
inter-government authority requiring the cessation of trading activities with
the subject party as a result of the violation of export controls, safety or
other regulatory laws.
4.5 Upon termination of this Agreement, Distributor shall no longer
have the right to serve as a distributor of the Products in the Territories
and shall not be entitled to any additional consideration as a result of such
termination. However, Distributor shall have the right to continue selling in
the Territories the Products which are in Distributor's inventory at the time
of termination of this Agreement; such right, however, shall terminate six
(6) months after termination of this Agreement. Supplier shall accept all
Products returned by Distributor for full refund if Distributor so requests
in writing within twelve (12) months after termination of this Agreement,
such refund to be made at the prices for which the Products were originally
purchased by Distributor from Supplier, provided that the returned Products
are in good condition as approved by Supplier, such approval by Supplier
shall not unreasonably be withheld or delayed.
4.6 Upon termination of this Agreement, Distributor shall cease to
represent itself as being a distributor of Supplier. Within sixty (60) days
after termination, Distributor will return to Supplier all promotional
materials for and samples and demonstration models of the Products.
4.7 Notwithstanding termination of this Agreement upon notice as
provided in Section 4.2 of this Agreement, Supplier shall continue to provide
Products in conformity with and pursuant to the terms of this Agreement
during the remaining term of this Agreement. Further, in the event of a
termination notice, Distributor shall notify Supplier by the termination
date, of a list of all prospective customers interested in the Products. If,
within six (6) months after the termination date, Supplier receives a
purchase order from any of the identified prospects, Supplier (i) shall
promptly notify Distributor of such purchase order and (ii) shall pay to
Distributor a commission equal to the Distributor's discount with respect to
the Products under such purchase order.
4.8 Notwithstanding termination of this Agreement, Distributor shall
continue to perform all warranty service during the term of any applicable
warranty period, whether such warranty expires before or after the
termination of this Agreement, with respect to any Products sold by, on
behalf of, or in cooperation with Distributor.
4.9 Upon the termination, expiration or non-renewal of this
Agreement, Supplier shall not be liable to Distributor for any compensation,
reimbursement or damages on account of the loss of prospective profits from
anticipated sales, or on account of any expenditures, investments, losses or
commitments in connection with the business or goodwill of Supplier,
Distributor, or
6.
<PAGE>
otherwise, provided that Supplier has not breached any material provision of
this Agreement, except as expressly provided in Section 4.7 of this Agreement.
5. INDEMNIFICATION.
5.1 Distributor hereby agrees to indemnify and hold Supplier
harmless from and against any and all damages, liabilities, fines or expenses
incurred by Supplier as a result of Distributor's breach of any provision
hereof.
5.2 Supplier hereby agrees to indemnify and hold Distributor
harmless from and against any and all damages, liabilities, fines or expenses
incurred by Distributor as a result of Supplier's breach of any provision
hereof.
5.3 Supplier agrees to defend and hold Distributor harmless from and
against any and all damages, liabilities, fines or expenses incurred by
Distributor in connection with any claim or lawsuit arising out of the
design, manufacture, use, Supplier's warranty, or any defect ("gebrek") of
any of the Products, provided that Distributor has complied with its
obligations hereunder and has given prompt notice of the claim or lawsuit to
Supplier together with all information and documents relating to such a claim
or lawsuit. Distributor hereby agrees to assist Supplier in defending such
claim or lawsuit.
5.4 Supplier agrees to defend and hold Distributor harmless from and
against any and all damages, liabilities, fines or expenses incurred by
Distributor in connection with any claim or lawsuit arising out of any
infringement or alleged infringement of any patent or other intellectual
property rights of any person, firm or company in the Territories, provided
that Distributor has given prompt notice of the claim or lawsuit to Supplier
together with all information and documents relating to such a claim or
lawsuit. Distributor hereby agrees to assist Supplier in defending such claim
or lawsuit.
5.5 The indemnification agreements as provided in this Section 5
shall continue in full force and effect despite the expiration, recision, or
termination of this Agreement.
6. RELATIONSHIP OF THE PARTIES.
6.1 The relationship between Supplier and Distributor is an
independent contractor relationship between a seller and buyer. Neither
Distributor, nor any employee of Distributor, shall be considered an employee
or agent of Supplier for any purpose. Unless otherwise expressly authorized
in writing by the other party hereto, neither party shall have the right or
authority to assume or create any responsibility, express or implied, on
behalf of or in the name of the other party hereto, or to bind the other
party in any manner whatsoever, or to accept payment from any person on
behalf of the other party.
6.2 Supplier hereby grants a license to Distributor permitting
Distributor to use Supplier's trademarks and trade names only in connection
with the sale of Products. Distributor agrees to use Supplier's trademarks
and trade names in connection with the sale of any Products. This license
shall terminate upon the termination of this Agreement, at which time
Distributor shall cease to and shall not thereafter use, and shall not permit
any of its agents, employees or subsidiaries thereafter to use, for any
purpose whatsoever, any of Supplier's trademarks or trade
7.
<PAGE>
names other than for the purpose of selling Products in Distributor's
inventory as specifically provided in Section 4.5 of this Agreement, or
pursuant to any other written agreement between the parties. Nothing in this
Agreement shall be deemed to transfer to or confer upon Distributor any
right, title or interest in any trademark or trade name owned by or used by
Supplier.
6.3 During the term of this Agreement and for a period of six (6)
months after termination of this Agreement, (i) Supplier shall not, without
Distributor's prior written consent, solicit employees of Distributor or any
of its subsidiaries for employment with Supplier or otherwise interfere with
Distributor's relationship with its employees, and (ii) Distributor shall
not, without Supplier's prior written consent, solicit employees of Supplier
or any of its subsidiaries for employment with Distributor or otherwise
interfere with Supplier's relationship with its employees. This Section shall
not restrict or prohibit (i) Supplier from hiring an employee of Distributor
or any of its subsidiaries, if such employee applies for employment with
Supplier by responding to an announcement of an available employment
position, and (ii) Distributor from hiring an employee of Supplier or any of
its subsidiaries, if such employee applies for employment with Distributor by
responding to an announcement of an available employment position.
7. ASSIGNMENT.
7.1 Neither this Agreement nor any right, title, interest or
obligation hereunder may be assigned or otherwise transferred by either party
or their assignees, transferees or successors in interest without the prior
written consent of the other party. This Agreement shall inure to the benefit
of such assignees, transferees and other successors in interest of the
parties in the event of an assignment or other transfer made consistent with
the provisions of this Agreement.
7.2 By its signature to the Agreement, Supplier consents to the
assignment of this Agreement to Distributor's affiliated companies in the
respective geographical areas set forth in Exhibit B attached hereto.
8. FORCE MAJEURE.
Neither party shall be liable for any breach of this Agreement
occasioned by an act of God, labor disputes, unavailability of transportation,
goods or services, governmental restrictions or actions, change in the law, war
(declared or undeclared) or other hostilities, or by any other event, the
condition or cause of which is beyond the control of such party. In the event of
nonperformance or delay attributable to any such causes, the period for
performance of the applicable obligation hereunder will be extended for a period
equal to the period of delay. However, the party so delayed shall use its best
efforts, without obligation to expend substantial amounts not otherwise required
under this Agreement, to circumvent or overcome the cause of the delay. In the
event that any such delay exceeds sixty (60) days, either party may at its
option terminate this Agreement effective immediately by giving written notice
thereof to the other party.
9. NOTICES.
Any notice required to be given hereunder shall be deemed to have been
effectively given only when delivered personally to an officer of the applicable
party, or when first sent by telefax
8.
<PAGE>
and confirmed by registered mail, addressed to the applicable party at its
address set forth below, or at such other address as such party my hereafter
designate as the appropriate address for the receipt of such notice:
To Supplier at: Fluoroware, Inc.
Attention: Stan Geyer
102 Jonathan Boulevard North
Chaska, Minnesota 55318
U.S.A.
To Distributor at: Metron Semiconductors Europa B.V.
c/o Metron Technology Corporation
Attention: Edward Segal
770 Lucerne Drive
Sunnyvale, California 94086-3844
U.S.A.
With a copy to: Metron Semiconductors Europa B.V.
Attention: Udo Jaensch
Saturnstra(beta)e 48
D-85609 Aschheim
Germany
10. WAIVER.
No waiver by either party of strict compliance with all terms and
conditions of this Agreement shall constitute a waiver of any subsequent failure
of the other party to comply strictly with each and every term and condition
hereof.
11. COMPLETE AGREEMENT.
This Agreement constitutes the entire agreement between the parties
relating to the subject matter contained herein and it supersedes and terminates
any and all prior agreements between them, including the Distribution Agreement
between Supplier and Distributor dated September 1, 1988, and the Conditions of
Sales Representative Term Agreement between Supplier and Metron Semiconductors
(Hong Kong) Ltd., dated June 4, 1985, as amended on October 22, 1985, June 4,
1986, and June 19, 1986. If any provision, or application hereof, of this
Agreement is held unlawful or unenforceable in any respect, such illegality or
unenforceability shall not affect other provisions or applications that can be
given effect and this Agreement shall be construed as if the unlawful or
unenforceable provision or application had not been contained herein. This
Agreement may be amended or otherwise modified only by a written document signed
by authorized representatives of the parties.
12. COUNTERPARTS.
This Agreement may be executed in two counterparts, each of which shall
be deemed an original, but both of which shall constitute but one instrument.
9.
<PAGE>
13. ARBITRATION AND APPLICABLE LAW.
13.1 Any dispute between the parties arising out of or in connection
with this Agreement that cannot be settled amicably between the parties shall
be finally resolved by arbitration. Arbitration proceedings shall be
conducted in Minneapolis, Minnesota pursuant to the International Arbitration
Rules of the American Arbitration Association. In the event that either party
makes a demand for arbitration, the arbitrator shall be selected by mutual
agreement between the parties, or if the parties are unable to agree on an
arbitrator within twenty (20) days after a demand for arbitration is made,
the arbitrator shall be selected by the American Arbitration Association.
Disputes subject to arbitration hereunder for claims in the aggregate amount
of One Million (U.S.) Dollars ($1,000,000.00) shall be resolved by a panel of
three independent impartial arbitrators, one arbitrator selected by Supplier,
one by Distributor and the third by the other two arbitrators. Failure to
select an arbitrator within twenty (20) days of a demand for arbitration
shall be deemed a waiver of a right to select an arbitrator and one will be
selected by the American Arbitration Association. All arbitrators shall be
persons with skill and experience in the industry. The costs of arbitration,
but not the costs and expenses of the parties, shall be shared equally by
Supplier and Distributor.
13.2 Either party shall have the right to review, prior to the
submission of its case to the arbitration panel, any and all documents in the
possession of the other party which relate to such other party's performance
under, or the conduct of its activities in connection with, this Agreement.
13.3 The governing language of this Agreement shall be English. This
Agreement shall be interpreted and enforced in accordance with the laws of
the United States and the State of Minnesota, without giving effect to choice
of law principles. The United Nations Convention on Contracts for the
International Sale of Goods shall not apply to this Agreement.
13.4 The agreement to arbitrate as provided in this Section 13 shall
continue in full force and effect despite the expiration, recision, or
termination of this Agreement. The parties knowingly and voluntarily waive
their rights to have their dispute tried and adjudicated by a judge or jury.
THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK
10.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DISTRIBUTOR: SUPPLIER:
METRON SEMICONDUCTORS EUROPA B.V. FLUOROWARE, INC.
By: \s\ Udo Jaensch By: \s\ James Dauwalter
------------------------------- -------------------------------
Title: Executive Vice President Title: Executive Vice President
---------------------------- -----------------------------
11.
<PAGE>
EXHIBIT 10.13
U.S. STOCKING DISTRIBUTOR
FIVE-YEAR AGREEMENT
BETWEEN
FLUOROWARE, INC.
3500 LYMAN BOULEVARD
CHASKA, MN 55318
AND
KYSER COMPANY
2621 RIDGEPOINT DRIVE, SUITE 230
AUSTIN, TX 78754
1. APPOINTMENT. Fluoroware, Inc. ("Fluoroware" or "we") hereby appoints
Kyser Company stocking distributor ("Distributor" or "you") for the marketing
and sale of those Fluoroware gas and liquid handling products set forth on
Schedule A, attached.
2. TERM. Subject to the provisions of Section 17, the term of this
Agreement shall be for a period of five years commencing September 1, 1997,
and ending August 31, 2002, renewing automatically for successive five-year
terms thereafter, unless terminated by either party: (a) without cause, at
the expiration of any five-year term upon one year written notice to the
other party; or (b) for cause, at any time, as provided herein.
3. AREA OF PRIMARY RESPONSIBILITY. Your area of primary responsibility will
be the following territory ("territory"): states of Washington, Oregon,
Idaho, Montana, Wyoming, Colorado, New Mexico, Utah, the mid-portion of Texas
and northeastern Nevada. A copy of the territory map is attached.
4. FLUOROWARE OBLIGATIONS. Fluoroware will make reasonable efforts to
accomplish the following on behalf of distributor:
(a) Deliver to you with reasonable diligence all products, price lists
and other literature reasonably required for performance of your obligations
under the Agreement.
(b) Refer inquiries received by us from your primary area of
responsibility for our gas and liquid handling products.
(c) Perform its duties within a reasonable time unless prevented by
circumstances beyond our control.
(d) Conduct necessary training programs to aid distributor sales
personnel to better understand and market Fluoroware products.
(e) Provide historical sales data by major product group and industry as
an aid in forecasting.
1.
<PAGE>
(f) Prepare final plans and forecasts, and establish corrective action
plans.
(g) Provide a quarterly performance report based on categories shown in
Section 6 and 7. Quarters are based on Fluoroware's fiscal year, commencing
September 1 of each year.
(h) Fairly and promptly provide all rewards earned by meeting or
exceeding performance standards as described in Section 8 and 9.
5. DISTRIBUTOR OBLIGATIONS. You, as distributor, represent and warrant to
Fluoroware that you will:
(a) Perform as a stocking distributor or manufacturer's representative
as specified below and use your best efforts to stock, market and sell
products within your Area of Primary Responsibility.
(b) Refer to us all inquiries received by you for the sale of the
products outside your Area of Primary Responsibility and otherwise refrain
from facilitation of sales through you outside of your territory.
(c) Not enter into any contracts or other commitments binding us without
our prior written consent.
(d) Not make any representation or give any warranty relating to the
products other than those expressly stated in Fluoroware's written sales
documents. You will be exclusively liable for any other representations and
warranties and will indemnify and hold Fluoroware harmless from any claims
(including, without limitation, Fluoroware's attorney fees) arising from any
unauthorized representations and warranties.
(e) With reasonable notice make yourself available for instruction or
discussion as deemed necessary by Fluoroware.
(f) Subject to the terms of Section 17(c), during the term of this
Agreement and for a period of two years following its expiration or
termination (whichever is earlier), you will refrain from selling, and
refrain from having any involvement or connection with the sale of, any
products competitive with those of Fluoroware. Fluoroware shall be entitled
to enforce the provisions of this Section by a temporary restraining order
and temporary and permanent injunctions (collectively, "specific
performance").
(g) Not make any purchase on our behalf or pledge our credit.
(h) Sell our products under the Fluoroware(R), Inc. label.
(i) Keep your account current: Net 30 days from date of invoice. If
during a quarter the distributor becomes delinquent in its payment to
Fluoroware, without approval, the distributor will be subject to a discount
penalty. The penalty will be calculated as a 2% reduction in the
distributor's discount for all of distributor's purchases during the
subsequent quarter ("subsequent quarter"). If at the end of the subsequent
quarter the distributor's payment performance is current, the standard
discount will be reactivated for the next succeeding quarter.
2.
<PAGE>
If distributor's account is not brought current by the end of the subsequent
quarter, the distributor may be terminated immediately.
(j) Report distributor sales monthly. Reports must be submitted to
Fluoroware on or before the 20th day of the subsequent month. Subsequent to
Fluoroware's right to revise the reporting requirements at any time, the
reports will contain the following information for each of distributor's
customers: ship-to-address; part number; and quantity for each customer. Each
customer is to be assigned to either microelectronic (ME) or process and
instrumentation (PI) markets.
(k) Report inventory value monthly, submitted to Fluoroware by the 20th
day of the subsequent month, and reported on a distributor cost basis.
(l) Provide Fluoroware proposed annual forecast by April 15th. Twelve
month sales forecasts for September through the following August are to be
reported separately for microelectronic ("ME") and process and
instrumentation ("P&I") sales. In each market, the total sales are to be
divided into major product groups; i.e., fittings, valves, tubing and all
others. Forecasts are to be based on distributor cost.
6. DISTRIBUTOR PERFORMANCE EVALUATION PROGRAM.
(a) All distributors will participate in a Performance Evaluation
Program. The Performance Evaluation Program will consist of two areas:
Recognition and Award. Distributors must meet the following performance
prerequisites in order to be eligible for either the Recognition or Award
aspect of the program:
(1) Must be a Fluoroware distributor at the beginning of the
fiscal year period.
(2) Must provide 100% of the required reports on time
- Monthly sales/inventory reports
- Annual forecast report
(3) Must make 100% of payments to Fluoroware on time, according to
the terms of this Agreement.
(4) On a quarterly basis, must maintain inventory between 10% and
35% of distributor's average annual sales to its customers during the
preceding four quarters.
(5) Must not currently be subject to corrective action in any
given category.
7. DISTRIBUTOR PERFORMANCE EVALUATION
(a) Distributor performance will be measured in the following three
categories:
(1) Overall sales volume
(2) Percent sales growth; Microelectronics
3.
<PAGE>
(3) Percent sales growth; Process and Instrumentation
(b) All distributors will be expected to meet a performance standard of
85% within each of the listed categories.
(c) The following definitions apply to the performance measurement system;
(1) Sales amounts refer to the volume of product sold to a
distributor calculated by the actual purchase price.
(2) Overall sales volume is defined as the ratio of the annualized
total reported sales to the distributor to the sales plan, expressed as a
percent.
(3) Microelectronics sales growth is the ratio of the annualized
reported microelectronic sales to the microelectronic sales plan, expressed
as a percent.
(4) Process and instrumentation sales growth is the ratio of
annualized reported process and instrumentation sales to the process and
instrumentation sales plan, expressed as a percent.
(5) The Inventory Level is defined as the ratio of the distributor
reported inventory value to the annualized sales, expressed as a percent. The
annualized sales includes sales from product(s) sold as a sales
representative.
8. DISTRIBUTOR RECOGNITION PROGRAM
(a) Distributors will be measured in three areas of performance: overall
sales volume, sales growth in microelectronics, and sales growth in process
and instrumentation. All areas of performance will be evaluated against the
Forecast Plan established for each distributor.
(b) Distributors who meet or exceed 96% of their Forecast Plan in each
category, and meet the performance prerequisites, will be eligible for the
Recognition Program. Distributors' scores in each category will be the
percentage, to plan, that they achieve in each category. Distributors' rank
in each category will be the place number in which they finish in that given
category. The ranking scores in each category will be totaled for an overall
distributor rank, for example:
<TABLE>
- ---------------------------------------------------------------------------------------------
Category Rank Ranking Score
- ---------------------------------------------------------------------------------------------
<S> <C> <C>
Sales Volume 2 2
Growth: ME 6 6
Growth: P&I 11 11
--
19
- ---------------------------------------------------------------------------------------------
</TABLE>
(c) The distributor with the lowest total score will be recognized as
Fluoroware's Top Distributor. Recognition plaques will be issued as follows:
4.
<PAGE>
(1) Platinum award given to top distributor
(2) Gold award given to second ranked distributor
(3) Silver award given to third ranked distributor
(4) Bronze award given to fourth and fifth ranked distributor.
Additionally, the Top Finisher in each of the three evaluation
categories will be recognized with a plaque.
(d) Distributors who qualify for such recognition will receive a 3%
inventory exchange as defined in paragraph 13 of this Agreement. The
inventory exchange is calculated as a percentage of the distributor's award
year purchase dollars from Fluoroware. Qualifying distributors must place
their orders for inventory exchange within 30 days after receiving notice of
the award, or the award is forfeited.
9. DISTRIBUTOR AWARD PROGRAM
(a) The Award Program is an incentive program for distributors who
achieve exceptional results in all areas of performance (i.e., sales volume,
ME growth and P&I growth). In order to be eligible for the Award Program, a
distributor must meet or exceed 125% of the Forecast Plan in all three
categories.
(b) Those who qualify for the Award Program will be ranked utilizing the
same methodology described in the Recognition Program. The awards in this
program will be administered as a percentage of the award year purchase
dollars form Fluoroware, such awards shall not exceed the following amounts:
<TABLE>
- -------------------------------------------------------------
Rank Credit Award Not to Exceed
- -------------------------------------------------------------
<S> <C> <C>
1 3.0% $50,000
2 2.5% 40,000
3 2.0% 30,000
4 1.5% 20,000
5 1.0% 10,000
</TABLE>
All credit awards are in the form of cash discounts on orders placed
within 90 days after receiving notice of the credit award. Any credit award that
is not used in such 90-day period is forfeited.
10. DISTRIBUTOR CORRECTIVE ACTION PROGRAM
If the following a quarterly evaluation a distributor's performance
does not meet the performance standard as described in Sections 6 and 7, the
distributor will be notified. If following the next quarterly evaluation a
distributor's performance still does not meet the performance standard, the
distributor will participate in a corrective action plan. If following an annual
evaluation a distributor's performance does not meet the performance standard as
described in Sections 6 and 7, the distributor will participate in a corrective
action program.
5.
<PAGE>
In the first phase of corrective action the distributor meets with
Fluoroware sales territory manager to evaluate areas of unsatisfactory
performance and to create a plan to meet or exceed the performance standard. The
plans must be developed and implemented within three months of initial
notification.
In the second phase the distributor performance is monitored against
the corrective action plan for six (6) months. If performance improves and meets
the performance standard by the end of six (6) months, the distributor returns
to normal status. If at the end of six (6) months a distributor does not meet
the performance standard, Fluoroware has the right to extend the corrective
action program or terminate the relationship with the distributor.
Following satisfactory completion of a corrective action program and
meeting the performance standard, continued performance above the performance
standard for two (2) years without further corrective action is excepted and
failure to meet the performance standard during any quarter during that two-year
period shall result in immediate termination of the distributor.
11. PRICES
(a) Fluoroware agrees to sell Fluoroware(R), Inc. products to you as a
distributor at the discounts from published list price as indicated on
Schedule B attached hereto. All prices are based on delivery FOB Chaska,
Minnesota. Distributor agrees to pay all costs of transportation, storage and
insurance.
(b) Fluoroware agrees that you shall have the right to establish the
final selling prices to your customers on all sales negotiated by you as a
stocking distributor. Fluoroware maintains the right to establish final
selling prices on all sales where the distributor is acting as a
manufacturer's representative as provided in Section 16.
(c) Fluoroware may change: (a) any published list prices and/or
conditions of sale by giving the distributor written notice of the changes at
least thirty (30) days; and (b) any terms of Schedules A, B and C before
implementation.
12. ORDER REQUIREMENTS AND INFORMATION
(a) Minimum order value is net $100.00, unless an alternate agreement is
made with Fluoroware sales management when an order is placed.
(b) Rush orders are defined as those where the request is for same day
or next day shipment from Fluoroware. It is the distributor's responsibility
to minimize these requests.
(c) Drop shipments are defined as orders shipped directly from
Fluoroware to the distributor's customers. Drop shipments will earn normal
discounts less 10%, unless an alternate written agreement is made with
Fluoroware sales management prior to the shipment.
(d) UPS and all other shipping charges incurred by Fluoroware for any rush
orders or drop shipments will be prepaid by Fluoroware, added to the
distributor's invoice and reimbursed to Fluoroware.
6.
<PAGE>
13. INVENTORY EXCHANGE
NEW DISTRIBUTORS ONLY:
(a) After the first twelve (12) months as a Fluoroware distributor, the
distributor may exchange product of its choosing in a dollar amount equal to
five percent (5%) of its first year purchases form Fluoroware. The returned
product must be received by Fluoroware by the end of the 15th month.
NEW AND EXISTING DISTRIBUTORS:
(b) At the introduction of each new product, the potential for a future
inventory exchange will be addressed. Qualifying new product, displaced
product, if any, and the time period for the exchange will be defined. A
maximum of five percent (5%) of the total combined sales of the new and
displaced products during the specified time period can be returned.
(c) Inventory may otherwise be returned if and as allowed under Section
8 by distributors earning such rights via performance.
(d) Inventory being returned must have a Return Authorization Number.
All items must be in resalable condition, unused, in the original packaging
and of current revision level. A packing list showing part numbers,
quantities and the Return Authorization Number must accompany returned
inventory.
(e) A credit memo will be issued for the exchange. The credit allowance
will be the maximum distributor discount for each product form the previous
year's published price.
(f) A purchase order must be entered before or at the same time of the
exchange.
(g) The dollar amount of the purchase must be within $100.00 of the
credit allowance.
(h) All freight charges will be paid by the distributor.
14. RETURN FOR REPAIR POLICY PROCEDURES
(a) Products returned for repair must be issued a Return Authorization
Number prior to shipping. Products returned without an approved Return
Authorization will not be accepted.
(b) Defective products that are within Fluoroware's written warranty
period for that specific product will be replaced or repaired by Fluoroware.
(c) Products that have been altered or tampered with in any way will
void the warranty. Fluoroware reserves the right to refuse service on any
such part.
(d) The return of products that have been exposed to hazardous media
must be approved by Fluoroware and a Fluoroware return tag must be completed
prior to product return.
7.
<PAGE>
Fluoroware may require that the product(s) be cleaned and neutralized to
Fluoroware's satisfaction or service may be refused.
15. RETURN FOR CREDIT
(a) Full credit for the order in question will be issued if a product or
shipping error was made by Fluoroware. Freight charges for returning the
shipment will be paid by Fluoroware.
(b) There will be a restocking charge of twenty-five percent (25%) of
the distributor's purchase price on all resalable items returned for credit
when the error is made by the purchaser. Shipping charges to be paid by the
purchaser. Charges on collect return will be deducted from the allowable
credit.
(c) All items must be in resalable condition, unused, in the original
packaging and or the current revision level.
(d) Claims for shortages or inaccurate filling of orders must be made to
Fluoroware within ten (10) days after receipt of shipment.
(e) Returned goods will be accepted only with prior approval and Return
Authorization Number.
(f) Goods orders through a distributor and returned to Fluoroware by the
end-user will not be accepted without prior approval.
16. MANUFACTURER'S SALES REPRESENTATIVE ROLE
(a) Occasionally, Fluoroware may ask you to act as a manufacturer's sale
representative ("manufacturer's representative"), instead of as a stocking
distributor in order to obtain or maintain a specific customer's business for
CFM products. Schedule C contains the commission structure for sales credited
to you in your capacity as a manufacturer's representative. Commission will
be paid in the form of a credit memo on paid invoices.
Billing and shipping will occur between the customer and Fluoroware.
The manufacturer's representative's role will include, but not be limited to,
local sales and support.
You will serve as a manufacturer's representative with regard to the
sale of any non-standard Fluoroware products, including all specialized or
customer made products.
Special events involving a customer not specified on Schedule C, may
occur and are best accommodated by a distributor acting as a manufacturer's
representative. The commission and role of the representative in these
situations will be determined prior to the sale and in accordance with
Schedule C.
Certain CFM products with high volume, multiple configurations, machined
or fabricated to a customer specification, and low margins may also be sold
through a distributor acting as a manufacturer's representative.
8.
<PAGE>
(b) Your authority as a manufacturer's representative shall be limited
to, and defined by, the terms set forth in Section 16A, paragraph 5.
17. TERMINATION
(a) This Agreement can be terminated by Fluoroware immediately upon
written notice if:
(1) You attempt to assign or subcontract this Agreement or rights
or obligations hereunder without prior written consent of Fluoroware.
(2) There is a change in the control, operation or management of
your business which is unacceptable to Fluoroware.
(3) You cease to function as a going concern or cease to conduct
operations on behalf of Fluoroware in the normal course of business.
(4) You encounter serious financial difficulty which affects your
performance under this Agreement.
(5) Fluoroware receives information that's you may be unable to
perform this Agreement and you do not provide Fluoroware adequate proof of
your ability to perform within 30 days after written notice from Fluoroware.
(6) You misrepresent a sales agreement or sales report, or sell
samples.
(7) You engage in activity which is in competition with Fluoroware
products or violates any of your obligations under Section 5.
(8) You fail to keep your account current or cease to make payment
to Fluoroware or fail to pay the balance due on your account immediately upon
receipt of a second written warning of failure to pay.
(9) You fail to pay the balance due on your account immediately
upon receiving late payment notice as part of any quarterly evaluation.
(b) This Agreement may otherwise be terminated by Fluoroware according
to the corrective action plan referred to in Section 10.
(c) In the event of termination under Section 17 or any other breach
(collectively, "breach"), distributor agrees: (1) to pay Fluoroware all
damages arising from the breach and all attorney fees, costs and
disbursements incurred by Fluoroware in enforcing its rights under this
Agreement; and (2) that it will not, for a period of two years following the
effective date of the breach or termination (whichever is later), represent
any manufacturer of products competitive with Fluoroware, and that it will
not sell, or have any involvement or connection with the sale of, any
products competitive with those of Fluoroware. Fluoroware shall be entitled
to enforce the provisions of this Section by specific performance.
9.
<PAGE>
(d) If Fluoroware terminates this agreement for any reason other than for
breach, the parties agree that the actual damages resulting form the breach are
not readily ascertainable and that Fluoroware will pay the distributor the
following amount as liquidated damages in lieu of any other damages or remedies:
For a period of two (2) years commencing the effective date of termination,
Fluoroware will pay the distributor a commission of ten percent of all sales of
Fluoroware products in the distributor's territory during that two-year period.
The commission shall only be paid on the same Fluoroware products which the
distributor sold within the territory prior to the termination. The commission
payable under this clause 17(d), shall be based exclusively on the price
Fluoroware charges its next distributor for such products (after subtracting any
discounts, credits or awards) and shall NOT include any other customary charges,
including without limitation taxes, transportation, storage and returns. This
commission shall be payable on a quarterly basis within thirty (30) days after
the date of any quarter during such two-year period. The parties agree that the
remedy provided in this Section 17(d) is not a penalty.
(e) If the distributor terminates this agreement for any reason other
than Fluoroware's breach, the distributor agrees that it will not, for a
period of two (2) years following the effective date of the termination,
represent any manufacturer of products competitive with Fluoroware, and that
it will not sell, or have any involvement or connection with the sale of, any
products competitive with those of Fluoroware. Fluoroware shall be entitled
to enforce the provisions of this Section 17(e) by specific performance. The
parties agreed that the remedy provided in this Section 17(e) is not a
penalty.
18. RIGHTS UPON TERMINATION
(a) On termination of this Agreement, for any cause whatsoever, it is
hereby expressly agreed that Fluoroware shall deliver against all distributor
orders previously accepted subject to payment on delivery and will negotiate
all outstanding credit memos with distributor.
(b) If Fluoroware should terminate this Agreement, all stock may be
returned for full credit provided it is in resalable condition. If the
distributor terminates the Agreement, Fluoroware is not responsible for
taking back stock.
19. CONFIDENTIALITY
(a) Any information provided between Fluoroware and distributor which
the provider deems confidential or proprietary shall be labeled as such at
the time of disclosure if the disclosure is written, or if verbal, shall be
confirmed in writing as confidential within thirty (30) days after
disclosure. The receiving party shall treat such information in confidence
and shall take reasonable and customary steps to assure that such information
is not shared with any third party. Information shall not be confidential if
its already known to recipient at the time of disclosure or recipient
otherwise learns of it via a third party which is free to disclose it without
obligation. These obligations shall remain in effect during the term of this
Agreement and for a period of two (2) years thereafter.
If the parties have singed any other non-disclosure or confidentiality
agreements, the terms of such agreements shall supplement the terms of this
agreement.
10.
<PAGE>
(b) All reports and documentation supplied to Fluoroware by the
distributor pursuant to the requirements of Section 5(j)-(l) shall be
considered confidential and shall be subject to the confidentiality
obligations identified in the paragraph above.
20. MODIFICATION
(a) Except as provided in Section 20(b) of this Agreement, this
Agreement may only be modified in writing, signed by the distributor and
Fluoroware.
(b) If, under the terms of this Agreement, Fluoroware has reserved the
right to modify any specific terms including, without limitation, the terms
described in Section 11(c)) (collectively, "reserved terms"), Fluoroware may
modify those reserved terms by giving the distributor written notice of the
modifications at least 30 days before implementation.
21. MERGER
(a) This Agreement incorporates the full understanding of the parties and
replaces in its entirety any and all prior understandings relating to
distribution rights and any other contracts or obligations between the parties.
There are no other agreements between the parties except as stated herein, all
such prior or other agreements being merged into this Agreement.
(b) If Fluoroware waives any breach by this distributor (or any other
distributor), such waiver shall not constitute a waiver of any subsequent breach
by this distributor (or any other distributor).
22. GOVERNING LAW
(a) This Agreement shall be interpreted under the laws of the State of
Minnesota.
FLUOROWARE, INC.
Signed: /s/ Thomas R. Burhoe Dated: 9/9/97
---------------------------------- ------
Thomas R. Burhoe
North American Sales Manager
Critical Fluid Management
KYSER COMPANY
Signed: /s/ Greg Claeys Dated: 9/19/97
---------------------------------- -------
Greg Claeys
President
Kyser Company
11.
<PAGE>
Exhibit 10.15
MANAGING DIRECTORS SERVICE AGREEMENT
BETWEEN
METRON TECHNOLOGY (UNITED KINGDOM) LTD.
AND
JOHN CHRISTOPHER LEVETT-PRINSEP
DATED MAY 1, 1996
<PAGE>
TABLE OF CONTENTS
PAGE
1. DEFINITIONS........................................................1
2. TERM OF EMPLOYMENT.................................................2
3. REMUNERATION.......................................................2
4. EXPENSES...........................................................2
5. MOTOR CAR..........................................................3
6. ILLNESS............................................................3
7. DUTIES, TIME AND ATTENTION.........................................3
8. HOLIDAYS...........................................................4
9. SUMMARY TERMINATION................................................4
10. TERMINATION -- GENERAL.............................................5
11. RECONSTRUCTION OR AMALGAMATION.....................................5
12. RESTRICTIONS AFTER TERMINATION.....................................5
13. WARRANTIES.........................................................6
14. CONFIDENTIALITY....................................................6
15. PENSION SCHEME.....................................................7
16. THE SCHEDULE.......................................................7
17. NOTICES............................................................7
18. POST-OPERATIVE.....................................................7
19. ENTIRE AGREEMENT...................................................7
20. CONSENTS...........................................................7
21. PROPER LAW.........................................................8
i.
<PAGE>
TABLE OF CONTENTS
(CONTINUED)
PAGE
SCHEDULE A - Provisions required by the Employment Protection
(Consolidation) Act of 1978
SCHEDULE B - Metron Semiconductors Europe B.V. Incentive Compensation
Plan
SCHEDULE C - Pension Benefits Policy
ii.
<PAGE>
MANAGING DIRECTORS SERVICE AGREEMENT
AN AGREEMENT made the 1st day of May, 1996 between METRON TECHNOLOGY
(UNITED KINGDOM) LTD. whose registered office is situated at 6 & 7 Grafton Way,
Basingstoke, Mants, RG22 6HY (hereinafter called "the Company") and JOHN
CHRISTOPHER LEVETT-PRINSEP of Lakewood, Straight Mile, Romsey, 505 9BA
(hereinafter called "the Director").
WHEREAS,
NOW IT IS HEREBY AGREED that the Company, as defined above, shall
employ the Director and the Director shall serve the Company as the President,
European Operations and Managing Director of the Company upon and subject to the
following terms and conditions:
1. DEFINITIONS.
In this Agreement unless the context otherwise requires the following
expressions shall have the following meanings:
1.1 "THE ACT" means the Employment Protection (Consolidation) Act 1978 as
amended by the Trade Union Reform and Employment Rights Act 1993;
1.2 "THE GROUP" means Metron Technology B.V. and its subsidiaries and any
other company which is for the time being a holding company (as defined by
Section 736 of the Companies Act 1985) of Metron Technology B.V. or another
subsidiary of any such holding company;
1.3 "THE AUDITORS" means the Auditors for the time being of Metron
Technology B.V.
1.4 "THE BOARD" means the Board of Directors for the time being of Metron
Technology B.V.
1.5 Any reference to a statutory provision shall be deemed to include a
reference to any statutory modification or re-enactment of the same.
1.6 Reference to clauses and paragraphs are to clauses and paragraphs of
this Agreement.
1.7 Clause headings are included for guidance only and do not affect the
interpretation of this Agreement.
1.8 Words denoting the singular shall include the plural and vice versa and
words denoting any gender shall include all genders.
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2. TERM OF EMPLOYMENT.
2.1 The employment shall commence on the 1st day of May, 1996 ("the
Commencement Date") and shall (subject to termination as provided in Clause 9)
be for an initial fixed period of one year and shall thereafter be terminable by
either party giving to the other not less than twelve months notice.
2.2 For the purpose of calculating the continuous period of employment, the
Director has been continuously employed by Metron Semiconductors Europe B.V., or
its affiliate, predecessor or successor since February 1, 1978.
3. REMUNERATION.
THE REMUNERATION OF THE DIRECTOR SHALL BE:
3.1 A fixed salary (which shall accrue from day to day) at the rate of
103,000 pounds British sterling per annum (or such higher rate as the Company
may in its discretion from time to time decide) payable by equal monthly
installments in arrear on the last day of every month. The Group, acting through
the Group's Board or its Compensation Committee, as the case may be, shall
review the base salary at least annually and may in its sole discretion as sole
shareholder of Employer increase such salary to reflect performance, appropriate
industry data and other factors but shall not be obligated to provide for any
increases.
3.2 All incentive compensation, including but not limited to bonuses, shall
be governed by the Metron Semiconductors Europe B.V. Incentive Compensation Plan
(prepared during the time the Group was entitled "Metron Semiconductors Europe
B.V."), attached hereto and incorporated by reference as Schedule B.
Although Director's incentive compensation is governed by the
Metron Semiconductors Europe B.V. Incentive Compensation Plan, Director is, and
at all times during this Agreement shall remain, an employee of Metron
Technology (United Kingdom) Ltd. only.
3.3 Annual subscriptions in respect of the membership of the Director and
his wife and infant children to B.U.P.A. under a medical insurance scheme on
such reasonable terms on the parties hereto may agree.
3.4 The costs of (i) a life policy for the benefit of the Director's estate
(or as he shall direct) providing a lump sum in the event of his death of four
times his then salary, (ii) permanent health insurance to provide an annual
amount (from the date of disability to the normal retirement date of employees
of the Company), which shall initially be equal to no less than two-thirds of
his annual salary immediately before such disability, and which amount shall be
guaranteed to increase each year by a percentage no less than the percentage
increase in the Retail Price Index (All Items) or equivalent index) in the
prevent year.
4. EXPENSES.
The Company shall by way of reimbursement also pay or procure to be
paid to the Director all travelling, hotel, entertainment and other expenses
incurred by him in the
2
<PAGE>
performance of his duties hereunder, including any expenses incurred in
attending meetings of the Board or Committees of the Board or General Meetings
of the Company or any member of the Group to which he is required to render
services hereunder, PROVIDED THAT the Company shall be entitled to require such
expenses be duly vouched by written evidence and be in accordance with Company
policy.
5. MOTOR CAR.
The Company will provide the Director with a motor car of a type and make
suitable for the status of the Director (currently Jaguar XJS) and which shall
be changed for a new model every three years, and shall pay all expenses in
connection therewith provided always that the Director will take good care of
the same and return the same to the address of the Company first hereinbefore
mentioned in good condition (reasonable wear and tear only excepted) immediately
on termination of Director's employment or of this agreement.
6. ILLNESS.
6.1 In the case of illness of the Director or other disability
incapacitating him from attending to his duties (such illness or other cause
being hereinafter referred to as "Incapacity") the Director shall continue to be
paid during the first 12 months of such absence (such payment to be inclusive of
any Statutory Sick Pay to which the Director may be entitled) provided that he
complies with the rules of the Company's Sick Pay Scheme.
The Company's Sick Pay Scheme can be obtained from Sick Pay Scheme
Administrator on request.
In the case of Incapacity preventing the Director from attending work
the Director shall report such absence by 10:00 a.m. on the first day of such
absence to the Office Manager and shall report to that person by 10:00 a.m. on
each subsequent day of absence due to incapacity.
7. DUTIES, TIME AND ATTENTION.
During the continuance of his employment hereunder the Director shall:
7.1 Exercise such power and functions and perform such duties appropriate
to his status, qualifications and experience in relation to the business of the
Company as may from time to time reasonably be vested in or assigned to him by
the Board, and shall comply with all directions from time to time given to him
by the Board (or by anyone authorized by the Board), and with all rules and
regulations from time to time laid down by the Company concerning its employees.
7.2 Unless prevented by ill health or accident, and except during holidays
permitted by this Agreement, Director shall devote the whole of his time,
attention and abilities to carrying out his duties hereunder. The Director shall
attend the premises of the Company during the normal business hours of the
Company from time to time and such other time or times as may be reasonably
required by the Company, provided always that the Director shall not be entitled
hereunder to any additional remuneration for working outside such normal
business hours.
3
<PAGE>
7.3 Carry out his duties in the proper loyal and efficient manner, and
shall use his best endeavors to promote the interests and reputation of the
Company and not knowingly do anything which is to its detriment.
7.4 Travel to such places (whether within or outside the United Kingdom) in
such manner and on such occasions as the Company may from time to time require.
7.5 Not without the prior written consent of the Company undertake any
other trade, business or profession, or be or become an employee, partner,
shareholder or agent of any other company, firm or person or assist or be
engaged, concerned or interested (whether directly or indirectly) in any trade
business or profession whatsoever other than the business of the Company or of
the Group, PROVIDED THAT nothing in this paragraph shall preclude the Director
from holding or acquiring for investment purposes no more than 5 per cent of any
class of stock, shares, debentures or other securities in any company which is
listed and/or dealt on the Stock Exchange, the Unlisted Securities Market or any
other investment exchange (as that term is defined in the Financial Services Act
of 1966).
8. HOLIDAYS.
8.1 The holiday year is from 1st January to 31st December.
8.2 The Director shall be entitled to be absent from duty for the usual
public and bank holidays and for a further 25 working days in each holiday year
(or such longer period in any such period as the Board may decide), any such
holidays to be taken at such time or times as shall be agreed between the
Director and the Board or, failing agreement, as the Board shall determine.
8.3 The holiday entitlement shall accrue pro rata to the length of time
during which the Director shall be employed by the Company in any one year. This
will apply in the calculation of accrued holiday pay (if any) which the Director
shall be entitled to receive on the expiration or termination of this Agreement.
9. SUMMARY TERMINATION.
9.1 The Company shall be entitled by notice in writing to terminate this
Agreement forthwith and without payment in lieu of notice if the Director shall:
9.1.1 Be guilty of any gross dishonesty or misconduct in connection
with or affecting the business of the Company, or shall commit any material
breach of this Agreement other than a breach which (being capable of being
remedied) shall have been remedied by him within 30 days of a written notice
from the Board specifying the breach and requiring him to remedy such breach, be
convicted of a criminal offence other than a motoring offence which in the
reasonable opinion of the Board affects his position as an employee of the
Company, adjudicated bankrupt or make a composition or enter into any deed of
arrangement with his creditors, or shall commit any act of fraud or dishonesty.
9.2 The rights of the Company under 9.1 are without prejudice to any other
rights it may have at law to terminate the Director's employment.
4
<PAGE>
10. TERMINATION -- GENERAL.
Upon the termination howsoever of this Agreement, the Director shall:
10.1 At any time or from time to time thereafter upon the request of the
Company resign without claim for compensation from office as a Director (and
Secretary, if appropriate) of the Company and such offices held by him in any
other member of the Group and shall transfer to such person as the Company
directs and without payment (and shall deliver any share certificate in respect
of) any nominee shares which he holds in (or on behalf of) any such company as
may be so requested, and in the event of his failure to do so forthwith upon
request the Company is hereby irrevocably authorized to appoint some person in
his name and on his behalf to sign and deliver such resignation or resignations
to the Company and to which other member of the Group of which the Director is
at the material time a Director or other officer and any stock transfer relating
to the said nominee shares.
10.2 Without the consent of the Company, not at any time thereafter,
represent himself still to be connected with the Company or any Associated
Company or Group.
11. RECONSTRUCTION OR AMALGAMATION.
If before the expiration of this Agreement, the employment of the
Director hereunder shall be terminated by reason of the liquidation of the
Company for the purpose of reconstruction or amalgamation, and the Director
shall be offered employment with any concern or undertaking resulting from such
reconstruction or amalgamation for a period not less than the unexpired term of
this Agreement and on terms and conditions not less favorable than the terms of
this Agreement, then the Director shall have no claim against the Company in
respect of the termination of his employment hereunder by reason of such
liquidation.
12. RESTRICTIONS AFTER TERMINATION.
12.1 In order to protect the goodwill, trade secrets and trade connections
of the Company, and without prejudice to any other duty imposed by law and
equity the Director covenants that he will not, without the consent of the
Company which shall not be unreasonably withheld:
12.1.1 At any time after the termination of this Agreement disclose or
make use of the Company's trade secrets and other confidential information.
12.1.2 During the period of twelve months commencing with the
termination of his employment hereunder either on his own account or for any
other person, firm or company solicit or seek to be appointed an agent or
distributor for any person, firm or company who was a supplier to the Company
during the period of 12 months prior to the termination of his employment with
the Company.
12.1.3 For the period of 12 months commencing with the termination of
his employment hereunder either on his own account or on behalf of or for any
other person, firm or company solicit or attempt to solicit or seek to be
appointed an agent or distributor of any senior employee, consultant, or
independent contractor of the Company or member of the Group to
5
<PAGE>
terminate his relationship with the Company or member of the Group in order to
become an employee, consultant or independent contractor to or for any person,
firm or company and with whom the Director had had a regular course of dealing
in the period of 12 months immediately preceding his termination of employment
whether this was in whole or in part of such period.
12.2 The restrictions referred to in sub-clauses 12.1.2 and 12.1.3 above
shall have no effect after the termination of employment if such termination is
by the Company in breach of the terms of this Agreement.
13. WARRANTIES.
The Director hereby warrants and undertakes that:
13.1 He has not committed any criminal offense or committed any other act
which would render him unfit to serve as a director of the Company, that he has
duly passed the examinations for any qualification which he claims, that he is
not subject to any order for the attachment of earnings or bankruptcy and has
not made any composition or arrangement with his creditors, that there is no
unsatisfied summons, writ, pending action or prosecution against him in respect
of any matter as aforesaid, and that he is not disqualified by virtue of the
Company Directors Disqualification Act 1986 or by the articles of association or
otherwise by law from being a director, and that he will not be in breach of any
obligation whatsoever as a result of having entered into this Agreement.
13.2 He will not at any time except only to the extent (if any) as is
necessary and proper in the course of his employment hereunder, or he is under a
mandatory and binding legal obligation to disclose to any person, firm or
company, any information as to the practice, business dealings, management,
finances or affairs of the Company or any member of the Group, or of any of the
customers or clients of the Company or any member of the Group, which may come
to his knowledge by reason of his employment hereunder, and shall keep with
complete secrecy all confidential information entrusted to him and shall not use
or attempt to use any such information in any manner except as aforesaid and
this subclause 13.2 shall continue to apply as well after termination of this
Agreement as before and without limit in point of time.
13.3 He will abide by and will not exceed any guidelines for the time being
imposed by the directors as to any contract or obligations to be made for or on
behalf of the Company or any member of the Group.
14. CONFIDENTIALITY.
14.1 The Director shall during the continuance of his employment hereunder
and after the termination thereof (howsoever occasioned) observe strict secrecy
as to the trade secrets of the Company of which he becomes possessed during the
course of his employment hereunder and shall not either during his employment or
at any time thereafter, except in the proper course of his duties hereunder or
with the prior written consent of the Board or as is required by a Court of
competent jurisdiction, divulge or communicate to any third party (except to any
other employee of the Company authorized to receive the same) or use for his own
account of any such trade secret or other confidential information concerning
the Company and he shall use his best endeavours to prevent the publication and
disclosure of the same.
6
<PAGE>
15. PENSION SCHEME.
15.1 The Director shall be entitled to be a member of the Company's
directors' contributory pension scheme in accordance with and subject to the
regulation thereof for the time being in force. A copy of the Pension Benefits
Policy is attached hereto as Schedule C.
15.2 A contracting-out certificate under the Social Security Pension Act
1975 is in force in respect of the employment of the Director.
15.3 It is further agreed that the Company is obligated to contribute a
fixed amount of 17.32% of basic salary to your pension plan annually during the
period of your employment.
16. THE SCHEDULE.
The provisions set out in the Schedule hereto (which constitutes the
statement of terms and conditions of employment required by Section 1 of the
Act) as from time to time amended shall apply as if incorporated in this
Agreement.
17. NOTICES.
Any notice required to be served hereunder must be in writing and may
be given personally or by posting the same by first class prepaid post to the
Company at its registered office for the time being or to the Director at his
address given or other last known address and any notice so given by post as
aforesaid shall be deemed served forty-eight hours after it is posted and in
proving such service it shall be sufficient to prove that any envelope
containing the notice was properly addressed, stamped and posted.
18. POST-OPERATIVE.
The expiration or determination of this Agreement howsoever arising
shall not affect such of its provisions as are expressed to operate or have
effect thereafter and shall be without prejudice to any right of action already
accrued to either party in respect of any breach of this Agreement by the other
party.
19. ENTIRE AGREEMENT.
19.1 Subject to the provisions of Clause 12.2 above the expiration or
determination of this Agreement howsoever arising shall not affect such of its
provisions as are expressed to operate or have affect thereafter and shall be
without prejudice to any right of action already accrued to either party in
respect to any breach of this Agreement by the other party.
20. CONSENTS.
Any amendment to this Agreement shall be in writing signed by the
parties hereto and expressed to be for the purpose of such amendment.
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<PAGE>
21. PROPER LAW.
This Agreement shall be governed by the law of England and the parties
hereto irrevocably submit to the jurisdiction of the English courts as regards
any claim or matter arising under this Agreement.
IN WITNESS WHEREOF, this Agreement has been executed and sealed by the
parties hereto the day and year first before written.
METRON TECHNOLOGY B. V.
By: \s\ Ed Segal
--------------------------------
Ed Segal
President
\s\ John Christopher Levett-Prinsep
-------------------------------------
JOHN CHRISTOPHER LEVETT-PRINSEP
8
<PAGE>
SCHEDULE A
1. Amplification of terms of employment:
(a) Name of the Company: METRON TECHNOLOGY (UNITED KINGDOM) LTD.
Address of the Company: 6 & 7 Grafton Way
Basingstoke, Hampshire
RG22 6NY
(b) Name of the Director: JOHN CHRISTOPHER LEVETT-PRINSEP
Address of the Director: Lakewood, Straight Mile,
Romsey, SO5 9BA
(c) Date of commencement of Employment with the Company: For the purpose
of calculating the continuous period of employment when the Company, the
Director has been continuously employed by the Company or its affiliate since
1st February 1978.
(d) Remuneration - See Clause 3 L 103,000 British sterling per annum index
linked and the first monthly installment will be payable on_________________.
(e) Notice - See Clause 2: The Agreement is for an initial fixed term of
_____ years and thereafter is terminable by either the Company or the Director
giving not less than twelve months notice in writing to the other.
(f) Job Title: President, European Operations and
Director, Metron Technology (United
Kingdom) Ltd.
2. In accordance with Section 1(3) of the Act, the following terms of the
Director's employment apply on the date of the Agreement to which this
is a Schedule:
(a) Hours of Work: There are no fixed hours of work.
(b) Holidays: The Director is entitled to
twenty-five days holiday with pay - see
Clause 8 of the Agreement. The entitlement
to holiday, and on termination of
employment, holiday pay in lieu of
holiday, accrues pro rata throughout each
holiday year during which the employment
hereunder continues.
(c) Sickness or injury: The Director is entitled
to be paid during any period of absence
from work during sickness or injury -
see also Clause 6 of the Agreement.
3. The following information is supplied pursuant to the Act and reflects
the Company's current practice:
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(a) DISCIPLINARY RULES
There is no formal Disciplinary Procedure applicable to this
employment. The Director shall merely be expected to exhibit a high standard of
proprietary in all his dealings with and in the name of the Company.
(b) GRIEVANCE PROCEDURE
There is no formal grievance procedure applicable to this
employment. The Director should apply to the Board in the event of such a
grievance.
(c) APPEALS PROCEDURE
As (b) above.
(d) PENSION
A contracting-out certificate is in force in respect of this
employment.
4. There are no collective agreements currently in force which directly
affect the terms and conditions of this employment.
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Exhibit 10.16
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Hendricks Agreement") is being entered
into as of July 13, 1998 (the "Closing Date") by and among T.A. KYSER CO., a
Nevada corporation ("Kyser"), METRON TECHNOLOGY CORPORATION, a California
corporation ("MTC"), METRON TECHNOLOGY B.V., a Netherlands corporation
("Purchaser") and GARRY HENDRICKS ("Employee").
RECITALS
A. Pursuant to an Agreement and Plan of Merger and Reorganization dated
as of June 12, 1998 ("the Merger Agreement") among Kyser, Metron Acquisition
Sub, Inc.,(the "Merger Sub"), and Purchaser, Kyser's stockholders are receiving
shares of capital stock of Purchaser in exchange for their shares of common
stock of Kyser as a result of the Merger of the Merger Sub with and into Kyser
(the "Merger"), and Kyser is becoming a wholly owned subsidiary of Purchaser.
B. Whereas pursuant to a Joinder Agreement dated June 12, 1998,
Employee has agreed to be bound by the terms and conditions of the Merger
Agreement as a Signing Stockholder.
C. Employee was a stockholder of Kyser prior to the Merger, and has
been serving as the Chairman of Kyser.
D. Purchaser and Kyser have agreed that as a condition to consummating
the Merger and the other transactions contemplated by the Merger Agreement,
Employee will execute and deliver the Hendricks Agreement.
E. Contemporaneously with the execution and delivery of the Hendricks
Agreement, Employee is executing and delivering to Kyser and Purchaser a
Noncompetition Agreement of even date herewith (the "Noncompetition Agreement").
The Merger Agreement, which Employee agreed to be bound by when he executed the
Joinder Agreement, and the Noncompetition Agreement, are referred to
collectively herein as the "Other Agreements."
AGREEMENT
In order to induce Purchaser to consummate the transactions
contemplated by the Merger Agreement, and in further consideration of the mutual
covenants and agreements contained herein, the parties agree as follows:
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1. EMPLOYMENT
1.1 TERM; DUTIES.
(a) TERM. Employee agrees to serve as an employee of Kyser from
the Closing Date until Employee's employment as an employee of Kyser is
terminated pursuant to the provisions of Section 1.6.
(b) DUTIES. During his employment with Kyser, Employee shall
serve as Vice Chairman of Kyser and shall have such responsibilities as may
be assigned to him by Kyser's Board of Directors. Employee agrees to serve
Kyser faithfully and in a professional manner consistent with the skill,
competence and efficiency expected of a Vice Chairman, and to devote
substantially all of his working time, attention and efforts during the term
of this Agreement to the business and affairs of Kyser. The foregoing,
however, shall not preclude Employee from engaging in civic, charitable or
religious activities or from devoting a reasonable amount of time to private
investments or from serving on the boards of directors of nonprofit entities,
so long as such activities and service are not performed for any competitor
of Kyser and so long as such activities do not materially interfere or
conflict with his responsibilities to Kyser. Activities conducted for a
for-profit entity shall require the prior written consent of the Chief
Executive Officer of Purchaser. Employee represents and warrants to Kyser
that he is under no contractual commitments inconsistent with his obligations
set forth in the Hendricks Agreement. Employee's duties hereunder shall be
performed at the offices of Kyser, located in the Dallas, Texas standard
metropolitan statistical area or at such other location as Kyser and Employee
mutually agree; provided, however, that, in the performance of his duties,
Employee shall be required to travel at such times and to such places as
Kyser may reasonably request from time to time.
1.2 SALARY. In consideration of all services to be rendered by
Employee to Kyser, Kyser shall pay to Employee a salary of not less than
Employee's current base salary per annum, which is $198,450.00 per annum,
which salary (i) may be increased (but not decreased unless such decrease is
done on an equitable pro rata basis for both Kyser's and MTC's executives
located in the United States and provided such decrease shall not exceed 10%
of Employee's base salary per annum at the time of such decrease) from time
to time by the Board of Directors of Kyser, (ii) shall be reviewed at least
annually by the Board of Directors of Kyser (although the Board is not under
any obligation to increase the salary of Employee), (iii) shall be payable at
such times as other salaried employees of Kyser receive their regular salary
payments, and (iv) shall be subject to standard withholdings and deductions.
1.3 OTHER BENEFITS.
(a) MTC BENEFITS.. During his employment, Kyser, MTC and
Purchaser shall provide to Employee, the same benefits that Kyser now or in
the future makes generally available to its executive officers or that MTC
now or in the future makes generally available to all of its executive
officers located in the United States, subject to Employee's satisfaction of
the respective eligibility requirements for such benefits. Employee shall
receive credit under such benefit plans for his years of service with Kyser.
Employee shall pay any contributions which are generally required of
executives of Kyser or MTC to receive any such benefits. Such perquisites may
include but not necessarily be limited to, use of and reimbursement for
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cellular/car phone, professional organizational dues and professional
development seminars. It is anticipated that the Kyser Board will annually
review Employee's benefits package and may, in its discretion, increase (but
not decrease unless such decrease is done on an equitable pro rata basis for
both Kyser's and MTC's executives) such perquisites.
(b) VACATION. During his employment, Employee shall be entitled
to not less than 20 days of paid vacation per year, which vacation days shall
accrue pro rata each month. Employee may accrue up to a maximum of 30 days
vacation, at which point further accrual stops until accrued vacation is
used, unless otherwise agreed between the parties.
(c) LIFE INSURANCE. In the event of Employee's death during the
term of this Agreement (including during the Consulting Period (as defined in
Section 1.6(d)(i)), Kyser shall pay to Employee's designated beneficiary
$1,000,000 of any amounts that Kyser receives pursuant to that certain life
insurance policy that Kyser maintains on Employee's life naming Kyser as
beneficiary. Kyser shall use its best efforts to maintain such policy, or a
policy providing similar benefits, in effect.
(d) BONUS PLANS.
(i) Employee shall be entitled to participate in the
annual incentive compensation plans for senior management of both Kyser and
Purchaser, attached as Exhibit 1.3(d)(i) and 1.3(d)(ii), pursuant to the
terms of these plans. Generally, any such compensation shall be paid out of a
pool funded by a percentage of the annual net income of Purchaser or Kyser
(as the case may be) calculated before income taxes and performance incentive
compensation. Kyser and Purchaser shall have the sole discretion to change or
eliminate their annual incentive compensation plans, to determine the amount
placed into the pool, to determine whether Employee is entitled to any
compensation under these plans, and to determine the amount of any such
compensation. Notwithstanding the foregoing provisions, Kyser and Purchaser
agree that for the fiscal year ending May 31, 1999, Kyser will pay Employee a
bonus of not less than $25,000; PROVIDED, HOWEVER, such payment will be made
subject to Sections 1.3(d)(ii) and (iii).
(ii) In addition, any such compensation shall be
considered earned as of the last day of Kyser's and Purchaser's respective
fiscal years, as the case may be, provided that Employee has remained
employed on a full-time basis by Kyser through that date. If Employee is
awarded any such compensation, it will be paid in one lump sum as soon as
practicable after the annual audit of Purchaser's financial statements is
complete and Purchaser has completed the necessary calculations of the
amounts, if any, which are due. Any such compensation shall be subject to
standard withholdings.
(iii) In the event of Employee's death or disability (as such
term is defined in the Hendricks Agreement) during the term of the Hendricks
Agreement, for the fiscal year in which his death or disability occurs, Kyser
and Purchaser each shall pay Employee's estate (in the event of Employee's
death) or the Employee (in case of his disability) the bonus to which he
would otherwise have been entitled had he been employed as of the last day of
such fiscal year multiplied by a fraction, the numerator of which is the
number of days elapsed in the
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fiscal year up to and including the date of his death, or, in the case of
disability, the last day of active employment, and the denominator of which
is 365.
1.4 EXPENSES. Employee shall be entitled to prompt reimbursement
from Kyser for reasonable out-of-pocket business expenses reasonably incurred
by Employee during his employment in the performance of Employee's duties
under the Hendricks Agreement; provided, however, that Kyser shall not be
required to reimburse Employee for any such expenses unless: (a) Employee
presents vouchers and receipts indicating in reasonable detail the amount and
business purpose of each of such expenses; and (b) Employee otherwise
complies with Kyser's reasonable reimbursement policies established from time
to time and in effect during the Employment Term.
1.5 CLAIMS AGAINST KYSER. Employee represents and warrants to Kyser
that he does not have claims and is not aware of any claims or rights against
Kyser arising directly or indirectly from his past employment with Kyser, and
in consideration for the Hendricks Agreement, Employee hereby releases and
discharges Kyser and its affiliates from all claims, rights, causes of
action, demands and obligations arising directly or indirectly from his past
employment with Kyser except for any salary, bonuses, vacation pay, expense
reimbursement, health benefits or Kyser ESOP benefits owed to me by Kyser in
the ordinary course of business on the date of the Hendricks Agreement.
Employee acknowledges that he is knowingly and voluntarily waiving and
releasing any rights he may have under the Age Discrimination in Employment
Act. He also acknowledges that the consideration given for the waiver in this
Section is in addition to anything of value to which he was already entitled.
He further acknowledges that he has been advised by this writing that: (i)
his waiver and release do not apply to any claims that may arise after he
signs the Hendricks Agreement; (ii) he has the right to consult with an
attorney prior to executing the Hendricks Agreement; (iii) he has twenty-one
(21) days within which to consider the Hendricks Agreement (although he may
choose to voluntarily execute the Hendricks Agreement earlier); (iv) he has
seven (7) days following the execution of the Hendricks Agreement to revoke
the Hendricks Agreement; and (v) the Hendricks Agreement shall not be
effective until the date upon which the revocation period has expired, which
shall be the eighth day after this Agreement is executed by him ("Effective
Date"). In giving this release, which includes claims which may be unknown to
Employee at present, Employee acknowledges that he has read and understands
Section 1542 of the California Civil Code which reads as follows: "A general
release does not extend to claims which the creditor does not know or suspect
to exist in his favor at the time of executing the release, which if known by
him must have materially affected his settlement with the debtor." Employee
hereby expressly waives and relinquishes all rights and benefits under that
section and any law of any jurisdiction of similar effect with respect to his
release of any claims he may have against Kyser contained in this Section 1.5.
1.6 TERMINATION.
(a) TERM OF AGREEMENT. Employee's employment as an employee of
Kyser (but not as a consultant to Kyser pursuant to Section 1.6(d)) may be
terminated by either party at any time, with or without cause, and with or
without advance notice. The date that either party gives notice of
termination shall be the "Termination Date."
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(b) DEFINITION OF "CAUSE." Employee's employment with Kyser
shall be deemed to have been terminated for "Cause" if such employment is
terminated following: (i) any intentional misconduct, fraud or bad faith on
the part of Employee in the performance of any of his duties as an employee
of Kyser that are materially injurious to Kyser; (ii) the conviction of
Employee of, or the entry by Employee of a plea of guilty or no contest to,
any felony; (iii) the breach by Employee of any material provision in any of
the Other Agreements if such breach is not fully cured by Employee within ten
days after he receives notice from Kyser of such breach; or (iv) the
continued failure of Employee to perform any reasonable duties assigned to
him by Kyser or to perform any of his obligations set forth in the Hendricks
Agreement (other than any such failure resulting from incapacity due to
physical or mental illness), if such breach or failure is not fully cured by
Employee within ten days after he receives notice of such breach or failure
which specifically identifies the manner in which Kyser believes he has not
substantially performed his duties.
(c) DEFINITION OF "GOOD REASON." "Good Reason" shall mean (i) a
material change in the responsibilities, authority, title or office of
Employee resulting in the diminution of his position (ii) except for
decreases made on an equitable pro rata basis for both Kyser's and MTC's
executives located in the United States, a diminution in Employee's annual
base salary below the amount stated in Section 1.2 or as same may be
increased from time to time, PROVIDED, HOWEVER, that such decrease shall not
exceed 10% of Employee's base salary per annum at the time of such decrease;
(iii) except for changes made on an equitable pro rata basis for both Kyser's
and MTC's executives located in the United States, the failure by Kyser to
continue to provide Employee with benefits substantially similar to those
enjoyed by executives of Kyser or MTC; (iv) Kyser's requiring Employee to be
based anywhere other than Kyser's office at which he was based as of the date
of the Hendricks Agreement; or (v) any material breach by Kyser or Purchaser
of the Hendricks Agreement; excluding for all of these purposes an isolated,
insubstantial or inadvertent action not taken in bad faith which is remedied
by Kyser or Purchaser promptly after notice thereof is given by Employee.
(d) BENEFITS UPON TERMINATION BY KYSER WITHOUT CAUSE, UPON
RESIGNATION BY EMPLOYEE FOR GOOD REASON OR DISABILITY. Should Employee's
employment be terminated by Kyser without Cause, should Employee resign for
Good Reason, or should Employee become disabled from performing his duties as
an employee of Kyser and the disability continues for a period of more than
15 consecutive weeks, during the first three years of employment after the
Closing Date, (i) Kyser shall pay to Employee any salary, vacation pay,
expense reimbursement, health benefits or Kyser ESOP benefits owed to
Employee in the ordinary course of business as of the Termination Date, and
(ii) should Employee execute the Employee Agreement and Release attached
hereto as Exhibit 1.6(d) Employee shall be entitled to enter into a
consulting arrangement with Kyser on the following terms and conditions:
(i) CONSULTING PERIOD. Kyser will retain Employee as a
consultant from the Termination Date until the date which is three (3) years
after the Closing Date (the "Consulting Period"). If Employee obtains full
time employment or the substantial equivalent of full time employment (e.g.
consulting) with another employer during the Consulting Period, the
Consulting Fees (as defined in Section 1.6(d)(iii)(1)) that Kyser is
obligated to pay shall be offset by the amount of earnings that Employee
receives from such other employment or substantial equivalent of employment.
Employee agrees to notify Kyser immediately, in writing, upon
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accepting an offer for any such employment or substantial equivalent of
employment with another employer. Kyser may terminate the Consulting Period
at any time for Cause. Upon termination of the Consulting Period, all of
Kyser's obligations under Section 1.6(d) shall be terminated and of no effect.
(ii) CONSULTING DUTIES. Employee agrees that, while he is
retained by Kyser as a consultant, he will remain available to provide
consulting in any area of his expertise upon reasonable request by a duly
authorized officer of Kyser. Employee agrees to serve Kyser faithfully and in
a professional manner consistent with the skill, competence and efficiency
expected of a consultant and to make himself available for a maximum of ten
(10) hours per week. Kyser will not assign Employee any duties which would
cause him to be considered an affiliate of Kyser for Rule 144 purposes. As a
consultant and shareholder, Employee will not have any special restrictions
under Kyser's insider trading window policy other than those restrictions
applicable to all Kyser employees.
(iii) CONSULTING COMPENSATION. During the Consulting
Period, Kyser agrees to pay Employee the following compensation:
(1) CONSULTING FEES. During the Consulting Period,
Kyser will continue Employee's base salary in effect as of the Termination
Date ("Consulting Fees"). Kyser will not deduct or withhold any amount from
Employee's Consulting Fees for taxes, social security, or other payroll
deductions, but will instead issue Employee a 1099 form with respect to his
Consulting Fees. Employee acknowledges that as an independent contractor
consultant, he will be responsible for the payment of all employment taxes
and any other taxes due and owing from Employee as a result of his Consulting
Fees and hereby indemnifies Kyser and holds it harmless from any liability
for any taxes, penalties, and interest which (a) may be assessed by any
taxing authority against Kyser or (b) which must be paid by Kyser to any
taxing authority, in each case, regarding taxes due and owing from Employee.
(2) HEALTH INSURANCE BENEFITS. After the Termination
Date, and to the extent permitted by the federal COBRA law and by Kyser's
current group health insurance policies, Employee will be eligible to
continue his health insurance benefits. Employee will be provided with a
separate notice of his COBRA rights at or about the Termination Date. Kyser
will pay the cost of continuing such benefits during the Consulting Period up
until the time Employee obtains full-time employment. Kyser will not pay the
cost of continuing such coverage after Employee obtains full-time employment
or after the end of the Consulting Period, whichever comes first.
(3) OTHER COMPENSATION OR BENEFITS. Employee
acknowledges that, except as expressly provided in the Hendricks Agreement,
he will not receive any additional compensation, severance or benefits after
the Termination Date, except for accrued and unpaid vacation time for all
periods prior to the Termination Date.
(iv) OTHER WORK ACTIVITIES. During the Consulting Period,
Employee will retain the right to engage in other consulting relationships or
employment in addition to his work for Kyser provided that such consulting or
employment complies fully with Employee's Noncompetition Agreement. Kyser
agrees to make reasonable arrangements to enable Employee
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to perform his consulting services for Kyser at such times and in such a
manner so that it will not interfere with other activities in which he may
engage.
(e) NO BENEFITS IF TERMINATED BY KYSER FOR CAUSE OR UPON
RESIGNATION BY EMPLOYEE WITHOUT GOOD REASON. Employee understands and agrees
that should his employment be terminated for Cause by Kyser, or should he
resign without Good Reason, he shall not be entitled to any consulting
relationship with Kyser nor shall he be entitled to any other severance
benefits whatsoever.
(f) BREACH BY KYSER OR PURCHASER. If either Kyser or Purchaser
materially breaches any of its obligations under the Hendricks Agreement,
then Employee's obligations under Sections 3 and 4 of the Noncompetition
Agreement shall be terminated and of no force and effect. The remaining
provisions of the Noncompetition Agreement, including without limitation,
Section 2 of the Noncompetition Agreement, shall remain in full force and
effect.
1.7 DEATH OF EMPLOYEE. The Hendricks Agreement shall terminate upon
the death of Employee, provided that any payments under section 1.3(e) which
Employee would be entitled to receive if the bonus determination had been
made as of the date of his death shall be payable for the portion of the year
preceding his death in accordance with Section 1.3(e) hereof. Within 10 days
of receiving notice of Employee's death, Kyser shall pay Employee's estate
all salary due or accrued as of the date of his death, and all accrued
vacation pay. Kyser and Purchaser shall promptly pay Employee's estate for
all bonuses due promptly after calculation of such amounts in accordance with
normal procedures under the respective bonus plans.
1.8 DISABILITY. If Employee becomes disabled from performing his
duties as an employee of Kyser and the disability has continued for a period
of more than 15 consecutive weeks, Kyser may, in its discretion, determine
that Employee will not return to work and terminate his employment as an
employee (but not as a consultant) with Kyser under the Hendricks Agreement.
Upon any such termination for disability, Employee during the period he
remains disabled, to the extent he is otherwise eligible, shall be entitled
to such disability, medical, life insurance, and other benefits as may be
provided generally for disabled employees of Kyser or MTC who are located in
the Untied States. As used herein and for purposes only of determining bonus
and salary payments, the term "disability" shall have the same meaning
provided in Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended, except for that section's reference to "12 months," which time
period shall instead be as provided herein. In the event of Employee's
termination on grounds of disability, Kyser and Purchaser shall pay Employee
all salary due or accrued as of the date of such termination, and all accrued
vacation pay and bonuses, Kyser and Purchaser shall promptly pay Employee for
all bonuses due promptly after calculation of such amounts in accordance with
normal procedures under the respective bonus plans.
1.9 RELOCATION. During the term of his employment pursuant to the
Hendricks Agreement, Employee shall not be required to relocate, without his
consent, from the general vicinity of Dallas, Texas.
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1.10 INDEMNIFICATION.
(a) Except to the extent modified below in (b), with regard to
Employee's performance of services on behalf of Kyser as an employee,
officer, director, or agent, Kyser agrees, to the extent permitted by
applicable law, to fully indemnify Employee and to hold him harmless from and
against all claims, damages, judgments, losses, liabilities, fees and
expenses incurred by him or threatened against him in connection with his
performance of services hereunder and to make advances to him for the payment
of legal fees, witness fees, expenses and costs related thereto, Kyser also
agrees to pay any damages, judgments, fines and amounts paid in settlement
and any other amounts the Employee becomes legally obligated to pay because
of any claim or claims made against or by Employee in connection with any
threatened, pending or completed action, suit or proceeding to which Employee
is entitled to indemnification pursuant to the terms of this Section 1.10;
PROVIDED, HOWEVER, Employee shall not settle any such proceeding without the
express written consent of Kyser. Purchaser and Kyser agree to use their best
efforts to include Employee in the coverage of any errors and omissions
and/or directors' and officers' insurance policies, if any, obtained by
Purchaser, MTC or Kyser for officers and directors of MTC and Kyser,
respectively.
(b) The indemnification provisions of Section 1.10(a) shall not
apply with respect to the obligations of Kyser to indemnify Employee in the
following events:
(i) to the extent that Employee is indemnified pursuant to
any insurance purchased and maintained by or on behalf of Purchaser and/or
Kyser pursuant to the provisions of Section 1.10(a) of the Hendricks
Agreement and any resulting obligations are actually paid on behalf of or
reimbursed to Employee pursuant to such insurance;
(ii) on account of Employee's acts or omissions that
involve intentional misconduct;
(iii) on account of violations of the provisions of
Section 1.6(b) of the Hendricks Agreement;
(iv) on account of acts or omissions of Employee that
Employee believed at the time of the act or omission to be contrary to the
best interests of Kyser or its stockholders or that involve the absence of
good faith on the part of Employee;
(v) with respect to any transaction from which Employee
derived an improper personal benefit;
(vi) on account of acts or omissions that show a reckless
disregard by Employee for his duties to Kyser or its stockholders in
circumstances in which Employee was aware, or should have been aware, in the
ordinary course of performing an officer's duties, of a risk of serious
injury to Kyser or its stockholders; or
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(vii) on account of acts or omissions that constitute an
unexcused pattern of inattention that amounts to an abdication of Employee's
duties to Kyser or its stockholders.
(c) CONTINUATION OF INDEMNITY. Kyser's indemnity obligations
contained herein shall continue during the period Employee is a director,
officer, employee or other agent of Purchaser, MTC or Kyser, respectively (or
is or was serving at the request of Purchaser, MTC or Kyser as a director,
officer, employee or other agent of another corporation, partnership, joint
venture trust, employee benefit plan or other enterprise) and shall survive
the termination of Employee's employment and consulting arrangements with
Kyser and continue thereafter so long as Employee shall be subject to any
possible claim or threatened, pending or completed action, suit or
proceeding, by reason of the fact that Employee was serving in the capacity
referred to herein and to the extent he would otherwise be entitled to
indemnification pursuant to Section 1.10.
(d) EXPENSES. Upon request, Kyser shall advance, prior to the final
disposition of any proceeding, following request therefor, such advance not
to be unreasonably withheld or delayed, all expenses incurred by Employee in
connection with such proceeding upon receipt of an undertaking by or on
behalf of Employee to repay said amounts if it shall be determined ultimately
that Employee is not entitled to be indemnified under the provisions of the
Hendricks Agreement, applicable law, Kyser's charter documents, or otherwise.
2. MISCELLANEOUS PROVISIONS.
2.1 OTHER AGREEMENTS. Nothing in the Hendricks Agreement shall limit
Employee's or Kyser's obligations or the rights and remedies of Employee or
Kyser under the Other Agreements, and nothing in any of the Other Agreements
shall limit Employee's or Kyser's obligations or the rights and remedies of
Employee or Kyser under the Hendricks Agreement.
2.2 SURRENDER OF RECORDS AND PROPERTY. Within three (3) days after
the Termination Date, Employee shall deliver promptly to Kyser (a) all
records, manuals, books, blank forms, documents, letters, memoranda, notes,
notebooks, reports, data, tables and calculations and all copies thereof in
his possession or under his control which are the property of Kyser or which
relate in any way to the business, products, practices or techniques of
Kyser, and (b) all other property and confidential information of Kyser or
Purchaser in his possession or under his control.
2.3 NOTICES. Any notice or other communication required or permitted
to be delivered to either party under the Hendricks Agreement shall be in
writing and shall be deemed properly delivered, given and received when
delivered (by hand, by registered mail, by courier or express delivery
service or by facsimile) to the address or facsimile telephone number set
forth beneath the name of such party below (or to such other address or
facsimile telephone number as such party shall have specified in a written
notice given to the other party hereto):
IF TO KYSER: T.A. Kyser Co.
c/o Metron Technology
1350 Old Bayshore Highway, Suite 360
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Burlingame, CA 94010
Attention: Chief Executive Officer
Facsimile: (415) 373-1135
IF TO EMPLOYEE:
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2.4 SEVERABILITY. In the event that any provision of the Hendricks
Agreement, or the application of any such provision to any person, entity or
set of circumstances, shall be determined to be invalid, unlawful, void or
unenforceable to any extent, the remainder of the Hendricks Agreement, and
the application of such provision to persons, entities or circumstances other
than those as to which it is determined to be invalid, unlawful, void or
unenforceable, shall not be impaired or otherwise affected and shall continue
to be valid and enforceable to the fullest extent permitted by law.
2.5 GOVERNING LAW. The Hendricks Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
Texas (without giving effect to principles of conflicts of laws).
2.6 WAIVER. No failure on the part of either party to exercise any
power, right, privilege or remedy under the Hendricks Agreement, and no delay
on the part of either party in exercising any power, right, privilege or
remedy under the Hendricks Agreement, shall operate as a waiver of such
power, right, privilege or remedy; and no single or partial exercise of any
such power, right, privilege or remedy shall preclude any other or further
exercise thereof or of any other power, right, privilege or remedy. Neither
party shall be deemed to have waived any claim arising out of the Hendricks
Agreement, or any power, right, privilege or remedy under the Hendricks
Agreement, unless the waiver of such claim, power, right, privilege or remedy
is expressly set forth in a written instrument duly executed and delivered on
behalf of such party; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
2.7 CAPTIONS. The captions contained in the Hendricks Agreement are
for convenience of reference only, shall not be deemed to be a part of the
Hendricks Agreement and shall not be referred to in connection with the
construction or interpretation of the Hendricks Agreement.
2.8 COUNTERPARTS. The Hendricks Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which,
when taken together, shall constitute one agreement.
2.9 FURTHER ASSURANCES. Each party hereto shall execute and/or cause
to be delivered to the other party hereto such instruments and other
documents and shall take such other actions as such other party may
reasonably request to effectuate the intent and purposes of the Hendricks
Agreement.
9.
<PAGE>
2.10 ENTIRE AGREEMENT. The Hendricks Agreement and the Other
Agreements set forth the entire understanding of the parties relating to the
subject matter hereof and thereof and supersede all prior agreements and
understandings between the parties relating to the subject matter hereof and
thereof.
2.11 AMENDMENTS. The Hendricks Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of Kyser and Employee.
2.12 ASSIGNMENT. The Hendricks Agreement and all rights and
obligations of Employee hereunder are personal to Employee and may not be
transferred or assigned by Employee at any time. Kyser may, with Employee's
written consent (which consent shall not be unreasonably withheld), assign
its rights under the Hendricks Agreement to any entity that assumes Kyser's
obligations hereunder in connection with any sale or transfer of all or
substantially all of Kyser's assets to such entity. This Agreement shall not
be terminated by a voluntary or involuntary dissolution of Kyser, MTC or
Purchaser or the transfer of all or substantially all the stock or assets of
Kyser, MTC or Purchaser or the merger of Kyser, MTC or Purchaser with or into
another entity.
2.13 BINDING NATURE. Subject to Section 2.12, the Hendricks
Agreement will be binding upon and inure to the benefit of Kyser and its
successors and assigns and Employee and his representatives, executors,
administrators, estate, heirs, successors and assigns.
2.14 ATTORNEYS' FEES AND EXPENSES. If any legal action or other
legal proceeding relating to the enforcement of any provision of the
Hendricks Agreement is brought against either party hereto, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party
may be entitled).
2.15 CONSTRUCTION.
(a) For purposes of the Hendricks Agreement, whenever the
context requires: the singular number shall include the plural, and vice
versa; the masculine gender shall include the feminine and neuter genders;
the feminine gender shall include the masculine and neuter genders; and the
neuter gender shall include the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to
the effect that ambiguities are to be resolved against the drafting party
shall not be applied in the construction or interpretation of the Hendricks
Agreement.
(c) As used in the Hendricks Agreement, the words "include" and
"including," and variations thereof, shall not be deemed to be terms of
limitation, but rather shall be deemed to be followed by the words "without
limitation."
(d) Except as otherwise indicated, all references in the
Hendricks Agreement to "Sections" and "Exhibits" are intended to refer to
Sections of the Hendricks Agreement and Exhibits to the Hendricks Agreement.
10.
<PAGE>
The parties hereto have caused the Hendricks Agreement to be executed
and delivered as of the date first above written.
KYSER:
T.A. KYSER CO.
By: /s/ Boyd E. Hurst, Jr.
-------------------------
Name: Boyd E. Hurst, Jr.
-------------------------
Title: E.V.P
-------------------------
MTC:
METRON TECHNOLOGY CORPORATION
By: /s/ Ed Segal
-------------------------
Name: Ed Segal
-------------------------
Title: President
-------------------------
PURCHASER:
METRON TECHNOLOGY B.V.
By: /s/ Ed Segal
-------------------------
Name: Ed Segal
-------------------------
Title: Managing Director,
President & CEO
-------------------------
EMPLOYEE:
/s/ Garry Hendricks
-------------------------------
GARRY HENDRICKS
11.
<PAGE>
Exhibit 10.18
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST
(AS AMENDED AND RESTATED EFFECTIVE MARCH 17, 1997)
<PAGE>
<TABLE>
<S> <C> <C>
ARTICLE 1 NAME AND ACCEPTANCE. . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.1 Name.. . . . . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.2 Acceptance.. . . . . . . . . . . . . . . . . . . . . . . .2
Section 1.3 Tax Identification Number. . . . . . . . . . . . . . . . .2
ARTICLE 2 MANAGEMENT AND CONTROL OF TRUST FUND . . . . . . . . . . . . . . .2
Section 2.1 Trust Fund.. . . . . . . . . . . . . . . . . . . . . . . .2
Section 2.2 Plan Administration. . . . . . . . . . . . . . . . . . . .2
Section 2.3 Exercise Of Trustee's Duties.. . . . . . . . . . . . . . .3
Section 2.4 General Powers.. . . . . . . . . . . . . . . . . . . . . .3
Section 2.5 Responsibility Of Trustee. . . . . . . . . . . . . . . . .7
Section 2.6 Compensation And Expenses. . . . . . . . . . . . . . . . .7
Section 2.7 Continuation Of Powers Upon Trust Termination. . . . . . .7
Section 2.8 Bond.. . . . . . . . . . . . . . . . . . . . . . . . . . .7
Section 2.9 Trustee Directions.. . . . . . . . . . . . . . . . . . . .7
Section 2.10 Insurance Proceeds.. . . . . . . . . . . . . . . . . . . .8
ARTICLE 3 PROVISIONS RELATED TO INVESTMENT OF TRUST FUND . . . . . . . . . .8
Section 3.1 Investment Of Trust Fund.. . . . . . . . . . . . . . . . .8
Section 3.2 Stock Splits And Other Capital Reorganization, Dividends..8
Section 3.3 Voting Of Shares.. . . . . . . . . . . . . . . . . . . . .9
Section 3.4 Distribution Of Trust Fund.. . . . . . . . . . . . . . . .9
Section 3.5 Put Option.. . . . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 4 VALUATION OF TRUST FUND. . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 5 NO REVERSION TO EMPLOYER . . . . . . . . . . . . . . . . . . . . .9
ARTICLE 6 CHANGE OF TRUSTEE. . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.1 Resignation Of The Trustee.. . . . . . . . . . . . . . . 10
Section 6.2 Removal Of The Trustee.. . . . . . . . . . . . . . . . . 10
Section 6.3 Duties Of Resigning Or Removed Trustee And Of Successor
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 6.4 Filling Trustee Vacancy. . . . . . . . . . . . . . . . . 11
ARTICLE 7 ADDITIONAL EMPLOYERS . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE 8 AMENDMENT AND TERMINATION. . . . . . . . . . . . . . . . . . . . 11
Section 8.1 Amendment. . . . . . . . . . . . . . . . . . . . . . . . 11
Section 8.2 Termination. . . . . . . . . . . . . . . . . . . . . . . 11
1.
<PAGE>
ARTICLE 9 INDEMNIFICATION, APPOINTMENT OF INVESTMENT ADVISOR, AND APPOINTMENT
OF ANCILLARY TRUSTEE . . . . . . . . . . . . . . . . . . . . . . 12
Section 9.1 Indemnification. . . . . . . . . . . . . . . . . . . . . 12
Section 9.2 Limitation on Liability - If Investment
Manager, Ancillary . . . . . . . . . . . . . . . . . . . 12
Section 9.3 Appointment Of An Investment Manager Or An Ancillary
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 9.4 Parties To Litigation. . . . . . . . . . . . . . . . . . 14
ARTICLE 10 MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 10.1 Disagreement As To Acts. . . . . . . . . . . . . . . . . 14
Section 10.2 Persons Dealing With Trustee.. . . . . . . . . . . . . . 14
Section 10.3 Third Party And Multiple Trustees. . . . . . . . . . . . 14
Section 10.4 Benefits May Not Be Assigned Or Alienated. . . . . . . . 14
Section 10.5 Evidence.. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 10.6 Waiver Of Notice.. . . . . . . . . . . . . . . . . . . . 14
Section 10.7 Counterparts.. . . . . . . . . . . . . . . . . . . . . . 14
Section 10.8 Governing Laws And Severability. . . . . . . . . . . . . 15
Section 10.9 Successors.. . . . . . . . . . . . . . . . . . . . . . . 15
Section 10.10 Action.. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 10.11 Conformance With Plan. . . . . . . . . . . . . . . . . . 15
Section 10.12 Headings.. . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2.
<PAGE>
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST
(AS AMENDED AND RESTATED EFFECTIVE MARCH 17, 1997)
THIS TRUST AGREEMENT is amended and restated by and between T.A. KYSER
COMPANY, a Nevada corporation (the "Company"), and Boyd E. Hurst, Jr., in his
individual capacity and his successor and assigns in the trust hereby evidenced,
as trustee (referred to as the "Trustee").
WITNESSETH THAT:
WHEREAS, the Company originally established and adopted the T.A. KYSER
COMPANY EMPLOYEE STOCK OWNERSHIP TRUST (the "Trust") (which is a part of the
T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN) on July 5, 1989 to be
effective as of August 1, 1988;
WHEREAS, the Company amended and restated the Trust on June 30, 1995 to
be effective as of August 1, 1989 (except that provisions required to be
effective before this date to comply with the Tax Reform Act of 1986 applied to
the Plan Years beginning afar 1988, unless an earlier or later effective date
was required pursuant to a statute or Treasury Regulation or as stated in the
T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN (the "Plan"));
WHEREAS, the Company established the Trust, as amended and restated,
which implements and forms a part of the Plan to be exempt from tax under
Section 501(a) of the Internal Revenue Code, as it may be amended from time to
time (the "Code");
WHEREAS, the Company established the Plan and the Trust as constituting
an employee stock ownership plan satisfying the requirements of Sections 401(a)
and 4975(e)(7) of the Code, and Section 407(d)(b) of the Employee Retirement
Income Security Act of 1974, as it may be amended from time to time ("ERISA");
WHEREAS, the Trust was established for the exclusive benefit of
Participants of the Plan;
WHEREAS, the Trustee accepts the Trust, as amended and restated, which is
a part of the Plan and agrees to perform the obligations set forth in this
Trust;
WHEREAS, the Company and Trustee amend the Trust pursuant to Section L of
the Trust;
WHEREAS, the Trust shall be interpreted, wherever possible, to comply
with the terms of the Code, ERISA, and all formal regulations and rulings;
WHEREAS, the capitalized terms used but not defined herein shall have the
respective meanings given to such terms in the Plan; and
NOW, THEREFORE, pursuant to the authority delegated to the undersigned
officers of the company by resolution of its Board of Directors (the "Board")
and the authority delegated to the Trustee under the Trust;
1.
<PAGE>
IT IS AGREED, by and between the parties hereto, that the trust
provisions contained herein shall be amended and restated constituting the
agreement on the effective date between the Company and the Trustee in
connection with the Plan and the Trust; and
IT IS FURTHER AGREED, by and between the parties hereto as follows:
ARTICLE 1
NAME AND ACCEPTANCE
SECTION 1.1 NAME. This Trust Agreement and Trust hereby established
shall be known as the "T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP TRUST."
SECTION 1.2 ACCEPTANCE. The Trustee continues to operate the Trust as
amended in restated form which is part of the Plan and agrees to perform the
obligations imposed under this Trust Agreement.
SECTION 1.3 TAX IDENTIFICATION NUMBER. The tax identification number
of the Trust is as follows: 75-2421355.
ARTICLE 2
MANAGEMENT AND CONTROL OF TRUST FUND
SECTION 2.1 TRUST FUND. The "Trust Fund" as of any date means all
property of every kind held or acquired by the Trustee pursuant to this Trust.
"Trust Fund" is also referred to as "Trust Assets." The Trustee may manage,
administer and invest all contributions made to the Trust by the Employer or
Employers under the Plan as one Trust Fund. If, for any reason, it becomes
necessary to determine the portion of the Trust Fund allocable to Employees and
former Employees of any Employer as of any date, the ESOP Committee (as defined
in Section 2.2 herein) shall specify such date as an Accounting Date, and after
all adjustments required under the Plan as of that Accounting Date have been
made, the portion of the Trust Fund attributable to such Employees and former
Employees shall be determined and shall consist of an amount equal to the
aggregate of the Account balances of Employees and former Employees of that
Employer plus an amount equal to any allocable contributions made by that
Employer since the close of the immediately preceding Plan Year.
SECTION 2.2 PLAN ADMINISTRATION. The Plan shall be administered by an
ESOP Committee. Except as provided in Section 2.4 herein and under ERISA, the
Trustee shall have no authority to act unless directed by the ESOP Committee.
In the absence of an ESOP Committee, the Company assumes the powers, duties and
responsibilities of the ESOP Committee. The ESOP Committee may authorize one or
more individuals to sign all communications between the ESOP Committee and
Trustee. The Company shall at all times keep the Trustee advised of the names
of the members of the ESOP Committee and individuals authorized to sign on
behalf of the ESOP Committee, and provide specimen signatures thereof. With the
Trustee's prior written consent, the ESOP Committee may authorize the Trustee to
act, without specific directions or other directions or instructions from the
ESOP
2.
<PAGE>
Committee, on any matter or class of matters with respect to which directions
or instructions from the ESOP Committee are called for hereunder. The Trustee
shall be fully protected in relying on any communication sent by any
authorized person and shall not be required to verify the accuracy or
validity of any signature unless the Trustee has reasonable grounds to doubt
the authenticity of any signature. If the Trustee requests any directions
hereunder and does not receive them, the Trustee shall act or refrain from
acting, as it may determine, with no liability for such action or inaction.
Notwithstanding the provisions herein, the Trustee must act in accordance
with ERISA and the Plan.
SECTION 2.3 EXERCISE OF TRUSTEE'S DUTIES. The Trustee shall discharge
its duties hereunder solely in the interest of Plan Participants and other
persons entitled to benefits under the Plan and:
(a) for the exclusive purpose of:
(i) providing benefits to Participants and other persons
entitled to benefits under the Plan; and
(ii) defraying reasonable expenses of administering the
Plan;
(b) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims; and
(c) in accordance with the documents and instruments governing
the Plan unless, in the good faith judgment of the Trustee, the documents and
instruments are not consistent with the provisions of the Code and ERISA.
SECTION 2.4 GENERAL POWERS. The Trustee has full discretion and
authority with regard to the investment and reinvestment of the Trust Fund,
except with respect to a Trust Asset under the control or direction of a
properly appointed Investment Manager. Subject to the provisions of Sections
2.2, 2.3 and 2.9 herein and Article 3 herein, with respect to the Trust Fund,
the Trustee shall have the following, but not limited to, powers, rights and
duties in addition to those provided elsewhere in this Trust, the Plan or by
law:
(a) To invest the Trust Fund primarily in Employer Securities
and to invest or reinvest the Trust Fund in any common or preferred stocks,
open-end or closed-end mutual funds, put and call options traded on a national
exchange, United States retirement plan bonds, corporate bonds, debentures,
convertible debentures, commercial paper, U.S. Treasury bills, U.S. Treasury
notes and other direct or indirect obligations of the United States Government
or its agencies, improved or unimproved real estate situated in the United
States, limited partnerships, limited liability companies, insurance contracts
of any type, mortgages, notes or other property of any kind, real or personal,
and to buy or sell options on common stock on a nationally recognized exchange
with or without holding the underlying common stock, to buy and sell
commodities, commodity options and contracts for the future delivery of
commodities, to exchange Employer Securities for stock of another Company, and
to make any other investments the Trustee deems appropriate, as a prudent man
would do under like circumstances with due regard for the purposes of the Plan.
Any investment made or retained by the Trustee in good
3.
<PAGE>
faith is proper but must be of a kind (with the exception of Employer
Securities) constituting a diversification considered by law suitable for
trust investments;
(b) To retain in cash (pending investment, reinvestment or the
distribution of dividends) such reasonable amount as may be required to satisfy
liquidity needs of the Trust and for the proper administration of the Trust and
to invest such cash as provided in Section 3.1 herein;
(c) To invest at a reasonable rate of interest or in a
common trust fund, as described in Code Section 584, or in a collective
investment fund, the provisions of which govern the investment of such assets
and which the plan incorporates by this reference and which conforms to the
rules of the Comptroller of the Currency;
(d) To lease for oil, gas and other mineral purposes and to
create mineral severances by grant or reservation; to pool or unitize interests
in oil, gas and other minerals; and to enter into operating agreements and to
execute division and transfer orders;
(e) To hold any securities or other property in the name of the
Trustee or its nominee, with depositories or agent depositories or in another
form as it may deem best, with or without disclosing the trust relationship;
(f) To file all tax returns for the Trust and Plan required of
the Trustee;
(g) To receive and to hold all contributions paid to it under
the Plan; provided, however, that the Trustee shall have no duty to require any
contributions to be made to it, to determine that the contributions received by
it comply with the provisions of the Plan or with any resolution of the Board
providing therefor;
(h) To credit and make distributions from the Trust Fund to
such persons or trusts, in such manner, at such times and in such forms
(Employer Securities, cash or a combination thereof) as directed by the ESOP
Committee without inquiring as to whether a payee or distributee is entitled to
the payment, or as to whether a payment is proper, and without liability for a
payment made in good faith without actual notice or knowledge of the changed
condition or status of the payee or distributee. Unless required by ERISA, the
Trustee is accountable only to the ESOP Committee for any payment or
distribution made by it in good faith on the order or direction of the ESOP
Committee. If any payment of benefits to be made from the Trust Fund by the
Trustee is not claimed, the Trustee shall notify the ESOP Committee of that fact
promptly. The ESOP Committee shall direct the Trustee or the Trustee will make
a diligent effort to ascertain the whereabouts of the payee or distributee of
benefits returned unclaimed. The Trustee shall dispose of such payments as the
ESOP Committee shall direct pursuant to the Plan and in accordance with ERISA.
The Trustee shall have no obligation to search for or ascertain the whereabouts
of any payee or distributee of benefits from the Trust Fund unless required by
the Plan, Code or ERISA;
(i) To vote Employer Securities as provided in the Plan, and
any other stocks, bonds or other securities held in the Trust, or otherwise
consent to or request any action on the part of the issuer in person, by proxy
or power of attorney;
4.
<PAGE>
(j) To contract or otherwise enter into transactions between
itself, as Trustee, and the Company or any Employer, or any Company shareholder
or other individual, for the purpose of acquiring, exchanging Employer
Securities for stock of another company, or selling Employer Securities and,
subject to the provisions of Section 2.3 herein and the Plan, to retain such
Employer Securities;
(k) To compromise, contest, arbitrate, settle or abandon claims
and demands by or against the Trust and Trust Fund;
(l) To begin, maintain or defend any litigation necessary, in
connection with the investment, reinvestment and administration of the Trust,
and, to the extent not paid from the Trust Fund and subject to Section 9.1
herein, the Employers shall indemnify the Trustee against all expenses and
liabilities reasonably sustained or anticipated by it by reason thereof
(including reasonable attorneys' fees);
(m) To retain any funds or property subject to any dispute
without liability for the payment of interest, or to decline to make payment or
delivery thereof until final adjudication is made by a court of competent
jurisdiction;
(n) To report to the Company as of the last day of each Plan
Year, as of any Accounting Date (or as soon thereafter as practicable), or at
such other times as may be required under the Plan, the then "Net Worth" of the
Trust Fund, which is, the fair market value of all property held in the Trust
Fund, reduced by any liabilities other than liabilities to Participants (and
their Beneficiaries) in the Plan, as determined by the Trustee;
(o) To furnish to the Company, Employer, the Plan Administrator
and the ESOP Committee an annual statement of account and accounts for such
other periods as may be required under the Plan, showing the condition of the
Trust Fund and the Net Worth of the Trust Fund at the end of the Plan Year, all
investments, receipts, disbursements and other transactions made by the Trustee
during the Plan Year, covered by the statement, and such other information as
the Trustee may possess which the Company requires in order to comply with
Section 103 of ERISA. The Trustee shall keep accurate accounts of all
investments, earnings thereon, and all accounts, books and records related to
such investments shall be open to inspection by any person designated by the
Company, Employer or the ESOP Committee at reasonable times and may be audited
from time to time by any person or persons as the Company, Employer or ESOP
Committee may specify in writing. All accounts of the Trustee shall be kept on
an accrual basis. The ESOP Committee may direct the Trustee to furnish the ESOP
Committee, Plan Administrator, Company or Employer with whatever information
relating to the Trust Fund. If, during the term of this Trust, the Department
of Labor issues Regulations under ERISA regarding the valuation of Employer
Securities or other assets for purposes of the reports required by ERISA, the
Trustee shall use such valuation methods for purposes of the accounts described
by this subparagraph. If the Trustee determines that there is not a generally
recognized market (as contemplated by Section 3(18)(A) of ERISA) for shares of
Employer Securities, all valuations of such securities shall be made by an
"Independent Appraiser" (as described in Section 401(a)(28)(C) of the Code)
retained by the Trustee, and reviewed and finalized by the Trustee, in
accordance with Section 3(18)(B) of ERISA. The Company or the ESOP Committee may
approve such accounting by written notice of approval delivered to the Trustee
or by failure
5.
<PAGE>
to express objection to such accounting in writing delivered to the Trustee
within sixty (60) days from the date upon which the accounting was delivered
to the Company. Upon the receipt or a written approval of the accounting, or
upon the passage of the period of time within which objection may be filed
without written objections having been delivered to the Trustee, such
accounting shall be deemed to be approved, and the Trustee shall be released
and discharged as to all items, matters and things set forth in such account,
as fully as if such accounting had been settled and allowed by decree of a
court of competent jurisdiction in an action or proceeding in which the
Trustee, the ESOP Committee, the Company and all persons having or claiming
to have any interest in the Trust Fund or under the Plan were parties;
(p) To pay any estate, inheritance, income or other tax, charge
or assessment attributable to any benefit which, it shall or may be required to
pay or withhold taxes; and to require before making any payment such release or
other document from any taxing authority and such indemnity from the intended
payee or distributee as the Trustee shall deem necessary for its protection;
(q) To employ and to reasonably rely upon information and
advice furnished by agents, attorneys, independent appraisers, independent
financial advisors, accountants or other persons of its choice for such purposes
as the Trustee considers desirable;
(r) To assume, until advised to the contrary, that the Trust
evidenced by this Agreement is qualified under Section 401(a) of the Code and is
entitled to tax exemption under Section 501 (a) of the Code;
(s) To have the authority to invest and reinvest the assets of
the Trust Fund, in personal property of any kind, including, but not limited to
Employer Securities, bonds, notes, debentures, mortgages, equipment trust
certificates, investment trust certificates, life insurance, guaranteed
investment contracts, preferred or common stock, and registered investment
companies; provided, however, that all investments in Employer Securities shall
be undertaken pursuant to the provisions of Section 3.1 herein;
(t) To exercise any options, subscription rights and other
privileges with respect to the Trust Fund, subject to the provisions of Article
3 herein, to manage, sell, contract to sell, grant options to purchase, convey,
exchange, transfer, abandon, improve, repair, insure, lease for any term even
though commencing in the future or extending beyond the term of the Trust, and
otherwise deal with all property, real or personal, in such manner, for such
considerations and on such terms and conditions as the Trustee decides;
(u) To register ownership of any securities or other property
held by it in its own name or in the name of a nominee, with or without the
addition of words indicating that such securities are held in a fiduciary
capacity, and may hold any securities in bearer form, but the books and records
of the Trustee shall at all times reflect that all such investments are part of
the Trust;
(v) To borrow such sum or sums of money, to assume
indebtedness, to extend mortgages, to obtain an Exempt Loan from time to time as
the Trustee considers necessary or desirable and in the best interest of the
Plan, Trust Fund and Plan Participants, and for that
6.
<PAGE>
purpose to mortgage or encumber or pledge any part of the Trust Fund (subject
to the provisions of Code Section 4975(c) and the Regulations issued
thereunder);
(w) To enter into an Exempt Loan transaction pursuant to the
Plan;
(x) To perform any and all other acts which are necessary or
appropriate for the proper management, investment and distribution of the Trust
Fund;
(y) To construe and interpret the Plan, direction(s) from the
ESOP Committee, and the rules and regulations adopted and to answer all
questions arising in the administration, interpretation, and application of the
Plan document and documents related to the Plan's operation; and
(z) To purchase Qualifying Employer Securities as an investment
of the Trust, provided the Trustee does not pay in excess of adequate
consideration as defined in ERISA.
SECTION 2.5 RESPONSIBILITY OF TRUSTEE. The Trustee shall not be
responsible in any way for the adequacy of the Trust Fund to meet and discharge
any or all liabilities under the Plan or for the proper application of
distributions made or other actions taken upon the direction of the ESOP
Committee. The powers, duties and responsibilities of the Trustee shall be
limited to those set forth in this Trust and the Plan, or as later agreed upon
by the Trustee, Company, and ESOP Committee in writing.
SECTION 2.6 COMPENSATION AND EXPENSES. The Trustee, Investment
Manager, and Ancillary Trustee shall be entitled to reasonable compensation for
its services, as agreed to between the Company and the Trustee from time to time
in writing and to reimbursement of all reasonable expenses incurred by the
Trustee, Investment Manager, and Ancillary Trustee in the administration of the
Trust and Plan. The Trustee is authorized to pay from the Trust Fund all
expenses reasonably incurred by the Trustee, Investment Manager, and Ancillary
Trustee, to the extent such fees and expenses are for the ordinary and necessary
administration and operation of the Trust, including its compensation,
compensation to any agents employed by the Trustee, Investment Manager, and
Ancillary Trustee and any accounting and legal expenses unless such expenses are
paid directly by the Employer. If the Trustee cannot pay from the Trust Fund
expenses incurred based upon the advice of legal counsel, the Employer shall pay
such expenses. Any fee or expense paid directly or indirectly, by the Employer
is not an Employer contribution to the Trust, provided the fee or expense
relates to the ordinary and necessary administration of the Trust.
SECTION 2.7 CONTINUATION OF POWERS UPON TRUST TERMINATION.
Notwithstanding anything to the contrary in this Agreement, upon termination of
the Trust, the powers, rights and duties of the Trustee hereunder shall continue
until all Trust Assets have been liquidated and distributed out of the Trust.
SECTION 2.8 BOND. The Trustee shall be required to provide bond as
required under Section 412 of ERISA for the faithful performance of its duties
under the Trust and Plan.
SECTION 2.9 TRUSTEE DIRECTIONS. All decisions, determinations,
directions, interpretations, and applications (collectively referred to as
"determination") of the Plan and
7.
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Trust by the Trustee shall be final and binding upon all persons, including
(but not limited to) the Company, ESOP Committee, and all Participants and
Beneficiaries unless such determination is in violation of ERISA or any
federal or state laws or the ESOP Committee has the authority to make such
determination and directs or overrides the Trustee's decision provided the
ESOP Committee's determination does not cause the Trustee to violate ERISA or
any federal or state laws.
SECTION 2.10 INSURANCE PROCEEDS. The Trustee will allocate any
insurance proceeds received from the purchase of insurance contracts to
Participants' Accounts in the same manner as the allocation under the Plan of
the Employer contribution for the Plan Year in which the death of the insured
Participant occurs.
ARTICLE 3
PROVISIONS RELATED TO INVESTMENT OF TRUST FUND
SECTION 3.1 INVESTMENT OF TRUST FUND. Any cash received by the Trustee
as Employer contributions or as Income of the Trust Fund attributable to the
Suspense Account or Other Investments Account or any other appropriate account
under the Plan which is not applied to pay the current obligations of the Trust,
if any, shall be either held in the Other Investments Account, or be invested at
the discretion of the Trustee, or shall be applied to the payment of non-current
obligations or general obligations of the Trust. All cash received by the
Trustee as income attributable to Company Stock Accounts and Other Investment
Accounts or Segregated Investments Accounts shall be invested as soon as
practicable after receipt by the Trustee. In making payments in respect of
current obligations, non-current obligations, or general obligations of the
Trust, the Trustee shall use income and Employer contributions as is specified
in the Plan, namely, that income shall be first used to pay interest payments.
The Trustee is authorized to purchase Employer Securities with the Trust Assets
held in the Other Investments Accounts and the Company Stock Account. The
Trustee is further authorized to purchase Employer Securities from the Company
or from any shareholder and the Employer Securities may be outstanding, newly
issued or treasury stock. Whenever investment in Employer Securities of amounts
held in the Trust Fund is required or permitted hereunder, such investment may
be accomplished, at the discretion of the Trustee, by a sale within the Trust.
Specifically, the Company Stock Accounts of Participants, Former Participants,
Alternate Payees, and Beneficiaries who have become entitled to cash
distributions hereunder may be liquidated by an exchange for assets held in
other Accounts of the Plan. All purchases or exchanges of Employer Securities
shall be for no more than "adequate consideration," as defined in Section 3(18)
of ERISA. If there is no generally recognized market for Employer Securities,
"adequate consideration" shall mean the fair market value of such Employer
Securities, determined in good faith by the Trustee. Pending such investment or
application of cash, the Trustee may invest the cash in accordance with Article
2 hereof or may retain cash uninvested without liability for interest if it is
prudent to act in such a manner.
SECTION 3.2 STOCK SPLITS AND OTHER CAPITAL REORGANIZATION, DIVIDENDS.
Any Employer Securities received by the Trustee as a stock split or as a result
of a reorganization or other recapitalization of the Company (collectively
referred to as "stock split") shall be allocated in accordance with the terms of
the Plan as of each Accounting Date under the Plan. If the Plan
8.
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does not address the allocation of a stock split, the Trustee shall allocate
the stock split in proportion to the Employer Securities to which they are
attributable. Cash or stock in kind dividends received by the Trustee shall
be reinvested in accordance with the terms of the Plan.
SECTION 3.3 VOTING OF SHARES. Employer Securities held in the Trust
Fund shall be voted by the Trustee in the manner set forth in the Plan.
SECTION 3.4 DISTRIBUTION OF TRUST FUND. The Trustee shall make all
distributions in accordance with the direction of the ESOP Committee.
SECTION 3.5 PUT OPTION. If the distribution of a Participant's Company
Stock Account is to be made in cash, or a distribution of Employer Securities
pursuant to the Plan or the Trustee is required to diversify a Participant's
Company Stock Account pursuant to the Plan, or the Trustee expects to incur
substantial Trust expenses which will not be paid directly by the Employer, and
the Trustee determines that the Trust Fund has insufficient cash to make
anticipated distributions or diversification thereof or pay Trust expenses, the
Trustee shall have a "put option" on Employer Securities it holds to the Company
to the extent the Trustee needs cash for the purpose of making such anticipated
distributions, diversifications of Participant Company Stock Accounts, and
paying such expenses. The Company will use its best efforts to ensure that the
Company will purchase the Employer Securities for an amount that is not less
than "adequate consideration" as that term is defined in ERISA Section 3(18) and
the overall transaction is fair to the Plan from a financial point of view.
ARTICLE 4
VALUATION OF TRUST FUND
The Trustee shall value the Trust Fund in accordance with the Plan.
ARTICLE 5
NO REVERSION TO EMPLOYER
No part of the corpus or income of the Trust Fund shall revert to any
Employer or be used for, or diverted to, purposes other than or the exclusive
benefit of Participants and other persons entitled to benefits under the Plan,
provided, however, that:
(a) Each Employer's contribution under the Plan is conditioned
on the continued qualification of the Plan as applied to that Employer under
Sections 401(a) and 4975(e)(7) of the Code and if the Plan does not so qualify,
the Trustee shall, upon written direction of the ESOP Committee, return to that
Employer the amount of such contribution and any increment thereon within one
calendar year after the date that qualification of the Plan, as applied to that
Employer, is denied, but only if the application for qualification is submitted
within the time prescribed by law.
(b) If, upon termination of the Plan with respect to any
Employer, any amounts are held in a Code Section 415 Suspense Account which are
attributable to the contributions of such Employer and such amounts may not be
credited to the Accounts of
9.
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Participants, such amounts, upon the written direction of the ESOP Committee,
will be returned to that Employer as soon as practicable after the
termination of the Plan with respect to that Employer.
(c) Employer contributions under the Plan are conditioned upon
the deductibility thereof under Section 404 of the Code, and, to the extent any
such deduction of an Employer is disallowed by the Internal Revenue Service, the
Trustee shall, upon the written direction of the ESOP Committee, return the
amount of the contribution (to the extent disallowed), reduced by the amount of
any losses thereon, to the Employer within one year after the date the deduction
is disallowed.
(d) If a contribution or any portion thereof is made by an
Employer by a mistake of fact, the Trustee shall, upon written direction of the
ESOP Committee, return the amount of the contribution or such portion, reduced
by the amount of any losses thereon, to the Employer within one year after the
date of payment to the Trustee.
Notwithstanding the foregoing, the Trustee has no responsibility as to
the sufficiency of the Trust Fund to provide any distribution to an Employer
under this Article 5.
ARTICLE 6
CHANGE OF TRUSTEE
SECTION 6.1 RESIGNATION OF THE TRUSTEE. The Trustee may resign its
position at any time by giving thirty (30) days' advance written notice to the
Company and the ESOP Committee. If the Company fails to appoint a successor
trustee within thirty (30) days of its receipt of the Trustee's written notice
of resignation, the Chairman of the Board of the Company shall serve as Trustee
pending appointment of Successor.
SECTION 6.2 REMOVAL OF THE TRUSTEE. The Company may remove the Trustee
by hand delivering or by mailing by registered or certified mail, addressed to
such Trustee at his or her or its last known address, at least thirty (30) days'
advance written notice of removal, subject to providing the removed Trustee with
satisfactory written evidence of the appointment of a successor Trustee and of
the successor Trustee's acceptance of the trusteeship. If two or more persons
hold the position of Trustee, in the event of the removal of one such person,
during any period the selection of a replacement is pending, or during any
period such person is unable to serve for any reason, the remaining person or
persons will act as the Trustee.
SECTION 6.3 DUTIES OF RESIGNING OR REMOVED TRUSTEE AND OF SUCCESSOR
TRUSTEE. If the Trustee resigns or is removed, it shall promptly transfer and
deliver the assets of the Trust Fund to the successor Trustee, and may reserve
such amount to provide for the payment of all fees and expenses, or taxes then
or thereafter chargeable against the Trust Fund, to the extent not previously
paid by the Employers. The Employers shall be obligated to reimburse the Trust
for any amount reserved by the Trustee. Within one hundred twenty (120) days,
the resigned or removed Trustee shall furnish to the Company and the successor
Trustee an account of its administration of the Trust from the date of its last
account. Each successor Trustee shall succeed to the title to the Trust Fund
vested in the predecessor Trustee without the signing or
10.
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filing of any further instrument, but any resigning or removed Trustee shall
execute all documents and do all acts necessary to vest such title or record
in any successor Trustee. Each successor Trustee shall have all the powers,
rights and duties conferred by this Trust as if originally named Trustee. No
successor Trustee shall be personally liable for any act or failure to act of
a predecessor Trustee, except as required by ERISA. With the approval of the
Company and ESOP Committee, a successor Trustee may accept the account
rendered and the property delivered to it by its predecessor Trustee as a
full and complete discharge to the predecessor Trustee without incurring any
liability or responsibility for so doing.
SECTION 6.4 FILLING TRUSTEE VACANCY. The Company shall fill a vacancy
in the office of Trustee as soon as practicable by a writing filed with the
person or entity appointed to fill the vacancy.
ARTICLE 7
ADDITIONAL EMPLOYERS
In addition to the requirements of the Plan, any related Employer may
become a party to this Trust Agreement by:
(a) filing with the Company and the Trustee a copy of a
resolution of its board of directors to that effect; and
(b) filing with the Trustee a copy of a resolution of the Board
of Directors of the Company consenting to such action.
ARTICLE 8
AMENDMENT AND TERMINATION
SECTION 8.1 AMENDMENT. While the Company expects and intends to
continue the Trust, the Company reserves the right to amend the Trust at any
time pursuant to an action of the Board of Directors of the Company, except that
no amendment shall change the rights, duties and liabilities of the Trustee
under the Trust without its prior written agreement, nor reduce a Participant's
benefits to less than the amount such Participant would be entitled to receive
if such Participant had resigned from the employ of the Employer on the date of
the amendment. Amendments to the Trust shall be in writing and shall be
effective upon execution of such amendments by both the Company and the Trustee
unless otherwise agreed.
SECTION 8.2 TERMINATION. The Trust may be terminated as to all
Employees on any date specified by the Company. The Trust will terminate as to
any Employer on the first to occur of the following:
(a) the date it is terminated by that Employer;
(b) the date such Employer's contributions, or contributions on
its behalf to the Trust, are completely discontinued;
11.
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(c) the date such Employer is judicially declared bankrupt
under Chapter 7 of the U.S. Bankruptcy Code; or
(d) the dissolution, merger, consolidation, or reorganization
of that Employer, or the sale by that Employer of all or substantially all of
its assets, except that, with the consent of the Company, such arrangements may
be made whereby the Trust will be continued by any successor to that Employer or
any purchaser of all or substantially all of that Employer's assets, in which
case the successor or purchaser will be substituted for that Employer under the
Trust.
The Trustee's powers upon termination as described above will continue
until liquidation of the Trust Fund, or the portion thereof attributable to an
Employer, as the case may be. Upon termination of this Trust the Trustee shall
first reserve such reasonable amounts as it may deem necessary to provide for
the payment of any expenses or fees then or thereafter chargeable to the Trust
Fund. Subject to such reserve, the balance of the Trust Fund shall be
liquidated and distributed by the Trustee to or for the benefit of the
Participants or their Beneficiaries, as directed by the ESOP Committee after
compliance with the Plan and applicable requirements of ERISA, as amended from
time to time, or other applicable law, accompanied by a certification that the
disposition is in accordance with the terms of the Plan and the Trustee need not
question the propriety of such certification. The Company shall have full
responsibility to see that such distribution is proper and within the terms of
the Plan and this Trust. Any Employer securities remaining subject to pledge
will be used to repay the Exempt Loan but only to the extent permitted under
ERISA and the Code.
ARTICLE 9
INDEMNIFICATION, APPOINTMENT OF INVESTMENT ADVISOR, AND APPOINTMENT OF
ANCILLARY TRUSTEE
SECTION 9.1 INDEMNIFICATION. The Employer shall indemnify and save
harmless the Trustee from and against any and all loss resulting from liability
to which the Trustee may be subjected by reason of any act or conduct (except
willful misconduct or gross negligence unless done with the knowledge and
consent at the direction of Board of Directors) in its official capacity in the
administration of the Trust and Plan, including all court costs and other
expenses reasonably incurred in the Trustee's defense, in case the Employer
fails to provide such defense. The indemnification provisions of this Section
9.1 do not relieve the Trustee from any liability he or she or it may have under
ERISA for breach of a fiduciary duty. The indemnification provisions of this
Section 9.1 do not relieve the Trustee from any liability, to the extent that a
court of competent jurisdiction from which no appeal can be taken, enters a
final judgment that the actions or omissions were the result of gross negligence
or willful misconduct. The Trustee and the Company may execute a letter
agreement further delineating the indemnification agreement of this Section 9.1,
provided the letter agreement is consistent with and does not violate ERISA and
Texas law.
SECTION 9.2 LIMITATION ON LIABILITY - IF INVESTMENT MANAGER, ANCILLARY
TRUSTEE. The ESOP Committee and Trustee shall not be liable for the acts or
omissions of any Investment Manager or an ancillary trustee appointed by the
Company, nor shall the ESOP Committee and Trustee be under any obligation to
invest or reinvest or otherwise manage any asset of the Trust
12.
<PAGE>
Fund which is subject to the management of a properly appointed Investment
Manager or ancillary trustee. The Company and any properly appointed
Investment Manager or ancillary trustee may execute a letter agreement
pursuant to Section 9.3 herein as a part of this Trust delineating the
duties, responsibilities and liabilities of the Investment Manager or
ancillary trustee with respect to any part of the Trust Fund under the
control of the Investment Manager or ancillary trustee.
SECTION 9.3 APPOINTMENT OF AN INVESTMENT MANAGER OR AN ANCILLARY
TRUSTEE. The Company, in writing, may appoint any person or trust company in
any State to act as an Investment Manager or as an ancillary trustee with
respect to a designated portion of the Trust Fund. An Investment Manager or
ancillary trustee must acknowledge in writing its acceptance of the terms and
conditions of its appointment as an Investment Manager or ancillary trustee and
its fiduciary status under ERISA. The Investment Manager and ancillary trustee
has the rights, powers, duties, and discretion as the Company may delegate,
subject to any limitations or directions specified in the instrument evidencing
appointment of the Investment Manager or ancillary trustee and to the terms of
the Trust or of ERISA. The investment powers delegated to the Investment Manager
or to the ancillary trustee may include any investment powers available under
Section 2.4 or Section 3.3 of the Trust including but not limited to the right
to invest or reinvest any portion of the assets of the Trust Fund in Employer
Securities, and to invest or reinvest any portion of the assets of the Trust
Fund in a common trust fund as described in Code Section 584, or in any
collective investment fund, the provisions of which govern the investment of
such assets and which the Trust incorporates by this reference (but only if the
ancillary trustee is a bank or similar financial institution supervised by the
United States or by a State and the ancillary trustee (or its affiliate, as
defined in Code Section 1504) maintains the common trust fund or collective
investment fund exclusively for the collective investment of money contributed
by the ancillary trustee (or its affiliate) in a trustee capacity and which
conforms to the rules of the Comptroller of the Currency).
The Investment Manager or ancillary trustee may resign its position at
any time by providing at least thirty (30) days' advance written notice to the
Company, unless the Company waives this notice requirement. The Company, in
writing, may remove an Investment Manager or ancillary trustee at any time. In
the event of resignation or removal, the Company shall either appoint another
Investment Manager or ancillary trustee, return the assets to the control and
management of the Trustee, or receive such assets in the capacity of the
Investment Manager or ancillary trustee. Thc Company may delegate its
responsibilities under this Section 9.03 herein to the Trustee.
If the U.S. Department of Labor ("the Department") requires engagement of
an independent fiduciary to have control or management of all or a portion of
the Trust Fund, the Company will appoint such independent fiduciary, as directed
by the Department. The independent fiduciary will have the duties,
responsibilities, and powers prescribed by the Department and will exercise
those duties, responsibilities, and powers in accordance with the terms,
restrictions, and conditions established by the Department and, to the extent
not inconsistent with ERISA, the terms of the Plan. Thc independent fiduciary
must accept its appointment in writing and must acknowledge its status as a
fiduciary of the Plan.
13.
<PAGE>
SECTION 9.4 PARTIES TO LITIGATION. Except as otherwise provided by
ERISA, no Participant or Beneficiary is a necessary party or is required to
receive notice of process in any court proceeding involving the Plan, the Trust,
the Trust Fund or any fiduciary of the Plan. Any final judgment entered in any
proceeding will be conclusive upon the Company, the Employer, the Plan
Administrator, the ESOP Committee, the Trustee, Participants and Beneficiaries.
ARTICLE 10
MISCELLANEOUS
SECTION 10.1 DISAGREEMENT AS TO ACTS. If there is a disagreement
between the Trustee and anyone as to any act or transaction reported in any
accounting, the Trustee shall have the right to have its own account settled by
a court of competent jurisdiction.
SECTION 10.2 PERSONS DEALING WITH TRUSTEE. No person dealing with the
Trustee shall be required to see to the application of any money paid or
property delivered to the Trustee, or to determine whether or not the Trustee is
acting pursuant to any authority granted to it under the Trust or the Plan.
SECTION 10.3 THIRD PARTY AND MULTIPLE TRUSTEES. No person dealing with
the Trustee is obligated to see to the proper application of any money paid or
property delivered to the Trustee, or to inquire whether the Trustee has acted
pursuant to any of the terms of the Trust and Plan. Each person dealing with
the Trustee may act upon any notice, request or representation in writing by the
Trustee, or by the Trustee's duly authorized agent, and is not liable to any
person in so acting. The certificate of the Trustee that it is acting in
accordance with the Trust and Plan will be conclusive in favor of any person
relying on the certificate. If more than two persons act as Trustee, a decision
of the majority of such persons controls with respect to any decision regarding
the administration or investment of the Trust Fund, or any portion of the Trust
Fund with respect to which such persons act as Trustee. However, the signature
of only one Trustee is necessary to effect any transaction on behalf of the
Trust.
SECTION 10.4 BENEFITS MAY NOT BE ASSIGNED OR ALIENATED. The interests
of Participants, Beneficiaries and other persons entitled to benefits under the
Trust and Plan are not subject to the claims of their creditors and may not be
voluntarily or involuntarily assigned, alienated or encumbered, except to the
extent that the ESOP Committee, pursuant to the Plan, directs the Trustee that
any such interests are subject to a qualified domestic relations order, as
defined in Section 414(p) of the Code.
SECTION 10.5 EVIDENCE. Evidence required of anyone under the Trust may
be by certificate, affidavit, document or other instrument which the person
acting in reliance thereon considers pertinent and reliable, and signed, made or
presented by the proper party.
SECTION 10.6 WAIVER OF NOTICE. Any notice required under the Trust or
Plan may be waived in writing by the person entitled thereto.
SECTION 10.7 COUNTERPARTS. The Trust may be executed in any number of
counterparts, each of which shall be deemed an original and no other
counterparts need be produced.
14.
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SECTION 10.8 GOVERNING LAWS AND SEVERABILITY. The Trust shall be
construed and administered according to the laws of the State of Texas to the
extent that such laws are not preempted by the laws of the United States of
America. If any provision of the Trust or Plan is held illegal or invalid, the
illegality or invalidity shall not affect the remaining provisions of the Trust
and Plan, but shall be severable, and the Trust and Plan shall be construed and
enforced as if the illegal or invalid provision had never been inserted hereto.
SECTION 10.9 SUCCESSORS. The Trust shall be binding on the Company,
Employer and any successor thereto by virtue of any merger, sale, dissolution,
consolidation or reorganization on the Trustee and its successor and on all
persons entitled to benefits under the Plan and their respective heirs and legal
representatives.
SECTION 10.10 ACTION. Any action required or permitted to be taken by the
Company under the Trust shall be by resolution of its Board of Directors or by a
person or persons authorized by resolution of its Board of Directors. The
Trustee shall not recognize or take notice of any appointment of any
representative of the Company or ESOP Committee unless and until the Company or
the ESOP Committee shall have notified the Trustee in writing of such
appointment and the extent of such representative's authority. The Trustee may
assume that such appointment and authority continue in effect until it receives
written notice to the contrary from the Company or ESOP Committee. Any action
taken or omitted to be taken by the Trustee by authority of any representative
of the Company or ESOP Committee within the scope of his or her authority shall
be as effective for all purposes hereof as if such action or nonaction had been
authorized by the Company or ESOP Committee.
SECTION 10.11 CONFORMANCE WITH PLAN. Unless otherwise indicated in the
Trust, all capitalized terms herein shall have the meaning as stated in the
Plan. To the extent provisions of the Plan and the Trust conflict, the
provisions of the Plan shall govern; provided, however, that the Trustee's
duties and obligations shall be determined solely under the Trust.
SECTION 10.12 HEADINGS. The headings and sections of this Agreement are
for convenience or reference only and shall have no substantive effect on the
provisions of this Agreement.
15.
<PAGE>
IN WITNESS WHEREOF, the Company, by its duly authorized officer, and
Trustee have caused this Trust Agreement to be signed on the 19th day of March,
1997, to be effective the 17th day of March, 1997.
"COMPANY"
T.A. KYSER COMPANY,
A NEVADA CORPORATION
By: \s\ Garry Hendricks
--------------------------------
Garry Hendricks, C.E.O.
"TRUSTEE"
By: \s\ Boyd E. Hurst, Jr.
--------------------------------
Boyd E. Hurst Jr., in his
individual capacity, as
Trustee of T.A. KYSER
COMPANY EMPLOYEE STOCK
OWNERSHIP TRUST
16.
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Exhibit 10.19
AMENDMENT NUMBER ONE TO THE
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP TRUST
(As Amended and Restated, Effective March 17, 1997)
T.A. Kyser Co., a corporation organized under the laws of the State of
Nevada (hereinafter referred to as "Company"), makes this Amendment Number One
to the T.A. Kyser Company Employee Stock Ownership Trust (As Amended and
Restated, Effective March 17, 1997) (hereinafter referred to as "Trust"). It is
intended that this Amendment Number One and the Trust (which is a part of the
T.A. Kyser Company Employee Stock Ownership Plan [As Amended and Restated,
Effective March 17, 1997], as amended) qualify under Sections 401(a) and
4975(e)(7) of the Internal Revenue Code of 1986, as amended ("Code"), and
Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). It is also intended that the T.A. Kyser Company Employee
Stock Ownership Trust (As Amended and Restated, Effective March 17, 1997) be
exempt from tax under Section 501(a) of the Code. Amendment Number One and the
Trust shall be interpreted whenever possible, to comply with the terms of the
Code, ERISA and all formal regulations and rulings.
WITNESSETH:
WHEREAS, the Company (formerly known as "Kyser Company") established
the Kyser Company Employee Stock Ownership Trust on July 5, 1989, effective
August 1, 1988;
WHEREAS, the Kyser Company Employee Stock Ownership Trust was amended
by Amendment Number 1 on October 25, 1990, which was effective October 25, 1990;
WHEREAS, Kyser Company subsequently changed its name to "T.A. Kyser
Co.;"
WHEREAS, the Kyser Company Employee Stock Ownership Plan was amended by
Amendment Number 2 on October 31, 1990, which was effective October 31, 1990;
WHEREAS, the Company amended and substituted the T.A. Kyser Company
Employee Stock Ownership Plan, in restated form, on July 2, 1997, effective
March 17, 1997, known as the T.A. Kyser Company Employee Stock Ownership Trust
(As Amended and Restated, Effective March 17, 1997);
WHEREAS, the Company continued, in a separate instrument, the T.A.
Kyser Company Employee Stock Ownership Plan (As Amended and Restated, Effective
March 17, 1997) which is and becomes a part of the T.A. Kyser Company Employee
Stock Ownership Trust (As Amended and Restated, Effective March 17, 1997);
WHEREAS, the Company desires to adopt Amendment Number One to the Trust
to be effective simultaneously upon the Effective Time (as defined in Section
1.12 of the Agreement and Plan of Merger and Reorganization among METRON
TECHNOLOGY B.V., a Netherlands corporation, Metron Acquisition Sub, Inc., and
the Company) (referred to herein as the "Kyser Effective Date") to clarify
certain provisions of the Trust as a result of the Trust owning stock of METRON
TECHNOLOGY B.V. governed by the laws of the Netherlands;
1.
<PAGE>
WHEREAS, Section 8.01 of the Trust authorizes the Company to make
amendments to the Plan; and
NOW, THEREFORE, in consideration of the above premises, the Company
hereby amends the Trust in accordance with this Amendment Number One. Amendment
Number One is hereby adopted as an appendix to the Trust to be effective on the
Kyser Effective Date.
1. Section 2.04 of the Trust entitled "General Powers" is hereby
amended by deleting the existing Section 2.04(a) in its entirety and by
substituting the following new Section 2.04(a) in its stead, as follows:
"(a) Notwithstanding Sections 2.02, 2.03 and 2.09 herein and
Article III herein, the Trustee has the sole authority and power to
invest the Trust Fund primarily in Employer Securities and to invest or
reinvest the Trust Fund in any common or preferred stocks, Deeds of
Issuance, open-end or closed-end mutual funds, put and call options
traded on a national exchange, United States retirement plan bonds,
corporate bonds, debentures, convertible debentures, commercial paper,
U.S. Treasury bills, U.S. Treasury notes and other direct or indirect
obligations of the United States Government or its agencies, improved
or unimproved real estate situated in the United States, limited
partnerships, limited liability companies, insurance contracts of any
type, mortgages, notes or other property of any kind, real or personal,
and to buy or sell options on common stock on a nationally recognized
exchange with or without holding the underlying common stock, to buy
and sell commodities, commodity options and contracts for the future
delivery of commodities, to exchange Employer Securities for stock of
another company (specifically, Deed of Issuances of METRON TECHNOLOGY
B.V. [or its successor]), and to make any other investments the Trustee
deems appropriate, as a prudent man would do under like circumstances
with due regard for the purposes of the Plan. Any investment made or
retained by the Trustee in good faith is proper but must be of a kind
(with the exception of Employer Securities) constituting a
diversification considered by law suitable for trust investments;"
2. Section 2.04 of the Trust entitled "General Powers" is hereby
amended by adding the following language as the last sentence to the existing
Section 2.04(h), as follows:
"Any transfer of Employer Securities may be effected only in
accordance with the applicable requirements of Dutch law and the
provisions of the Articles of Association of the Company;"
3. Section 2.09 of the Trust entitled "Trustee Directions" is
hereby amended by deleting the existing Section 2.09 in its entirety and by
substituting the following new Section 2.09 in its stead, as follows:
"Sec. 2.09. TRUSTEE DIRECTIONS. All decisions, determinations,
directions, interpretations, and applications (collectively referred to
as "determination") of the Trust by the Trustee shall be final and
binding upon all persons, including (but not limited to) the Company,
ESOP Committee, and all Participants and Beneficiaries unless such
determination is in violation of ERISA or any federal or state laws or
the applicable
2.
<PAGE>
provisions of Dutch law and the Articles of Association
of METRON TECHNOLOGY B.V. (or such other Dutch B.V. company)."
4. Section 3.05 of the Trust entitled "Put Option" is hereby
amended by adding the following language as the last sentence to the existing
Section 3.05, as follows:
"No repurchase of shares of METRON TECHNOLOGY B.V. (or of
another Dutch B.V. company) shall be effected other than in compliance
with the applicable provisions of Dutch law and the Articles of
Association of METRON TECHNOLOGY B.V. (or such other Dutch B.V.
company)."
5. Section 8.01 of the Trust entitled "Amendment" is hereby
amended by deleting all reference to "Company" and by substituting "Company and
Employer" in its stead.
6. Section 10.08 of the Trust entitled "Governing Laws and
Severability" is hereby amended by deleting the first sentence and substituting
the following new first sentence in its stead, as follows:
"The Company, Employer, and Trustee agree (i) the Trust shall
be construed and administered according to the laws of the State of
Texas to the extent that such laws are not preempted by the laws of the
United States of America, (ii) expressly and irrevocably consent and
submit to the jurisdiction of each state and federal court located in
Dallas County, Texas (and each appellate court located in the State of
Texas) in connection with any such legal proceeding, and (iii) each
such state and federal court located in the State of Texas shall be
deemed to be a convenient forum."
IN ALL OTHER RESPECTS, the Trust is hereby ratified and confirmed.
3.
<PAGE>
IN WITNESS WHEREOF, the Trustee, Company and METRON TECHNOLOGY B.V.
have executed this Amendment Number One to the Trust in multiple copies on
this 13th day of July, 1998, to be effective as of the Kyser Effective Date.
TRUSTEE:
By: \s\ Colin M. Anderson
---------------------------------------
Colin M. Henderson, Individually
COMPANY:
T.A- KYSER CO.
By: \s\ C. Garry Hendricks
---------------------------------------
C. Garry Hendricks, Chief Executive
Officer
METRON TECHNOLOGY B.V-
By: \s\ Ed Segal
---------------------------------------
Name: Ed Segal
-------------------------------------
Title: Managing Director
------------------------------------
4.
<PAGE>
Exhibit 10.20
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED, EFFECTIVE MARCH 17, 1997)
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C>
Table of Contents............................................................................................... i
Index........................................................................................................... ii
Alphabetical Listing of Definitions............................................................................. ix
Employee Stock Ownership Plan Agreement ......................................................................... 1
Article I: Definitions.......................................................................... 3
Article II: Employee Participants................................................................ 23
Article III: Employer Contributions and Participant Forfeitures................................... 26
Article IV: Participant Contributions............................................................ 41
Article V: Termination of Service - Participant Vesting......................................... 42
Article VI: Time and Method of Payment of Benefits............................................... 48
Article VII: Employer Administrative Provisions................................................... 61
Article VIII: Participant Administrative Provisions................................................ 63
Article IX: ESOP Committee Duties With Respect to Participants' Accounts......................... 69
Article X: Repurchase of Employer Securities.................................................... 74
Article XI: Provisions Relating to Insurance and Insurance Company.............................. 78
Article XII: Miscellaneous........................................................................ 81
Article XIII: Exclusive Benefit, Amendment, Termination............................................ 90
</TABLE>
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INDEX
<TABLE>
<S> <C>
ARTICLE I - DEFINITIONS
Sec. 1.01. Plan............................................................................................3
Sec. 1.02. Employer........................................................................................3
Sec. 1.03. Trustee.........................................................................................3
Sec. 1.04. Plan Administrator..............................................................................4
Sec. 1.05. ESOP Committee..................................................................................4
Sec. 1.06. Employee........................................................................................4
Sec. 1.07. Highly Compensated Employee.....................................................................4
Sec. 1.08. Participant.....................................................................................6
Sec. 1.09. Beneficiary.....................................................................................6
Sec. 1.10. Compensation....................................................................................6
Sec. 1.11. Account.........................................................................................8
Sec. 1.12. Accrued Benefit.................................................................................8
Sec. 1.13. Nonforfeitable..................................................................................8
Sec. 1.14. Plan Year.......................................................................................8
Sec. 1.15. Effective Date..................................................................................8
Sec. 1.16. Plan Entry Date.................................................................................8
Sec. 1.17. Accounting Date.................................................................................8
Sec. 1.18. Trust...........................................................................................8
Sec. 1.19. Trust Fund......................................................................................8
Sec. 1.20. Nontransferable Annuity.........................................................................8
Sec. 1.21. ERISA...........................................................................................9
Sec. 1.22. Code............................................................................................9
Sec. 1.23. Service.........................................................................................9
Sec. 1.24. Hour of Service.................................................................................9
Sec. 1.25. Disability.....................................................................................10
Sec. 1.26. Service for Predecessor Employer...............................................................10
Sec. 1.27. Related Employers..............................................................................10
Sec. 1.28. Leased Employees...............................................................................11
Sec. 1.29. Determination of Top Heavy Status..............................................................11
Sec. 1.30. Disqualified Person............................................................................14
Sec. 1.31. Employer Securities............................................................................15
Sec. 1.32. Exempt Loan....................................................................................16
Sec. 1.33. Leveraged Employer Securities..................................................................16
Sec. 1.34. Separation from Service........................................................................16
Sec. 1.35. Alternate Payee................................................................................16
Sec. 1.36. Board of Directors.............................................................................16
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<TABLE>
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Sec. 1.37. Current Obligations............................................................................16
Sec. 1.38. General Obligations............................................................................16
Sec. 1.39. Income of the Trust Fund.......................................................................16
Sec. 1.40. Non-Current Obligations........................................................................17
Sec. 1.41. Participant Employer Securities Account........................................................17
Sec. 1.42. Participant General Investments Account........................................................17
Sec. 1.43. Rollover Account...............................................................................17
Sec. 1.44. Severance Date.................................................................................17
Sec. 1.45. Unallocated Employer Securities Account........................................................17
Sec. 1.46. Unallocated General Investments Account........................................................17
Sec. 1.47. Valuation Date.................................................................................17
Sec. 1.48. Qualified Participant..........................................................................17
Sec. 1.49. Qualified Election Period......................................................................18
Sec. 1.50. Retirement.....................................................................................18
Sec. 1.51. Participation of Other Employers...............................................................18
Sec. 1.52. Ineligible Employee............................................................................18
Sec. 1.53. Late Retirement Date...........................................................................18
Sec. 1.54. Company........................................................................................19
Sec. 1.55. Eligible Rollover Distribution.................................................................19
Sec. 1.56. Eligible Retirement Plan.......................................................................19
Sec. 1.57. Distributee....................................................................................19
Sec. 1.58. Direct Rollover................................................................................19
Sec. 1.59. Eligible Employee..............................................................................19
Sec. 1.60. General Investments Accounts...................................................................19
Sec. 1.61. Forfeiture.....................................................................................19
Sec. 1.62. Vested.........................................................................................20
Sec. 1.63. Aggregate Account..............................................................................20
Sec. 1.64. Fiduciary......................................................................................20
Sec. 1.65. Former Participant.............................................................................20
Sec. 1.66. Investment Manager.............................................................................20
Sec. 1.67. Break in Service...............................................................................20
Sec. 1.68. Participant's Account..........................................................................20
Sec. 1.69. Retired Participant............................................................................20
Sec. 1.70. Retirement Date................................................................................20
Sec. 1.71. Terminated Participant.........................................................................20
Sec. 1.72. Qualifying Employer Securities.................................................................21
Sec. 1.73. Publicly Traded................................................................................21
Sec. 1.74. Net Profits....................................................................................21
Sec. 1.75. Self-Employed Individual.......................................................................21
Sec. 1.76. Normal Retirement..............................................................................21
Sec. 1.77. Inactive Participant...........................................................................21
</TABLE>
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<TABLE>
<S> <C>
Sec. 1.78. Elective Contributions.........................................................................21
Sec. 1.79. Annuity Starting Date..........................................................................21
Sec. 1.80. Regulations....................................................................................22
Sec. 1.81. Restatement Date...............................................................................22
ARTICLE II - EMPLOYEE PARTICIPANTS
Sec. 2.01. Participation..................................................................................23
Sec. 2.02. Year of Service -Participation.................................................................23
Sec. 2.03. Participation Upon Re-employment...............................................................23
Sec. 2.04. Ineligibility to Become a Participant..........................................................23
Sec. 2.05. Continuance as a Participant...................................................................24
Sec. 2.06. Employment by Employer; Service With
Newly Acquired Entities; Records of Employer...................................................24
Sec. 2.07. Election Not to Participate....................................................................25
ARTICLE III - EMPLOYER CONTRIBUTIONS AND PARTICIPANT
FORFEITURES
PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS:
SECTION 3.01 THROUGH 3.06
Sec. 3.01. Amount.........................................................................................26
Sec. 3.02. Determination of Contribution..................................................................26
Sec. 3.03. Time of Payment of Contribution................................................................26
Sec. 3.04. Allocations....................................................................................26
Sec. 3.05. Treatment of Employer Securities Purchased Under
Installment Payment Contracts or With Borrowed Funds...........................................31
Sec. 3.06. Accrual of Benefit.............................................................................33
PART 2. LIMITATIONS ON ALLOCATIONS: SECTION 3.07 THROUGH 3.09
Sec. 3.07. Limitations on Allocations to Participants' Accounts...........................................34
Sec. 3.08. Definitions - Article III......................................................................36
Sec. 3.09. Transactions Involving Employer Securities.....................................................39
ARTICLE IV - PARTICIPANT CONTRIBUTIONS
Sec. 4.01. Participant Voluntary Contributions............................................................41
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<TABLE>
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Sec. 4.02. Participant Voluntary Contributions - Special Discrimination Test..............................41
Sec. 4.03. Participant Rollover Contributions.............................................................41
ARTICLE V - TERMINATION OF SERVICE - PARTICIPANT VESTING
Sec. 5.01. Normal Retirement Age..........................................................................42
Sec. 5.02. Participant Disability or Death................................................................42
Sec. 5.03. Vesting Schedule...............................................................................42
Sec. 5.04. Cash-Out Distributions to Partially-Vested Participants and
Restoration of Forfeited Accrued Benefit.......................................................43
Sec. 5.05. Segregated Account For Repaid Amount...........................................................45
Sec. 5.06. Year of Service -Vesting.......................................................................46
Sec. 5.07. Break in Service -Vesting......................................................................46
Sec. 5.08. Included Years of Service -Vesting.............................................................46
Sec. 5.09. Forfeiture Occurs..............................................................................47
ARTICLE VI - TIME AND METHOD OF PAYMENT OF BENEFITS
Sec. 6.01. Time of Payment of Accrued Benefit.............................................................48
Sec. 6.02. Method of Payment of Accrued Benefit...........................................................50
Sec. 6.03. Benefit Payment Elections......................................................................54
Sec. 6.04. Annuity Distributions to Participants and Surviving Spouses....................................57
Sec. 6.05. Special Distribution and Payment Requirements..................................................57
Sec. 6.06. Default on a Loan..............................................................................58
Sec. 6.07. Distributions Under Domestic Relations Orders..................................................58
Sec. 6.08. Late Retirement................................................................................59
Sec. 6.09. Limitations on Benefits........................................................................59
Sec. 6.10. Thirty (30) Day Period.........................................................................59
ARTICLE VII - EMPLOYER ADMINISTRATIVE PROVISIONS
Sec. 7.01. Information to ESOP Committee..................................................................61
Sec. 7.02. No Liability...................................................................................61
Sec. 7.03. Indemnity of Certain Fiduciaries...............................................................61
Sec. 7.04. Amendment to Vesting Schedule..................................................................61
ARTICLE VIII - PARTICIPANT ADMINISTRATIVE PROVISIONS
</TABLE>
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<TABLE>
<S> <C>
Sec. 8.01. Beneficiary Designation........................................................................63
Sec. 8.02. No Beneficiary Designation.....................................................................63
Sec. 8.03. Personal Data to Committee.....................................................................63
Sec. 8.04. Address for Notification.......................................................................64
Sec. 8.05. Assignment or Alienation.......................................................................65
Sec. 8.06. Notice of Change In Terms......................................................................65
Sec. 8.07. Litigation Against the Trust...................................................................65
Sec. 8.08. Information Available..........................................................................65
Sec. 8.09. Appeal Procedure For Denial of Benefits........................................................65
Sec. 8.10. Diversification of Participant's Account.......................................................66
Sec. 8.11. Participant Voting Rights - Employer Securities................................................67
Sec. 8.12. Fees and Expenses .............................................................................68
ARTICLE IX - ESOP COMMITTEE DUTIES WITH RESPECT
TO PARTICIPANTS' ACCOUNTS
Sec. 9.01. Members' Compensation, Expenses................................................................69
Sec. 9.02. Term...........................................................................................69
Sec. 9.03. Powers.........................................................................................69
Sec. 9.04. General........................................................................................69
Sec. 9.05. Funding Policy.................................................................................71
Sec. 9.06. Manner of Action...............................................................................71
Sec. 9.07. Authorized Representative......................................................................71
Sec. 9.08. Interested Member..............................................................................71
Sec. 9.09. Individual Accounts............................................................................71
Sec. 9.10. Value of Participant's Accrued Benefit.........................................................73
Sec. 9.11. Allocations to Participants' Accounts..........................................................73
Sec. 9.12. Individual Statement...........................................................................73
Sec. 9.13. Account Charged................................................................................73
Sec. 9.14. Unclaimed Account Procedure....................................................................74
ARTICLE X - REPURCHASE OF EMPLOYER SECURITIES
Sec. 10.01. Put Option.....................................................................................74
Sec. 10.02. Restriction on Employer Securities.............................................................74
Sec. 10.03. Lifetime Transfer and Right of First Refusal...................................................75
Sec. 10.04. Payment of Purchase Price......................................................................75
Sec. 10.05. Notice.........................................................................................76
</TABLE>
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<TABLE>
<S> <C>
Sec. 10.06. Terms and Definitions..........................................................................77
Sec. 10.07. Certain Rights With Respect to Employer Securities.............................................77
Sec. 10.08. Trustee's Put Option...........................................................................77
Sec. 10.09. Security Holder................................................................................77
Sec. 10.10. Provisions Non-Terminable .....................................................................77
ARTICLE XI - PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
Sec. 11.01. Insurance Benefit..............................................................................78
Sec. 11.02. Limitation on Life Insurance Protection........................................................78
Sec. 11.03. Definitions....................................................................................79
Sec. 11.04. Dividend Plan..................................................................................80
Sec. 11.05. Insurance Company Not a Party to Agreement.....................................................80
Sec. 11.06. Insurance Company Not Responsible For Trustee's Actions........................................80
Sec. 11.07. Insurance Company Reliance On Trustee's Signature..............................................80
Sec. 11.08. Acquittance....................................................................................80
Sec. 11.09. Duties of Insurance Company....................................................................80
ARTICLE XII - MISCELLANEOUS
Sec. 12.01. Evidence.......................................................................................81
Sec. 12.02. No Responsibility For Plan Action..............................................................81
Sec. 12.03. Fiduciaries Not Insurers.......................................................................81
Sec. 12.04. Waiver of Notice...............................................................................81
Sec. 12.05. Successors.....................................................................................81
Sec. 12.06. Word Usage.....................................................................................81
Sec. 12.07. State Law......................................................................................82
Sec. 12.08. Employment Not Guaranteed......................................................................82
Sec. 12.09. Severability...................................................................................82
Sec. 12.10. Contrary Provisions .....................................................................82
Sec. 12.11. Notice to Employees............................................................................82
Sec. 12.12. Agreement of Participants......................................................................82
Sec. 12.13. Action by Employers............................................................................82
Sec. 12.14. Adoption of the Plan By a Controlled Group Member..............................................82
Sec. 12.15. Disassociation of Any Employer From Plan ......................................................83
Sec. 12.16. Audit..........................................................................................83
Sec. 12.17 Bonding........................................................................................84
Sec. 12.18. Named Fiduciary................................................................................84
</TABLE>
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<TABLE>
<S> <C>
Sec. 12.19. Securities and Exchange Commission Approval....................................................85
Sec. 12.20. Valuation of Trust.............................................................................85
Sec. 12.21. Exempt Loan....................................................................................85
Sec. 12.22. Records and Statements.........................................................................87
Sec. 12.23. Parties to Litigation..........................................................................87
Sec. 12.24. Professional Agents............................................................................87
Sec. 12.25. Distribution of Trust Fund.....................................................................88
Sec. 12.26. Distribution Directions........................................................................88
Sec. 12.27. Withholding for any Payment of Taxes...........................................................88
ARTICLE XIII- EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
Sec. 13.01. Exclusive Benefit..............................................................................90
Sec. 13.02. Amendment By Company...........................................................................90
Sec. 13.03. Discontinuance.................................................................................91
Sec. 13.04. Full Vesting on Termination....................................................................91
Sec. 13.05. Merger and Direct Transfer.....................................................................91
Sec. 13.06. Complete Termination...........................................................................92
Sec. 13.07. Partial Termination............................................................................93
</TABLE>
-viii-
<PAGE>
ALPHABETICAL LISTING OF DEFINITIONS
<TABLE>
<CAPTION>
DEFINITION SEC.#
- ---------- -----
<S> <C>
Account 1.11
Accounting Date 1.17
Accrued Benefit 1.12
Aggregate Account 1.63
Alternate Payee 1.35
Annuity Starting Date 1.79
Beneficiary 1.09
Board of Directors 1.36
Break in Service 1.67
Code 1.22
Company 1.54
Compensation 1.10
Current Obligations 1.37
Determination of Top Heavy Status 1.29
Direct Rollover 1.58
Disability 1.25
Disqualified Person 1.30
Distributee 1.57
Effective Date 1.15
Elective Contributions 1.78
Eligible Employee 1.59
Eligible Retirement Plan 1.56
Eligible Rollover Distribution 1.55
Employee 1.06
Employer 1.02
Employer Securities 1.31
Employment Commencement Date 2.02
ERISA 1.21
ESOP Committee 1.05
Exempt Loan 1.32
Fiduciary 1.64
Forfeiture 1.61
Former Participant 1.65
General Investments Accounts 1.60
General Obligations 1.38
Highly Compensated Employee 1.07
Hour of Service 1.24
Inactive Participant 1.77
Income of Trust Fund 1.39
Ineligible Employee 1.52
Investment Manager 1.66
Late Retirement Date 1.53
Leased Employees 1.28
Leveraged Employer Securities 1.33
Named Fiduciaries 12.18
Net Profits 1.74
Non-Current Obligations 1.40
Nonforfeitable 1.13
Nontransferable Annuity 1.20
Normal Retirement 1.76
Normal Retirement Age 5.01
Participant 1.08
Participant's Account 1.68
Participant Employer Securities Account 1.41
Participant General Investments Account 1.42
Participation of Other Employers 1.51
Plan 1.01
Plan Administrator 1.04
Plan Entry Date 1.16
Plan Year 1.14
Publicly Traded 1.73
Qualified Election Period 1.49
Qualified Participant 1.48
Qualifying Employer Securities 1.72
Regulations 1.80
Related Employers 1.27
Restatement Date 1.81
Retired Participant 1.69
Retirement 1.50
Retirement Date 1.70
Rollover Account 1.43
Securities Exchange Act 1.73
Self-Employed Individual 1.75
Separation From Service 1.34
Service 1.23
Service for Predecessor Employer 1.26
Severance Date 1.44
Terminated Participant 1.71
Trust 1.18
Trust Fund 1.19
Trustee 1.03
Unallocated Employer Securities Account 1.45
Unallocated General Investments Account 1.46
Valuation Date 1.47
Vested 1.62
</TABLE>
-ix-
<PAGE>
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED, EFFECTIVE MARCH 17, 1997)
T.A. KYSER COMPANY, a corporation organized under the laws of the State
of Nevada pursuant to Articles of Incorporation filed with the Secretary of
State of the State of Nevada, hereby amends and restates the T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN, to be effective on the Restatement Date and
hereafter shall be known as the T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN
(As Amended and Restated, Effective March 17, 1997) for the benefit of certain
of its Employees and their Beneficiaries. It is intended that the Plan continue
to be a stock bonus plan that qualifies as an employee stock ownership plan
under Sections 401(a) and 4975(e)(7) of the Code and Section 407(d)(6) of ERISA.
It is also intended that the Trust which implements and forms a part of the Plan
continue to be exempt from tax under Section 501(a) of the Code. The Plan shall
be interpreted, wherever possible, to comply with the terms of the Code, ERISA
and all applicable Regulations thereunder.
PURPOSES:
The purposes of this Plan are to reward Eligible Employees of the
Employer for their loyal and faithful service and to provide Employees with an
opportunity to share in the ownership of T.A. KYSER COMPANY. The benefits
provided by the T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN (As Amended and
Restated, Effective March 17, 1997) will be in addition to the benefits
Employees are entitled to receive under any other announced programs of the
Employer.
T.A. KYSER COMPANY (formerly known as "KYSER COMPANY") established the
KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN on July 5, 1989, effective August 1,
1988. The KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was amended by Amendment
Number 1 on September 10, 1990, which was effective August 1, 1988. The KYSER
COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was again amended by Amendment Number 2 on
October 25, 1990, which was effective October 25, 1990. Amendment Number 2 to
the KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN changed the name of the KYSER
COMPANY EMPLOYEE STOCK OWNERSHIP PLAN to the "T.A. KYSER COMPANY EMPLOYEE STOCK
OWNERSHIP PLAN."
The T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was amended and
restated on June 30, 1995, effective August 1, 1989 (except that the provisions
which were required to be effective before such date in accordance with the Tax
Reform Act of 1986 were generally applicable to the Plan Years beginning after
1988, unless an earlier or later effective date was required pursuant to a
statute or Treasury Regulation or as stated in such plan). The T.A.
<PAGE>
KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was subsequently amended by
Amendment Number 1 on April 18, 1996, which was effective August 1, 1989.
The T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN (As Amended and
Restated, Effective March 17, 1997) is a substitution and amendment of the T.A.
KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN, in restated form, and shall
continue to be maintained for the exclusive benefit of Eligible Employees of the
Employer and their Beneficiaries. No part of the Trust Fund can ever revert to
any Employer or be used for or diverted for purposes other than the exclusive
benefit of Employees of the Employer and their Beneficiaries, except as provided
herein. This Plan shall be interpreted in a manner consistent with this intent
and the intent of the Company that the Plan established and continued hereunder
shall satisfy the provisions of ERISA and those of the Code relating to stock
bonus plans and employee stock ownership plans.
WITNESSETH:
WHEREAS, T.A. KYSER COMPANY (formerly known as "KYSER COMPANY")
established the KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN on July 5, 1989,
effective August 1, 1988;
WHEREAS, the KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was amended by
Amendment Number 1 on September 10, 1990, which was effective August 1, 1988;
WHEREAS, KYSER COMPANY subsequently changed its name to "T.A. KYSER
COMPANY;"
WHEREAS, the KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was amended by
Amendment Number 2 on October 25, 1990, which was effective October 25, 1990;
WHEREAS, Amendment Number 2 to the KYSER COMPANY EMPLOYEE STOCK
OWNERSHIP PLAN changed the name of the KYSER COMPANY EMPLOYEE STOCK OWNERSHIP
PLAN to the "T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN;"
WHEREAS, the T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was
amended and restated on June 30, 1995, effective August 1, 1989 (except that the
provisions which were required to be effective before this date in accordance
with the Tax Reform Act of 1986 were generally applicable to the Plan Years
beginning after 1988, unless an earlier or later effective date was required
pursuant to a statute or Treasury Regulation or as stated in such plan);
2.
<PAGE>
WHEREAS, the T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN was
amended by Amendment Number 1 on April 18, 1996, which was effective August 1,
1989;
WHEREAS, T.A. KYSER COMPANY hereby amends and substitutes the T.A.
KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN in restated form, effective March
17, 1997, unless otherwise required by the Code and the Treasury Regulations
thereunder;
WHEREAS, T.A. KYSER COMPANY hereby continues the T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN (As Amended and Restated, Effective March 17,
1997), as of the Restatement Date, for the administration and distribution of
contributions made by the Employer for the purpose of providing retirement
benefits for Eligible Employees and their Beneficiaries;
WHEREAS, T.A. KYSER COMPANY continues, in a separate instrument, the
T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP TRUST (As Amended and Restated,
Effective March 17, 1997) which is and becomes a part of the T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN (As Amended and Restated, Effective March 17,
1997); and
WHEREAS, the provisions of the T.A. KYSER COMPANY EMPLOYEE STOCK
OWNERSHIP PLAN (As Amended and Restated, Effective March 17, 1997) apply solely
to an Employee whose employment with the Employer terminates on or after the
Effective Date of the Plan. If an Employee's employment with the Employer
terminates prior to the Effective Date, that Employee is not entitled to
benefits under the Plan.
NOW, THEREFORE, the Company establishes the following terms and
conditions:
ARTICLE I
DEFINITIONS
Sec. 1.01. PLAN. "Plan" means the retirement plan established and
continued herein by the Company designated as the T.A. KYSER COMPANY EMPLOYEE
STOCK OWNERSHIP PLAN (As Amended and Restated, Effective March 17, 1997). The
Company has designated this Plan to be a stock bonus plan that qualifies as an
employee stock ownership plan under Sections 401(a) and 4975(e)(7) of the Code
and Section 407(d)(6) of ERISA, and to invest primarily in Employer Securities.
Sec. 1.02. EMPLOYER. "Employer" means T.A. KYSER COMPANY (formerly
known as "KYSER COMPANY"), a Texas corporation, and any corporation,
association,
3.
<PAGE>
partnership, subsidiary, or other entity or person adopting this Plan
pursuant to Sections 1.51 and 12.14 hereof.
Sec. 1.03. TRUSTEE. "Trustee" means the trustee or trustees acting at
the time in question under a trust agreement, and its or his or her or their
successor(s) as such.
Sec. 1.04. PLAN ADMINISTRATOR. "Plan Administrator" is the ESOP
Committee unless the Company designates another person to hold the position of
Plan Administrator. In addition to its other duties, the Plan Administrator has
full responsibility for compliance with the reporting and disclosure rules under
ERISA.
Sec. 1.05. ESOP COMMITTEE. "ESOP Committee" means the Employee Stock
Ownership Plan Committee, which members are appointed by the Company, as from
time to time constituted.
Sec. 1.06. EMPLOYEE. "Employee" means any employee of the Employer.
Sec. 1.07. HIGHLY COMPENSATED EMPLOYEE.
A. PLAN YEARS BEGINNING BEFORE DECEMBER 31, 1996. For Plan Years
beginning before December 31, 1996, "Highly Compensated Employee" means an
Employee who, during the Plan Year or during the preceding twelve (12) month
period:
(a) is a more than five percent (5%) owner of the Employer
(applying the constructive ownership rules of Code Section 318, and
applying the principles of Code Section 318, for an unincorporated
entity);
(b) has Compensation in excess of Seventy-Five Thousand
Dollars ($75,000) (as adjusted by the Commissioner of the Internal
Revenue Service for the relevant year);
(c) has Compensation in excess of Fifty Thousand Dollars
($50,000) (as adjusted by the Commissioner of the Internal Revenue
Service for the relevant year) and is part of the top-paid twenty
percent (20%) group of employees (based on Compensation for the
relevant year); or
(d) has Compensation in excess of fifty percent (50%) of the
dollar amount prescribed in Code Section 415(b)(1)(A) (relating to
defined benefit plans) and is an officer of the Employer.
If the Employee satisfies the definition in clause (b), (c) or (d) of
this Section 1.07 in the Plan Year but does not satisfy clause (b), (c) or (d)
of this Section 1.07 during the preceding twelve (12)
4.
<PAGE>
month period, or if elected by the Company, the calendar year ending with or
within the applicable determination year (or, in the case of a determination
year that is shorter than twelve (12) months, the calendar year ending with
or within the twelve (12) month period ending with the end of the applicable
determination year), or if elected by the Company, the twelve (12) month
period immediately preceding the calendar year, and does not satisfy clause
(a) of this Section 1.07 in either period, the Employee is a Highly
Compensated Employee only if he is one (1) of the one hundred (100) most
highly compensated Employees for the Plan Year. The number of officers taken
into account under clause (d) of this Section 1.07 will not exceed the
greater of three (3) or ten percent (10%) of the total number (after
application of the Code Section 414(q) exclusions) of Employees, but no more
than fifty (50) officers. If no Employee satisfies the Compensation
requirement in clause (d) of this Section 1.07 for the relevant year, the
ESOP Committee will treat the highest paid officer as satisfying clause (d)
of this Section 1.07 for that year.
For purposes of this Section 1.07, "Compensation" means the general
definition of "Compensation" as defined in Section 1.10(A) hereof, increased for
"Elective Contributions" (as defined in Section 1.78 hereof).
The ESOP Committee must make the determination of who is a Highly
Compensated Employee, including the determinations of the number and identity of
the top paid twenty percent (20%) group, the top one hundred (100) paid
Employees, the number of officers includible in clause (d) of this Section 1.07
and the relevant Compensation, consistent with Code Section 414(q) and Treasury
Regulations issued under that Code Section. The Company may make a calendar year
election to determine the Highly Compensated Employees for the Plan Year, as
prescribed by Treasury Regulations. A calendar year election must apply to all
plans and arrangements of the Employer. For purposes of applying any
nondiscrimination test required under the Plan or under the Code, in a manner
consistent with applicable Treasury Regulations, the ESOP Committee will treat a
Highly Compensated Employee and all family members (a spouse, a lineal ascendant
or descendant, or a spouse of a lineal ascendant or descendant) as a single
Highly Compensated Employee, but only if the Highly Compensated Employee is a
more than five percent (5%) owner or is one of the ten (10) Highly Compensated
Employees with the greatest Compensation for the Plan Year. This aggregation
rule applies to a family member even if that family member is a Highly
Compensated Employee without family aggregation.
The term "Highly Compensated Employee" also includes any former
Employee who Separated from Service (or has a deemed Separation from Service, as
determined under Treasury Regulations) prior to the Plan Year, performs no
Service for the Employer during the Plan Year, and was a Highly Compensated
Employee either for the separation year or any Plan Year ending on or after his
55th birthday. If the former Employee's Separation from Service occurred prior
to January 1, 1987, he is a Highly Compensated Employee only if he satisfied
clause (a) of this Section 1.07 or received Compensation in excess of Fifty
Thousand Dollars ($50,000) during either of the
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following: (1) the year of his Separation from Service (or the prior year);
or (2) any year ending after his 54th birthday.
B. PLAN YEARS BEGINNING AFTER DECEMBER 31, 1996. For Plan Years
beginning after December 31, 1996, "Highly Compensated Employee" means an
Employee who:
(a) is a more than five percent (5%) owner of the Employer
(applying the constructive ownership rules of Code Section 318, and
applying the principles of Code Section 318, for an unincorporated
entity) during the Plan Year or during the preceding Plan Year; or
(b) for the preceding Plan Year, had Compensation from the
Employer greater than Eighty Thousand Dollars ($80,000) (as adjusted by
the Commissioner of the Internal Revenue Service for the relevant
year), and (if the Employer elects for a Plan Year) was in the top paid
group of Employees. For purposes of this clause (b), the "top paid
group" is the top twenty percent (20%) of Employees based on their
Compensation.
For Plan Years beginning after December 31, 1996, the ESOP Committee
will not apply any family aggregation rules for purposes of applying any
nondiscrimination test required under the Plan or the Code.
Sec. 1.08. PARTICIPANT. "Participant" is an Eligible Employee who
becomes a Participant in the Plan in accordance with the provisions of Section
2.01 hereof.
Sec. 1.09. BENEFICIARY. "Beneficiary" is a person designated by a
Participant or is or may become entitled to a benefit under the Plan. A
Beneficiary who becomes entitled to a benefit under the Plan remains a
Beneficiary under the Plan until his benefit has been fully distributed to him.
A Beneficiary's right to (and the Plan Administrator's or the ESOP Committee's
duty to provide to the Beneficiary) information or data concerning the Plan does
not arise until he first becomes entitled to receive a benefit under the Plan.
Sec. 1.10. COMPENSATION. Any references in this Plan to "Compensation"
is a reference to the definition in this Section 1.10, unless the Plan reference
specifies a modification to this definition. The ESOP Committee will take into
account only Compensation actually paid for the relevant period.
(A) GENERAL DEFINITION OF COMPENSATION. "Compensation" means the Participant's
wages, salaries, fees for professional service, other amounts received (whether
or not paid in cash) for personal services actually rendered in the course of
employment with the Employer maintaining the Plan but only to the extent
includible in the gross income of the Participant. This definition of
Compensation includes, but is not limited to, commissions paid salesmen,
compensation for services
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on the basis of a percentage of profits, commissions on insurance premiums,
tips, fringe benefits, reimbursements, and expense allowances. This
definition of Compensation does not include:
(1) Employer contributions to a plan of deferred compensation to the
extent the contributions are not included in the gross income of the
Employee for the taxable year in which contributed, on behalf of an
Employee to a simplified employee pension plan to the extent such
contributions are excludable from the Employee's gross income, and any
distributions from a plan of deferred compensation, regardless of
whether such amounts are includible in the gross income of the Employee
when distributed.
(2) Amounts realized from the exercise of a non-qualified stock option,
or when restricted stock (or property) held by an Employee either
becomes freely transferable or is no longer subject to a substantial
risk of forfeiture.
(3) Amounts realized from the sale, exchange or other disposition of
stock acquired under a stock option described in Part II, Subchapter D,
Chapter 1 of the Code.
(4) Other amounts which receive special tax benefits, such as premiums
for group term life insurance (but only to the extent that the premiums
are not includible in the gross income of the Employee), or
contributions made by an Employer (whether or not under a salary
reduction agreement) towards the purchase of an annuity contract
described in Code Section 403(b) (whether or not the contributions are
excludable from the gross income of the Employee).
(B) DEFINITION OF COMPENSATION FOR ALLOCATION PURPOSES. To determine a
Participant's contribution allocation under Section 3.04(A) hereof, Compensation
means the general definition of Compensation described in Section 1.10(A)
hereof, but excludes (1) commissions, (2) bonuses, (3) overtime compensation,
(4) any fringe benefits, and (5) contributions to this Plan or any deferred
compensation plan except salary deferrals under Code Sections 401(k) and 125.
Compensation, however, includes Elective Contributions (as defined in Section
1.78 hereof).
(C) LIMITATIONS ON COMPENSATION.
(1) COMPENSATION DOLLAR LIMITATION. The ESOP Committee must take into
account only the first One Hundred Sixty Thousand Dollars ($160,000) (or such
other amount as the Commissioner of Internal Revenue Service may prescribe,
which may be higher or lower) of any Participant's Compensation. For any Plan
Year after December 31, 1993 and before January 1, 1997, the ESOP Committee must
take into account only the first One Hundred Fifty Thousand Dollars ($150,000)
(or such other amount as the Commissioner of Internal Revenue Service may
prescribe, which may be higher or lower depending on new legislation) of any
Participant's Compensation. For any Plan Year prior to January 1, 1994, the ESOP
Committee shall determine the compensation
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dollar limitation by taking into account only the first Two Hundred Thousand
Dollars ($200,000.00) of any Participant's Compensation.
(2) APPLICATION OF COMPENSATION LIMITATION TO CERTAIN FAMILY MEMBERS.
For Plan Years beginning before December 31, 1996, the Compensation limitation
applies to the combined Compensation of the Employee and of any family member
aggregated with the Employee under Section 1.07 hereof who is either (i) the
Employee's spouse; or (ii) the Employee's lineal descendant under the age of
nineteen (19). If, for a Plan Year, the combined Compensation of the Employee
and such family members who are Participants entitled to an allocation for that
Plan Year exceeds the Compensation limitation, "Compensation" for each such
Participant, for purposes of the contribution and allocation provisions of
Article III hereof, means his Adjusted Compensation. "Adjusted Compensation" is
the amount which bears the same ratio to the Compensation limitation as the
affected Participant's Compensation (without regard to the Compensation
limitation) bears to the combined Compensation of all the affected Participants
in the family unit. If the Plan uses permitted disparity, the ESOP Committee
must determine the integration level of each affected family member Participant
prior to the proration of the Compensation limitation, but the combined
integration level of the affected Participants may not exceed the Compensation
limitation. The combined excess Compensation of the affected Participants in the
family unit may not exceed the Compensation limitation minus the affected
Participant's combined integration level (as determined under the preceding
sentence). If the combined excess Compensation exceeds this limitation, the ESOP
Committee will prorate the excess Compensation limitation among the affected
Participants in the family unit in proportion to each such individual's Adjusted
Compensation minus his integration level.
For Plan Years beginning after December 31, 1996, the ESOP Committee
will not apply any family aggregation rules in determining the Compensation
limitation of any Participant.
Sec. 1.11. ACCOUNT. "Account" means the separate account(s) established
and maintained for a Participant under the Plan.
Sec. 1.12. ACCRUED BENEFIT. "Accrued Benefit" means the amount standing
in a Participant's Account(s) as of any Valuation Date derived from Employer
contributions, Participant Forfeitures and Employee contributions, if any,
allocated to a Participant's Account as of any Valuation Date.
Sec. 1.13. NONFORFEITABLE. "Nonforfeitable" means a Participant's or
Beneficiary's unconditional claim, legally enforceable against the Plan, to the
Participant's Accrued Benefit.
Sec. 1.14. PLAN YEAR. "Plan Year" means the tax year of the Plan, a
twelve (12) consecutive month period beginning on August 1 of each year and
ending on the following July 31.
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Sec. 1.15. EFFECTIVE DATE. "Effective Date" of the Plan is August 1,
1988.
Sec. 1.16. PLAN ENTRY DATE. "Plan Entry Date" means the Effective Date
and every February 1 and August 1 after the Effective Date.
Sec. 1.17. ACCOUNTING DATE. "Accounting Date" is the last day of the
Plan Year. Unless otherwise specified in the Plan, all Plan allocations for a
particular Plan Year will be made as of the Accounting Date of that Plan Year.
Sec. 1.18. TRUST. "Trust" means the T.A. KYSER COMPANY EMPLOYEE STOCK
OWNERSHIP TRUST (As Amended and Restated, Effective March 17, 1997) which is and
continues to be a part of this Plan.
Sec. 1.19. TRUST FUND. "Trust Fund" means all property of every kind
held or acquired by the Trustee under the Trust. "Trust Fund" is also referred
to as "Trust Assets."
Sec. 1.20. NONTRANSFERABLE ANNUITY. "Nontransferable Annuity" or
"Nontransferable Annuity Contract" means an annuity which by its terms provides
that it may not be sold, assigned, discounted, pledged as collateral for a loan
or security for the performance of an obligation or for any purpose to any
person other than the insurance company. If the Plan distributes an annuity
contract, the contract must be a Nontransferable Annuity.
Sec. 1.21. ERISA. "ERISA" means the Employee Retirement Income
Security Act of 1974, as amended from time to time, or any successor statute
thereto and the final and temporary Regulations promulgated, and the
applicable rulings issued thereunder. References herein to Sections of ERISA
shall include any successor provisions thereto.
Sec. 1.22. CODE. "Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute thereto. References herein
to Sections of the Code shall include any successor provisions thereto.
Sec. 1.23. SERVICE. "Service" means any period of time the Employee is
in the employ of the Employer, including any period the Employee is on an unpaid
leave of absence authorized by the Employer under a uniform, nondiscriminatory
policy applicable to all Employees.
Sec. 1.24. HOUR OF SERVICE. "Hour of Service" means:
(a) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment, for the performance of duties.
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The ESOP Committee credits Hours of Service under this paragraph (a)
to the Employee for the computation period in which the Employee
performs the duties, regardless of when paid;
(b) Each Hour of Service for back pay, regardless of mitigation of
damages, to which the Employer has agreed or for which the Employee has
received an award. The ESOP Committee credits Hours of Service under
this paragraph (b) to the Employee for the computation period(s) to
which the award or the agreement pertains rather than for the
computation period in which the award, agreement or payment is made;
and
(c) Each Hour of Service for which the Employer, either directly or
indirectly, pays an Employee, or for which the Employee is entitled to
payment (regardless of whether the employment relationship is
terminated), for reasons other than for the performance of duties
during a computation period, such as leave of absence, vacation,
holiday, sick leave, illness, incapacity (including Disability),
layoff, jury duty or military duty. The ESOP Committee will credit no
more than five hundred and one (501) Hours of Service under this
paragraph (c) to an Employee on account of any single continuous period
during which the Employee does not perform any duties (whether or not
such period occurs during a single computation period). The ESOP
Committee credits Hours of Service under this paragraph (c) in
accordance with the rules of paragraphs (b) and (c) of Labor Regulation
Section 2530.200b-2, which the Plan, by this reference, specifically
incorporates in full within this paragraph (c).
The ESOP Committee will not credit an Hour of Service under more than
one of the above paragraphs. A computation period for purposes of this Section
1.24 is the Plan Year, Year of Service period, Break in Service period or other
period, as determined under the Plan provision for which the ESOP Committee is
measuring an Employee's Hours of Service. The ESOP Committee will resolve any
ambiguity with respect to the crediting of an Hour of Service in favor of the
Employee.
(A) METHOD OF CREDITING HOURS OF SERVICE. The Employer will credit every
Employee with Hours of Service on the basis of the "actual" method. For purposes
of the Plan, "actual" method means the determination of Hours of Service from
records of hours worked and hours for which the Employer makes payment or for
which payment is due from the Employer.
(B) MATERNITY OR PATERNITY LEAVE. Solely for purposes of determining whether the
Employee incurs a Break in Service under any provision of this Plan, the ESOP
Committee may credit Hours of Service during an Employee's unpaid absence period
due to maternity or paternity leave. The ESOP Committee considers an Employee on
maternity or paternity leave if the Employee's absence is due to the Employee's
pregnancy, the birth of the Employee's child, the placement with the Employee of
an adopted child, or the care of the Employee's child immediately following the
child's birth or placement. The ESOP Committee may credit Hours of Service under
this paragraph on the basis of the number of Hours of Service the Employee would
receive if he were paid during the
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absence period or, if the ESOP Committee cannot determine the number of Hours
of Service the Employee would receive, on the basis of eight (8) hours per
day during the absence period. The ESOP Committee may credit only the number
(not exceeding five hundred and one (501)) of Hours of Service necessary to
prevent an Employee's Break in Service. The ESOP Committee credits all Hours
of Service described in this paragraph to the computation period in which the
absence period begins or, if the Employee does not need these Hours of
Service to prevent a Break in Service in the computation period in which his
absence period begins, the ESOP Committee may credit these Hours of Service
to the immediately following computation period.
Sec. 1.25. DISABILITY. "Disability" means the Participant's entitlement
to Social Security disability benefits.
Sec. 1.26. SERVICE FOR PREDECESSOR EMPLOYER. If the Employer maintains
the plan of a predecessor employer, the Plan may, at the discretion of the ESOP
Committee, treat Service of the Employee with the predecessor employer as
Service with the Employer.
Sec. 1.27. RELATED EMPLOYERS. "Related Employers" means a controlled
group of corporations (as defined in Code Section 414(b)), trades or businesses
(whether or not incorporated) which are under common control (as defined in Code
Section 414(c)) or an affiliated service group (as defined in Code Section
414(m) or in Code Section 414(o)). "Related Employer" means one of the Related
Employers. If the Employer is a Related Employer, the term "Employer" includes
the Related Employers for purposes of crediting Hours of Service, determining
Years of Service and Breaks in Service under Articles II and V hereof, applying
the Participation Test (for Plan Years beginning before December 31, 1996) and
the Coverage Test under the suspension of accrual requirements of Section
3.06(D) hereof, applying the limitations on allocations in Part 2 of Article III
hereof, applying the top heavy rules and the minimum allocation requirements of
Article III hereof, the definitions of Employee, Highly Compensated Employee,
Compensation and Leased Employee, and for any other purpose required by the
applicable Code section or by a Plan provision. Only an Employer described in
Section 1.02 hereof may contribute to the Plan, and only an Employee employed by
an Employer described in Section 1.02 hereof is eligible to participate in this
Plan.
Sec. 1.28. LEASED EMPLOYEES. The Plan treats a Leased Employee as an
Employee of the Employer. A Leased Employee is an individual (who otherwise is
not an Employee of the Employer) who, pursuant to a leasing agreement between
the Employer and any other person, has performed services for the Employer (or
for the Employer and any persons related to the Employer within the meaning of
Code Section 144(a)(3)) on a substantially full time basis for at least one (1)
year and who performs services historically performed by employees in the
Employer's business field. If a Leased Employee is treated as an Employee by
reason of this Section 1.28, "Compensation" includes Compensation from the
leasing organization which is attributable to services performed for the
Employer.
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The Plan does not treat a Leased Employee as an Employee if the leasing
organization covers the employee in a safe harbor plan and, prior to application
of this safe harbor plan exception, twenty percent (20%) or less of the
Employer's Employees (other than Highly Compensated Employees) are Leased
Employees. A safe harbor plan is a money purchase pension plan providing
immediate participation, full and immediate vesting, and a non-integrated
contribution formula equal to at least ten percent (10%) of the employee's
compensation without regard to employment by the leasing organization on a
specified date. The safe harbor plan must determine the ten percent (10%)
contribution on the basis of compensation as defined in Code Section 415(c)(3)
plus Elective Contributions (as defined in Section 1.78 hereof).
The ESOP Committee must apply this Section 1.28 in a manner consistent
with Code Sections 414(n) and 414(o) and the Regulations issued under those Code
Sections. The ESOP Committee will reduce a Leased Employee's allocation of
Employer contributions under this Plan by the Leased Employee's allocation under
the leasing organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the Employer.
Sec. 1.29. DETERMINATION OF TOP HEAVY STATUS. The ESOP Committee must
determine whether the Plan is top heavy for a Plan Year. If this Plan is the
only qualified plan maintained by the Employer, the Plan is top heavy for a Plan
Year if the top heavy ratio as of the Determination Date (as hereafter defined)
exceeds sixty percent (60%). The "top heavy ratio" is a fraction, the numerator
of which is the sum of the present value of Accrued Benefits of all Key
Employees (as hereafter defined) as of the Determination Date and the
denominator of which is a similar sum determined for all Employees. The ESOP
Committee must include in the top heavy ratio, as part of the present value of
Accrued Benefits, any contribution not made as of the Determination Date but
includible under Code Section 416 and the applicable Treasury Regulations, and
distributions made within the Determination Period (as hereafter defined). The
ESOP Committee must calculate the top heavy ratio by disregarding the Accrued
Benefit (and distributions, if any, of the Accrued Benefit) of any Non-Key
Employee (as hereafter defined) who was formerly a Key Employee, and by
disregarding the Accrued Benefit (including distributions, if any, of the
Accrued Benefit) of an individual who has not received credit for at least one
(1) Hour of Service with the Employer during the Determination Period. The ESOP
Committee must calculate the top heavy ratio, including the extent to which it
must take into account distributions, rollovers and transfers, in accordance
with Code Section 416 and the Treasury Regulations thereunder.
If the Employer maintains other qualified plans (including a 401(k)
arrangement or simplified employee pension plan), or maintained another such
plan which now is terminated, this Plan is top heavy only if it is part of the
Required Aggregation Group (as hereafter defined), and the top heavy ratio for
the Required Aggregation Group and for the Permissive Aggregation Group (as
hereafter defined), if any, each exceeds sixty percent (60%). The top heavy
ratio will be calculated in the same manner as required by the first paragraph
of this Section 1.29, taking into account all
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plans that are aggregated. To the extent distributions to a Participant are
taken into account, distributions from a terminated plan which would have
been part of the Required Aggregation Group if it were in existence on the
Determination Date must be included. The present value of Accrued Benefits
under defined benefit plans or simplified employee pension plans included
within the group will be calculated in accordance with the terms of those
plans, Code Section 416 and the Treasury Regulations under that Code Section.
If a Participant in a defined benefit plan is a Non-Key Employee, his Accrued
Benefit will be determined under the accrual method, if any, which is
applicable uniformly to all defined benefit plans maintained by the Employer
or, if there is no uniform method, in accordance with the slowest accrual
rate permitted under the fractional rule accrual method described in Code
Section 411(b)(1)(C). To calculate the present value of benefits from a
defined benefit plan, actuarial assumptions (interest and mortality only)
prescribed by the defined benefit plan(s) will be used to value benefits for
top heavy purposes. If an aggregated plan does not have a valuation date
coinciding with the Determination Date, the Accrued Benefits in the
aggregated plan must be valued as of the most recent valuation date falling
within the twelve-month period ending on the Determination Date, except as
Code Section 416 and applicable Treasury Regulations require for the first
and second plan year of a defined benefit plan. The top heavy ratio will be
calculated with reference to the Determination Dates that fall within the
same calendar year.
DEFINITIONS. For purposes of applying the provisions of this Section
1.29:
(a) "Key Employee" means, as of any Determination Date, any Employee or
former Employee (or Beneficiary of such Employee) who, for any Plan
Year in the Determination Period: (i) has Compensation in excess of
fifty percent (50%) of the dollar amount prescribed in Code Section
415(b)(1)(A) (relating to defined benefit plans) and is an officer of
the Employer; (ii) has Compensation in excess of the dollar amount
prescribed in Code Section 415(c)(1)(A) (relating to defined
contribution plans) and is one of the Employees owning the ten (10)
largest interests in the Employer; (iii) is a more than five percent
(5%) owner of the Employer; or (iv) is a more than one percent (1%)
owner of the Employer and has Compensation of more than One Hundred
Fifty Thousand Dollars ($150,000). The constructive ownership rules of
Code Section 318 (or the principles of that Section, in the case of an
unincorporated Employer) will apply to determine ownership in the
Employer. The number of officers taken into account under clause (i)
will not exceed the greater of three (3) or ten percent (10%) of the
total number (after application of the Code Section 414(q) exclusions)
of Employees, but no more than fifty (50) officers. The ESOP Committee
will make the determination of who is a Key Employee in accordance with
Code Section 416(i)(1) and the Treasury Regulations under that Code
Section.
(b) "Non-Key Employee" is an employee who does not meet the definition
of Key Employee.
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(c) "Compensation" means the general definition of Compensation as
determined under Section 1.10(A) hereof, increased for Elective
Contributions (as defined in Section 1.78 hereof).
(d) "Required Aggregation Group" means: (1) each qualified plan of the
Employer in which at least one Key Employee participates at any time
during the Determination Period; and (2) any other qualified plan of
the Employer which enables a plan described in clause (1) to meet the
requirements of Code Section 401(a)(4) or of Code Section 410.
(e) "Permissive Aggregation Group" is the Required Aggregation Group
plus any other qualified plans maintained by the Employer, but only if
such group would satisfy in the aggregate the requirements of Code
Sections 401(a)(4) and 410. The ESOP Committee will determine the
Permissive Aggregation Group.
(f) "Employer" means the Employer that adopts this Plan and any Related
Employers described in Section 1.27 hereof.
(g) "Determination Date" for any Plan Year is the Accounting Date of
the preceding Plan Year or, in the case of the first Plan Year of the
Plan, the Accounting Date of that Plan Year.
(h) The "Determination Period" is the five (5) year period ending on
the Determination Date.
(i) "Super Top Heavy Plan" means that, as of the Determination Date,
(i) the present value of Accrued Benefits of Key Employees, and (ii)
the sum of the Aggregate Accounts of Key Employees under this Plan and
all plans of an Aggregation Group, exceeds ninety percent (90%) of the
present value of Accrued Benefits and the Aggregate Accounts of all
Participants under this Plan and all plans of an Aggregation Group.
Sec. 1.30. DISQUALIFIED PERSON. "Disqualified Person" means a person
who is:
(a) a fiduciary (as hereinafter defined);
(b) a person providing services to the Plan;
(c) an Employer any of whose Employees are covered by the Plan;
(d) an employee organization any of whose members are covered by
the Plan;
(e) an owner, direct or indirect, of fifty percent (50%) or more of:
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(i) the combined voting power of all classes of stock
entitled to vote or the total value of shares of all
classes of stock of a corporation;
(ii) the capital interest or the profits interest of a
partnership; or
(iii) the beneficial interest of a trust or unincorporated
enterprise,
which is an Employer or an employee organization described in
subparagraph (c) or (d) above;
(f) a member of the family (as hereafter defined) of any
individual described in subparagraph (a), (b), (c), or (e)
above;
(g) a corporation, partnership, or trust or estate of which (or in
which) fifty percent (50%) or more of:
(i) the combined voting power of all classes of stock
entitled to vote or the total value of shares of all
classes of stock of such corporation;
(ii) the capital interest or profits interest of such
partnership; or
(iii) the beneficial interest of such trust or estate is
owned, directly or indirectly, or held by persons
described in subparagraph (a), (b), (c), (d) or (e)
above;
(h) an officer, director (or an individual having powers or
responsibilities similar to those of officers or directors), a
ten percent (10%) or more shareholder, or a highly compensated
employee (earning ten percent (10%) or more of the yearly
wages of an Employer) of a person described in subparagraph
(c), (d), (e) or (g) above; or
(i) a ten percent (10%) or more (in capital or profits) partner or
joint venturer of a person described in subparagraph (c), (d),
(e) or (g) above.
The Secretary of the Treasury, after consultation and coordination with
the Secretary of Labor or his delegate, may by regulation prescribe a percentage
lower than fifty percent (50%) for subparagraphs (e) and (g) above and lower
than ten percent (10%) for subparagraphs (h) and (i) above.
For purposes of this Section 1.30, the term "fiduciary" means any
person who:
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(a) exercises any discretionary authority or discretionary control
respecting management of the Plan or exercises any authority
or control respecting management or disposition of its assets;
(b) renders investment advice for a fee or other compensation,
direct or indirect, with respect to any monies or other
property of the Plan, or has any authority or responsibility
to do so; or
(c) has any discretionary authority or discretionary
responsibility in the administration of the Plan.
The term "fiduciary" includes any person designated under Section
405(c)(1)(B) of ERISA.
For purposes of subparagraphs (e)(i) and (g)(i) above, there shall be
taken into account indirect stockholdings which would be taken into account
under Section 267(c)(4) of the Code, except that, for purposes of this
paragraph, Section 267(c)(4) of the Code shall be treated as providing that the
members of the family of an individual shall include his spouse, ancestor,
lineal descendant, and any spouse of a lineal descendant.
For purposes of subparagraphs (e)(ii) and (iii), (g)(ii) and (iii), and
(i) above, the ownership of profits or beneficial interests shall be determined
in accordance with the rules for constructive ownership of stock provided in
Section 267(c) of the Code (other than paragraph (3) thereof), except that
Section 267(c)(4) of the Code shall be treated as providing that the members of
the family of an individual shall include his spouse, ancestor, lineal
descendant, and any spouse of a lineal descendant.
Sec. 1.31. EMPLOYER SECURITIES. "Employer Securities" means common
stock issued by the Company, or by a corporation which is a member of the same
controlled group of the Company, which is readily tradeable on an established
securities market. If there is no common stock which meets such requirements,
the term "Employer Securities" or "Company Stock" shall mean common stock issued
by the Company or by a corporation which is a member of the same controlled
group of the Company, having a combination of voting power and dividend rights
equal to or in excess of:
(a) that class of common stock of the Company (or any other such
corporation) having the greatest voting power; and
(b) that class of common stock of the Company (or any other such
corporation) having the greatest dividend rights.
Noncallable preferred stock shall also be treated as "Employer Securities" if
such stock is convertible at any time into stock which meets the qualifications
above, and if such conversion is at a conversion
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price which (at the date of the acquisition by the Trust) is reasonable. For
purposes of the preceding sentence, preferred stock shall be treated as
noncallable if after the call there will be a reasonable opportunity for a
conversion which meets such requirements.
Sec. 1.32. EXEMPT LOAN. "Exempt Loan" means a loan or loans made to the
Trust by a Disqualified Person (as defined in Section 1.30 hereof) or a loan to
the Trust which a Disqualified Person guarantees, provided the loan or loans
satisfies the requirements of Treasury Regulation Section 54.4975-7(b).
Sec. 1.33. LEVERAGED EMPLOYER SECURITIES. "Leveraged Employer
Securities" means Employer Securities (as defined in Section 1.31 hereof)
acquired by the Trust with the proceeds of an Exempt Loan.
Sec. 1.34. SEPARATION FROM SERVICE. "Separation from Service" or
"Separates from Service" or "Separated from Service" means the Employee no
longer has an employment relationship with the Employer maintaining this
Plan. Severance Date is defined in Section 1.44 hereof.
Sec. 1.35. ALTERNATE PAYEE. "Alternate Payee" means a spouse, former
spouse, child, or other dependent of a Participant to whom benefits are
payable under the Plan pursuant to the terms of a qualified domestic
relations order as defined in Section 414(p) of the Code.
Sec. 1.36. BOARD OF DIRECTORS. "Board of Directors" or "Board" means
the Board of Directors of the Company, as from time to time constituted.
Sec. 1.37. CURRENT OBLIGATIONS. "Current Obligations" means obligations
of the Trust arising from an extension of credit to the Trust and payable in
cash within one (1) year from the date a contribution is due pursuant to Section
3.03 hereof.
Sec. 1.38. GENERAL OBLIGATIONS. "General Obligations" means
obligations of the Trust not arising from extensions of credit to the Trust,
but which are commitments which arise from authorized activities of the Trust.
Sec. 1.39. INCOME OF THE TRUST FUND. "Income of the Trust Fund" means
the net gain or loss of the General Investments Accounts of the Trust Fund, as
reflected by interest payments, dividends, realized and unrealized gains and
losses on securities, other than Employer Securities, and on other investment
transactions, and reduced by expenses paid from the Trust Fund. The expenses of
the Trust Fund do not include interest paid on any installment contracts for the
purchase of Employer Securities by the Trust or on any loan of the Trust
incurred to purchase Employer Securities.
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Sec. 1.40. NON-CURRENT OBLIGATIONS. "Non-Current Obligations" means
obligations of the Trust arising from an extension of credit to the Trust and
payable in cash more than one (1) year from the date a contribution is due.
Sec. 1.41. PARTICIPANT EMPLOYER SECURITIES ACCOUNT. "Participant
Employer Securities Account" means the Account of a Participant which is
credited with shares and fractional shares of Employer Securities purchased and
paid for by the Trust or contributed to the Trust or shares otherwise allocable
to the Participant's participation in the Plan. "Participant Employer Securities
Account" is also referred to as "Employer Securities Account."
Sec. 1.42. PARTICIPANT GENERAL INVESTMENTS ACCOUNT. "Participant
General Investments Account" means the Account of a Participant which is
increased by his share of net income (or loss) of the Trust Fund and Employer
contributions and Participant Forfeitures, other than amounts invested in
Employer Securities, and which
is decreased by amounts necessary to pay for Employer Securities.
Sec. 1.43. ROLLOVER ACCOUNT. "Rollover Account" has the meaning given
in Section 4.03 hereof.
Sec. 1.44. SEVERANCE DATE. "Severance Date" means termination of a
Participant's Service prior to Normal Retirement Age or Early Retirement Date
(both terms defined in Section 5.01 hereof) for reasons other
than Retirement, Disability or death.
Sec. 1.45. UNALLOCATED EMPLOYER SECURITIES ACCOUNT. "Unallocated
Employer Securities Account" means the suspense account maintained under the
Plan to which will be credited all shares of Employer Securities prior to the
allocation of such shares to the Participant Employer Securities Accounts.
Sec. 1.46. UNALLOCATED GENERAL INVESTMENTS ACCOUNT. "Unallocated
General Investments Account" means the suspense account maintained under the
Plan which reflects all transactions of the Plan involving cash and assets other
than Employer Securities, prior to the allocation of such cash and other assets
to the Participant General Investments Accounts.
Sec. 1.47. VALUATION DATE. "Valuation Date" means each date on which
the Trust Fund is valued under Sections 9.11 and 12.20 hereof.
Sec. 1.48. QUALIFIED PARTICIPANT. "Qualified Participant" means a
Participant who has attained age fifty-five (55) and who, commencing on the
Effective Date, has completed at least ten (10) years of participation in the
Plan. A "year of participation" means a Plan Year commencing on the date in
which the Participant was eligible for an allocation of Employer contributions,
regardless of whether the Employer actually contributed to the Plan for that
Plan Year.
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Sec. 1.49. QUALIFIED ELECTION PERIOD. "Qualified Election Period" means
the six (6) Plan Years beginning with the Plan Year in which the Participant
first becomes a Qualified Participant.
Sec. 1.50. RETIREMENT. "Retirement" means a Participant's Separation
from Service with an Employer at or after attaining Normal Retirement Age or
Early Retirement Date.
Sec. 1.51. PARTICIPATION OF OTHER EMPLOYERS. Subject to Section 12.14
hereof, any other corporation or organization which is a member of a group of
corporations described in Code Section 409(l) that includes the Company may
adopt this Plan, effective as of the date indicated in its instrument of
adoption, if (i) its application is made in writing to the Board and ESOP
Committee; (ii) such application is accepted in writing by the Board and ESOP
Committee; and (iii) such approved Employer executes an instrument in writing
duly authorized by it adopting this Plan and delivers a copy thereof to the ESOP
Committee. Throughout this instrument, a distinction is purposely drawn between
rights and obligations of the Company and rights and obligations of an Employer.
The rights and obligations specified as belonging to the Company shall belong
only to it, including but not limited to, appointment of the ESOP Committee,
appointment and removal of the Trustee, and amendment of the Plan. An Employer's
instrument of adoption may provide for the following: (i) making of an initial
contribution to the Trust, (ii) making such other changes with respect to the
Plan as are approved by the ESOP Committee, and (iii) the designation of the
name of the Plan with respect to its Employees. Each Employer shall have the
obligation, as hereinafter provided and as may be provided in its instrument of
adoption, to make contributions for its own Participants, and no Employer shall
have the obligation to make contributions for the Participants of any other
Employer unless determined by the ESOP Committee. Any failure by an Employer to
fulfill its own obligations under this Plan shall, except as provided in the
next preceding sentence, have no effect upon any other Employer. An Employer may
withdraw from this Plan without affecting any other Employer. If an Employer
withdraws or its participation is terminated by the Board, such Employer may, in
its sole discretion, adopt for its Employees alone and independent of this Plan
its own plan which shall be considered a continuation of this Plan with respect
to itself and its Participants.
Sec. 1.52. INELIGIBLE EMPLOYEE. "Ineligible Employee" means an Employee
who ceases to be an Eligible Employee, but remains in the Service of the
Employer or a Related Employer.
Sec. 1.53. LATE RETIREMENT DATE. "Late Retirement Date" means the date
of Separation from Service with the Employer for any reason other than death
where the termination occurs subsequent to the Employee's Normal Retirement
Date.
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Sec. 1.54. COMPANY. "Company" means T.A. KYSER COMPANY (formerly known
as "KYSER COMPANY") or its successor. The tax identification number for the
Company is as follows: _______________.
Sec. 1.55. ELIGIBLE ROLLOVER DISTRIBUTION. An "Eligible Rollover
Distribution" is any distribution of all or any portion of the balance to the
credit of the Distributee, except that an Eligible Rollover Distribution does
not include the following: (1) any distribution that is one of a series of
substantially equal periodic payments (not less frequently than annually) made
for the life (or life expectancy) of the Distributee or the joint lives (or
joint life expectancies) of the Distributee and the Distributee's designated
beneficiary, or for a specified period of ten (10) years or more; (2) any
distribution to the extent such distribution is required under Section 401(a)(9)
of the Code; and (3) the portion of any distribution that is not includible in
gross income (determined without regard to the exclusion for net unrealized
appreciation with respect to Employer Securities).
Sec. 1.56. ELIGIBLE RETIREMENT PLAN. An "Eligible Retirement Plan" is
an individual retirement account described in Section 408(a) of the Code, an
individual retirement annuity described in Section 408(b) of the Code, an
annuity plan described in Section 403(a) of the Code, or a qualified trust
described in Section 401(a) of the Code, that accepts the Distributee's Eligible
Rollover Distribution. In the case of an Eligible Rollover Distribution to the
surviving spouse, however, an Eligible Retirement Plan is an individual
retirement account or individual retirement annuity.
Sec. 1.57. DISTRIBUTEE. "Distributee" includes an employee, former
employee, or beneficiary of either an employee or former employee. In addition,
the employee's or former employee's surviving spouse and the employee's or
former employee's spouse or former spouse who is the Alternate Payee under a
qualified domestic relations order, as defined in Section 414(p) of the Code,
are Distributees with regard to the interest of the spouse or former spouse.
Sec. 1.58. DIRECT ROLLOVER. A "Direct Rollover" is a payment by the
Plan to the Eligible Retirement Plan specified by the Distributee.
Sec. 1.59. ELIGIBLE EMPLOYEE. Each Employee becomes an "Eligible
Employee," and thereby eligible to participate in the Plan, coincident with or
immediately following the date on which he completes one (1) Year of Service.
For purposes of an Employee's eligibility, the Plan takes into account all of
his Years of Service (as defined in Section 2.02 hereof) with the Employer.
Sec. 1.60. GENERAL INVESTMENTS ACCOUNTS. "General Investments Accounts"
means the Participant General Investments Account and the Unallocated General
Investments Account.
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Sec. 1.61. FORFEITURE. "Forfeiture" refers to the amount of a
Participant's Accrued Benefit which is not Vested.
Sec. 1.62. VESTED. "Vested" refers to the portion of a Participant's
Accrued Benefit which is Nonforfeitable.
Sec. 1.63. AGGREGATE ACCOUNT. "Aggregate Account" means, with respect
to each Participant, the value of all Accounts maintained on behalf of a
Participant, whether attributable to Employer contributions,
Participant Forfeitures or Employee contributions.
Sec. 1.64. FIDUCIARY. "Fiduciary" means any person who (a) exercises
any discretionary authority or discretionary control and management of the Plan
or exercises any authority or control and management or disposition of Plan
Assets, (b) renders investment advice for a fee or other compensation, direct or
indirect, with respect to any monies or other property of the Trust or has any
authority or responsibility to do so, or (c) has any discretionary authority or
discretionary responsibility in the administration of the Plan and the Trust,
including, but not limited to, the Trustee and the Plan Administrator.
Sec. 1.65. FORMER PARTICIPANT. "Former Participant" means a person who
has been a Participant but has ceased to be a Participant for any reason.
Sec. 1.66. INVESTMENT MANAGER. "Investment Manager" means any person,
firm, or corporation who is a registered investment advisor under the Investment
Advisors Act of 1940, a bank or an insurance company, and who has the power to
manage, acquire, or dispose of Plan Assets, and who acknowledges in writing his
fiduciary responsibility to the Plan.
Sec. 1.67. BREAK IN SERVICE. Except as provided in Section 5.07, "Break
in Service" means any twelve (12) consecutive month period in which an Employee
does not complete more than five hundred (500) Hours of Service with the
Employer.
Sec. 1.68. PARTICIPANT'S ACCOUNT. "Participant's Account" means the
Accounts established and maintained under the Plan for each Participant with
respect to his total interest in the Plan.
Sec. 1.69. RETIRED PARTICIPANT. "Retired Participant" means a person
who has been a Participant, but has become entitled to benefits under the Plan.
Sec. 1.70. RETIREMENT DATE. "Retirement Date" means the date as of
which a Participant retires for reasons other than Disability or death, whether
such retirement occurs on a Participant's Retirement or Late Retirement Date.
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Sec. 1.71. TERMINATED PARTICIPANT. "Terminated Participant" means a
person who has been a Participant but whose employment has been terminated other
than by death, Disability, or Retirement.
Sec. 1.72. QUALIFYING EMPLOYER SECURITIES. "Qualifying Employer
Securities" means Employer Securities (as defined in Section 1.31 hereof) which
are (1) stock or otherwise an equity security or (2) a bond, debenture, note, or
certificate, or other evidence of indebtedness described in Section 503(e) of
the Code.
Sec. 1.73. PUBLICLY TRADED. "Publicly Traded" means Qualifying Employer
Securities that are listed on a national securities exchange registered under
Section 6 of the Securities Exchange Act of 1934 ("Securities Exchange Act") or
that are quoted on a system which is sponsored by a national securities
association registered under Section 15(a) of the Securities Exchange Act.
Sec. 1.74. NET PROFITS. "Net Profits" mean, with respect to any fiscal
year, the Employer's net income or profit for such fiscal year determined upon
the basis of the Employer's books of account in accordance with generally
accepted accounting principles without any reduction for tax based upon income,
or for contributions made by the Employer to the Plan.
Sec. 1.75. SELF-EMPLOYED INDIVIDUAL. "Self-Employed Individual" means
with respect to any taxable year, an individual who has earned income (as
defined in Code Section 401(c)(2)) for such taxable year. To the extent provided
in regulations prescribed by the Secretary, such term also includes, for any
taxable year:
(a) an individual who would be a self-employed individual
within the meaning of the preceding sentence but for the fact that the
trade or business carried on by such individual did not have net
profits for the taxable year, and
(b) an individual who has been a self-employed individual
within the meaning of the preceding sentence for any prior taxable
year.
Sec. 1.76. NORMAL RETIREMENT. "Normal Retirement" means Separation from
Service on or after reaching Normal Retirement Age.
Sec. 1.77. INACTIVE PARTICIPANT. An "Inactive Participant" is a
Participant who is no longer an Employee.
Sec. 1.78. ELECTIVE CONTRIBUTIONS. "Elective Contributions" are amounts
excludable from the Employee's gross income under Code Sections 125, 402(a)(8),
401(h) or 403(b),
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and contributed by the Employer, at the Employee's election, to a Code
Section 401(k) arrangement, a simplified employee pension, a cafeteria plan,
or tax-sheltered annuity.
Sec. 1.79. ANNUITY STARTING DATE. "Annuity Starting Date" means the
first day of the first period for which an amount is payable as an annuity. In
the case of a benefit not payable in the form of an annuity, "Annuity Starting
Date" means the first day on which all events have occurred which entitle the
Participant to the benefit.
Sec. 1.80. REGULATIONS. "Regulations" and "Treasury Regulations" means
the final and temporary regulations issued by the Internal Revenue Service which
interpret the provisions of the Internal Revenue Code of 1986, as amended.
"Regulations" and "Labor Regulations" also means the final and temporary
regulations issued by the Department of Labor which interpret the provisions of
the Employee Retirement Income Security Act of 1974, as amended.
Sec. 1.81. RESTATEMENT DATE. "Restatement Date" of this Plan means
March 17, 1997, unless otherwise required by the Code and the Treasury
Regulations thereunder.
END OF ARTICLE I
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ARTICLE II
EMPLOYEE PARTICIPANTS
Sec. 2.01. PARTICIPATION. Each Eligible Employee becomes a Participant
in the Plan on the Plan Entry Date (if employed on such date) coincident with or
immediately following the date on which he became an Eligible Employee. However,
all Employees who were participants in the T.A. KYSER COMPANY EMPLOYEE STOCK
OWNERSHIP PLAN on the Restatement Date shall automatically become Participants
in the Plan as of the Restatement Date.
Sec. 2.02. YEAR OF SERVICE - PARTICIPATION. For purposes of an
Employee's participation in the Plan under Section 2.01 hereof, the Plan takes
into account all of his Years of Service with the Employer. "Year of Service"
means an eligibility computation period during which the Employee completes not
less than one thousand (1,000) Hours of Service. For purposes of participation,
a Year of Service is calculated in one of two methods. In the first method, the
initial eligibility computation period is the first twelve (12) consecutive
month period measured from the Employment Commencement Date. If the Employee
does not complete one thousand (1,000) Hours of Service during that twelve-month
period, participation is calculated by another method. In the second method, the
subsequent eligibility computation period is based on the Plan Year which begins
in the first year of employment and overlaps it. If the Employee does not
complete one thousand (1,000) Hours of Service during that Plan Year, the
eligibility computation period begins again on the first day of the following
Plan Year and so forth until the Employee completes one thousand (1,000) Hours
of Service during a Plan Year. "Employment Commencement Date" means the date on
which the Employee first performs an Hour of Service for the Employer. For
purposes of this Section 2.02, "Employer" means the Employer as defined in
Section 1.02 hereof and any corporation, association, partnership or other
entity acquired by the Employer as defined in Section 1.02 hereof.
Sec. 2.03. PARTICIPATION UPON RE-EMPLOYMENT. A Participant reemployed
following a Break in Service shall re-enter the Plan as a Participant on the
date of his reemployment. However, if the Participant is reemployed after a
Break in Service and has no vested rights under the Plan and the number of
consecutive one-year Breaks in Service equals or exceeds five years or the
number of aggregate years of prebreak Service, whichever is greater, the
Participant shall be treated as a new Employee for purposes of participation.
The "12 consecutive month period" under this Section 2.03 is the same twelve
(12) consecutive month period for which the Plan measures "Years of Service"
under Section 2.02. An Employee who satisfies the Plan's eligibility conditions
but who terminates employment with the Employer prior to becoming a Participant
will become a Participant on the date of his reemployment, provided he has not
incurred five (5) consecutive one-year Breaks in Service. Any Employee who
terminates employment prior to satisfying the Plan's eligibility conditions
becomes a Participant in accordance with the provisions of Section 2.01 hereof.
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Sec. 2.04. INELIGIBILITY TO BECOME A PARTICIPANT. Notwithstanding the
provisions of Section 2.01 above, any Eligible Employee shall not be eligible
and shall not become a Participant, and any Employee who is a Participant shall
cease to be eligible to be a Participant, if:
(a) Such Employee is or becomes a member of a collective bargaining
unit if retirement benefits covering such unit were the subject of good
faith bargaining and coverage under this Plan was not agreed to under
such bargaining;
(b) Such Employee is employed by a Related Employer that is not an
adopting Employer or is excluded from participation by the terms of the
Employer's adoption agreement;
(c) Such individual is not on the payroll of an Employer, unless such
individual is considered a "Leased Employee" under Section 1.28 hereof;
(d) Such Employee is a non-resident alien who receives no earned income
from an Employer that constitutes income from sources within the United
States; or
(e) The date the Employee elects not to participate in the Plan,
pursuant to Section 2.07 hereof.
Sec. 2.05. CONTINUANCE AS A PARTICIPANT. Notwithstanding any other
provision herein, a Participant shall continue as a Participant until whichever
of the following dates first occurs:
(a) The date of such Participant's death;
(b) The date the Participant ceases to be an Employee;
(c) The date the Participant becomes ineligible to participate in the
Plan, pursuant to Section 2.04 hereof; or
(d) The date the Participant elects not to participate in the Plan
pursuant to Section 2.07 hereof.
After an individual ceases to be a Participant, his Account(s) shall
continue to be held and invested pursuant to the terms of the Plan, and shall
share in the earnings or losses of the Plan pending distribution pursuant to
Article VI hereof. However, he shall be ineligible to share in Employer
contributions or Participant Forfeitures, except as otherwise provided in
Sections 3.06(B) and 3.06(C) hereof.
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Sec. 2.06. EMPLOYMENT BY EMPLOYER; SERVICE WITH NEWLY ACQUIRED
ENTITIES; RECORDS OF EMPLOYER. Notwithstanding any other provision herein, in
the event the Employer has or shall acquire the control of any organization by
the purchase of assets or stock, merger, amalgamation, consolidation or any
other similar event, the Board of Directors may direct to what extent, if any,
employment by such organization shall be deemed to be employment by the
Employer, and, in connection therewith, may specify a special Plan Entry Date.
The personnel records of the Employer or any Related Employer shall be
conclusive evidence for the purpose of determining the period of employment of
any and all Employees.
Sec. 2.07. ELECTION NOT TO PARTICIPATE. An Eligible Employee, or any
present Participant, may elect not to participate in the Plan or enter into an
agreement with the Employer not to participate in the Plan. For an election to
be effective for a particular Plan Year, the Employee or Participant must either
(a) file the election in writing with the Trustee not later than thirty (30)
days prior to the Accounting Date of that Plan Year unless accepted by the ESOP
Committee at a different time or (b) enter into an agreement with the Employer
which provides that the Employee or Participant shall not participate in the
Plan (collectively referred to herein as "election"). The Employer will not make
a contribution under the Plan for the Employee or for the Participant for the
Plan Year for which the election is effective, nor for any succeeding Plan Year.
The Employee or Participant may re-elect to participate in the Plan unless the
election provides otherwise. After an Employee's or Participant's election not
to participate has been effective for at least two (2) Plan Years, unless the
agreement between the Employee and Employer provides otherwise, the Employee or
Participant may re-elect to participate in the Plan for any Plan Year and
subsequent Plan Years. If the Employee or Participant is permitted to enter or
re-enter the Plan, he may re-elect to participate in the Plan by filing his
election in writing with the Trustee not later than thirty (30) days prior to
the Accounting Date of the Plan Year for which his election is to be effective.
An Employee or Participant who re-elects to participate may not again elect not
to participate in the Plan. If an Employee is a Self-Employed Individual, the
Employee's election must be effective no later than the date the Employee first
would become a Participant in the Plan and the election is irrevocable (except
as permitted by Treasury Regulations without creating a Code Section 401(k)
arrangement with respect to that Self-Employed Individual). The Trustee must
furnish an Employee or a Participant any form required for purposes of an
election under this Section 2.07. An election timely filed is effective for the
entire Plan Year.
A Participant who elects not to participate in the Plan may not receive
a distribution of his Accrued Benefit attributable thereto except as provided
under Article VI hereof. However, for each Plan Year for which a Participant's
election not to participate is effective, his Account(s), if any, continues to
share in Trust Fund allocations under Article IX hereof. The Employee or the
Participant receives vesting credit under Article V hereof for each included
Year of Service during the period the election not to participate is effective.
END OF ARTICLE II
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ARTICLE III
EMPLOYER CONTRIBUTIONS AND PARTICIPANT FORFEITURES
PART 1. AMOUNT OF EMPLOYER CONTRIBUTIONS AND PLAN ALLOCATIONS: SECTIONS 3.01
THROUGH 3.06
Sec. 3.01. AMOUNT. The Employer will contribute to the Plan, for each
Plan Year, the amount which its board of directors may from time to time deem
advisable. The Employer may contribute to this Plan regardless of whether it has
Net Profits. Employer contributions for each Plan Year shall never be less than
the amount required to enable the Trust to discharge its Current Obligations and
notwithstanding whether some or all of such contributions may fail to qualify
for income tax deductions by the Employer. However, the Employer may not make a
contribution to the Plan for any Plan Year to the extent the contribution would
exceed the Participants' Maximum Permissible Amounts pursuant to Part 2 of this
Article III.
The Employer contributes to this Plan on the condition its contribution
is not due to a mistake of fact and the Internal Revenue Service will not
disallow the deduction for its contribution. Upon written request from the
Employer, the amount of the Employer's contribution made by the Employer by
mistake of fact or the amount of the Employer's contribution disallowed as a
deduction under Code Section 404 must be returned to the Employer unless such
contribution is necessary to discharge the Plan's Current Obligations.
The Employer may make its contribution in cash or in Employer
Securities as the Employer from time to time may determine provided the
contribution in Employer Securities is not a prohibited transaction under the
Code or ERISA. The Employer may make its contribution of Employer Securities at
fair market value determined at the time of contribution.
Sec. 3.02. DETERMINATION OF CONTRIBUTION. The Employer, from its
records, determines the amount of any contributions to be made by it to the
Trust under the terms of the Plan.
Sec. 3.03. TIME OF PAYMENT OF CONTRIBUTION. The Employer may pay its
contribution for each Plan Year in one (1) or more installments without
interest. The Employer must make its contribution to the Trust within the time
prescribed by the Code or applicable Treasury Regulations to be deductible on
its federal corporate income tax return.
Sec. 3.04. ALLOCATIONS.
(A) METHOD OF ALLOCATION.
(1) ALLOCATIONS TO ACCOUNTS.
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(a) PARTICIPANT EMPLOYER SECURITIES ACCOUNT. The Participant
Employer Securities Account of each Participant shall be
increased by his allocable share (determined under the Plan)
of (i) the shares of Employer Securities (including fractional
shares) purchased and paid for by the Plan or contributed in
kind by the Employer; (ii) Forfeitures of Employer Securities;
(iii) stock (in kind) dividends of Employer Securities held in
his Participant Employer Securities Account; and (iv) Employer
Securities released from the Unallocated Employer Securities
Account. Such credits shall be recorded in whole shares and
fractional shares of Employer Securities in order that such
Account shall share in any appreciation in the market value of
the shares of Employer Securities in the Participant Employer
Securities Account, or in any decreases in such market value.
All fractional shares shall be computed at least to the
nearest one-one hundredth (1/100th) of a share (i.e., at least
two places to the right of the decimal).
(b) PARTICIPANT GENERAL INVESTMENTS ACCOUNT. The Participant
General Investments Account of each Participant will be
increased (or decreased) by the dollar value of his allocable
share of (i) the net income (or loss) of the Plan attributable
to such Account; (ii) cash dividends and other rights or
warrants received on Employer Securities in his Participant
Employer Securities Account; (iii) Employer contributions and
Participant Forfeitures in other than Employer Securities and
(iv) appreciation (or depreciation) in the fair market value
of the assets of the Plan (other than Employer Securities)
attributable to such Account. The Participant General
Investments Account of each Participant will be decreased for
any payments on purchases of Employer Securities or repayment
of debt (including principal and interest) incurred for the
purchase of Employer Securities which are attributable to such
Account.
(c) UNALLOCATED EMPLOYER SECURITIES ACCOUNTS AND
UNALLOCATED GENERAL INVESTMENT ACCOUNTS.
(i) UNALLOCATED EMPLOYER SECURITIES ACCOUNT. The
Unallocated Employer Securities Account shall be
increased as of each Valuation Date by the number of
shares of Employer Securities purchased with the
proceeds of a loan obligation or installment
purchase. The Unallocated Employer Securities Account
shall also be increased as of each Valuation Date by
the stock (in kind) dividends received with respect
to Employer Securities held in such Account and by
any Employer Securities purchased with funds of the
Unallocated General Investments Account. The
Unallocated Employer Securities Account shall be
decreased by the number of shares of Employer
Securities that are to be released from such Account
in accordance with Section 3.05 hereof.
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(ii) UNALLOCATED GENERAL INVESTMENTS ACCOUNT. The
Unallocated General Investments Account will be
increased (or decreased) with a dollar value of such
Account's allocable share of (A) the net income (or
loss) of the Plan attributable to such Account; (B)
cash dividends and other rights or warrants received
in Employer Securities in the Unallocated Employer
Securities Account; and (C) amounts attributable to
such Account that are used to purchase Employer
Securities or to pay installment purchase contracts
or loan obligations of the Plan in accordance with
Section 3.05 hereof.
(d) ALLOCATION PROCEDURES. Subject to Section 3.05 below,
Accounts shall be adjusted in accordance with the following:
(i) INCOME AND APPRECIATION IN VALUE OF GENERAL
INVESTMENTS ACCOUNTS. The income of the Participant
General Investments Accounts and the Unallocated
General Investments Account under the Plan (including
the appreciation or depreciation in value of the
assets in the General Investments Accounts under the
Plan) shall be allocated to such Accounts in
proportion to the balances in such Accounts as of the
next preceding Valuation Date, but after first
reducing each such Account balance by any
distributions or charges from such Account since the
next preceding Valuation Date. Such amounts shall be
allocated among the Participant General Investments
Accounts and the Unallocated General Investments
Account in such uniform and reasonable manner as the
ESOP Committee may prescribe.
(ii) INCOME AND APPRECIATION IN VALUE OF EMPLOYER
SECURITIES ACCOUNTS. The income (except stock in
kind) dividends with respect to Employer Securities
(except the unrealized appreciation or depreciation
in value of Employer Securities held in both the
Participant Employer Securities Accounts and the
Unallocated Employer Securities Account) shall be
allocated to the appropriate Participant General
Investments Accounts and the Unallocated General
Investments Account, as is appropriate, in proportion
to the balances, as of the last Valuation Date, in
the respective Participant Employer Securities
Accounts, or Unallocated Employer Securities Account
to which the income is attributable but after first
reducing each such Account balance by any
distributions or charges from such Accounts since the
last Valuation Date. Stock (in kind) dividends with
respect to Employer Securities shall be allocated to
the Account which held the Employer Securities that
generated the stock (in kind) dividend. Any dividends
received with respect to Employer Securities in the
Unallocated Employer Securities Account purchased
with the proceeds of a loan obligation or
29.
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pursuant to an installment purchase shall be used
first to repay current principal and then to repay
current interest with respect to such loan
obligation or installment purchase. To the extent
no such loan obligation exists, such dividends may
be used to purchase Employer Securities to the
extent available or to satisfy General Obligations
of the Plan.
(iii) EMPLOYER CONTRIBUTIONS. Employer contributions
for the Plan Year shall be allocated, as designated
by the Company or required by law, to Participant
General Investments Accounts, or, if made in Employer
Securities, to Participant Employer Securities
Accounts. The ESOP Committee will allocate and credit
each annual Employer contribution to each Participant
who satisfies the conditions of Section 3.06 hereof.
The ESOP Committee will make this allocation in the
same ratio that each Participant's Compensation for
the Plan Year bears to the total Compensation for all
such Participants for the Plan Year.
(iv) FORFEITURES. Forfeitures occurring during such
Plan Year (net of any amount of Forfeitures allocated
to the restoration of prior Forfeitures) shall be
allocated to the Account of each Participant.
Forfeitures shall be allocated according to the ratio
that the Compensation for the Plan Year of each
Participant bears to the total Compensation of all
such Participants for the Plan Year. In making a
Forfeiture allocation under this provision, the ESOP
Committee, to the extent possible, must first forfeit
from a Participant's General Investment Account, then
from any other Participant's Account holding assets
other than Employer Securities before making a
Forfeiture from the Participant's Employer Securities
Account, and then from the Participant's Employer
Securities Account. If the Participant has an
interest in more than one (1) class of Qualifying
Employer Securities which have been allocated to the
Participant Employer Securities Account (and any
other Account holding Employer Securities), the ESOP
Committee, to the extent possible, must forfeit the
same proportion of each class of stock held in the
Participant Employer Securities Account (and any
other Account holding Employer Securities). In making
a Forfeiture allocation under this provision, the
ESOP Committee will base Forfeitures of Employer
Securities upon fair market value of the Employer
Securities as of the Accounting Date of the
Forfeitures.
(v) SUBACCOUNTS. All amounts credited to a
Participant Employer Securities Account shall be
accounted for as part of the Participant's Employer
Contribution Account or Rollover Account according to
the ratio of amounts from such subaccounts used to
purchase Employer Securities or,
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in the case of Employer Securities reallocated
from the Unallocated Employer Securities Account
pursuant to Section 3.05 hereof, to the
Participant's Employer Contribution Account.
(B) TOP HEAVY MINIMUM ALLOCATION.
(1) MINIMUM ALLOCATION. The ESOP Committee will determine whether the
Plan is top heavy in any Plan Year. If the Employer satisfies the top heavy
minimum benefit requirements in another qualified retirement plan it maintains,
this Plan does not guarantee a top heavy minimum allocation. If another
qualified retirement plan maintained by the Employer does not satisfy the top
heavy minimum benefit requirements and the Plan is top heavy in any Plan Year,
the following provisions apply:
(a) Each Non-Key Employee who is a Participant and is employed
by the Employer on the last day of the Plan Year will receive
a top heavy minimum allocation for that Plan Year,
irrespective of whether he satisfies the Hours of Service
condition under Section 3.06(B) hereof; and
(b) The top heavy minimum allocation is the lesser of three
percent (3%) of the Non-Key Employee's Compensation for the
Plan Year or the highest contribution rate for the Plan Year
made on behalf of any Key Employee. However, if a defined
benefit plan maintained by the Employer which benefits a Key
Employee depends on this Plan to satisfy the
anti-discrimination rules of Code Section 401(a)(4) or the
coverage rules of Code Section 410 (or another plan benefiting
the Key Employee so depends on such defined benefit plan), the
top heavy minimum allocation is three percent (3%) of the
Non-Key Employee's Compensation regardless of the contribution
rate for the Key Employees.
(2) SPECIAL DEFINITIONS. For purposes of this Section 3.04(B), the term
"Participant" includes any Employee otherwise eligible to participate in the
Plan but who is not a Participant because of his failure to make elective
deferrals under a Code Section 401(k) arrangement or because of his failure to
make mandatory employee contributions. For purposes of Section 3.04(B)(1)(b)
hereof, "Compensation" means Compensation as defined in Section 1.10 hereof,
except: (i) Compensation does not include Elective Contributions (as defined in
Section 1.78 hereof); (ii) any exclusions from Compensation (other than the
exclusion of Elective Contributions and the exclusions described in paragraphs
(1), (2), (3) and (4) of Section 1.10(A) hereof) do not apply; and (iii) any
modification to the definition of Compensation in Section 3.06 hereof does not
apply.
(3) DETERMINING CONTRIBUTION RATES. For purposes of this Section
3.04(B), a Participant's contribution rate is the sum of Employer contributions
(not including Employer contributions to Social Security) and Participant
Forfeitures allocated to the Participant's Account
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for the Plan Year divided by his or her Compensation for the entire Plan
Year. However, for purposes of satisfying a Participant's top heavy minimum
in Plan Years beginning after December 31, 1988, a non-key employee
Participant's contribution rate does not include any Elective Contributions
under a Code Section 401(k) arrangement nor any Employer matching
contributions necessary to satisfy the nondiscrimination requirements of Code
Section 401(k) or Code Section 401(m). To determine a Participant's
contribution rate, the ESOP Committee must treat all qualified top heavy
defined contribution plans maintained by the Employer or by any Related
Employers (described in Section 1.27 hereof) as a single plan.
(4) NO ALLOCATIONS. If, for a Plan Year, there are no allocations of
Employer contributions or Participant Forfeitures for any Key Employee, the Plan
does not require any top heavy minimum allocation for the Plan Year, unless a
top heavy minimum allocation applies because of the maintenance by the Employer
of more than one (1) plan.
(5) METHOD OF COMPLIANCE. The Plan will satisfy the top heavy minimum
allocation in accordance with this Section 3.04(B)(5). The ESOP Committee first
will allocate the Employer contributions (and Participant Forfeitures, if any)
for the Plan Year in accordance with the allocation formula under Section
3.04(A) hereof. The Employer then will contribute an additional amount for the
Account of any Participant entitled under this Section 3.04(B) to a top heavy
minimum allocation and whose contribution rate for the Plan Year, under this
Plan, is less than the top heavy minimum allocation. The additional amount is
the amount necessary to increase the Participant's contribution rate to the top
heavy minimum allocation. The ESOP Committee will allocate the additional
contribution to the Account of the Participant on whose behalf the Employer
makes the contribution.
Sec. 3.05. TREATMENT OF EMPLOYER SECURITIES PURCHASED UNDER INSTALLMENT
PAYMENT CONTRACTS OR WITH BORROWED FUNDS.
(a) DEBT PURCHASE OF EMPLOYER SECURITIES. Any Employer Securities
purchased by the Plan under an installment payment contract or with
borrowed funds shall initially be allocated to the Unallocated Employer
Securities Account.
(b) REALLOCATION FROM UNALLOCATED EMPLOYER SECURITIES ACCOUNT. As of
the Accounting Date of each Plan Year, and as of any special Valuation
Date if directed by the ESOP Committee, there shall be transferred from
the Unallocated Employer Securities Account to the Participant Employer
Securities Accounts, a portion of the Employer Securities purchased
under an installment purchase contract or with funds borrowed by the
Plan equal to the number of shares determined by taking the shares so
purchased which have not theretofore been released from the Unallocated
Employer Securities Account multiplied in a manner specified in Section
12.21(F) hereof. Each Participant's share of the Employer Securities to
be allocated pursuant to the preceding sentence shall be determined by
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multiplying the number of shares of Employer Securities to be allocated
in a manner specified in Section 12.21(F) hereof.
(c) PAYMENTS ON INSTALLMENT PURCHASE CONTRACTS AND LOAN OBLIGATIONS OF
THE PLAN. As of the Accounting Date of each Plan Year, and as of any
special Valuation Date if directed by the ESOP Committee, installment
payments, including principal and interest, made by the Plan out of
Employer contributions made with respect to the period then ending,
under installment purchase contracts for the purchase of Employer
Securities, or under loan agreements covering funds borrowed by the
Plan to finance the purchase of Employer Securities, will reduce
Participant General Investments Accounts in the same proportion that
Employer contributions are allocated under the provisions of Section
3.04(A)(1)(d) hereof. Unless required by law or herein, dividends paid
on Employer Securities held in the Unallocated Employer Securities
Account shall be allocated in accordance with Section
3.04(A)(1)(d)(iii) hereof. For purposes of determining payments on
installment purchase contracts and loan obligations of the Plan, each
such installment purchase contract and/or loan obligation shall provide
for payment of principal and interest substantially in accordance with
the following: All income ("specified income") allocable to the
Unallocated Employer Securities Account and Unallocated General
Investments Account that is attributable to collateral for the
obligation or attributable to Employer contributions made in order to
meet the Plan's obligation under such a loan shall be used, before any
Employer contributions are so used, to pay principal amounts due under
such installment purchase contracts or loan obligations; Employer
contributions shall be first applied to repay interest under
installment purchase contracts or loan obligations with any excess used
to fund current principal requirements not otherwise funded by the
specified income; if the specified income of the Unallocated Employer
Securities Account and Unallocated General Investments Account is not
sufficient to pay principal due under the installment purchase contract
or loan obligation, then Employer contributions shall be used to fund
the difference; if the specified income exceeds the amount necessary to
pay principal due on installment purchase contracts and loan
obligations for the Plan Year, then such excess amount shall be first
used to pay interest currently due with respect to the installment
purchase contracts or loan obligations and any remaining amount of
income may, at the direction of the ESOP Committee, be used to prepay
principal due on installment purchase contracts and loan obligations in
succeeding Plan Years.
(d) DIVIDENDS USED TO REPAY LOAN. If dividends on allocated shares are
to be used to repay an Exempt Loan (as defined in Section 1.32 hereof),
the following provisions shall apply:
(1) Employer Securities at least equal in value to the
dividends used to make loan payments shall be allocated to the Account
that would otherwise have received the dividend allocations; and
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(2) remaining released Employer Securities shall be allocated
as a contribution pursuant to Section 3.04(A)(1)(d)(iii) hereof.
If dividends on allocated shares and unallocated shares are
not used to repay an Exempt Loan (as defined in Section 1.32 hereof),
such dividends shall be allocated to the Participant's General
Investments Account and Participants Unallocated General Investments
Account pursuant to Section 3.04(A)(1)(d)(i) or (ii) hereof as income.
The ESOP Committee shall direct the Trustee to distribute the cash to
the Participants (and Beneficiaries) within ninety (90) days after the
close of the Plan Year in which the dividends have been paid to the
extent of each Participant's respective Nonforfeitable vesting
percentages determined as of the close of the Plan Year pursuant to
Section 5.03 hereof.
Sec. 3.06. ACCRUAL OF BENEFIT. The ESOP Committee will determine the
accrual of benefit (Employer contributions and Participant Forfeitures) on the
basis of the Plan Year.
(A) COMPENSATION TAKEN INTO ACCOUNT. In allocating an Employer contribution to a
Participant's Account, the ESOP Committee, except for purposes of determining
the top heavy minimum contribution under Section 3.04(B) hereof, will take into
account only the Compensation determined for the portion of the Plan Year in
which the Employee actually is a Participant.
(B) HOURS OF SERVICE REQUIREMENT. Subject to the top heavy minimum allocation
requirement of Section 3.04(B) hereof, the ESOP Committee will not allocate any
portion of an Employer contribution and Participant Forfeitures, if any, for a
Plan Year to any Participant's Account if the Participant does not complete a
minimum of one thousand (1,000) Hours of Service during the Plan Year, unless
the Participant terminates employment during the Plan Year because of death or
Disability or because of the attainment of Normal Retirement Age (in the current
Plan Year or in a prior Plan Year) or because of reaching his Early Retirement
Date (in the current Plan Year or in a prior Plan Year).
(C) EMPLOYMENT REQUIREMENT. If the conditions of Section 3.06(B) hereof are
satisfied and the Participant Separates from Service during a Plan Year, such
Participant will not share in the allocation of Employer contributions and
Participant Forfeitures, if any, for that Plan Year unless the Participant
Separates from Service because of death or Disability or because of the
attainment of Normal Retirement Age (in the current Plan Year or in a prior Plan
Year) or because of reaching his Early Retirement Date (in the current Plan Year
or in a prior Plan Year).
(D) SUSPENSION OF ACCRUAL REQUIREMENTS. The Plan suspends the allocation
requirements under Sections 3.06(B) and (C) hereof if the Plan fails to satisfy
the Participation Test (for Plan Years beginning before December 31, 1996) or
the Coverage Test. For Plan Years beginning before December 31, 1996, a Plan
satisfies the Participation Test if for the Plan Year, the number of
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Employees who benefit under the Plan is at least equal to the lesser of fifty
(50) or forty percent (40%) of the total number of Includible Employees (as
hereafter defined) for the Plan Year. A Plan satisfies the Coverage Test if,
for the Plan Year, the number of Non-highly Compensated Employees (as
hereafter defined) who benefit under the Plan is at least equal to seventy
percent (70%) of the total number of Includible Non-highly Compensated
Employees for the Plan Year. "Includible Employees" are all Employees other
than the following: (1) those Employees excluded from participating in the
Plan for the entire Plan Year by reason of the collective bargaining unit
exclusion or the nonresident alien exclusion described under the Code or by
reason of the eligibility requirements of Section 1.59 hereof; and (2) any
Employee who incurs a Separation from Service during the Plan Year and fails
to complete at least five hundred and one (501) Hours of Service for the Plan
Year. A "Non-highly Compensated Employee" is an Employee who is not a Highly
Compensated Employee and who, for Plan Years beginning before December 31,
1996, is not a family member aggregated with a Highly Compensated Employee
pursuant to Section 1.07 hereof. For purposes of the Participation Test (for
Plan Years beginning before December 31, 1996) and the Coverage Test, an
Employee is benefiting under the Plan for a Plan Year if, under Section 3.04
hereof, he is entitled to an allocation for the Plan Year.
If this Section 3.06(D) applies for a Plan Year, the ESOP Committee
will suspend the allocation requirements for the Includible Employees who are
Participants, beginning first with the Includible Employee(s) employed with the
Employer on the last day of the Plan Year, then the Includible Employee(s) who
have the latest Separation from Service during the Plan Year, and continuing to
suspend the accrual requirements for each Includible Employee who incurred an
earlier Separation from Service, from the latest to the earliest Separation from
Service date, until the Plan satisfies both the Participation Test (for Plan
Years beginning before December 31, 1996) and the Coverage Test for the Plan
Year. If two or more Includible Employees have a Separation from Service on the
same day, the ESOP Committee will suspend the accrual requirements for all such
Includible Employees, notwithstanding whether the Plan can satisfy the
Participation Test (for Plan Years beginning before December 31, 1996) and the
Coverage Test by accruing benefits for fewer than all such Includible Employees.
If the Plan suspends the accrual requirements for an Includible Employee, that
Employee will share in the allocation of Employer contributions and Participant
Forfeitures, if any, without regard to the number of Hours of Service he has
earned for the Plan Year and without regard to whether he is employed by the
Employer on the last day of the Plan Year.
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PART 2. LIMITATIONS ON ALLOCATIONS: SECTIONS 3.07 THROUGH 3.09
Sec. 3.07. LIMITATIONS ON ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. The
amount of Annual Additions (as defined in Section 3.08 hereof) which the ESOP
Committee may allocate under this Plan on a Participant's behalf for a
Limitation Year (as defined in Section 3.08 hereof) may not exceed the Maximum
Permissible Amount (as defined in Section 3.08 hereof). If the amount the
Employer otherwise would contribute to the Participant's Account would cause the
Annual Additions for the Limitation Year to exceed the Maximum Permissible
Amount, the Employer will reduce the amount of its contribution so the Annual
Additions for the Limitation Year will equal the Maximum Permissible Amount. If
an allocation of Employer contributions, pursuant to Section 3.04 hereof, would
result in an Excess Amount (as defined in Section 3.08 hereof) (other than an
Excess Amount resulting from the circumstances described in Section 3.07(B)
hereof) to the Participant's Account, the ESOP Committee will reallocate the
Excess Amount to the remaining Participants who are eligible for an allocation
of Employer contributions for the Plan Year in which the Limitation Year ends.
The ESOP Committee will make this reallocation on the basis of the allocation
method under the Plan as if the Participant whose Account otherwise would
receive the Excess Amount is not eligible for an allocation of Employer
contributions. If the amount the Employer otherwise would contribute to the
Participant's Account will still cause the Annual Additionals for the Limitation
Year to exceed the Maximum Permissible Amount, the ESOP Committee will dispose
of such excess amount in accordance with Section 3.07(B) hereof.
(A) ESTIMATION OF COMPENSATION. Prior to the determination of the Participant's
actual Compensation for a Limitation Year, the ESOP Committee may determine the
Maximum Permissible Amount on the basis of the Participant's estimated annual
Compensation for such Limitation Year. The ESOP Committee must make this
determination on a reasonable and uniform basis for all Participants similarly
situated. The ESOP Committee must reduce any Employer contributions (including
any allocation of Participant Forfeitures) based on estimated annual
Compensation by any Excess Amounts carried over from prior years. As soon as is
administratively feasible after the end of the Limitation Year, the ESOP
Committee will determine the Maximum Permissible Amount for such Limitation Year
on the basis of the Participant's actual Compensation for such Limitation Year.
(B) DISPOSITION OF EXCESS AMOUNT. If, pursuant to Sections 3.07 and 3.07(A)
above, or because of the allocation of Participant Forfeitures, there is an
Excess Amount with respect to a Participant for a Limitation Year, the ESOP
Committee will dispose of such Excess Amount as follows:
(1) The ESOP Committee will return any nondeductible voluntary Employee
contributions, if any, to the Participant to the extent that the return
would reduce the Excess Amount.
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(2) If, after the application of paragraph (1), an Excess Amount still
exists, and the Plan covers the Participant at the end of the
Limitation Year, then the ESOP Committee will use the Excess Amount(s)
to reduce future Employer contributions (including any allocation of
Participant Forfeitures) under the Plan for the next Limitation Year
and for each succeeding Limitation Year, as is necessary, for the
Participant. The Participant may elect to limit his Compensation for
allocation purposes to the extent necessary to reduce his allocation
for the Limitation Year to the Maximum Permissible Amount and eliminate
the Excess Amount.
(3) If, after the application of paragraph (1), an Excess Amount still
exists, and the Plan does not cover the Participant at the end of the
Limitation Year, then the ESOP Committee will hold the Excess Amount
unallocated in a suspense account. The ESOP Committee will apply the
suspense account to reduce Employer contributions (including allocation
of Participant Forfeitures) for all remaining Participants in the next
Limitation Year, and in each succeeding Limitation Year if necessary.
(4) The ESOP Committee will not distribute any Excess Amount(s) to
Participants or to Former Participants.
(C) MORE THAN ONE PLAN. The Employer may contribute under another defined
contribution plan in addition to its contributions under this Plan. If the ESOP
Committee allocated an Excess Amount to a Participant's Account on an allocation
date of this Plan which coincides with an allocation of the other defined
contribution plan, the ESOP Committee will attribute the total Excess Amount
allocated as of such date to any other qualified plan maintained by the Employer
unless the ESOP Committee determines otherwise or applicable law prohibits such
allocation to the other qualified plan maintained by the Employer.
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Sec. 3.08. DEFINITIONS - ARTICLE III. For purposes of this Part 2 of
Article III, the following terms mean:
(a) "Annual Addition" - The sum of the following amounts allocated on
behalf of a Participant for a Limitation Year: (i) all Employer
contributions; (ii) all Participant Forfeitures; and (iii) all Employee
contributions. For purposes of the preceding sentence, the amount of
Employer contributions shall be determined based upon the lesser of (i)
the fair market value of Employer Securities contributed to the Plan
(determined at the time of contribution); or (ii) the amount of cash
contributed to the Plan. Except to the extent provided in Treasury
regulations, Annual Additions include excess contributions described in
Code Section 401(k), excess aggregate contributions described in Code
Section 401(m) regardless of whether the Plan distributes or forfeits
such excess amounts. Excess deferrals under Code Section 402(g) are not
Annual Additions unless distributed after the correction period
described in Code Section 402(g). Annual Additions also include Excess
Amounts reapplied to reduce Employer contributions under Section 3.07
hereof. Amounts allocated after March 31, 1984, to an individual
medical account (as defined in Code Section 415(l)(2)) included as part
of a defined benefit plan maintained by the Employer are Annual
Additions. Furthermore, Annual Additions include contributions paid or
accrued after December 31, 1985, for taxable years ending after
December 31, 1985, attributable to post-retirement medical benefits
allocated to the separate account of a key employee (as defined in Code
Section 419A(d)(3)) under a welfare benefit fund (as defined in Code
Section 419(e)) maintained by the Employer, but only for purposes of
the dollar limitation applicable to the Maximum Permissible Amount.
Notwithstanding any provision herein, "Annual Additions" do
not include any Employer contributions applied by the ESOP Committee
(not later than the due date, including extensions, for filing the
Employer's federal income tax return for that Plan Year) to pay
interest on an Exempt Loan, and any leveraged Employer Securities the
ESOP Committee allocates as Forfeitures; provided, however, the
provisions of this sentence do not apply in a Plan Year for which the
ESOP Committee allocated more than one-third (1/3) of the Employer
contributions applied to pay principal and interest on an Exempt Loan
to Restricted Participants (as defined below). The ESOP Committee may
reallocate the Employer contributions in accordance with Section 3.04
hereof to the Accounts of non-Restricted Participants to the extent
necessary in order to satisfy this special limitation. For purposes of
this Section 3.08, "Restricted Participants" means Participants who are
Highly Compensated Employees within the meaning of Code Section 414(q).
(b) For Plan Years beginning before December 31, 1997, "Compensation"
means for purposes of applying the limitations of Part 2 of this
Article III, "Compensation" as determined under the general definition
of Compensation in Section 1.10(A) hereof that excludes Elective
Contributions (as defined in Section 1.78 hereof) and excludes (1)
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reimbursements or other expense allowances, (2) P.S. 58 costs, (3)
fringe benefits (cash or non-cash), (4) moving expenses, and (5)
deferred compensation and welfare benefits. For Plan Years beginning
after December 31, 1997, "Compensation" means for purposes of applying
the limitations of Part 2 of this Article III, "Compensation" as
determined under the general definition of Compensation in Section
1.10(A) hereof that includes Elective Contributions (as defined in
Section 1.78 hereof) and excludes (1) reimbursements or other expense
allowances, (2) P.S. 58 costs, (3) fringe benefits (cash or non-cash),
(4) moving expenses, and (5) deferred compensation and welfare
benefits.
(c) "Maximum Permissible Amount" means the lesser of (i) Thirty
Thousand Dollars ($30,000) or (ii) twenty-five percent (25%) of the
Participant's Compensation for the Limitation Year. If there is a short
Limitation Year because of a change in Limitation Year, the ESOP
Committee will multiply the Thirty Thousand Dollars ($30,000) (or
adjusted limitation) by the following fraction:
Number of months in the short Limitation Year
----------------------------------------------
12
(d) "Employer" means the Employer that adopts this Plan and any Related
Employer described in Section 1.27 hereof. Solely for purposes of
applying the limitations of Part 2 of this Article III, the ESOP
Committee will determine Related Employers described in Section 1.27
hereof by modifying Code Sections 414(b) and (c) in accordance with
Code Section 415(h).
(e) "Excess Amount" means the excess of the Participant's Annual
Additions for the Limitation Year over the Maximum Permissible Amount.
(f) "Limitation Year" means the Plan Year. If the Employer amends the
Limitation Year to a different twelve (12) consecutive month period,
the new Limitation Year must begin on a date within the Limitation Year
for which the Employer makes the amendment, creating a short Limitation
Year.
(g) "Defined contribution plan" means a retirement plan which provides
for an individual account for each participant and for benefits based
solely on the amount contributed to the participant's account, and any
income, expenses, gains and losses, and any forfeitures of accounts of
other participants which the plan may allocate to such participant's
account. The ESOP Committee must treat all defined contribution plans
(whether or not terminated) maintained by the Employer as a single
plan. Solely for purposes of the limitations of Part 2 of this Article
III, the ESOP Committee will treat employee contributions made to a
defined benefit plan maintained by the Employer as a separate defined
contribution plan. The ESOP Committee also will treat as a defined
contribution plan an individual medical
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account (as defined in Code Section 415(l)(2)) included as part of a
defined benefit plan maintained by the Employer and a welfare
benefit fund under Code Section 419(e) maintained by the Employer to
the extent there are post-retirement medical benefits allocated to
the separate account of a key employee (as defined in Code Section
419A(d)(3)).
(h) "Defined benefit plan" means a retirement plan which does not
provide for individual accounts for Employer contributions. The ESOP
Committee must treat all defined benefit plans (whether or not
terminated) maintained by the Employer as a single plan.
(i) "Defined benefit plan fraction" -
Projected annual benefit of the
Participant under the defined benefit plan(s)
--------------------------------------------------------
The lesser of (i) 125% (subject to the "100% limitation"
in paragraph (k)) of the dollar limitation in effect
under Code Section 415(b)(1)(A) for the Limitation
Year, or (ii) 140% of the Participant's average
Compensation for his high 3 consecutive Years of
Service
To determine the denominator of this fraction, the ESOP
Committee will make any adjustment required under Code Section 415(b)
and will determine a Year of Service as a Plan Year in which the
Employee completed at least one thousand (1,000) Hours of Service. The
"projected annual benefit" is the annual retirement benefit (adjusted
to an actuarially equivalent straight life annuity if the plan
expresses such benefit in a form other than a straight life annuity or
qualified joint and survivor annuity) of the Participant under the
terms of the defined benefit plan on the assumptions he continues
employment until his normal retirement age (or current age, if later)
as stated in the defined benefit plan, his compensation continues at
the same rate as in effect in the Limitation Year under consideration
until the date of his normal retirement age and all other relevant
factors used to determine benefits under the defined benefit plan
remain constant as of the current Limitation Year for all future
Limitation Years.
CURRENT ACCRUED BENEFIT. If the Participant accrued benefits
in one or more defined benefit plans maintained by the Employer which
were in existence on May 5, 1986, the dollar limitation used in the
denominator of this fraction will not be less than the Participant's
Current Accrued Benefit. A Participant's "Current Accrued Benefit" is
the sum of the annual benefits under such defined benefit plans which
the Participant had accrued as of the end of the 1986 Limitation Year
(the last Limitation Year beginning before January 1, 1987), determined
without regard to any change in the terms or conditions of the Plan
made after May 5,
40.
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1986, and without regard to any cost of living adjustment occurring
after May 5, 1986. This Current Accrued Benefit rule applies only if
the defined benefit plans individually and in the aggregate
satisfied the requirements of Code Section 415 as in effect at the
end of the 1986 Limitation Year.
(j) "Defined contribution plan fraction" -
The sum, as of the close of the Limitation Year, of
the Annual Additions to the Participant's Account under the
defined contribution plan(s)
-----------------------------------------------------------
The sum of the lesser of the following amounts determined for
the Limitation Year and for each prior Year of Service with
the Employer: (i) 125% (subject to the
"100% limitation" in paragraph (k)) of the dollar limitation
in effect under Code Section 415(c)(1)(A) for the Limitation
Year (determined without regard to the special dollar
limitations for employee stock ownership plans), or (ii) 35%
of the Participant's Compensation for the
Limitation Year
For purposes of determining the defined contribution plan
fraction, the ESOP Committee will not recompute Annual Additions in
Limitation Years beginning prior to January 1, 1987, to treat all
Employee contributions as Annual Additions. If the Plan satisfied Code
Section 415 for Limitation Years beginning prior to January 1, 1987,
the ESOP Committee will redetermine the defined contribution plan
fraction and the defined benefit plan fraction as of the end of the
1986 Limitation Year, in accordance with this Section 3.08. If the sum
of the redetermined fractions exceeds 1.0, the ESOP Committee will
subtract permanently from the numerator of the defined contribution
plan fraction an amount equal to the product of (1) the excess of the
sum of the fractions over 1.0, times (2) the denominator of the defined
contribution plan fraction. In making the adjustment, the ESOP
Committee must disregard any accrued benefit under the defined benefit
plan which is in excess of the Current Accrued Benefit. This Plan
continues any transitional rules applicable to the determination of the
defined contribution plan fraction under the Employer's Plan as of the
end of the 1986 Limitation Year.
(k) "100% limitation" - If the 100% limitation applies, the ESOP
Committee must determine the denominator of the defined benefit plan
fraction and the denominator of the defined contribution plan fraction
by substituting 100% for 125%. The 100% limitation applies only if: (i)
the Plan's top heavy ratio exceeds 90%; or (ii) the Plan's top heavy
ratio is greater than 60%, and the Employer does not provide extra
minimum benefits which satisfy Code Section 416(h)(2).
41.
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Sec. 3.09. TRANSACTIONS INVOLVING EMPLOYER SECURITIES.
(a) No portion of the Plan attributable to (or allocable in lieu of)
Employer Securities acquired by the Plan in a sale to which Code
Section 1042 applies may accrue or be allocated directly or indirectly
under any plan maintained by the Employer meeting the requirements of
Code Section 401(a):
(1) during the "Non-allocation Period" (as defined in Section
3.09(d) below), for the benefit of:
(i) any taxpayer who makes an election under Code
Section 1042(a) with respect to Employer Securities,
(ii) any individual who is related to the taxpayer
(within the meaning of Code Section 267(b)), or
(2) for the benefit of any other person who owns (after
application of Code Section 318(a)) more than twenty-five
percent (25%) of:
(i) any class of outstanding stock of the Employer
which issued such Employer Securities or of any
corporation which is a member of the same controlled
group of corporations (as defined in Section 1.27
hereof), or
(ii) the total value of any class of outstanding
stock of any such corporation.
(b) Subparagraph (a)(1)(ii) above shall not apply to lineal descendants
of the taxpayer, provided that, the aggregate amount allocated to the
benefit of all such lineal descendants during the "Non-allocation
Period" does not exceed more than five percent (5%) of the Employer
Securities (or amounts allocated in lieu thereof) held by the Plan
which are attributable to a sale to the Plan by any person related to
such descendants (within the meaning of Code Section 267(c)(4)) in a
transaction to which Code Section 1042 applied.
(c) A person shall be treated as failing to meet the stock ownership
limitation under paragraph (a)(2) above if such person fails such
limitation:
(1) at any time during the one (1) year period ending on the
date of sale of Employer Securities to the Plan, or
(2) on the date as of which Employer Securities are
allocated to Participants in the Plan.
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(d) For purposes of this Section 3.09, "Non-allocation Period" means
the ten (10) year period beginning on the date of the sale of the
Employer Securities and ending on the later of:
(1) the date which is ten (10) years after the sale of the
Employer Securities, or
(2) the date of the Plan allocation attributable to the final
payment of the acquisition indebtedness incurred in connection
with such sale.
END OF ARTICLE III
43.
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ARTICLE IV
PARTICIPANT CONTRIBUTIONS
Sec. 4.01. PARTICIPANT VOLUNTARY CONTRIBUTIONS. The Plan does not
permit (or require) Participant voluntary contributions.
Sec. 4.02. PARTICIPANT VOLUNTARY CONTRIBUTIONS - SPECIAL DISCRIMINATION
TEST. The ESOP Committee, in accordance with Section 4.01 above, is not required
to satisfy a special discrimination test under Code Section 401(m).
Sec. 4.03. PARTICIPANT ROLLOVER CONTRIBUTIONS. The Plan does not permit
Participants to make Rollover Contributions to this Plan. The ESOP Committee,
therefore, is not required to maintain a Rollover Account under the Plan.
END OF ARTICLE IV
44.
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ARTICLE V
TERMINATION OF SERVICE - PARTICIPANT VESTING
Sec. 5.01. NORMAL RETIREMENT AGE. A Participant's Normal Retirement Age
is sixty-five (65) years of age. A Participant's Early Retirement Date is the
date on which a Participant attains age sixty (60) or the fifth (5th)
anniversary of the date the Participant commenced participation in the Plan,
whichever is later. Under Section 6.08 hereof, a Participant who remains in the
employ of the Employer after attaining Normal Retirement Age (or Early
Retirement Date) shall continue to participate in the Plan until his Late
Retirement Date. A Participant's Accrued Benefit derived from Employer
contributions is one hundred percent (100%) Nonforfeitable upon and after his
attaining Normal Retirement Age or Early Retirement Date (if employed by the
Employer on or after such date).
Sec. 5.02. PARTICIPANT DISABILITY OR DEATH. If a Participant's
employment with the Employer terminates as a result of death or Disability, the
Participant's Accrued Benefit derived from Employer contributions will be one
hundred percent (100%) Nonforfeitable.
Sec. 5.03. VESTING SCHEDULE.
(A) VESTING SCHEDULE. Except as provided in Sections 5.01, 5.02 and
9.14 hereof, for each Year of Service a Participant's Nonforfeitable percentage
of his Accrued Benefit derived from Employer contributions and Participant
Forfeitures equals the percentage in the following vesting schedule:
<TABLE>
<CAPTION>
Percent of
Years of Service Nonforfeitable
With the Employer Accrued Benefit
----------------- ----------------
<S> <C>
Less than 3 Years.....................................................None
3 Years, but less than 4...............................................20%
4 Years, but less than 5...............................................40%
5 Years, but less than 6...............................................60%
6 Years, but less than 7...............................................80%
7 Years or More........................................................100%
</TABLE>
With respect to any Plan Year for which the Plan is a top heavy Plan,
the ESOP Committee will calculate a Participant's Nonforfeitable percentage of
his Accrued Benefit under the following vesting schedule until such time as the
Plan is no longer deemed to be top heavy:
45.
<PAGE>
<TABLE>
<CAPTION>
Percent of
Years of Service Nonforfeitable
With the Employer Accrued Benefit
- ------------------ ----------------
<S> <C>
Less than 2 Years......................................................None
2 Years, but less than 3.................................................20%
3 Years, but less than 4.................................................40%
4 Years, but less than 5.................................................60%
5 Years, but less than 6.................................................80%
6 Years or More.........................................................100%
</TABLE>
The ESOP Committee will apply the top heavy vesting schedule to
Participants who are credited with at least one (1) Hour of Service after the
top heavy vesting schedule becomes effective. A shift between vesting schedules
under this Section 5.03 is an amendment to the vesting schedule, and the ESOP
Committee must apply the rules of Section 7.04 hereof accordingly. A shift to a
new vesting schedule under this Section 5.03 is effective on the first day of
the Plan Year for which the top heavy status of the Plan changes.
With respect to any Plan Year, if this Plan ceases to be a top heavy
Plan, the vested percentage of a Participant's Account that was Nonforfeitable
before the Plan ceased to be top heavy will remain Nonforfeitable, and any
Employee who was a Participant during the Plan Year the Plan was top heavy and
who had three (3) or more Years of Service (including any Years of Service not
yet taken into account under the Plan) will automatically remain under the top
heavy vesting schedule.
(B) SPECIAL VESTING FORMULA. If a distribution (other than a cash-out
distribution described in Section 5.04 hereof) is made to a partially-vested
Participant, and the Participant has not incurred a Forfeiture Break in Service
(as defined in Section 5.08(B) hereof) at the relevant time, the ESOP Committee
will establish a separate Account for the Participant's Accrued Benefit. At any
relevant time following the distribution, the ESOP Committee will determine the
Participant's Nonforfeitable Accrued Benefit derived from Employer contributions
in accordance with the following formula: P(AB + (R x D)) - (R x D).
To apply this formula, "P" is the Participant's current vesting
percentage at the relevant time, "AB" is the Participant's Employer-derived
Accrued Benefit at the relevant time, "R" is the ratio of "AB" to the
Participant's Employer-derived Accrued Benefit immediately following the earlier
distribution and "D" is the amount of the earlier distribution. If, under a
restated Plan, the Plan has made distribution to a partially-vested Participant
prior to its restated effective date and is unable to apply the cash-out
provisions of Section 5.04 hereof to that prior distribution, this special
vesting formula also applies to that Participant's remaining Account.
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Sec. 5.04. CASH-OUT DISTRIBUTIONS TO PARTIALLY-VESTED PARTICIPANTS AND
RESTORATION OF FORFEITED ACCRUED BENEFIT. If, pursuant to Article VI hereof, a
partially-vested Participant receives a cash-out distribution before he incurs a
Forfeiture Break in Service (as defined in Section 5.08(B) hereof), the cash-out
distribution will result in an immediate Forfeiture of the non-vested portion of
the Participant's Accrued Benefit derived from Employer contributions. A
partially-vested Participant is a Participant whose Nonforfeitable percentage
determined under Section 5.03 hereof is less than one hundred percent (100%). A
cash-out distribution is a distribution of the entire present value of the
Participant's Nonforfeitable Accrued Benefit.
(A) RESTORATION AND CONDITIONS UPON RESTORATION. A partially-vested
Participant who is re-employed by the Employer after receiving a cash-out
distribution of the Nonforfeitable percentage of his Accrued Benefit may repay
the amount of the cash-out distribution attributable to Employer contributions,
unless the Participant no longer has a right to restoration by reason of the
conditions of this Section 5.04(A). If a partially-vested Participant makes the
cash-out distribution repayment, the ESOP Committee, subject to the conditions
of this Section 5.04(A), must restore his Accrued Benefit attributable to
Employer contributions to the same dollar amount as the dollar amount of his
Accrued Benefit on the Accounting Date, or other Valuation Date, immediately
preceding the date of the cash-out distribution, unadjusted for any gains or
losses occurring subsequent to that Accounting Date, or other Valuation Date.
Restoration of the Participant's Accrued Benefit includes restoration of all
Code Section 411(d)(6) protected benefits with respect to that restored Accrued
Benefit, in accordance with applicable Treasury Regulations. The ESOP Committee
will not restore a re-employed Participant's Accrued Benefit under this
paragraph if:
(1) Five (5) years have elapsed since the Participant's first
re-employment date with the Employer following the cash-out
distribution; or
(2) The Participant incurred a Forfeiture Break in Service (as defined
in Section 5.08(B) hereof). This condition also applies if the
Participant makes repayment within the Plan Year in which he incurs the
Forfeiture Break in Service and that Forfeiture Break in Service would
result in a complete Forfeiture of the amount the ESOP Committee
otherwise would restore.
(B) TIME AND METHOD OF RESTORATION. If neither of the two conditions
preventing restoration of the Participant's Accrued Benefit applies, the ESOP
Committee will restore the Participant's Accrued Benefit as of the Plan Year
Accounting Date coincident with or immediately following the repayment. To
restore the Participant's Accrued Benefit, the ESOP Committee, to the extent
necessary, will allocate to the Participant's Account:
(1) First, the amount, if any, of Participant Forfeitures the ESOP
Committee would otherwise allocate under Section 3.04 hereof;
47.
<PAGE>
(2) Second, the amount, if any, of the Trust Fund net income or gain
for the Plan Year; and
(3) Third, the Employer contribution for the Plan Year to the extent
made under a discretionary formula.
To the extent the amounts described in clauses (1), (2) and (3) above
are insufficient to enable the ESOP Committee to make the required restoration,
the Employer must contribute, without regard to any requirement or condition of
Section 3.01 hereof, the additional amount necessary to enable the ESOP
Committee to make the required restoration. If, for a particular Plan Year, the
ESOP Committee must restore the Accrued Benefit of more than one re-employed
Participant, then the ESOP Committee will make the restoration allocation(s) to
each such Participant's Account in the same proportion that a Participant's
restored amount for the Plan Year bears to the restored amount for the Plan Year
of all re-employed Participants. The ESOP Committee will not take into account
the allocation under this Section 5.04 in applying the limitation on allocations
under Part 2 of Article III hereof.
(C) ZERO PERCENT VESTED PARTICIPANT. The deemed cash-out rule applies to a
zero percent (0%) vested Participant. A zero percent (0%) vested Participant is
a Participant whose Accrued Benefit derived from Employer contributions is
entirely Forfeitable at the time of his Separation from Service. If the
Participant's Account is not entitled to an allocation of Employer contributions
or Participant Forfeitures for the Plan Year in which he has a Separation from
Service, the ESOP Committee will apply the deemed cash-out rule as if the zero
percent (0%) vested Participant received a cash-out distribution on the date of
the Participant's Separation from Service. If the Participant's Account is
entitled to an allocation of Employer contributions or Participant Forfeitures
for the Plan Year in which he has a Separation from Service, the ESOP Committee
will apply the deemed cash-out rule as if the zero percent (0%) vested
Participant received a cash-out distribution on the first day of the first Plan
Year beginning after his Separation from Service. For purposes of applying the
restoration provisions of this Section 5.04, the ESOP Committee will treat the
zero percent (0%) vested Participant as repaying his cash-out "distribution" on
the first date of his re-employment with the Employer.
Sec. 5.05. SEGREGATED ACCOUNT FOR REPAID AMOUNT. Until the ESOP
Committee restores the Participant's Accrued Benefit, as described in Section
5.04, the cash-out amount the Participant has repaid will be held in a
Segregated Account maintained solely for that Participant. The amount in the
Participant's Segregated Account must be invested in federally insured interest
bearing savings account(s) or time deposit(s) (or a combination of both), or in
other fixed income investments. Until commingled with the balance of the Trust
Fund on the date the ESOP Committee restores the Participant's Accrued Benefit,
the Participant's Segregated Account remains a part of the Plan, but it alone
shares in any income it earns and it alone bears any expense or loss it incurs.
The ESOP Committee will direct the Trustee to repay to the Participant as soon
as
48.
<PAGE>
is administratively practicable the full amount of the Participant's
Segregated Account if the ESOP Committee determines either of the conditions
of Section 5.04(A) prevents restoration as of the applicable Accounting Date,
notwithstanding the Participant's repayment. The ESOP Committee will direct
the Trustee to commingle the Participant's Segregated Account with the
balance of the Trust Fund as of the second Accounting Date immediately
following the date of the Participant's repayment.
Sec. 5.06. YEAR OF SERVICE - VESTING. For purposes of vesting under
Section 5.03 hereof, Year of Service means any Plan Year during which an
Employee completes not less than one thousand (1,000) Hours of Service with the
Employer.
Sec. 5.07. BREAK IN SERVICE - VESTING. For purposes of this Article V,
a Participant incurs a "Break in Service" if during any Plan Year he does not
complete more than five hundred (500) Hours of Service with the Employer, unless
he does not complete more than five hundred (500) Hours of Service because: (a)
he is transferred; (b) he is on an approved leave of absence which does not
exceed eighteen (18) months and he returns to employment with the Employer
immediately following the leave of absence; (c) he is temporarily laid off, and
he returns to employment with the Employer immediately following the temporary
layoff; or (d) he is in the service of the armed forces of the United States,
and he returns to employment with the Employer within ninety (90) days after
termination of military service without being employed somewhere else. Solely
for the purpose of determining whether an Employee has incurred a Break in
Service, if the Employee is absent from Service because of her pregnancy, the
birth of her child, his or her receipt of a child through adoption, or his or
her caring for the child immediately after birth or adoption, he or she shall be
entitled to the Hours of Service that he or she would have received but for that
absence for one (1) year after the absence began. Eight (8) Hours of Service
shall be credited for each day of such absence. However, no more than a total of
five hundred one (501) hours can be credited. The five hundred one (501) hours
shall be credited to the Plan Year in which the absence first begins if such
hours shall prevent a Break in Service in that period; otherwise, the five
hundred one (501) hours shall be credited to the next Plan Year.
Sec. 5.08. INCLUDED YEARS OF SERVICE - VESTING.
(A) INCLUDED YEARS OF SERVICE. For purposes of determining "Years of
Service" under Section 5.06 hereof, the Plan takes into account all Years of
Service an Employee completes with the Employer, except:
(1) Any Year of Service before a Break in Service if the number of
consecutive Breaks in Service equals or exceeds the greater of five (5)
or the aggregate number of Years of Service prior to the Break. This
exception applies only if the Participant is not vested in his Accrued
Benefit derived from Employer contributions at the time he has a Break
in Service. The aggregate number of Years of Service before a Break in
Service does not include any
49.
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Years of Service not required to be taken into account under this
exception by reason of any prior Break in Service.
(2) Any Year of Service earned prior to the Effective Date of the Plan.
(B) FORFEITURE BREAK IN SERVICE. For the sole purpose of determining a
Participant's Nonforfeitable percentage of his Accrued Benefit derived from
Employer contributions which accrued for his benefit prior to a Forfeiture Break
in Service, the Plan disregards any Year of Service after the Participant first
incurs a Forfeiture Break in Service. The Participant incurs a Forfeiture Break
in Service when he incurs five (5) consecutive Breaks in Service.
Sec. 5.09. FORFEITURE OCCURS. A Participant's Forfeiture, if any, of
his Accrued Benefit derived from Employer contributions occurs under the Plan as
of the last day of the Plan Year in which the Participant first incurs a
Forfeiture Break in Service; or the date the Participant receives a cash-out
distribution. The ESOP Committee determines the percentage of a Participant's
Accrued Benefit Forfeiture, if any, under this Section 5.09 solely by reference
to the vesting schedule of Section 5.03 hereof. A Participant will not forfeit
any portion of his Accrued Benefit for any other reason or cause except as
expressly provided by this Section 5.09 or as provided under Section 9.14
hereof.
END OF ARTICLE V
50.
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ARTICLE VI
TIME AND METHOD OF PAYMENT OF BENEFITS
Sec. 6.01. TIME OF PAYMENT OF ACCRUED BENEFIT. Unless, pursuant to
Sections 6.03 hereof, the Participant or the Beneficiary elects in writing to a
different time or method of payment, the ESOP Committee will direct the Trustee
to commence distribution of a Participant's Nonforfeitable Accrued Benefit in
accordance with this Section 6.01. A Participant must consent, in writing, to
any distribution required under this Section 6.01 if the present value of the
Participant's Nonforfeitable Accrued Benefit at the time of the distribution to
the Participant exceeds, or at the time of any prior distribution exceeded,
Three Thousand Five Hundred Dollars ($3,500) and the Participant has not
attained the later of Normal Retirement Age or age sixty-two (62). The
Participant's spouse also must consent, in writing, to any distribution. A
distribution date under this Article VI, unless otherwise specified within the
Plan, is October 1 of each Plan Year or as soon as administratively practicable
following a distribution date. For purposes of the consent requirements under
this Article VI, if the present value of the Participant's Nonforfeitable
Accrued Benefit, at the time of any distribution exceeds, or at the time of any
prior distribution exceeded, Three Thousand Five Hundred Dollars ($3,500), the
ESOP Committee must treat that present value as exceeding Three Thousand Five
Hundred Dollars ($3,500) for purposes of all subsequent Plan distributions to
the Participant. For purposes of applying this Section 6.01, a Participant's
Account shall not include any Employer Securities acquired with the proceeds of
an Exempt Loan hereof until the close of the Plan Year in which the loan is
repaid in full subject to the minimum distribution requirements of Section
401(a)(9) of the Code, death, or Disability of a Participant, or the Participant
reaching Normal Retirement Age or his Early Retirement Date.
(A) SEPARATION FROM SERVICE FOR A REASON OTHER THAN DEATH.
(1) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT NOT EXCEEDING $3,500.
If the Participant's Nonforfeitable Accrued Benefit does not exceed Three
Thousand Five Hundred Dollars ($3,500) and if the Participant's Separation from
Service is for any reason other than death or Disability, the ESOP Committee
will direct the Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit in a lump sum as soon as possible following the close of the Plan Year
in which the Participant incurs a one (1) year break in Service. Notwithstanding
anything to the contrary in this Paragraph for distributions made after December
31, 1992, the Participant may elect to have his Nonforfeitable Accrued Benefit
distributed, in whole or in part, directly to an Eligible Retirement Plan
specified by the Participant in a Direct Rollover and at the time and in the
manner prescribed by the ESOP Committee; provided, however, the Direct Rollover
portion of the distribution qualifies as an Eligible Rollover Distribution.
(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS $3,500. If the
Participant's Nonforfeitable Accrued Benefit Exceeds Three Thousand Five Hundred
Dollars ($3,500) and if the Participant's Separation from Service is for any
reason other than death or Disability, the ESOP
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Committee will direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a form and at the time elected by the
Participant, pursuant to Section 6.03 hereof.
(3) DISABILITY. If the Participant's Separation from Service is because
of Disability, the ESOP Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in a form and at the time elected
by the Participant, pursuant to Section 6.03 hereof. In the absence of an
election by the Participant, the ESOP Committee will direct the Trustee to
commence distribution of the Participant's Nonforfeitable Accrued Benefit in a
lump sum on the sixtieth (60) day following the close of the Plan Year in which
the Participant's Separation from Service occurs, subject to the notice and
consent requirements of this Article VI and to the applicable mandatory
commencement dates described in Paragraph (1) or in Paragraph (2) of this
Section 6.01(A).
(B) REQUIRED BEGINNING DATE. If any distribution commencement date described
under Paragraph (A) of this Section 6.01, either by Plan provision or by
Participant election (or nonelection), is later than the Participant's Required
Beginning Date, the ESOP Committee instead must direct the Trustee to make
distribution on the Participant's Required Beginning Date. For Plan Years
beginning after December 31, 1996, the Required Beginning Date of a Participant
(other than a more than five percent (5%) owner) is the April 1 of the calendar
year following the later of: (i) the year in which the Participant attains age
seventy and one-half (70 1/2) or (ii) the calendar year in which occurs the
Retirement of the Participant. For Plan Years beginning before December 31, 1996
(and for Plan Years beginning after December 31, 1996, in the case of a more
than five percent (5%) owner), a Participant's Required Beginning Date is April
1 following the close of the calendar year in which the Participant attains age
seventy and one-half (70 1/2). However, if the Participant, prior to incurring a
Separation from Service, attained age seventy and one-half (70 1/2) by January
1, 1988, and, for the five (5) Plan Year period ending in the calendar year in
which he attained age seventy and one-half (70 1/2) and for all subsequent
years, the Participant was not a more than five percent (5%) owner, the Required
Beginning Date is the April 1 following the close of the calendar year in which
the Participant Separates from Service or, if earlier, the April 1 following the
close of the calendar year in which the Participant becomes a more than five
percent (5%) owner. Furthermore, if a Participant who was not a more than five
percent (5%) owner attained age seventy and one-half (70 1/2) during 1988 and
did not incur a Separation from Service prior to January 1, 1989, his Required
Beginning Date is April 1, 1990. A mandatory distribution at the Participant's
Required Beginning Date will be in lump sum unless the Participant, pursuant to
the provisions of this Article VI, makes a valid election to receive an
alternative form of payment.
(C) DEATH OF THE PARTICIPANT. The ESOP Committee will direct the Trustee, in
accordance with this Section 6.01(C), to distribute to the Participant's
Beneficiary the Participant's Nonforfeitable Accrued Benefit remaining in the
Trust at the time of the Participant's death. The ESOP Committee will determine
the death benefit by reducing the Participant's Nonforfeitable Accrued Benefit
by any security interest the Plan has against that Nonforfeitable Accrued
Benefit by reason of an outstanding Participant loan.
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(1) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT DOES NOT
EXCEED $3,500. If the deceased Participant's Nonforfeitable Accrued
Benefit does not exceed Three Thousand Five Hundred Dollars ($3,500),
the ESOP Committee must direct the Trustee to distribute the deceased
Participant's Nonforfeitable Accrued Benefit in a lump sum not later
than one (1) year following the Participant's death or, if later, the
date on which the ESOP Committee receives notification of or otherwise
confirms the Participant's death. Notwithstanding anything to the
contrary in this Paragraph for distributions made after December 31,
1992, the Participant's Beneficiary may elect to have his
Nonforfeitable Accrued Benefit distributed, in whole or in part,
directly to an Eligible Retirement Plan specified by the Participant's
Beneficiary in a Direct Rollover and at the time and in the manner
prescribed by the ESOP Committee; provided, however, the Direct
Rollover portion of the distribution qualifies as an Eligible Rollover
Distribution.
(2) DECEASED PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT EXCEEDS
$3,500. If the deceased Participant's Nonforfeitable Accrued Benefit
exceeds Three Thousand Five Hundred Dollars ($3,500), the ESOP
Committee will direct the Trustee to distribute the deceased
Participant's Nonforfeitable Accrued Benefit at the time and in the
form elected by the Participant or, if applicable, by the Beneficiary,
as permitted under this Article VI. In the absence of an election, the
ESOP Committee will direct the Trustee to distribute the Participant's
undistributed Nonforfeitable Accrued Benefit in a lump sum as soon as
administratively practicable following the close of the Plan Year in
which the Participant's death occurs or, if later, the first
distribution date (as defined in Section 6.01 hereof) following the
date the ESOP Committee receives notification of or otherwise confirms
the Participant's death.
If the death benefit is payable in full to the Participant's surviving
spouse, the surviving spouse, in addition to the distribution options provided
in this Section 6.01(C), may elect distribution at any time or in any form
(other than the joint and survivor annuity) this Article VI would permit for a
Participant.
Sec. 6.02. METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to any
restrictions prescribed by Section 6.03 hereof and subject to Section 6.05
hereof, a Participant or Beneficiary may elect distribution under the
following methods:
(A) DEATH, DISABILITY OR RETIREMENT. In the event of death,
Disability or the attainment of Normal Retirement Age or Early
Retirement Date, a Participant's Account shall, at the request of such
Participant, be distributed as follows not later than one (1) year
after the close of the Plan Year in which such event occurs:
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(1) PLAN YEARS PRIOR TO AUGUST 1, 1994. For Plan
Years beginning prior to August 1, 1994, distribution of the
Participant's Account will be made in a lump sum.
(2) PLAN YEARS BEGINNING ON OR AFTER AUGUST 1, 1994.
For Plan Years beginning on or after August 1, 1994,
distribution of the Participant's Account will be made in
substantially equal annual installments over a period of five
(5) years; provided, however, that if the value of such
Account exceeds five hundred thousand dollars ($500,000), the
term of the distribution shall be five (5) years, plus one (1)
year (but not more than five (5) additional years) for each
one hundred thousand dollars ($100,000) (or fraction thereof)
by which the value of such Account exceeds five hundred
thousand dollars ($500,000).
(B) OTHER TERMINATION OF PARTICIPATION. In the event a
Participant terminates employment for reasons other than death,
Disability or the attainment of Normal Retirement Age or Early
Retirement Date, the Participant's vested Account Balance will, at the
request of such Participant, be distributed as follows:
(1) PLAN YEARS BEGINNING PRIOR TO AUGUST 1, 1994. For
Plan Years beginning prior to August 1, 1994, if a Participant
is not reemployed before the end of the fifth (5th) Plan Year
following the Plan Year in which the Participant terminates
employment, distribution of the Participant's Account will be
made in a lump sum not later than one (1) year after the close
of the fifth (5th) Plan Year following the Plan Year in which
the Participant terminates employment.
(2) PLAN YEARS BEGINNING ON OR AFTER AUGUST 1, 1994.
For Plan Years beginning on or after August 1, 1994, if a
Participant is not reemployed before the end of the fifth
(5th) Plan Year following the Plan Year in which the
Participant terminates employment, distribution of the
Participant's Account will commence not later than one (1)
year after the close of the fifth (5th) Plan Year following
the Plan Year in which the Participant terminates employment.
Distribution of such Account will be made in substantially
equal annual installments over a period of five (5) years;
provided, however, that if the value of such Account exceeds
five hundred thousand dollars ($500,000), the term of the
distribution shall be five (5) years, plus one (1) year (but
not more than five (5) additional years) for each one hundred
thousand dollars ($100,000) (or fraction thereof) by which the
value of such Account exceeds five hundred thousand dollars
($500,000).
(3) TIME OF DISTRIBUTION. Notwithstanding anything in
this Section 6.02 to the contrary, effective for Plan Years
beginning on or after August 1, 1993, in the event a
Participant's employment is terminated for reasons other than
death,
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Disability or attaining Normal Retirement Age or Early
Retirement Date, distribution of the Participant's Account
shall commence no later than one (1) year after the close of
the Plan Year in which the earliest of the following events
occurs:
(a) the Participant's Normal Retirement Date;
(b) the Participant's death; or
(c) the Participant's Disability.
(C) DIRECT ROLLOVER. At the time the Participant is entitled to receive
a distribution under Subsection (a) or (b) of Section 6.02 hereof, the
Participant's Account, in whole or in part, shall be distributed
directly to an Eligible Retirement Plan specified by the Participant in
a Direct Rollover and at the time and in the manner prescribed by the
ESOP Committee; provided, however, the Direct Rollover portion of the
distribution qualifies as an Eligible Rollover Distribution.
Distribution options (a) or (b) permitted under this Section 6.02 are
available only if the present value of the Participant's Nonforfeitable Accrued
Benefit at the time of the distributions to the Participant exceeds, or at the
time of any prior distribution exceeded, Three Thousand Five Hundred Dollars
($3,500). If a Participant elects distribution option (c), the Participant's
Account, in whole or in part, shall be distributed directly to the Eligible
Retirement Plan specified by the Participant in a Direct Rollover and at the
time and in the manner prescribed by the ESOP Committee; provided, however, the
Direct Rollover portion of the distribution qualifies as an Eligible Rollover
Distribution.
To facilitate installment payments under this Article VI, the ESOP
Committee may direct the Trustee to segregate all or any part of the
Participant's Accrued Benefit in a Segregated Account. The Participant's
Segregated Account will be invested in federally insured interest bearing
savings account(s) or time deposit(s) (or a combination of both), or in other
fixed income investments. A Segregated Account remains a part of the Trust, but
it alone shares in any income it earns, and it alone bears any expense or loss
it incurs. Notwithstanding any other provision herein, the Participant may elect
to commence distribution on any later distribution date as provided under
Treasury Regulation Section 1.411(d)-4.
(A) MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS. The ESOP Committee may
not direct the Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit, nor may the Participant elect to have the Trustee distribute his
Nonforfeitable Accrued Benefit, under a method of payment which, as of the
Required Beginning Date, does not satisfy the minimum distribution requirements
under Code Section 401(a)(9) and the applicable Treasury Regulations. The
minimum distribution for a calendar year equals the Participant's Nonforfeitable
Accrued Benefit as of the
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latest Valuation Date preceding the beginning of the calendar year divided by
the Participant's life expectancy (as determined under Article VIII hereof,
subject to the requirements of the Treasury Regulations under Code Section
401(a)(9). The ESOP Committee will increase the Participant's Nonforfeitable
Accrued Benefit, as determined on the relevant Valuation Date, for Employer
contributions or Participant Forfeitures allocated after the Valuation Date
and by July 31 of the valuation calendar year, and will decrease the
valuation by distributions made after the Valuation Date and by July 31 of
the valuation calendar year. For purposes of this valuation, the ESOP
Committee will treat any portion of the minimum distribution for the first
distribution calendar year made after the close of that year as a
distribution occurring in that first distribution calendar year. In computing
a minimum distribution, the ESOP Committee must use the unisex life
expectancy multiples under Treasury Regulation Section 1.72-9. The ESOP
Committee, only upon the Participant's written request, will compute the
minimum distribution for a calendar year subsequent to the first calendar
year for which the Plan requires a minimum distribution by redetermining the
applicable life expectancy. The ESOP Committee may not redetermine the joint
life and last survivor expectancy of the Participant and a nonspouse
designated Beneficiary in a manner which takes into account any adjustment to
a life expectancy other than the Participant's life expectancy.
If the Participant's spouse is not his designated Beneficiary, a method
of payment to the Participant (whether by Participant election or by ESOP
Committee direction) may not provide more than incidental benefits to the
Beneficiary. The Plan must satisfy the minimum distribution incidental benefit
("MDIB") requirement in the Treasury Regulations issued under Code Section
401(a)(9) for distributions made on or after the Participant's Required
Beginning Date and before the Participant's death. To satisfy the MDIB
requirement, the ESOP Committee will compute the minimum distribution required
by this Section 6.02(A) by substituting the applicable MDIB divisor for the
applicable life expectancy factor, if the MDIB divisor is a lesser number.
Following the Participant's death, the ESOP Committee will compute the minimum
distribution required by this Section 6.02(A) solely on the basis of the
applicable life expectancy factor and will disregard the MDIB factor. For Plan
Years beginning prior to January 1, 1989, the Plan satisfies the incidental
benefit requirement if the distributions to the Participant satisfied the MDIB
requirement or if the present value of the retirement benefits payable solely to
the Participant is greater than fifty percent (50%) of the present value of the
total benefits payable to the Participant and his Beneficiary. The ESOP
Committee must determine whether benefits to the Beneficiary are incidental as
of the date the Trustee is to commence payment of the retirement benefits to the
Participant, or as of any date the Trustee redetermines the payment period to
the Participant.
The minimum distribution for the first distribution calendar year is
due by the Participant's Required Beginning Date. The minimum distribution for
each subsequent distribution calendar year, including the calendar year in which
the Participant's Required Beginning Date falls, is due by December 31 of that
year. If the Participant receives distribution in the form of a Nontransferable
Annuity Contract, the distribution satisfies this Section 6.02(A) if the
contract complies with the requirements of Code Section 401(a)(9) and the
applicable Treasury Regulations.
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(B) MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES. The method of
distribution to the Participant's Beneficiary must satisfy Code Section
401(a)(9) and the applicable Treasury Regulations. If the Participant's death
occurs after his Required Beginning Date, the method of payment to the
Beneficiary must provide for completion of payment over a period which does not
exceed the payment period which had commenced for the Participant. If the
Participant's death occurs prior to his Required Beginning Date, the method of
payment to the Beneficiary must provide for completion of payment to the
Beneficiary over a period not exceeding: (i) five (5) years after the date of
the Participant's death; or (ii) if the Beneficiary is a designated Beneficiary,
the designated Beneficiary's life expectancy. The ESOP Committee may not direct
payment of the Participant's Nonforfeitable Accrued Benefit over a period
described in clause (ii) unless payment to the designated Beneficiary will
commence no later than the December 31 following the close of the calendar year
in which the Participant's death occurred or, if later, and the designated
Beneficiary is the Participant's surviving spouse, December 31 of the calendar
year in which the Participant would have attained age seventy and one-half (70
1/2). If a distribution will be made in accordance with clause (ii), the minimum
distribution for a calendar year equals the Participant's Nonforfeitable Accrued
Benefit as of the latest Valuation Date preceding the beginning of the calendar
year divided by the designated Beneficiary's life expectancy. The ESOP Committee
must use the unisex life expectancy multiples under Treasury Regulation Section
1.72-9 for purposes of applying this paragraph. The ESOP Committee, only upon
the written request of the Participant or of the Participant's surviving spouse,
will recalculate the life expectancy of the Participant's surviving spouse not
more frequently than annually, but may not recalculate the life expectancy of a
nonspouse designated Beneficiary after payment to the designated Beneficiary
begins. The ESOP Committee will apply this paragraph by treating any amount paid
to the Participant's child, which becomes payable to the Participant's surviving
spouse upon the child's attaining the age of majority, as paid to the
Participant's surviving spouse. Upon the Beneficiary's written request, the ESOP
Committee must direct the Trustee to accelerate payment of all, or any portion,
of the Participant's unpaid Accrued Benefit, as soon as administratively
practicable following the effective date of that request.
Sec. 6.03. BENEFIT PAYMENT ELECTIONS. Not earlier than ninety (90)
days, but not later than thirty (30) days, before the Participant's Annuity
Starting Date, the ESOP Committee must provide a benefit notice to a Participant
who is eligible to make an election under this Section 6.03. The benefit notice
must explain the optional forms of benefit in the Plan, including the material
features and relative values of those options, and the Participant's right to
defer distribution until he attains the later of Normal Retirement Age or age
sixty-two (62).
If a Participant or Beneficiary makes an election prescribed by this
Section 6.03, the ESOP Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in accordance with that election.
Any election under this Section 6.03 is subject to the requirements of Section
6.02 hereof. The Participant or Beneficiary must make an election under this
Section 6.03 by filing his election form with the ESOP Committee at any time
before the Trustee otherwise would
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commence to pay a Participant's Accrued Benefit in accordance with the
requirements of Article VI hereof.
(A) PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE. If the present value of
a Participant's Nonforfeitable Accrued Benefit exceeds Three Thousand Five
Hundred Dollars ($3,500), he may elect to have the Trustee commence distribution
as of any distribution date, but not earlier than October 1 following the close
of the Plan Year in which the Participant's Separation from Service occurs. The
Participant may reconsider an election at any time prior to the Annuity Starting
Date and elect to commence distribution as of any other distribution date, but
not earlier than the date described in the first sentence of this Paragraph (A).
Following his attainment of Normal Retirement Age or Early Retirement Date, a
Participant who has Separated from Service may elect distribution as of any
distribution date, regardless of the restrictions otherwise applicable under
this Section 6.03(A). If the Participant is partially-vested in his Accrued
Benefit, an election under this Paragraph (A) to distribute prior to the
Participant's incurring a Forfeiture Break in Service (as defined in Section
5.08 hereof), must be in the form of a cash-out distribution (as defined in
Article V hereof). A Participant may not receive a cash-out distribution if,
prior to the time the Trustee actually makes the cash-out distribution, the
Participant returns to employment with the Employer.
(B) PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM SERVICE. After a Participant
attains Normal Retirement Age or Early Retirement Date, the Participant, until
he retires, has a continuing election to receive all or any portion of his
Accrued Benefit. A Participant must make an election under this Section 6.03(B)
on a form prescribed by the ESOP Committee at any time during the Plan Year for
which his election is to be effective. In his written election, the Participant
must specify the percentage or dollar amount he wishes distributed to him. The
Participant's election relates solely to the percentage or dollar amount
specified in his election form and his right to elect to receive an amount, if
any, for a particular Plan Year greater than the dollar amount or percentage
specified in his election form terminates on the Accounting Date. A distribution
to a Participant must be made in accordance with his election under this Section
6.03(B) within the ninety (90) day period (or as soon as administratively
practicable) after the Participant files his written election with the Trustee.
The balance of the Participant's Accrued Benefit not distributed pursuant to his
election(s) will be distributed in accordance with the other distribution
provisions of this Plan.
(C) DEATH BENEFIT ELECTIONS. If the present value of the deceased Participant's
Nonforfeitable Accrued Benefit exceeds Three Thousand Five Hundred Dollars
($3,500), the Participant's Beneficiary may elect to have the Participant's
Nonforfeitable Accrued Benefit distributed in a form and within a period
permitted under Section 6.02 hereof. The Beneficiary's election is subject to
any restrictions designated in writing by the Participant and not revoked as of
his date of death.
(D) EMPLOYER SECURITIES ACQUIRED BY AN EXEMPT LOAN. Notwithstanding anything to
the contrary herein, for any Employer Securities acquired with the proceeds of
an Exempt Loan, distribution under this Section shall not be required until the
first distribution date following the
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close of the Plan Year in which such loan has been fully repaid subject to
the minimum distribution requirements of Section 401(a)(9) of the Code and
subject to the Participant's death, Disability, or reaching Normal Retirement
Age or Early Retirement Date.
(E) ELECTION TO POSTPONE DISTRIBUTION OF BENEFITS. If the present value of a
Participant's Nonforfeitable Accrued Benefit exceeds Three Thousand Five Hundred
Dollars ($3,500), he may elect to postpone the distribution of the
Nonforfeitable Accrued Benefit under the Plan as provided in Sections 6.02 and
6.03(A) hereof. Upon request, the ESOP Committee will direct the Trustee to
provide the Participant electing to postpone his distribution of his
Nonforfeitable Accrued Benefit with the necessary election forms.
(F) DIRECT ROLLOVER ELECTION. Notwithstanding anything to the contrary herein
for distributions made after December 31, 1992, any Participant who is
considered a "Distributee" and who receives an Eligible Rollover Distribution
may elect to have all or any portion of the distribution transferred directly to
an Eligible Retirement Plan. Upon request, the ESOP Committee will direct the
Trustee to provide the Distributee with the necessary forms.
(G) ADVANCE DISTRIBUTIONS. At the request of a Participant who is then one
hundred percent (100%) vested in his Accrued Benefit, and who has participated
in this Plan for eight (8) or more years subsequent to July 31, 1988, the ESOP
Committee shall direct the Trustee to pay to the Participant an advance
distribution not to exceed twenty-five percent (25%) of the Participant's vested
Accrued Benefit as then estimated by the ESOP Committee, provided the
Participant is then employed by the Employer.
Notwithstanding the foregoing, advance distributions shall not be
permitted with respect to any amounts allocated to a Participant's Account after
December 31, 1988, except for distributions necessary to meet a hardship
constituting immediate and heavy financial need.
The ESOP Committee, in its sole discretion, shall determine in a
uniform and nondiscriminatory manner, whether the Participant's hardship
constitutes an immediate and heavy financial need, based on all relevant facts
and circumstances. The following are financial needs considered immediate and
heavy: medical expenses (within the meaning of Section 213(d) of the Code)
incurred by the Participant, the Participant's spouse, or dependents; the
purchase (excluding mortgage payments) of a principal residence for the
Participant; payment of tuition and related educational fees for the next twelve
(12) months of post-secondary education for the Participant, the Participant's
spouse, children, or dependents; or the need to prevent eviction of the
Participant from, or a foreclosure on the mortgage of, the Participant's
principal residence. Notwithstanding the foregoing, a distribution will not be
considered as necessary to satisfy an immediate and heavy financial need of the
Participant unless (i) the Participant has obtained all distributions, other
than hardship distributions, and all nontaxable loans under all plans maintained
by the Employer, and (ii) the distribution is not in excess of the amount of an
immediate and heavy financial need.
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If an advance distribution is made, a Participant shall again be
eligible to receive an additional ten percent (10%) advance distribution for
reason of hardship constituting immediate and heavy financial need, provided the
Participant is then employed by the Employer, one time during each five (5)
calendar year interval subsequent to the calendar year in which the Participant
received the first advance distribution. If any advance distribution is made,
the Participant's Accrued Benefit when computed will be reduced by the amount of
such advance.
(H) PAYMENT OF BENEFITS. Notwithstanding anything in this Plan to the contrary,
payment of a Participant's Accrued Benefit will commence, unless the Participant
otherwise elects, no later than the sixtieth (60th) day after the close of the
Plan Year (or if later after the Accrued Benefit is determined) in which the
latest of the following events occur:
(1) The attainment by the Participant of age sixty-five
(65);
(2) The Participant's actual retirement from the employ
of the Employer;
(3) The tenth (10th) anniversary of the year in which the
Participant commenced participation in the Plan.
(I) UNDISTRIBUTED ACCOUNTS. Any part of a Participant's Account which is
retained in the Trust after the Plan Year end coinciding with or immediately
following the date on which the Participant terminates employment shall, as soon
as possible after such Plan Year end, be physically segregated and invested in
federally insured interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments, in its sole
discretion, by the ESOP Committee. However, except in the case of reemployment,
none of the Participant's Accounts will be credited with any further Employer
contributions, Forfeitures, dividends on Employer Securities, or gain on the
sale of unallocated shares of Employer Securities.
Sec. 6.04. ANNUITY DISTRIBUTIONS TO PARTICIPANTS AND SURVIVING SPOUSES.
The joint and survivor annuity requirements of the Code do not apply to this
Plan. The Plan does not provide any annuity distributions to Participants. A
transfer agreement may not permit a plan which is subject to the provisions of
Code Section 417 to transfer assets to this Plan.
Sec. 6.05. SPECIAL DISTRIBUTION AND PAYMENT REQUIREMENTS.
(A) DISTRIBUTION OF EMPLOYER SECURITIES. Unless the Participant and, if
applicable, pursuant to Sections 401(a)(11) and 417 of the Code, with the
consent of a Participant's spouse, elects to have other distribution provisions
of the Plan apply, or unless other distribution provisions of the Plan require
earlier distribution of the Participant's Account, the portion of the
Participant's Account attributable to Employer Securities (the "Eligible
Portion") must be distributed no later than the time prescribed by this Section
6.05(A), regardless of any other provision of the Plan. The distribution
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provisions of this Section 6.05(A) are subject to the consent and form of
distribution requirements of Articles V and VI hereof.
(1) If the Participant Separates from Service by reason of the
attainment of Normal Retirement Age, Early Retirement Date, death or
Disability, the ESOP Committee will direct the Trustee to commence
distribution of the Eligible Portion not later than one (1) year after
the close of the Plan Year in which that event occurs.
(2) If the Participant Separates from Service for any reason other than
by reason of the attainment of Normal Retirement Age, Early Retirement
Date, death or Disability, the ESOP Committee will direct the Trustee
to commence distribution of the Eligible Portion not later than one (1)
year after the close of the fifth (5th) Plan Year following the Plan
Year in which the Participant Separated from Service. If the
Participant resumes employment with the Employer on or before the last
day of the fifth (5th) Plan Year following the Plan Year of his or her
Separation from Service, the distribution provisions of this Paragraph
(2) do not apply.
For purposes of this Section 6.05(A), Employer Securities do not
include any Employer Securities acquired with the proceeds of an Exempt Loan
until the close of the Plan Year in which the borrower repays the Exempt Loan in
full.
(B) THIRTY (30) DAY WAIVER. If a distribution is one to which Sections
401(a)(11) and 417 of the Code do not apply, such distribution may commence less
than thirty (30) days after the notice required under Treasury Regulation
Section 1.411(a)-11(c) is given, provided that:
(A) The ESOP Committee clearly informs the Participant that the
Participant has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
(B) the Participant, after receiving the notice, affirmatively elects a
distribution.
Sec. 6.06. DEFAULT ON A LOAN. If a Participant or Beneficiary defaults
on a loan made pursuant to a loan policy adopted by the ESOP Committee, the Plan
treats the default as a distributable event only if the Participant has incurred
a Separation from Service or has attained Normal Retirement Age. If either
condition applies, then, at the time of the default, or, if later, at the time
either condition first occurs, the Participant's Nonforfeitable Accrued Benefit
will be reduced by the lesser of the amount in default (plus accrued interest)
or the Plan's security interest in that Nonforfeitable Accrued Benefit.
Sec. 6.07. DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS. Nothing
contained in this Plan prevents the ESOP Committee from complying with the
provisions of a qualified domestic relations order (as defined in Code Section
414(p)). This Plan specifically
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permits distribution to an Alternate Payee under a qualified domestic
relations order at any time regardless of whether the Participant has
attained his earliest retirement age (as defined under Code Section 414(p))
under the Plan. A distribution to an Alternate Payee prior to the time the
Participant reaches his earliest retirement age is available only if: (1) the
order specifies distribution at that time or permits an agreement between the
Plan and the Alternate Payee to authorize an earlier distribution; and (2)
the order requires the Alternate Payee's consent to such distribution prior
to the Participant's attainment of his earliest retirement age if the present
value of the Alternate Payee's benefits under the Plan exceeds Three Thousand
Five Hundred Dollars ($3,500). Nothing in this Section 6.07 gives a
Participant a right to receive distribution at a time otherwise not permitted
under the Plan nor does it permit the Alternate Payee to receive a form of
payment not otherwise permitted under the Plan. Furthermore, for any Employer
Securities acquired with the proceeds of an Exempt Loan, distribution under
this Section 6.07 shall not be required until such Exempt Loan is repaid in
full unless required by the Code.
The ESOP Committee must establish reasonable procedures to determine
the qualified status of a domestic relations order. Upon receiving a domestic
relations order, the ESOP Committee promptly will notify the Participant and any
Alternate Payee named in the order, in writing, of the receipt of the order and
the Plan's procedures for determining the qualified status of the order. Within
a reasonable period of time after receiving the domestic relations order, the
ESOP Committee must determine the qualified status of the order and must notify
the Participant and each Alternate Payee, in writing, of its determination. The
ESOP Committee must provide notice under this paragraph by mailing to the
individual's address specified in the domestic relations order, or in a manner
consistent with Department of Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued Benefit is
payable during the period the ESOP Committee is making its determination of the
qualified status of the domestic relations order, the ESOP Committee must make a
separate accounting of the amounts payable. If the ESOP Committee determines the
order is a qualified domestic relations order within eighteen (18) months of the
date amounts first are payable following receipt of the order, the ESOP
Committee will direct the Trustee to distribute the payable amounts in
accordance with the order. If the ESOP Committee determines that the order is
not a qualified domestic relations order or does not make its determination of
the qualified status of the order within the eighteen (18) month determination
period, the ESOP Committee will direct the Trustee to distribute the payable
amounts in the manner the Plan would distribute if the order did not exist and
will apply the order prospectively if the ESOP Committee later determines the
order is a qualified domestic relations order.
To the extent it is not inconsistent with the provisions of the
qualified domestic relations order, the ESOP Committee may direct the Trustee to
invest any partitioned amount in a segregated subaccount or separate account and
to invest the account in federally insured, interest-bearing savings account(s)
or time deposit(s) (or a combination of both), or in other fixed income
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investments. A segregated subaccount remains a part of the Plan, but it alone
shares in any income it earns, and it alone bears any expense or loss it incurs.
Any payments or distributions required under this Section 6.07 will be made by
separate benefit checks or other separate distribution to the Alternate
Payee(s).
Sec. 6.08. LATE RETIREMENT. A Participant may remain in the Service of
the Employer after his Normal Retirement Date. In such case, he shall remain a
Participant until his Late Retirement Date. At such time, his interest in his
Account shall be distributed to him in accordance with this Article VI. Such
Participant is subject to the minimum distribution requirement of Section
401(a)(9) of the Code.
Sec. 6.09. LIMITATIONS ON BENEFITS. All of the provisions of this
Article VI are subject to Section 12.27 hereof, relating to withholding for
payment of taxes, and are subject to the rights of any Alternate Payee.
Sec. 6.10. THIRTY (30) DAY PERIOD. If a distribution is one to which
Sections 401(a)(11) and 417 of the Code do not apply, such distribution may
commence less than thirty (30) days after the notice required under Section
1.411(a)-11(c) of the Treasury Regulations is given provided that:
(A) the ESOP Committee clearly informs the Participant that the
Participant has a right to a period of at least thirty (30) days after
receiving the notice to consider the decision of whether or not to
elect a distribution (and, if applicable, a particular distribution
option), and
(B) the Participant, after receiving the notice, affirmatively elects
in writing a distribution.
END OF ARTICLE VI
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ARTICLE VII
EMPLOYER ADMINISTRATIVE PROVISIONS
Sec. 7.01. INFORMATION TO ESOP COMMITTEE. The Employer must supply
current information to the ESOP Committee as to the name, date of birth, date of
employment, annual Compensation, leaves of absence, Years of Service and date of
termination of employment of each Employee who is, or who will be eligible to
become, a Participant under the Plan, together with any other information which
the ESOP Committee considers necessary. The Employer's records as to the current
information the Employer furnishes to the ESOP Committee are conclusive as to
all persons.
Sec. 7.02. NO LIABILITY. The Employer assumes no obligation or
responsibility to any of its Employees, Participants, Former Participants or
Beneficiaries for any act of, or failure to act, on the part of the Trustee,
ESOP Committee (unless the Employer is the ESOP Committee) or the Plan
Administrator (unless the Employer is the Plan Administrator).
Sec. 7.03. INDEMNITY OF CERTAIN FIDUCIARIES. The Employer indemnifies
and saves harmless the Plan Administrator, Trustee, ESOP Committee, and the
members of the ESOP Committee, and each of them, from and against any and all
loss resulting from liability to which the Plan Administrator, Trustee, the ESOP
Committee, or the members of the ESOP Committee, may be subjected by reason of
any act or conduct (except willful misconduct or gross negligence) in their
official capacities in the administration of this Plan, including all court
costs and other expenses reasonably incurred in their defense, in case the
Employer fails to provide such defense. The indemnification provisions of this
Section 7.03 do not relieve the Plan Administrator or any ESOP Committee member
from any liability he may have under ERISA, including any liability for breach
of a fiduciary duty. In the case of any ESOP Committee member, the
indemnification provisions of this Section 7.03 do not relieve it from any
liability, to the extent that a court of competent jurisdiction from which no
appeal can be taken, enters a final judgment that the ESOP Committee member's
actions or omissions were the result of gross negligence or willful misconduct.
The Plan Administrator, Trustee, the ESOP Committee members, and the Company may
execute a letter agreement further delineating the indemnification provisions of
this Section 7.03, provided the letter agreement is consistent with and does not
violate ERISA and Texas law. The indemnification provisions of this Section 7.03
extend to any other fiduciary solely to the extent provided by a letter
agreement executed by such person and the Company.
Sec. 7.04. AMENDMENT TO VESTING SCHEDULE. The Company reserves the
right to amend the vesting schedule at any time. However, the amended vesting
schedule will not be applied to reduce the Nonforfeitable percentage of any
Participant's Accrued Benefit derived from Employer contributions (determined as
of the later of the date the Employer adopts the amendment, or the date the
amendment becomes effective) to a percentage less than the Nonforfeitable
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percentage computed under the Plan without regard to the amendment. An amended
vesting schedule will apply to a Participant only if the Participant receives
credit for at least one (1) Hour of Service after the new schedule becomes
effective.
If the Company makes a permissible amendment to the vesting schedule,
each Participant having at least three (3) Years of Service with the Employer
may elect to have the percentage of his Nonforfeitable Accrued Benefit computed
under the Plan without regard to the amendment. The Participant must file his
election with the Trustee within sixty (60) days of the latest of (a) the
Company's adoption of the amendment; (b) the effective date of the amendment; or
(c) his receipt of a copy of the amendment. The Trustee as soon as practicable,
must forward a true copy of any amendment to the vesting schedule to each
affected Participant, together with an explanation of the effect of the
amendment, the appropriate form upon which the Participant may make an election
to remain under the vesting schedule provided under the Plan prior to the
amendment and notice of the time within which the Participant must make an
election to remain under the prior vesting schedule. The election described in
this Section 7.04 does not apply to a Participant if the amended vesting
schedule provides for vesting at least as rapid at all times as the vesting
schedule in effect prior to the amendment. For purposes of this Section 7.04, an
amendment to the vesting schedule includes any Plan amendment which directly or
indirectly affects the computation of the Nonforfeitable percentage of a
Participant's rights to his Accrued Benefit derived from Employer contributions
and Participant Forfeitures.
END OF ARTICLE VII
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ARTICLE VIII
PARTICIPANT ADMINISTRATIVE PROVISIONS
Sec. 8.01. BENEFICIARY DESIGNATION. Any Participant from time to time
may designate, in writing, any person or persons contingently or successively to
whom the Plan will pay his Nonforfeitable Accrued Benefit (including any life
insurance proceeds payable to the Participant's Account) in the event of his or
her death, and the Participant may designate the form and method. The ESOP
Committee will prescribe the form for the written designation of Beneficiary and
upon the Participant's filing the form with the ESOP Committee, the form
effectively revokes all designations filed prior to that date by the same
Participant.
The Beneficiary designation of a married Participant is not valid
unless the Participant's spouse consents to the Beneficiary designation. The
Participant's spouse shall automatically be the named Beneficiary and shall be
paid the Participant's death benefit unless (1) the Participant's spouse
affirmatively consents to the Beneficiary designation according to Code Section
417; or (2) the following sentence applies. The spousal consent requirements in
this paragraph do not apply if the Participant and his spouse are not married
throughout the one year period ending on the date of the Participant's death or
if the Participant's spouse is the Participant's sole primary Beneficiary.
Sec. 8.02. NO BENEFICIARY DESIGNATION. If a Participant fails to name a
Beneficiary in accordance with Section 8.01 hereof, or if the Beneficiary named
by a Participant predeceases him, or if the Beneficiary designation is invalid
or void, the Participant's Nonforfeitable Accrued Benefit will be paid in
accordance with Section 6.02 hereof in the following order of priority to:
(a) The Participant's surviving spouse;
(b) The Participant's surviving children, including adopted children,
in equal shares;
(c) The Participant's surviving parents, in equal shares; or
(d) The Participant's estate.
If the Beneficiary does not predecease the Participant, but dies prior
to distribution of the Participant's entire Nonforfeitable Accrued Benefit, the
remaining Nonforfeitable Accrued Benefit will be paid to the Beneficiary's
estate unless the Participant's Beneficiary designation provides otherwise.
Sec. 8.03. PERSONAL DATA TO COMMITTEE. Each Participant and each
Beneficiary of a deceased Participant must furnish to the ESOP Committee such
evidence, data or
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information as the ESOP Committee considers necessary or desirable for the
purpose of administering the Plan. The provisions of this Plan are effective
for the benefit of each Participant upon the condition precedent that each
Participant will promptly furnish full, true, and complete evidence, data,
and information when requested by the ESOP Committee, provided the ESOP
Committee advises each Participant of the effect of his failure to comply
with its request. Any adjustment required by reason of lack of proof or the
misstatement of the age of persons entitled to benefits hereunder, by the
Participant or otherwise, shall be in such manner as the ESOP Committee deems
equitable.
Any notice or information which according to the terms of the Plan or
the rules of the ESOP Committee must be filed with the ESOP Committee, shall be
deemed so filed if addressed and either delivered in person or mailed, postage
fully prepaid, to the ESOP Committee. If mailed, any such notice or information
shall be addressed to the ESOP Committee Chairman c/o T.A. KYSER COMPANY and
mailed to its corporate headquarters address.
Whenever a provision herein requires that a Participant (or the
Participant's Beneficiary) give notice to the ESOP Committee within a specified
number of days or by a certain date, and the last day of such period, or such
date falls on a Saturday, Sunday, or Company holiday, the Participant (or the
Participant's Beneficiary) will be deemed in compliance with such provision if
notice is delivered in person to the ESOP Committee or is mailed, properly
addressed, postage prepaid, and postmarked on or before the business day next
following such Saturday, Sunday or Company holiday. The ESOP Committee may, in
its sole discretion, modify or waive any specified requirement notice; provided,
however, that such modification or waiver must be administratively feasible,
must be in the best interest of the Participant, and must be made on the basis
of rules of the ESOP Committee which are applied uniformly to all Participants.
Sec. 8.04. ADDRESS FOR NOTIFICATION. Each Participant, each Beneficiary
of a deceased Participant, and other person entitled to benefits hereunder must
file with the ESOP Committee from time to time, in writing, his mailing address
and any change of mailing address. Any communication, statement or notice
addressed to a Participant, Former Participant or Beneficiary, at his last
mailing address filed with the ESOP Committee, or as shown on the records of the
Employer, binds the Participant, Former Participant or Beneficiary, for all
purposes of this Plan. Any check representing payment hereunder and any
communication addressed to a Participant, Former Participant, an Employee, a
former Employee, or Beneficiary, at such person's last mailing address filed
with the ESOP Committee, or if no such address has been filed, then at such
person's last mailing address as indicated on the records of the Employer, shall
be deemed to have been delivered to such person on the date on which such check
or communication is deposited, postage prepaid, in the United States mail.
If the ESOP Committee, for any reason, is in doubt as to whether
payments are being received by the person entitled thereto, it shall, by
registered mail addressed to the person concerned,
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at his mailing address last known to the ESOP Committee, notify such person
that all unmailed and future payments shall be henceforth withheld until he
provides the ESOP Committee with evidence of his existence and his proper
mailing address.
Sec. 8.05. ASSIGNMENT OR ALIENATION. Unless Section 6.07 hereof
applies, which relates to qualified domestic relations orders, neither a
Participant nor a Beneficiary may anticipate, assign or alienate (either at law
or in equity) any benefit provided under the Plan. A benefit under the Plan is
not subject to attachment, garnishment, levy, execution or other legal or
equitable process.
Sec. 8.06. NOTICE OF CHANGE IN TERMS. The Plan Administrator, within
the time prescribed by ERISA and the applicable regulations, must furnish all
Participants and Beneficiaries a summary description of any material amendment
to the Plan or notice of discontinuance of the Plan and all other information
required by ERISA to be furnished without charge.
Sec. 8.07. LITIGATION AGAINST THE TRUST. A court of competent
jurisdiction may authorize any appropriate equitable relief to redress
violations of ERISA or to enforce any provisions of ERISA or the terms of the
Plan. A fiduciary may receive reimbursement of expenses properly and actually
incurred in the performance of his duties with the Plan.
Sec. 8.08. INFORMATION AVAILABLE. Any Participant in the Plan or any
Beneficiary may examine copies of the Plan description, latest annual report,
any bargaining agreement, or this Plan, contract or any other instrument under
which the Plan was established or is operated. The Plan Administrator will
maintain all of the items listed in this Section 8.08 in his office, or in such
other place or places as he may designate from time to time in order to comply
with the regulations issued under ERISA, for examination during reasonable
business hours. Upon the written request of a Participant or Beneficiary, the
Plan Administrator will furnish him with a copy of any item listed in this
Section 8.08. The Plan Administrator may make a reasonable charge to the
requesting person for the copy so furnished.
Sec. 8.09. APPEAL PROCEDURE FOR DENIAL OF BENEFITS. A Participant,
Former Participant, or a Beneficiary ("Claimant") may file with the ESOP
Committee a written claim for benefits, if the Participant, Former Participant,
or Beneficiary determines the distribution procedures of the Plan have not
provided him his proper Nonforfeitable Accrued Benefit. The ESOP Committee must
render a decision on the claim within sixty (60) days of the Claimant's written
claim for benefits. The ESOP Committee must provide adequate notice in writing
to the Claimant whose claim for benefits under the Plan the ESOP Committee has
denied. The ESOP Committee's notice to the Claimant must set forth:
(a) The specific reason for the denial;
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(b) Specific references to pertinent Plan provisions on which the ESOP
Committee based its denial;
(c) A description of any additional material and information needed for
the Claimant to perfect his claim and an explanation of why the
material or information is needed; and
(d) That any appeal the Claimant wishes to make of the adverse
determination must be in writing to the ESOP Committee within sixty
(60) days after receipt of the ESOP Committee's notice of denial of
benefits. The ESOP Committee's notice must further advise the Claimant
that his failure to appeal the action to the ESOP Committee in writing
within the sixty (60) day period will render the ESOP Committee's
determination final, binding and conclusive.
If the Claimant should appeal to the ESOP Committee, he, or his duly
authorized representative, may submit, in writing, whatever issues and comments
he, or his duly authorized representative, feels are pertinent. At the appeals
conference (or prior thereto upon five (5) business days written notice to the
ESOP Committee), the Claimant, or his duly authorized representative, may review
Plan documents in the possession of the Plan Administrator which are pertinent
to the claim. Either the Claimant, ESOP Committee, or Plan Administrator may
cause a court reporter to attend the appeals conference and record the
proceedings. In such event, a complete written transcript of the proceeding
shall be furnished to all parties by the court reporter. The full expense of any
court reporter and such transcripts shall be borne by the party causing the
court reporter to attend the appeals conference. The ESOP Committee will
re-examine all facts related to the appeal and make a final determination as to
whether the denial of benefits is justified under the circumstances. The ESOP
Committee must advise the Claimant, in writing, of its decision within sixty
(60) days of the Claimant's written request for review. If the ESOP Committee
confirms the denial, in whole or in part, the communication shall set forth the
reasons for the decision and specific references to the Plan provisions on which
the decision is based. Such decisions of the ESOP Committee shall be final and
conclusive upon all parties.
Sec. 8.10. DIVERSIFICATION OF PARTICIPANT'S ACCOUNT. Except as provided
in this Section 8.10, a Participant does not have the right to direct the
Trustee with respect to the investment or re-investment of the assets comprising
the Participant's individual Account. Each "Qualified Participant," however, may
direct the investment of twenty-five percent (25%) of the total number of
Employer Securities acquired by or contributed to the Plan that have ever been
allocated to the Participant's Account on or before the most recent Plan
allocation date less the number of Employer Securities previously diversified
under this Section 8.10 within ninety (90) days after the Accounting Date of
each Plan Year (to the extent a direction amount exceeds the amount to which a
prior direction under this Section 8.10 applies) during the Participant's
Qualified Election Period. For the last Plan Year in the Participant's Qualified
Election Period, fifty percent (50%) will be substituted for twenty-five percent
(25%) in the immediately preceding sentence. The Qualified
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Participant must make his direction in writing, the direction may be
effective no later than ninety (90) days after the close of the Plan Year to
which the direction applies, and the direction must specify which, if any, of
the investment options the Participant selects.
A Qualified Participant may choose one of the following investment
options:
(a) The distribution of the portion of his Eligible Accrued Benefit
covered by the election. The distribution will be made within ninety
(90) days after the close of the ninety (90) day election period and
shall be made in cash.
(b) The direct transfer of the portion of his Eligible Accrued Benefit
covered by the election to another qualified plan of the Employer which
accepts such transfers, but only if the transferee plan permits
employee-directed investment and does not invest in Employer Securities
to a substantial degree. The direct transfer will be made no later than
ninety (90) days after the close of the ninety (90) day election
period.
Sec. 8.11. PARTICIPANT VOTING RIGHTS - EMPLOYER SECURITIES.
Notwithstanding any provision contained in the Plan to the contrary, the
following shall apply with respect to voting of Employer Securities:
(1) With respect to Employer Securities held in the
Employer Securities Account which are not part of a
registration-type class of securities (as defined in Code
Section 409(e)(4)), a Participant has the right to direct the
Trustee regarding the voting of such Employer Securities
allocated to his Employer Securities Account with respect to
any corporate matter which involves the approval or
disapproval of any corporate merger or consolidation,
recapitalization, reclassification, liquidation, dissolution,
sale of substantially all assets of a trade or business, or
such similar transaction as the Department of Treasury may
prescribe in regulations. On other corporate matters requiring
a vote of the shareholders, the ESOP Committee shall direct
the Trustee to properly vote such Employer Securities which
are held in the Employer Securities Account of the
Participants. As to any Employer Securities allocated to the
Participant's Employer Securities Account which are part of a
registration-type class of securities, the voting rights
provided in this Section 8.11 extend to all corporate matters
requiring a vote of stockholders. The ESOP Committee shall
direct the Trustee to vote allocated Employer Securities held
in the Participant Employer Securities Account for which it
has not received direction or for which it has not received a
valid direction from a Participant (or Beneficiary) as part of
the Plan Assets.
Each Participant (or Beneficiary) who timely
provides instructions to the Trustee shall be entitled to
direct the Trustee how to vote Employer Securities
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allocated to such Participant's Employer Securities Account
in accordance with this Section 8.11. In order to implement
these voting directions, the Company shall provide each
Participant (or Beneficiary) with proxy solicitation
materials or other notices or information statements which
are distributed to Company shareholders, together with a
form requesting confidential instructions as to the manner
in which Employer Securities allocated to the Participant's
Employer Securities Account are to be voted. Each
Participant (or Beneficiary) shall, as a named fiduciary
described in Section 403(a)(1) of ERISA, direct the Trustee
with respect to the vote of such Employer Securities which
are allocated to the Employer Securities Account of the
Participant. Reasonable means shall be employed to provide
confidentiality with respect to the voting by such
Participant (or Beneficiary), it being the intent of this
provision of this Section 8.11 to ensure that the Company
(and its directors, officers, employees and agents) cannot
determine the direction given by any Participant (or
Beneficiary). Such instructions shall be in such form and
shall be filed in such manner and at such time as the ESOP
Committee may prescribe.
(2) With respect to Employer Securities held in the
Unallocated Employer Securities Account which are part of a
registration-type class of securities, and which are not part
of a registration-type class of securities, the ESOP Committee
shall direct the Trustee to properly vote such Employer
Securities which are held in the Unallocated Employer
Securities Account for or against any proposal. If all
Employer Securities are held in the Unallocated Employer
Securities Account of each Participant (or Beneficiary) on the
record date when a matter is submitted to a vote of the
Company's shareholders, the Trustee, as directed by the ESOP
Committee, shall properly vote such Employer Securities for or
against any proposal.
(3) Notwithstanding any provision contained in this
Section 8.11, Participant (or Beneficiary) directions and ESOP
Committee directions which are or would result in a violation
of ERISA or would not be in the best interest of the
Participant (or Beneficiary) shall not be complied with.
If the ESOP Committee does not direct the Trustee
to vote on a matter, or the Participant (or Beneficiary)
directions or ESOP Committee directions are or would result
in a violation of ERISA or would not be in the best interest
of the Participant (or Beneficiary), the Trustee, in its
discretion, shall properly vote the Employer Securities in a
manner which is in the best interest of the Participants
(or Beneficiaries).
(4) If any provision contained in or action required
by this Section 8.11 violates any provision under ERISA, the
provisions under ERISA shall be complied with.
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Sec. 8.12. FEES AND EXPENSES. Normal brokerage charges which are
included in the cost of securities purchased (or charged to proceeds in the case
of sales) shall be paid by the Trust. The Company shall pay all expenses in
connection with the design, establishment, or termination of the Plan. The Trust
shall pay all costs of administering the Plan and Trust, unless such expenses
are paid by the Employer.
END OF ARTICLE VIII
ARTICLE IX
ESOP COMMITTEE
DUTIES WITH RESPECT TO PARTICIPANTS' ACCOUNTS
Sec. 9.01. MEMBERS' COMPENSATION, EXPENSES. The Company may appoint an
ESOP Committee to administer the Plan, the members of which may or may not be
Participants in the Plan, or which may be the Plan Administrator acting alone.
In the absence of an ESOP Committee appointment, the Trustee assumes the powers,
duties and responsibilities of the ESOP Committee. The members of the ESOP
Committee will serve without compensation for services as such, but the Employer
will pay all expenses of the ESOP Committee, except to the extent the Trust
properly pays for such expenses.
Sec. 9.02. TERM. Each member of the ESOP Committee serves until the
appointment of his successor.
Sec. 9.03. POWERS. The ESOP Committee is empowered to assist the
Trustee to satisfy and operate the Plan in accordance with the terms of the
Plan, the Trust, the Code, and ERISA. In case of a vacancy in the membership of
the ESOP Committee, the remaining members of the ESOP Committee may exercise any
and all of the powers, authority, duties and discretion conferred upon the ESOP
Committee pending the filling of the vacancy.
Sec. 9.04. GENERAL. The ESOP Committee has the following powers and
duties:
(a) To select a Secretary, who need not be a member of the ESOP
Committee;
(b) To determine the rights of eligibility of an Employee to
participate in the Plan, the value of a Participant's Accrued Benefit
and the Nonforfeitable percentage of each Participant's Accrued
Benefit;
(c) To adopt rules of procedure and regulations and guidelines
necessary for the proper and efficient administration of the Plan
provided the rules are not inconsistent with the terms of this
Agreement;
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(d) To construe and enforce the terms of the Plan and the rules and
regulations it adopts, including interpretation of the Plan documents
and documents related to the Plan's operation;
(e) To assist the Trustee in crediting and distributing the Trust
Assets;
(f) To review and render decisions respecting a claim for (or denial of
a claim for) a benefit under the Plan;
(g) To furnish the Employer with information which the Employer may
require for tax or other purposes;
(h) To engage the service of agents whom it may deem advisable to
assist it with the performance of its duties;
(i) To engage the services of an Investment Manager or Managers (as
defined in ERISA Section 3(38)), each of whom will have full power and
authority to manage, acquire or dispose (or direct the Trustee with
respect to acquisition or disposition) of any Plan Asset under its
control;
(j) To establish a nondiscriminatory policy with regard to making
loans, if any, to Participants and Beneficiaries;
(k) To construe and interpret the Plan and the rules and regulations
adopted and to answer all questions arising in the administration,
interpretation and application of the Plan document and documents
related to the Plan's operation;
(l) To establish and maintain a funding standard account and to make
credits and charges to the account to the extent required by and in
accordance with the provisions of the Code;
(m) To direct the Trustee to borrow such sum or sums of money, to
assume indebtedness, to extend mortgages, and to obtain an Exempt Loan;
and
(n) To direct the Trustee to purchase Qualifying Employer Securities as
an investment of the Plan and Trust provided the Trustee does not pay
in excess of adequate consideration as defined under ERISA.
Notwithstanding any other provision herein to the contrary, the ESOP
Committee shall not interfere or cause the Trustee to violate the terms of the
Plan, the Trust, the Code, and ERISA. The ESOP Committee must exercise all of
its powers, duties and discretion under the Plan in a uniform and
nondiscriminatory manner. All decisions, determinations, directions,
interpretations, and applications of the Plan by the ESOP Committee shall be
final and binding upon all persons, including (but not limited to) the Company,
Employer, Trustee, and all Participants, Former
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Participants, Beneficiaries and Alternate Payees unless in violation of the
Plan, the Trust, ERISA, the Code or any federal or state laws.
If the ESOP Committee adopts a loan policy, pursuant to paragraph (j)
of this Section 9.04, the loan policy must be a written document and must
include: (1) the identity of the person or positions authorized to administer
the participant loan program; (2) a procedure for applying for the loan; (3) the
criteria for approving or denying a loan; (4) the limitations, if any, on the
types and amounts of loans available; (5) the procedure for determining a
reasonable rate of interest; (6) the types of collateral which may secure the
loan; and (7) the events constituting default and the steps the Plan will take
to preserve Plan Assets in the event of default. This Section 9.04 specifically
incorporates a written loan policy as part of the Plan.
Sec. 9.05. FUNDING POLICY. This Plan is designed to invest primarily in
Employer Securities, which is a Qualifying Employer Security with respect to the
Employer within the meaning of Sections 409(1) and 4975(e)(8) of the Code. The
Trustee, however, may invest in assets other than Employer Securities to provide
for expenses and distributions and to the extent as the Trustee and ESOP
Committee deem appropriate.
Sec. 9.06. MANNER OF ACTION. The decision of a majority of the members
of the ESOP Committee appointed and qualified controls.
Sec. 9.07. AUTHORIZED REPRESENTATIVE. The ESOP Committee may authorize
any one of its members, or its Secretary, to sign on its behalf any notices,
directions, applications, certificates, consents, approvals, waivers, letters or
other documents. The ESOP Committee must evidence this authority by an
instrument signed by all members.
Sec. 9.08. INTERESTED MEMBER. No member of the ESOP Committee may
decide or determine any matter concerning the distribution, nature or method of
settlement of his own benefits under the Plan, except in exercising an election
available to that member in his capacity as a Participant, unless the Plan
Administrator is acting alone in the capacity of the ESOP Committee.
Sec. 9.09. INDIVIDUAL ACCOUNTS. The ESOP Committee will maintain, or
direct the Trustee to maintain, a separate Account, or multiple Accounts, in the
name of each Participant to reflect the Participant's Accrued Benefit under the
Plan set forth below. The ESOP Committee must maintain one Account for the
Employer Securities held by the Trust and another Account for the General
Investments Account to reflect the Participant's interest in the Trust
attributable to assets other than Employer Securities. If a Participant
re-enters the Plan subsequent to his having a Forfeiture Break in Service (as
defined in Section 5.08 hereof), a separate Account for the Participant's
pre-Forfeiture Break in Service Accrued Benefit and a separate Account for his
post-Forfeiture Break in Service Accrued Benefit shall be maintained unless the
Participant's entire Accrued Benefit under the Plan is one hundred percent
(100%) Nonforfeitable.
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The ESOP Committee will make its allocations, or request the Trustee to
make its allocations, to the Accounts of the Participants in accordance with the
provisions of Section 9.11 hereof. The ESOP Committee may direct the Trustee to
maintain a temporary Segregated Investment Account in the name of a Participant
to prevent a distortion of income, gain or loss allocations under Section 9.11
hereof.
The Trustee shall create and maintain adequate records to reflect all
transactions of the Plan and to disclose the interest in the Plan of each
Participant, Former Participant, Beneficiary, or Alternate Payee who has an
undistributed interest in the Plan, as follows:
(a) INDIVIDUAL ACCOUNTS. The ESOP Committee may establish and maintain
for each such individual a Participant Employer Securities Account and
a Participant General Investments Accounts, which Accounts are
collectively referred to herein as an Account.
(b) GENERAL ACCOUNTS. The ESOP Committee may establish and maintain for
the Plan suspense accounts to be known as an "Unallocated Employer
Securities Account" and an "Unallocated General Investments Account."
(c) ACCOUNTS FOR TRANSFERRED PARTICIPANTS. In the event a Participant
transferred from one (1) Employer to another Employer during a Plan
Year, the ESOP Committee shall continue to maintain on its books such
Participant's Account without differentiation between Employers.
(d) RIGHTS IN TRUST FUND. The maintenance of individual Accounts is
only for accounting purposes, and a segregation of the assets of the
Plan for each Account shall not be required. Distributions and
withdrawals made from an Account shall be charged to the Account as of
the date paid.
Sec. 9.10. VALUE OF PARTICIPANT'S ACCRUED BENEFIT. The value of each
Participant's Accrued Benefit consists of that proportion of the net worth (at
fair market value) of the Trust Fund which the net credit balance in his Account
bears to the total net credit balance in the Accounts of all Participants. For
purposes of a distribution under the Plan, the value of a Participant's Accrued
Benefit is its value as of the Valuation Date immediately preceding the date of
the distribution.
Sec. 9.11. ALLOCATIONS TO PARTICIPANTS' ACCOUNTS. A "Valuation Date"
under this Plan is each Accounting Date and each interim valuation date
determined under Section 12.20 hereof. As of each Valuation Date, the ESOP
Committee must adjust General Investment Accounts to reflect net income, gain or
loss since the last Valuation Date. The valuation period
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is the period beginning the day after the last Valuation Date and ending on
the current Valuation Date. The Trustee will allocate the Employer
contributions, Participant Forfeitures, net income, gain or loss, if any, in
accordance with Article III hereof.
Sec. 9.12. INDIVIDUAL STATEMENT. As soon as practicable after the
Accounting Date of each Plan Year, but within the time prescribed by ERISA, and
the regulations under ERISA, the Plan Administrator, ESOP Committee, or Trustee
will deliver to each Participant (and to each Beneficiary) a statement
reflecting the condition of his Accrued Benefit as of that date and such other
information that ERISA requires be furnished the Participant or Beneficiary. No
Participant, except a member of the ESOP Committee, shall have the right to
inspect the records reflecting the Account of any other Participant.
Sec. 9.13. ACCOUNT CHARGED. The ESOP Committee shall charge all
distributions made to a Participant or to his Beneficiary from his Account,
against the Account of the Participant when made.
Sec. 9.14. UNCLAIMED ACCOUNT PROCEDURE. The Plan does not require the
ESOP Committee, the Plan Administrator, the Employer, or the Company to search
for, or to ascertain the whereabouts of, any Participant or Beneficiary. The
ESOP Committee, by certified or registered mail addressed to his last known
address of record with the ESOP Committee or the Employer, shall notify any
Participant, or Beneficiary, that he is entitled to a distribution under this
Plan, and the notice shall quote the provisions of this Section 9.14. If the
Participant, or Beneficiary, fails to claim his distributive share or make his
whereabouts known in writing to the ESOP Committee within six (6) months from
the date of mailing of the notice, the ESOP Committee may treat the
Participant's or Beneficiary's unclaimed payable Accrued Benefit as forfeited
and shall reallocate and use the amount of the unclaimed payable Accrued Benefit
to reduce the Employer's contribution for the Plan Year in which the Forfeiture
occurs.
If a Participant or Beneficiary who has incurred a Forfeiture of his
Accrued Benefit under the provisions of the first paragraph of this Section 9.14
makes a claim, at any time, for his forfeited Accrued Benefit, the ESOP
Committee shall restore the Participant's or Beneficiary's forfeited Accrued
Benefit to the same dollar amount as the dollar amount of the Accrued Benefit
forfeited, unadjusted for any gains or losses occurring subsequent to the date
of the Forfeiture. The ESOP Committee will make the restoration during the Plan
Year in which the Participant or Beneficiary makes the claim, first from the
amount, if any, of Participant Forfeitures the ESOP Committee otherwise would
allocate for the Plan Year, then from the amount, if any, of the Trust Fund net
income or gain for the Plan Year and then from the amount, or additional amount,
the Employer contributes to enable the ESOP Committee to make the required
restoration. The ESOP Committee must direct the Trustee to distribute the
Participant's or Beneficiary's restored Accrued Benefit to him not later than
sixty (60) days after the close of the Plan Year in which the ESOP Committee
restores the forfeited Accrued Benefit. The Forfeiture provisions of this
Section 9.14 apply solely to the
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Participant's or to the Beneficiary's Accrued Benefit derived from Employer
contributions and Participant Forfeitures.
END OF ARTICLE IX
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ARTICLE X
REPURCHASE OF EMPLOYER SECURITIES
Sec. 10.01. PUT OPTION. In the event Employer Securities are not
readily tradable on an established market, the Company will issue a "put option"
to each Participant receiving a distribution of Employer Securities from his
Employer Securities Account. The put option will permit the Participant to sell
the Employer Securities to the Company, at any time during two (2) option
periods, at the current fair market value. The first put option period runs for
a period of at least sixty (60) days commencing on the date of distribution of
Employer Securities to the Participant. The second put option period runs for a
period of at least sixty (60) days commencing on the first day of the subsequent
Plan Year. If a Participant (or Beneficiary) exercises his put option, the
Company must purchase the Employer Securities at fair market value upon the
terms provided under Section 10.04 hereof. The Company may grant the Trust an
option to assume the Company's rights and obligations at the time a Participant
exercises an option under this Section 10.01.
Sec. 10.02. RESTRICTION ON EMPLOYER SECURITIES. Except upon the prior
written consent of the Company, no Participant (or Beneficiary) may sell,
assign, give, pledge, encumber, transfer or otherwise dispose of any Employer
Securities now owned or subsequently acquired by him without complying with the
terms of this Article X. If a Participant (or Beneficiary) pledges or encumbers
any Employer Securities with the required prior written consent, any security
holder's rights with respect to such Employer Securities are subordinate and
subject to the rights of the Company.
Certificates for Employer Securities distributed to Participants,
Inactive Participants, Former Participants, or Beneficiaries thereof, shall
contain the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE TRANSFERABLE
ONLY UPON COMPLIANCE WITH THE TERMS OF THE T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN (AS AMENDED AND RESTATED,
EFFECTIVE MARCH 17, 1997) AND THE T.A. KYSER COMPANY EMPLOYEE
STOCK OWNERSHIP TRUST (AS AMENDED AND RESTATED, EFFECTIVE
MARCH 17, 1997) (COLLECTIVELY REFERRED TO AS THE "PLAN"),
WHICH GRANTED TO T.A. KYSER COMPANY (THE "COMPANY") A RIGHT OF
FIRST REFUSAL. THE COMPANY WILL FURNISH TO THE RECORD HOLDER
OF THIS CERTIFICATE WITHOUT CHARGE UPON WRITTEN REQUEST TO THE
COMPANY AT ITS PRINCIPAL PLACE OF BUSINESS OR REGISTERED
OFFICE A COPY OF THE
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PLAN. THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT
BEEN REGISTERED WITH THE UNITED STATES SECURITIES AND
EXCHANGE COMMISSION UNDER THE SECURITIES LAWS OF 1933, AS
AMENDED, OR UNDER THE SECURITIES LAWS OF ANY STATE IN WHICH
THEY HAVE BEEN SOLD. WITHOUT SUCH REGISTRATION, SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED, UNLESS AN EXEMPTION FROM SUCH
REGISTRATION IS AVAILABLE.
On the front of each such certificate, there may be placed the
following notation in capital letters:
RESTRICTIONS ON TRANSFER STATED ON REVERSE SIDE
Sec. 10.03. LIFETIME TRANSFER AND RIGHT OF FIRST REFUSAL. If any
Participant (or Beneficiary) who receives Employer Securities under this Plan
desires to dispose of any of his Employer Securities for any reason during his
lifetime (whether by sale, assignment, gift or any other method of transfer), he
first must offer the Employer Securities for sale to the Company. The ESOP
Committee may require a Participant (or Beneficiary) entitled to a distribution
of Employer Securities to execute an appropriate stock transfer agreement
(evidencing the right of first refusal) prior to receiving a certificate of
Employer Securities.
In the case of an offer by a third party, the offer to the Company is
subject to all the terms and conditions set forth in Section 10.04 hereof based
on the price equal to the fair market value per share and payable in accordance
with the terms of Section 10.04 hereof unless the selling price and terms
offered to the Participant by the third party are more favorable to the
Participant than the selling price and terms of Section 10.04 hereof, in the
event the selling price and terms of the offer of the third party apply. The
Company must give written notice to the offering Participant of its acceptance
of the Participant's offer within fourteen (14) days after the Participant has
given written notice to the Company or the Company's rights under this Section
10.03 will lapse. The Company may grant the Trust the option to assume the
Company's rights and obligations with respect to all or any part of the Employer
Securities offered to the Company under this Section 10.03.
Notwithstanding any provision to the contrary herein, the Trustee is
prohibited from exercising this first right of refusal if the fair market value
at the time of exercise is higher than the last Valuation Date unless the ESOP
Committee and the Trustee determine such action shall not have an effect on the
qualification of this Plan.
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Sec. 10.04. PAYMENT OF PURCHASE PRICE. If the Company (or the Trustee,
at the direction of the ESOP Committee) exercises an option to purchase a
Participant's Employer Securities pursuant to an offer given under Section 10.03
hereof, the purchaser(s) must make payment in lump sum or, if the distribution
to the Participant (or to his Beneficiary) constitutes a Total Distribution, in
substantially equal installments over a period not exceeding five (5) years. A
"Total Distribution" to a Participant (or to a Beneficiary) is the distribution,
within one taxable year of the recipient, of the entire balance to the
Participant's credit under the Plan. In the case of a distribution which is not
a Total Distribution or which is a Total Distribution with respect to which the
purchaser(s) will make payment in lump sum, the purchaser(s) must pay the
Participant (or Beneficiary) the fair market value of the Employer Securities
repurchased no later than thirty (30) days after the date the Participant (or
Beneficiary) exercises the option. In the case of a Total Distribution with
respect to which the purchaser(s) will make installment payments, the
purchaser(s) must make the first installment payment no later than thirty (30)
days after the Participant (or Beneficiary) exercises the put option. For
installment amounts not paid within thirty (30) days of the exercise of the put
option, the purchaser(s) must evidence the balance of the purchase price by
executing a promissory note, delivered to the selling Participant at the
Closing. The note delivered at Closing (as defined in Section 10.06 hereof) must
bear a reasonable rate of interest, determined as of the Closing Date (as
defined in Section 10.06 hereof), and the purchaser(s) must provide adequate
security. The note must provide for equal annual installments with interest
payable with each installment, the first installment being due and payable one
year after the Closing Date. The note further must provide for acceleration in
the event of thirty (30) days' default of the payment on interest or principal
and must grant to the maker of the note the right to prepay the note in whole or
in part at any time or times without penalty; provided, however, the
purchaser(s) may not have the right to make any prepayment during the calendar
year or fiscal year of the Participant (or Beneficiary) in which the Closing
Date occurs.
Sec. 10.05. NOTICE. A person has given Notice permitted or required
under this Article X when the person deposits the Notice in the United States
mail, first class, postage prepaid, addressed to the person entitled to the
Notice at the address currently listed for him in the records of the ESOP
Committee. Any person affected by this Article X has the obligation of notifying
the ESOP Committee of any change of address.
Sec. 10.06. TERMS AND DEFINITIONS. For purposes of this Article X:
(a) "Fair market value" means the value of the Employer Securities (i)
determined as of the date of the exercise of an option if the exercise
is by a Disqualified Person, or (ii) in all other cases, determined as
of the most recent Accounting Date. The Trustee must determine fair
market value of Employer Securities for all purposes of the Plan by
engaging the services of an independent appraiser or independent
financial advisor ("independent party"). The ESOP Committee shall rely
upon a determination of valuation of Employer Securities made by the
independent party selected by the Trustee. The ESOP Committee shall
rely upon the
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independent party selected by the Trustee to be (1) independent
as required by law, and (2) qualified and experienced in
preparing valuations of closely-held corporations for ESOP purposes.
(b) "Notice" means any offer, acceptance of an offer, payment or any
other communications.
(c) "Beneficiary" includes the legal representative of a deceased
Participant.
(d) "Closing" means the place, date, and time ("Closing Date") to which
the selling Participant (or his Beneficiary) and purchaser may agree
for purposes of a sale and purchase under this Article X, provided
Closing must take place not later than thirty (30) days after the
exercise of an offer under Section 10.03 hereof.
(e) Stock that is not "readily tradable" is stock that is not publicly
traded or that is subject to a trading limitation. A security is
"publicly traded" if it is listed on a registered national securities
exchange or is quoted on a system sponsored by a registered national
securities exchange. A "trading limitation" is a restriction under any
federal or state securities law or regulation or an agreement that
makes the security not as freely tradable as one not subject to the
restriction.
Sec. 10.07. CERTAIN RIGHTS WITH RESPECT TO EMPLOYER SECURITIES. Any
Employer Securities, if they are not publicly traded when distributed, or are
subject to a trading limitation when distributed, must be subject to a put
option. The put option is to be exercisable only by the Participant, the
Participant's Beneficiary, and Alternate Payee, or by a person "including an
estate or its distributee" to whom the Employer Securities pass by reason of a
Participant's death. The put option must permit the Participant to put the
Employer Securities to the Company at fair market value.
Sec. 10.08. TRUSTEE'S PUT OPTION. The ESOP Committee may authorize the
Trustee to put the shares of Employer Securities held by the Trust to the
Company to be purchased by the Company at the then fair market value in the
event that a distribution from a Participant's Employer Securities Account is to
be made in cash, or a distribution pursuant to Section 12.25 hereof, or the
Trustee expects to incur Plan expenses which will not be paid directly by the
Employer and the Trustee determines that the Trust has insufficient cash to make
the anticipated distributions or pay Plan expenses.
Sec. 10.09. SECURITY HOLDER. Notwithstanding any provision herein, the
Trustee shall not otherwise obligate itself to acquire Employer Securities from
a particular shareholder at an indefinite time determined upon the happening of
an event such as, but not limited to, the death of a shareholder.
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Sec. 10.10. PROVISIONS NON-TERMINABLE. The provisions described in this
Article X are non-terminable even if the Exempt Loan is repaid or the Plan
ceases to be an employee stock ownership plan.
END OF ARTICLE X
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ARTICLE XI
PROVISIONS RELATING TO INSURANCE AND INSURANCE COMPANY
Sec. 11.01. INSURANCE BENEFIT. The Company may elect to provide
incidental life insurance benefits for Insurable Participants who consent to
life insurance benefits by signing the appropriate insurance company application
form. No incidental life insurance benefit for any Participant will be purchased
prior to an allocation to the Participant's Account. If the Policy is on the
joint lives of the Participant and another person, that Policy may not be
maintained if that other person predeceases the Participant.
The Company will direct the Trustee as to the insurance company and
insurance agent through which the Trustee is to purchase the insurance
Contracts, the amount of the coverage and the applicable dividend plan. Each
application for a Policy, and the Policies themselves, must designate the
Trustee as sole owner, with the right reserved to the Trustee to exercise any
right or option contained in the Policies, subject to the terms and provisions
of this Plan. The Trustee must be the named beneficiary for the Account of the
insured Participant. Proceeds of insurance contracts paid to the Participant's
Account under this Article XI are subject to the distribution requirements of
Article V and of Article VI hereof.
The premiums on any incidental benefit insurance Contract covering the
life of a Participant will be charged against the Account of that Participant.
All incidental benefit insurance Contracts issued under the Plan will be held as
assets of the Plan.
The aggregate of life insurance premiums paid for the benefit of a
Participant, at all times, may not exceed the following percentages of the
aggregate of the Employer contributions allocated to any Participant's Account:
(i) forty-nine percent (49%) in the case of the purchase of ordinary life
insurance Contracts; or (ii) twenty-five percent (25%) in the case of the
purchase of term life insurance or universal life insurance Contracts. If a
combination of ordinary life insurance Contract(s) and term life insurance or
universal life insurance Contract(s) are purchased, then the sum of one-half
(1/2) of the premiums paid for the ordinary life insurance Contract(s) and the
premiums paid for the term life insurance or universal life insurance
Contract(s) may not exceed twenty-five percent (25%) of the Employer
contributions allocated to any Participant's Account.
Sec. 11.02. LIMITATION ON LIFE INSURANCE PROTECTION. No life insurance
protection for any Participant will be continued beyond his Annuity Starting
Date. If the Plan holds any incidental benefit insurance Contract(s) on the life
of a Participant when he terminates his employment (other than by reason of
death), the following provisions shall apply:
(a) If the entire cash value of the Contract(s) is vested in the
terminating Participant, or if the Contract(s) will have no cash value
at the end of the Policy year in which termination of employment
occurs, the ESOP Committee shall direct the Trustee to transfer the
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Contract(s) to the Participant endorsed so as to vest in the transferee
all right, title and interest to the Contract(s), free and clear of the
Plan; subject however, to restrictions as to surrender or payment of
benefits as the Issuing Insurance Company may permit and as the ESOP
Committee directs;
(b) If only part of the cash value of the Contract(s) is vested in the
terminating Participant, then to the extent the Participant's interest
in the cash value of the Contract(s) is not vested, the Participant's
interest in the value of his Account attributable to Trust Assets other
than incidental benefit insurance contracts may be adjusted and proceed
as in Section 11.02(a) above, or the ESOP Committee may direct the
Trustee to effect a loan from the Issuing Insurance Company on the sole
security of the Contract(s) for an amount equal to the difference
between the cash value of the Contract(s) at the end of the policy year
in which termination of employment occurs and the amount of the cash
value that is vested in the terminating Participant, and the
Contract(s) endorsed must be transferred so as to vest in the
transferee all right, title and interest to the Contract(s), free and
clear of the Plan; subject however, to the restrictions as to surrender
or payment of benefits as the Issuing Insurance Company may permit and
the ESOP Committee directs;
(c) If no part of the cash value of the Contract(s) is vested in the
terminating Participant, the Contract(s) must be surrendered for cash
proceeds as may be available.
In accordance with the written direction of the ESOP Committee, any
transfer of Contract(s) under this Section 11.02 will be made on the
Participant's Annuity Starting Date (or as soon as administratively practicable
after that date). No Contract may be transferred under this Section 11.02 which
contains a method of payment not specifically authorized by Article VI hereof.
In this regard, such a Contract must be converted to cash and the ESOP Committee
may direct the Trustee to distribute the cash instead of the Contract, or before
making the transfer, require the Issuing Insurance Company to delete the
unauthorized method of payment option from the Contract.
Sec. 11.03. DEFINITIONS. For purposes of this Article XI:
(a) "Policy" means an ordinary life insurance contract or a term life
insurance Contract issued by an insurer on the life of a Participant.
(b) "Issuing Insurance Company" is any life insurance company which has
issued a Policy upon application by the Trustee or ESOP Committee under
the terms of this Plan.
(c) "Contract" or "Contracts" means a Policy of insurance. In the event
of any conflict between the provisions of this Plan and the terms of
any Contract or Policy of insurance issued in accordance with this
Article XI, the provisions of the Plan control.
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(d) "Insurable Participant" means a Participant to whom an insurance
company, upon an application being submitted in accordance with the
Plan, will issue insurance coverage, either as a standard risk or as a
risk in an extra mortality classification.
Sec. 11.04. DIVIDEND PLAN. The dividend plan is premium reduction
unless the Company directs the Trustee to the contrary. All dividends from a
Contract must be used to purchase insurance benefits or additional insurance
benefits for the Participant on whose life the Issuing Insurance Company has
issued the Contract. All Policies issued on the lives of Participants under the
Plan must be arranged, if possible, to have the same premium due date and all
ordinary life insurance Contracts to contain guaranteed cash values with as
uniform basic options as are possible to obtain. The term "dividends" includes
Policy dividends, refunds of premiums and other credits.
Sec. 11.05. INSURANCE COMPANY NOT A PARTY TO AGREEMENT. No insurance
company, solely in its capacity as an Issuing Insurance Company, is a party to
this Plan nor is the insurance company responsible for its validity.
Sec. 11.06. INSURANCE COMPANY NOT RESPONSIBLE FOR TRUSTEE'S ACTIONS. No
insurance company, solely in its capacity as an Issuing Insurance Company, need
examine the terms of this Plan nor is responsible for any action taken by the
Trustee.
Sec. 11.07. INSURANCE COMPANY RELIANCE ON TRUSTEE'S SIGNATURE. For the
purpose of making application to an insurance company and in the exercise of any
right or option contained in any Policy, the insurance company may rely upon the
signature of the Trustee or any member of the ESOP Committee and is saved
harmless and completely discharged in acting at the direction and authorization
of the Trustee or ESOP Committee.
Sec. 11.08. ACQUITTANCE. An insurance company is discharged from all
liability for any amount paid to the Plan, and is not obligated to see to the
distribution or further application of any moneys it so pays.
Sec. 11.09. DUTIES OF INSURANCE COMPANY. Each insurance company must
keep such records, make such identification of Contracts, funds and accounts
within funds, and supply such information as may be necessary for the proper
administration of the Plan under which it is carrying insurance benefits.
END OF ARTICLE XI
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ARTICLE XII
MISCELLANEOUS
Sec. 12.01. EVIDENCE. Anyone required to give evidence under the terms
of the Plan may do so by certificate, affidavit, document or other information
which the person to act in reliance may consider pertinent, reliable and
genuine, and to have been signed, made or presented by the proper party or
parties. The ESOP Committee is fully protected in acting and relying upon any
evidence described under the immediately preceding sentence.
Sec. 12.02. NO RESPONSIBILITY FOR PLAN ACTIONS. The ESOP Committee does
not have any obligation or responsibility with respect to any action required by
the Plan or Trust to be taken by the Trustee, Employer, the Company, the Plan
Administrator, any Participant or Eligible Employee, or for the failure of any
of the above persons to act or make any payment or contribution, or to otherwise
provide any benefit contemplated under this Plan. The Plan does not require the
ESOP Committee to determine if a loan obtained by the Trustee is an Exempt Loan
(as defined in Section 12.21 hereof), the Trustee is purchasing Qualifying
Employer Securities (as defined in Section 1.72 hereof), the Trustee is
purchasing Qualifying Employer Securities for no more than adequate
consideration (as defined in ERISA), or to collect any contribution required
under the Plan, or to determine the correctness of the amount of any Employer
contribution. The ESOP Committee need not inquire into or be responsible for any
action or failure to act on the part of the others, or on the part of any other
person who has any responsibility regarding the management, administration or
operation of the Plan, whether by the express terms of the Plan, the Trust or by
a separate agreement authorized by the Plan or by the applicable provisions of
ERISA.
Sec. 12.03. FIDUCIARIES NOT INSURERS. The ESOP Committee, the Plan
Administrator, the Company, and the Employer in no way guarantee the Trust Fund
from loss or depreciation. The Employer and the Company do not guarantee the
payment of any money which may be or becomes due to any person from the Trust
Fund.
Sec. 12.04. WAIVER OF NOTICE. Any person entitled to notice under the
Plan may waive the notice, unless the Code or Treasury regulations prescribe the
notice or ERISA specifically or impliedly prohibits such a waiver.
Sec. 12.05. SUCCESSORS. The Plan is binding upon all persons entitled
to benefits under the Plan, their respective heirs and legal representatives,
upon the Employer, its successors and assigns, and upon the Trustee, the ESOP
Committee, the Plan Administrator and their successors.
Sec. 12.06. WORD USAGE. Words used in the masculine also apply to the
feminine and neuter where applicable, and wherever the context of the Plan
dictates, the plural includes the singular and the singular includes the plural.
Whenever a noun, or pronoun in lieu thereof, is used
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in this Plan in plural form and there may be only one person within the scope
of the word so used, or in singular form and there be more than one person
within the scope of the word so used, such word, or pronoun used in lieu
thereof, shall have a singular or plural meaning, as the case may be. The
words "herein," "hereof," and "hereunder" and other similar compounds of the
word "here" shall mean and refer to the entire Plan, not to any particular
provision or Section. Reference to Plan means this Plan. Article and Section
headings are included for convenience of reference and are not intended to
add to, or subtract from, the terms of the Plan.
Sec. 12.07. STATE LAW. Texas law will determine all questions arising
with respect to the provisions of this Agreement, such as (but not limited to)
the execution, construction, administration and enforcement of the Plan, except
to the extent superseded by federal law.
Sec. 12.08. EMPLOYMENT NOT GUARANTEED. Nothing contained in this Plan,
or with respect to the establishment of the Trust, or any modification or
amendment to the Plan or Trust, or in the creation of any Account, or the
payment of any benefit, gives any Employee, Participant, Former Participant or
any Beneficiary any right to continue employment, any legal or equitable right
against the Company, the Employer, or Employee of the Employer, or its agents or
employees, the ESOP Committee, or against the Plan Administrator, except as
expressly provided by the Plan, the Trust, ERISA or by a separate agreement.
Sec. 12.09. SEVERABILITY. Notwithstanding any provision contained in
the Plan to the contrary, the provisions of this Plan shall be deemed severable
and the validity or unenforceability of any provision shall not affect the
validity or enforceability of the other provisions thereof.
Sec. 12.10. CONTRARY PROVISIONS. The provisions of this Article XII
shall govern notwithstanding anything contained in the Plan to the contrary.
Sec. 12.11. NOTICE TO EMPLOYEES. Notice of the Plan and of any
amendments thereto, of eligibility of each Employee, and notice of such other
matters as may be required by law or this instrument, shall be given by the
Employer to the Employees in such form as the ESOP Committee may deem
appropriate and reasonable and in conformity to lawful requirements.
Sec. 12.12. AGREEMENT OF PARTICIPANTS. Each Participant, by becoming
such, for himself or herself, and such Participant's heirs, executors,
administrators, legal representatives, and Beneficiaries, ipso facto, approves
and agrees to be bound by the provisions of this Plan.
Sec. 12.13. ACTION BY EMPLOYERS. Any written action herein permitted or
required to be taken by an Employer shall be by resolution of its board of
directors or by written instrument executed by a person or group of persons who
has been authorized by resolution of its board of directors as having authority
to take such action.
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Sec. 12.14. ADOPTION OF THE PLAN BY A CONTROLLED GROUP MEMBER. Any
business enterprise which on or after the Effective Date is or becomes a member
of a group of corporations described in Code Section 409(1) that includes the
Company shall be authorized to adopt the Plan for the benefit of its eligible
employees if approval of its board of directors is obtained.
(a) METHOD OF ADOPTING THE PLAN BY AN AFFILIATE. In order to adopt the
Plan, the board of directors of the adopting Employer must approve a
resolution expressly adopting the Plan for the benefit of its Employees
and the requirements set forth in Section 1.51 hereof must be
satisfied. The Company may require the Employer to authorize the
appropriate officer of such adopting Employer to contribute from time
to time, for purposes of the Plan, such sum as may be determined by the
board, to be such adopting Employer's contribution for the benefit of
Participants who are employed by such adopting Employer.
(b) TRANSMITTAL OF RESOLUTION. Upon the Company's request, a certified
copy of the adopting Employer's resolution shall be transmitted to the
Company and approval of the Board of Directors shall be deemed to
constitute the adoption of the Plan by the adopting Employer as of the
date specified in such adopting Employer's resolution or other
agreement.
Sec. 12.15. DISASSOCIATION OF ANY EMPLOYER FROM PLAN. Any Employer may
withdraw from the provisions of this Plan at any time upon the expiration of
thirty (30) days after delivery of written notice of its intent to do so to the
ESOP Committee and the Board, and shall thereupon cease to be a party to this
Plan. In such event, liability for further contributions for such Employer shall
cease, and the money attributable to its then Participants and Former
Participants shall either be distributed to the Participants or Former
Participants, if it elects to terminate the Plan as to it, in the same manner as
provided in the case of termination of the whole Plan, or shall be transferred
to an independent successor plan and trust that it may establish for the benefit
of its own employees, which shall be deemed a continuation of this Plan.
Withdrawal from the Plan by an Employer shall not affect the continued operation
of the Plan with respect to the Company and other Employers.
Sec. 12.16. AUDIT.
a. If an audit of the Plan's records shall be required
by ERISA and the regulations thereunder for any Plan
Year, the ESOP Committee shall direct the Trustee to
engage on behalf of all Participants any independent,
qualified certified public accountant for that
purpose. Such accountant shall, after an audit of the
books and records of the Plan in accordance with
generally
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accepted auditing standards within a reasonable
period after the close of the Plan Year,
furnish to the Company and the ESOP Committee a
report of his, her, or its audit setting forth his,
her, or its opinion that each of the following
statements, schedules or lists, or any other
statements that are required by ERISA or the
Secretary of Labor to be filed with the Plan's annual
report, are presented fairly in conformity with
generally accepted accounting principles applied
consistently:
(1) Statement of the assets and liabilities of
the Trust;
(2) Statement of changes in net assets available
to the Trust;
(3) Statement of receipts and disbursements of
all assets held for investment purposes;
(4) A schedule of all loans of fixed income
obligations and defaults at the close of the
Plan Year;
(5) A list of all leases in default or
uncollectible during the Plan Year;
(6) The most recent annual statement of assets and
liabilities of any bank common or collective
trust fund in which the Plan Assets are
invested or such information regarding
separate accounts or trusts with a bank or
insurance company as the ESOP Committee
deems necessary;
(7) A schedule of each transaction or series of
transactions involving an amount in excess
of three percent (3%) of Plan Assets; and
(8) Other schedules and statements necessary to
render an opinion.
All auditing and accounting fees may be paid by the
Employer, and if not, shall be an expense of the Plan
and may, at the election of the ESOP Committee, be
paid from the Trust.
b. If some or all of the information necessary to enable
the ESOP Committee to comply with ERISA is maintained
by a bank, insurance company, or similar institution
regulated, supervised, and subject to periodic
examination by state or federal agencies, it shall
transmit and certify the accuracy of that information
to the ESOP Committee as provided by ERISA within one
hundred twenty (120) days after the end of the Plan
Year or such other date as may be prescribed under
regulations of the Secretary of Labor.
Sec. 12.17. BONDING. Every Fiduciary, for the faithful performance of
its duties under the Plan to the extent required by ERISA, shall be bonded in
the amount required under ERISA; provided, however, that the minimum bond shall
be One Thousand and No/100 Dollars ($1,000). The amount of funds handled shall
be determined at the beginning of each Plan Year by the amount of the funds
handled by such person, group, or class to be covered and their predecessors, if
any, during the preceding Plan Year or if there is no preceding Plan Year, then
the amount of the funds to be handled during the then current year. The bond
shall provide protection to the Plan against any and all loss by reason of acts
of fraud or dishonesty by the Fiduciary, alone or in connivance with
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others. The security shall be a corporate security as the term is used in
Section 412(a)(2) of ERISA, and the bond shall be in a form approved by the
Secretary of Labor. Notwithstanding anything in the Plan to the contrary, the
cost of such bond shall be an expense of, and may at the election of the ESOP
Committee be paid from, the Trust or by the Employer.
Sec. 12.18. NAMED FIDUCIARY. The "Named Fiduciaries" of this Plan are
(1) the Trustee, (2) the Plan Administrator, and (3) any Investment Manager
appointed hereunder. The Named Fiduciaries shall have only those specified
powers, duties, responsibilities, and obligations as are specifically given them
under this Plan. In general, the Employer shall have the sole responsibility for
making the contributions provided for under the Plan. The Company shall have the
sole authority to appoint and remove the Trustee and the Plan Administrator. The
Plan Administrator shall have the sole responsibility for the administration of
the Plan. The Trustee shall have the sole responsibility to determine if a loan
secured by the Trustee on behalf of the Plan is an Exempt Loan (as defined in
Section 12.21 hereof), to determine that the Employer Securities purchased by
the Trust are Qualifying Employer Securities, to determine that the purchase
price paid to purchase Qualifying Employer Securities does not violate the
prohibited transaction rules, and for management of the assets held under the
Trust except those assets, management of which have been delegated to an
Investment Manager who shall be solely responsible for the management of the
assets delegated to it or as specifically provided under this Plan. Each Named
Fiduciary warrants that any directions given, information furnished, or action
taken by it shall be taken in accordance with the provisions of this Plan,
authorizing or providing for such direction, information, or action. Except for
the Trustee, each other Named Fiduciary may rely upon any such direction,
information, or action of another Named Fiduciary as being proper under this
Plan and is not required under this Plan to inquire into priority of any such
direction, information, or action. It is intended under this Plan that the Named
Fiduciary shall be responsible for the proper exercise of its own powers,
duties, responsibilities or obligations under this Plan. No Named Fiduciary
shall guarantee the Plan in any manner against investment lost or depreciation
in asset value.
Sec. 12.19. SECURITIES AND EXCHANGE COMMISSION APPROVAL. The Company
may request an interpretative letter from the Securities and Exchange Commission
stating that the transfers of Employer Securities contemplated thereunder do not
involve transactions requiring a registration of such Employer Securities under
the Securities Exchange Act of 1933. In the event a favorable interpretative
letter is not obtained, the Company reserves the right to amend the Plan, to
amend the Plan retroactively for an effective date to obtain a favorable
interpretative letter, or to terminate the Plan.
Sec. 12.20. VALUATION OF TRUST. The Trust Fund must be valued as of
each Accounting Date, and in addition, as of transaction date with any
Disqualified Person, to determine the fair market value of each Participant's
Accrued Benefit in the Plan. The Trust Fund must also be valued on such other
dates, as directed by the ESOP Committee. If a Valuation Date would otherwise
occur on a Saturday, Sunday, or Company holiday, then the Valuation Date shall
mean the preceding business day. For the purposes of each such valuation, the
assets of the Trust Fund
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shall be valued at their respective current fair market value, and the amount
of any obligations for which the Trust Fund may be liable shall be deducted
from the total value of the assets. With respect to activities carried on by
the Plan, an independent appraiser meeting requirements similar to those
prescribed by Treasury Regulations under Code Section 170(a)(1) must perform
all valuations of Employer Securities which are not readily tradeable on an
established securities market.
Sec. 12.21. EXEMPT LOAN. This Section 12.21 specifically authorizes the
Trustee to enter into an Exempt Loan transaction. The Board may empower the
Company to authorize the guarantee or making by the Employer of any such loan.
The following terms and conditions will apply to any Exempt Loan.
(A) The proceeds of the loan will be used within a reasonable time
after receipt only for any or all of the following purposes: (i) to
acquire Employer Securities, (ii) to repay such loan, or (iii) to repay
a prior Exempt Loan. Except as provided under Article X hereof, no
Employer Securities acquired with the proceeds of an Exempt Loan may be
subject to a put, call or other option, or buy-sell or similar
arrangement while held by and when distributed from this Plan, whether
or not this Plan is then an employee stock ownership plan.
(B) The interest rate of the loan may not be more than a reasonable
rate of interest.
(C) Any collateral pledged to the creditor must consist only of the
assets purchased by the borrowed funds and those assets used as
collateral on the prior Exempt Loan repaid with the proceeds of the
current Exempt Loan.
(D) The creditor may have no recourse against the Plan under the loan
except with respect to such collateral given for the loan,
contributions (other than contributions of Employer Securities) that
the Employer makes to the Plan to meet its obligations under the loan,
and earnings attributable to such collateral and the investment of such
contributions. The payment made with respect to an Exempt Loan by the
Plan during a Plan Year must not exceed an amount equal to the sum of
such contributions and earnings received during or prior to the year
less such payments in prior years.
(E) In the event of default upon the loan, the value of Plan Assets
transferred in satisfaction of the loan must not exceed the amount of
the default, and if the lender is a Disqualified Person, the loan must
provide for transfer of Plan Assets upon default only upon and to the
extent of the failure of the Plan to meet the payment schedule of the
loan.
(F) All assets acquired with the proceeds of an Exempt Loan must be
added to and maintained in a Suspense Account. In withdrawing assets
from the Suspense Account, the provisions of Treasury Regulation
Sections 54.4975-7(b)(8) and (15) will be applied as if all securities
in the Suspense Account were encumbered. Notwithstanding any other
provision herein, upon the payment of any portion of the loan, assets
in the Suspense Account shall be
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released from encumbrances. For each Plan Year during the duration
of the loan, the number of Employer Securities released must equal
the number of encumbered Employer Securities held immediately before
release for the current Plan Year multiplied by a fraction of (i)
the numerator of which is the amount of principal paid under the
purchase contract or the loan agreement for the current Plan Year;
(ii) the denominator of which is the total of the all principal to
be paid for the current and all future Plan Years during the term of
the note (determined without reference to any possible extensions or
renewals thereof); provided the terms of the Exempt Loan satisfy all
the requirements under Treasury Regulation Section
54.4975-7(b)(8)(ii). At the option of the Company, or if the Exempt
Loan does not contain the following characteristics: (1) the annual
payments of principal and interest (at a cumulative rate) are at
least as rapid as level annual payments of such amounts over ten
years, (2) the portion of each loan payment treated as interest does
not exceed the amount of payment that would be treated as interest
under standard loan amortization tables, and (3) the loan term
(including extensions and renewals) does not exceed ten years, then
interest paid and to be paid in the future on the Exempt Loan shall
be included in the numerator and denominator of the fraction. The
number of future Plan Years under the loan must be definitely
ascertainable and must be determined without taking into account any
possible extension or renewal periods. If the interest rate under
the loan is variable, the interest to be paid in future Plan Years
must be computed by using the interest rate applicable as of the end
of the Plan Year. If the collateral includes more than one class of
Employer Securities, the number of Employer Securities of each class
to be released for a Plan Year must be determined by applying the
same fraction to each such class. The ESOP Committee will allocate
assets withdrawn from the Suspense Account to the Accounts of
Participants who otherwise share in the allocation of the Employer's
contribution for the Plan Year for which the portion of the loan
resulting in the release of the assets has been paid in accordance
with the provisions of subparagraph (d)(ii) of paragraph (1)
subsection (A) of Section 3.04. The ESOP Committee consistently will
make this allocation as of each Accounting Date, and of any special
Valuation Date if directed by the ESOP Committee, on the basis of
non-monetary units, taking into account the relative Compensation of
all such Participants for such Plan Year.
(G) A loan may be obtained provided the loan is primarily for the
benefit of the Plan Participants and Beneficiaries of the Plan.
(H) Notwithstanding any other provision herein, the same proportion of
each class of Qualifying Employer Securities shall be forfeited,
subject to the Exempt Loan provisions herein allocable to the
Participant's Account, if more than one class of Qualifying Employer
Securities subject to the Exempt Loan provisions have been allocated to
a Participant's Employer Securities Account.
Sec. 12.22. RECORDS AND STATEMENTS. The records pertaining to the Plan
shall be open to the inspection of the Plan Administrator, ESOP Committee and
the Employer at all
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reasonable times and may be audited from time to time by any person or
persons as the Company or ESOP Committee may specify in writing. The ESOP
Committee may direct the Trustee to furnish the ESOP Committee or Plan
Administrator with whatever information relating to the Trust Fund the Plan
Administrator or ESOP Committee considers necessary.
Sec. 12.23. PARTIES TO LITIGATION. Except as otherwise provided by
ERISA, no Participant or Beneficiary is a necessary party or is required to
receive notice of process in any court proceeding involving the Plan or any
fiduciary of the Plan. Any final judgment entered in any proceeding will be
conclusive upon the Employer, the Plan Administrator, the ESOP Committee, the
Trustee, Participants and Beneficiaries.
Sec. 12.24. PROFESSIONAL AGENTS. The Company may employ and direct the
Trustee to pay from the Trust Fund reasonable compensation to agents, financial
advisors, appraisers, attorneys, accountants, investment managers, and other
persons to advise the Trustee as in its opinion may be necessary. The Company
may delegate to any agent, financial advisor, appraiser, attorney (which may be
counsel of the Employer), accountant, investment manager, or other person
selected by it any non-Trustee power or duty vested in it by the Plan.
Sec. 12.25. DISTRIBUTION OF TRUST FUND.
(A) UNREGISTERED EMPLOYER SECURITIES. If Employer Securities held in a
Participant Employer Securities Account are unregistered Employer Securities,
all distributions under the Plan will be made in Employer Securities. The
Participant (or his Beneficiary), however, may elect in writing to have his
Accounts distributed in cash. At the discretion of the ESOP Committee, the
Trustee may pay in cash any fractional security share and any funds in the
Participant General Investments Account to which a Participant or his
Beneficiary is entitled. At the discretion of the ESOP Committee, the Trustee
may apply any balance in a Participant General Investments Account to provide
whole shares of Employer Securities for distribution.
(B) REGISTERED EMPLOYER SECURITIES. If Employer Securities held in a Participant
Employer Securities Account are registered Employer Securities, all
distributions under the Plan will be made only as directed by the ESOP Committee
valued at the time of distribution. Distribution of a Participant's Account(s)
will be made in whole shares of Employer Securities, cash or a combination
thereof, as determined by the ESOP Committee; provided, however, that the ESOP
Committee shall notify the Participant of his right to demand distribution of
his Account(s) entirely in whole shares of Employer Securities. At the
discretion of the ESOP Committee, the Trustee may pay in cash any fractional
security share to which a Participant or his Beneficiary is entitled. In the
event the Trustee is to make a distribution in shares of Employer Securities,
any balance in a Participant General Investments Account may be applied to
provide whole shares of Employer Securities for distribution at the then value.
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(C) DIVIDENDS. Notwithstanding the preceding provisions of this Section 12.25,
the Trustee, if directed in writing by the ESOP Committee, shall pay to the
Participant, in cash, any cash dividends on Employer Securities allocated, or
allocable to Participant Employer Securities Accounts pursuant to Section
3.05(d) of the Plan. The ESOP Committee's direction must state whether the
Trustee is to pay the cash dividend distributions currently, or within the
ninety (90) day period following the close of the Plan Year in which the
Employer pays the dividends to the Trust. The ESOP Committee may request the
Employer to pay dividends on Employer Securities directly to Participants.
Sec. 12.26. DISTRIBUTION DIRECTIONS. If no one claims a payment or
distribution made from the Plan, disposition of the payment will be made in
accordance with the direction of the ESOP Committee.
Sec. 12.27. WITHHOLDING FOR ANY PAYMENT OF TAXES. If any assets of the
Plan, or any benefits payable under the Plan, shall become liable for the
payment of any estate, inheritance, income, or other tax, charge or assessment,
which in the Company's opinion the Trustee shall or may be required to pay, the
ESOP Committee may direct the Trustee to pay or withhold such tax, charge or
assessment out of any monies or other property in Trustee's hands for the
account of the person whose interest hereunder are liable for such tax. The ESOP
Committee may require such releases or other documents from any lawful taxing
authority and may require such indemnity from such Beneficiary the ESOP
Committee shall deem necessary. The Plan may provide any notices required by
Section 3405 of the Code with respect to federal income tax withholding from
distributions hereunder, and shall withhold and pay any federal income tax
required under Section 3405 of the Code.
END OF ARTICLE XII
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ARTICLE XIII
EXCLUSIVE BENEFIT, AMENDMENT, TERMINATION
Sec. 13.01. EXCLUSIVE BENEFIT. Except as provided under Article III
hereof, the Employer has no beneficial interest in any asset of the Trust and
no part of any asset in the Trust may ever revert to or be repaid to an
Employer, either directly or indirectly; nor, prior to the satisfaction of
all liabilities with respect to the Participants and their Beneficiaries
under the Plan, may any part of the corpus or income of the Trust Fund, or
any asset of the Trust, be (at any time) used for, or diverted to, purposes
other than the exclusive benefit of the Participants or their Beneficiaries.
In the event the Commissioner of the Internal Revenue Service, upon the
Employer's request for initial approval of this Plan, determines the Plan is
not a qualified plan under the Code, any contribution made incident to that
initial qualification by the Employer must be returned to the Employer within
one (1) year after the date the initial qualification is denied, but only if
the application for qualification is made by the time prescribed by law for
filing the Employer's return to the taxable year in which the Plan was
adopted or such later date as the Secretary of the Treasury may prescribe.
The Plan will terminate upon the return of the Employer's contributions.
Sec. 13.02. AMENDMENT BY COMPANY. The Company has the right at any time
and from time to time:
(a) To amend this Plan in any manner it deems necessary or advisable in
order to qualify (or maintain qualification of) this Plan under the
appropriate provisions of Code Sections 401(a) and 4975(e)(7);
(b) To amend distribution options in a nondiscriminatory manner as
permitted under Code Section 411(d)(6)(C)(ii); and
(c) To amend this Plan in any other manner.
No amendment may authorize or permit any of the Trust Fund (other than
the part which is required to pay taxes and administration expenses) to be used
for or diverted to purposes other than for the exclusive benefit of the
Participants or their Beneficiaries or estates. No amendment may cause or permit
any portion of the Trust Fund to revert to or become a property of the Company
or Employer. The Company also may not make any amendment which affects the
rights, duties or responsibilities of the Trustee, the Plan Administrator or the
ESOP Committee without the written consent of the affected Trustee, the Plan
Administrator or the affected member of the ESOP Committee. The Company must
make all amendments in writing. Each amendment must state the date to which it
is either retroactively or prospectively effective.
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(A) CODE SECTION 411(d)(6) PROTECTED BENEFITS. An amendment (including the
adoption of this Plan as a restatement of an existing plan) may not decrease a
Participant's Accrued Benefit, except to the extent permitted under Code Section
412(c)(8), and may not reduce or eliminate Code Section 411(d)(6) protected
benefits determined immediately prior to the adoption date (or, if later, the
effective date) of the amendment. An amendment reduces or eliminates Code
Section 411(d)(6) protected benefits if the amendment has the effect of either
(1) eliminating or reducing an early retirement benefit or a retirement-type
subsidy (as defined in Treasury Regulations), or (2) except as provided by
Treasury Regulations, eliminating an optional form of benefit. The ESOP
Committee must disregard an amendment to the extent application of the amendment
would fail to satisfy this paragraph. If the ESOP Committee must disregard an
amendment because the amendment would violate clause (1) or clause (2), the ESOP
Committee must maintain a schedule of the early retirement option or other
optional forms of benefit the Plan must continue for the affected Participants.
(B) EFFECTIVE DATE OF AMENDMENT. Any such amendment shall become effective as
provided therein upon its execution except the amendments which are required to
be made by provisions of ERISA or the Code, which if not made would disqualify
the qualified status of the Plan and the amendment shall be deemed to be made
prior to the end of any retroactive amendment period provided for in ERISA or
the Code.
Sec. 13.03. DISCONTINUANCE. Any Employer has the right, at any time, to
suspend or discontinue its contributions under the Plan. The Company has the
right to terminate, at any time, this Plan. The Plan will
terminate upon the first to occur of the following:
(a) The date terminated by action of the Company; and
(b) The dissolution or merger of the Company, unless the successor
entity makes provision to continue the Plan, in which event the
successor must substitute itself as the Company under this Plan. Any
termination of the Plan resulting from this paragraph (b) is not
effective until compliance with any applicable notice requirements
under ERISA.
Sec. 13.04. FULL VESTING ON TERMINATION. Upon either full or partial
termination of the Plan, or, if applicable, upon complete discontinuance of Plan
contributions to the Plan, an affected Participant's right to his Accrued
Benefit is one hundred percent (100%) Nonforfeitable, regardless of the
Nonforfeitable percentage which otherwise would apply under Article V hereof. A
partial termination of the Plan or discontinuance of Plan contributions to the
Plan will in no way accelerate the time of distribution of benefits to any
Participant.
Sec. 13.05. MERGER AND DIRECT TRANSFER. The Company may not consent to,
or be a party to, any merger or consolidation with another plan, or to a
transfer of assets or liabilities to another plan, unless immediately after the
merger, consolidation or transfer, the surviving plan
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provides each Participant a benefit equal to or greater than the benefit each
Participant would have received had the Plan terminated immediately before
the merger or consolidation or transfer.
The Plan may accept a direct transfer of plan assets on behalf of an
Employee prior to the date the Employee satisfies the Plan's eligibility
conditions. If the Plan accepts a direct transfer of plan assets, the ESOP
Committee must treat the Employee as a Participant for all purposes of the Plan
except the Employee is not a Participant for purposes of sharing in Employer
contributions or Participant Forfeitures under the Plan until he actually
becomes a Participant in the Plan.
(A) ELECTIVE TRANSFERS. Unless a transfer of assets to this Plan is an elective
transfer, the Plan will preserve all Code Section 411(d)(6) protected benefits
with respect to those transferred assets, in the manner described in Section
13.02 hereof. A transfer is an elective transfer if: (1) the transfer satisfies
the first paragraph of this Section 13.05 hereof; (2) the transfer is voluntary,
under a fully informed election by the Participant; (3) the Participant has an
alternative that retains his Code Section 411(d)(6) protected benefits
(including an option to leave his benefit in the transferor plan, if that plan
is not terminating); (4) the transfer satisfies the applicable spousal consent
requirements of the Code; (5) the transferor plan satisfies the joint and
survivor notice requirements of the Code, if the Participant's transferred
benefit is subject to those requirements; (6) the Participant has a right to
immediate distribution from the transferor plan, in lieu of the elective
transfer; (7) the transferred benefit is at least the greater of the single sum
distribution provided by the transferor plan for which the Participant is
eligible or the present value of the Participant's accrued benefit under the
transferor plan payable at that plan's normal retirement age; (8) the
Participant has a one hundred percent (100%) Nonforfeitable interest in the
transferred benefit; and (9) the transfer otherwise satisfies applicable
Treasury Regulations. An elective transfer may occur between qualified plans of
any type.
(B) DISTRIBUTION RESTRICTIONS UNDER CODE SECTION 401(K). If the Plan receives a
direct transfer (by merger or otherwise) of Elective Contributions (or amounts
treated as Elective Contributions) under a Plan with a Code Section 401(k)
arrangement, the distribution restrictions of Code Sections 401(k)(2) and (10)
continue to apply to those transferred Elective Contributions.
Sec. 13.06. COMPLETE TERMINATION. Upon termination of the Plan, the
distribution provisions of Article VI hereof remain operative, with the
following exceptions:
(A) if the present value of the Participant's Nonforfeitable Accrued
Benefit does not exceed Three Thousand Five Hundred Dollars ($3,500),
the ESOP Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit to him in lump sum as soon
as administratively practicable after the Plan terminates; and
(B) if the present value of the Participant's Nonforfeitable Accrued
Benefit exceeds Three Thousand Five Hundred Dollars ($3,500), the
Participant or the Beneficiary, in addition to
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the distribution events permitted under Article VI hereof, may elect
to have the Trustee commence distribution of his Nonforfeitable
Accrued Benefit as soon as administratively practicable after the
Plan terminates.
To liquidate the Trust, the ESOP Committee will purchase a deferred
annuity contract for each Participant which protects the Participant's
distribution rights under the Plan, if the Participant's Nonforfeitable Accrued
Benefit exceeds Three Thousand Five Hundred Dollars ($3,500) and the Participant
does not elect an immediate distribution pursuant to Paragraph (B) of this
Section 13.06. The Trust will continue until the Trustee, in accordance with the
direction of the ESOP Committee, has distributed all of the benefits under the
Plan.
On each Valuation Date, the ESOP Committee will credit any part of a
Participant's Accrued Benefit retained in the Trust with its proportionate share
of the Trust's income, expenses, gains and losses, both realized and unrealized.
Upon termination of the Plan, the amount, if any, in a suspense account under
Article III hereof will revert to the Employer, subject to the conditions of the
Treasury Regulations permitting such a reversion. A resolution or amendment to
freeze all future benefit accrual, but otherwise to continue maintenance of this
Plan, is not a termination for purposes of this Section 13.06.
Sec. 13.07. PARTIAL TERMINATION. Upon a partial termination of the
Plan, the ESOP Committee shall notify each affected Participant. The rights of
each Participant and Beneficiary affected by such partial termination to the
amounts credited to his Account shall be fully vested and nonforfeitable as of
the date of such partial termination as set forth in Section 13.04 hereof. Such
amounts shall either be distributed to such affected Participants and
Beneficiaries, as in the case of a complete termination of the Plan, or held, as
in the case of a discontinuance of contributions, as directed by the ESOP
Committee. However, a partial termination of the Plan will in no way accelerate
the time of distribution of benefits to any Participant.
END OF ARTICLE XIII
98.
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IN WITNESS WHEREOF, the Company has executed this Plan in multiple
copies in Dallas, Dallas County, Texas, on the 2nd day of July,
1997, to be effective the 17th day of March, 1997.
"EMPLOYER" AND "COMPANY"
T.A. KYSER COMPANY
By: /s/ C.G. Hendricks
------------------------------------
C.G. Hendricks, President
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Exhibit 10.21
AMENDMENT NUMBER ONE TO THE
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED, EFFECTIVE MARCH 17, 1997)
T.A. Kyser Co., a corporation organized under the laws of the State of
Nevada (hereinafter referred to as "Company"), makes this Amendment Number One
to the T.A. Kyser Company Employee Stock Ownership Plan (As Amended and
Restated, Effective March 17, 1997) (hereinafter referred to as "Plan"). It is
intended that this Amendment Number One and the Plan qualify, under Sections 401
(a) and 4975(e)(7) of the Internal Revenue Code of 1986, as amended ("Code"),
and Section 407(d)(6) of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). It is also intended that the T.A. Kyser Company Employee
Stock Ownership Trust (As Amended and Restated, Effective March 17, 1997) be
exempt from tax under Section 501(a) of the Code. Amendment Number One and the
Plan shall be interpreted whenever possible, to comply with the terms of the
Code, ERISA and all formal regulations and rulings.
WITNESSETH:
WHEREAS, T.A. Kyser Co. (formerly known as "Kyser Company") established
the Kyser Company Employee Stock Ownership Plan on July 5, 1989, effective
August 1, 1988;
WHEREAS, the Kyser Company Employee Stock Ownership Plan was amended by
Amendment Number 1 on September 10, 1990, which was effective August 1, 1988;
WHEREAS, Kyser Company subsequently changed its name to "T.A.
Kyser Co.;"
WHEREAS, the Kyser Company Employee Stock Ownership Plan was amended by
Amendment Number 2 on October 25, 1990, which was effective October 25, 1990;
WHEREAS, Amendment Number 2 to the Kyser Company Employee Stock
Ownership Plan changed the name of the Kyser Company Employee Stock Ownership
Plan to the "T.A. Kyser Company Employee Stock Ownership Plan;"
WHEREAS, the T.A. Kyser Company Employee Stock Ownership Plan was
amended and restated on June 30, 1995, effective August 1, 1989 (except that the
provisions which were required to be effective before this date in accordance
with the Tax Reform Act of 1986 were generally applicable to the Plan Years
beginning after 1988, unless an earlier or later effective date was required
pursuant to a statute or Treasury Regulation or as stated in such plan);
WHEREAS, the T.A. Kyser Company Employee Stock Ownership Plan was
amended by Amendment Number 1 on April 18, 1996, which was effective August 1,
1989;
WHEREAS, T.A. Kyser Company amended and substituted the T.A. Kyser
Company Employee Stock Ownership Plan, in restated form, on July 2, 1997,
effective March 17, 1997, known as the T.A. Kyser Company Employee Stock
Ownership Plan (As Amended and Restated, Effective March 17, 1997);
1.
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WHEREAS, T.A. Kyser Co. continued, in a separate instrument, the T.A.
Kyser Company Employee Stock Ownership Trust (As Amended and Restated, Effective
March 17, 1997) which is and becomes a part of the T.A. Kyser Company Employee
Stock Ownership Plan (As Amended and Restated, Effective March 17, 1997);
WHEREAS, T.A. Kyser Co. desires to adopt Amendment Number One to the
Plan to clarify certain provisions of the Plan and to bring the Plan into
compliance with the Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996 and the Taxpayer Relief Act of 1997;
WHEREAS, Section 13.02 of the Plan, authorizes the Company to make
amendments to the Plan; and
NOW, THEREFORE, in consideration of the above premises, the Company
hereby amends the Plan in accordance with this Amendment Number One. Amendment
Number One is hereby adopted as an appendix to the Plan.
1. Section 1.28 of the Plan entitled "Leased Employees" is hereby
amended by deleting the existing Section 1.28 in its entirety and by
substituting the following new Section 1.28 in its stead as follows:
"Sec. 1.28. LEASED EMPLOYEES. The Plan treats a Leased
Employee as an Employee of the Employer. A Leased Employee is an
individual (who otherwise is not an Employee of the Employer) who,
pursuant to a leasing agreement between the Employer and any other
person, has performed services for the Employer (or for the Employer
and any persons related to the employer within the meaning of Code
Section l44(a)(3)) on a substantially full time basis for at least one
(1) year and who (a) for Plan Years beginning before January 1, 1997,
performs services historically performed by employees in the Employer's
business field or (b) for Plan Years beginning after December 31, 1996,
performs services under the primary direction and control of the
Employer. If a Leased Employee is treated as an Employee by reason of
this Section 1.28, "Compensation" includes Compensation from the
leasing organization which is attributable to services performed for
the Employer.
The Plan does not treat a Leased Employee as an Employee if
the leasing organization covers the employee in a safe harbor plan and,
prior to application of this safe harbor plan exception, twenty percent
(20%) or less of the Employer's Employees (other than Highly
Compensated Employees) are Leased Employees. A safe harbor plan is a
money purchase pension plan providing immediate participation, full and
immediate vesting, and a non-integrated contribution formula equal to
at least ten percent (10%) of the employee's compensation without
regard to employment by the leasing organization on a specified date.
The safe harbor plan must determine the ten percent (10%) contribution
on the basis of compensation as defined in Code Section 415(c)(3) plus
Elective Contributions (as defined in Section 1.78 hereof).
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The ESOP Committee must apply this Section 1.28 in a manner
consistent with Code Sections 414(n) and 414(o) and the Treasury
Regulations issued under those Code Sections. The ESOP Committee will
reduce a Leased Employee's allocation of Employer contributions under
this Plan by the Leased Employee's allocation under the leasing
organization's plan, but only to the extent that allocation is
attributable to the Leased Employee's service provided to the
Employer."
2. Section 6.01 of the Plan entitled "Time of Payment of Accrued
Benefit" is hereby amended by deleting the existing Section 6.01 in its entirety
and by substituting the following new Section 6.01 in its stead as follows:
"Sec. 6.01. TIME OF PAYMENT OF ACCRUED BENEFIT. Unless,
pursuant to Section 6.03 hereof, the Participant or the Beneficiary
elects in writing to a different time or method of payment, the ESOP
Committee will direct the Trustee to commence distribution of a
Participant's Nonforfeitable Accrued Benefit in accordance with this
Section 6.01. A Participant must consent, in writing, to any
distribution required under this Section 6.01 if the present value of
the Participant's Nonforfeitable Accrued Benefit at the time of the
distribution to the Participant exceeds, or at the time of any prior
distribution exceeded, Five Thousand Dollars ($5,000) (Three Thousand
Five Hundred Dollars [$3,500] for Plan Years beginning on or before
August 5, 1997) and the Participant has not attained the later of
Normal Retirement Age or age sixty-two (62). A distribution date under
this Article VI, unless otherwise specified within the Plan, is October
1 of each Plan Year or as soon as administratively practicable
following a distribution date. For purposes of the consent requirements
under this Article VI, if the present value of the Participant's
Nonforfeitable Accrued Benefit, at the time of any distribution
exceeds, or at the time of any prior distribution exceeded, Five
Thousand Dollars ($5,000) (Three Thousand Five Hundred Dollars [$3,500]
for Plan Years beginning on or before August 5, 1997), the ESOP
Committee must treat that present value as exceeding Five Thousand
Dollars ($5,000) (Three Thousand Five Hundred Dollars [$3,500] for Plan
Years beginning on or before August 5, 1997), for purposes of all
subsequent Plan distributions to the Participant. For purposes of
applying this Section 6.01, a Participant's Account shall not include
any Employer Securities acquired with the proceeds of an Exempt Loan
until the close of the Plan Year in which the loan is repaid in full
subject to the minimum distribution requirements of Section 40l(a)(9)
of the Code, death, or Disability of a Participant, or the Participant
reaching Normal Retirement Age or his Early Retirement Date.
(A) SEPARATION FROM SERVICE FOR A REASON OTHER THAN
DEATH.
(1) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT
NOT EXCEEDING $5,000. If the Participant's Nonforfeitable
Accrued Benefit does not exceed Five Thousand Dollars ($5,000)
(Three Thousand Five Hundred Dollars [$3,500] for Plan Years
beginning on or before August 5, 1997), and if the
Participant's Separation from Service is for any reason
3.
<PAGE>
other than death or Disability, the ESOP Committee will
direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a lump sum as soon as
possible following the close of the Plan Year in which
the Participant incurs a one (1) year break in service.
Notwithstanding anything to the contrary in this
Paragraph, for distributions made after December 31,
1992, the Participant may elect to have his Nonforfeitable
Accrued Benefit distributed, in whole or in part, directly
to an Eligible Retirement Plan specified by the Participant
in a Direct Rollover and at the time and in the manner
prescribed by the ESOP Committee; provided, however, the
Direct Rollover portion of the distribution qualifies as an
Eligible Rollover Distribution.
(2) PARTICIPANT'S NONFORFEITABLE ACCRUED BENEFIT
EXCEEDS $5,000. If the Participant's Nonforfeitable Accrued
Benefit Exceeds Five Thousand Dollars ($5,000) (Three Thousand
Five Hundred Dollars [$3,500] for Plan Years beginning on or
before August 5, 1997), and if the Participant's Separation
from Service is for any reason other than death or Disability,
the ESOP Committee will direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit in a form and at
the time elected by the Participant, pursuant to Section 6.03
hereof.
(3) DISABILITY. If the Participant's Separation
from Service is because of Disability, the ESOP Committee will
direct the Trustee to distribute the Participant's
Nonforfeitable Accrued Benefit in a form and at the time
elected by the Participant, pursuant to Section 6.03 hereof.
In the absence of an election by the Participant, the ESOP
Committee will direct the Trustee to commence distribution of
the Participant's Nonforfeitable Accrued Benefit in a lump sum
on the sixtieth (60th) day following the close of the Plan
Year in which the Participant's Separation from Service
occurs, subject to the notice and consent requirements of this
Article VI and to the applicable mandatory commencement dates
described in Paragraph (1) or in Paragraph (2) of this Section
6.01(A).
(B) REQUIRED BEGINNING DATE. If any distribution
commencement date described under Paragraph (A) of this Section 6.01,
either by Plan provision or by Participant election (or nonelection),
is later than the Participant's Required Beginning Date, the ESOP
Committee instead must direct the Trustee to make distribution on the
Participant's Required Beginning Date. For Plan Years beginning after
December 31, 1996, the Required Beginning Date of a Participant (other
than a more than five percent (5%) owner) is the April 1 of the
calendar year following the later of: (i) the year in which the
Participant attains age seventy and one-half (70 1/2) or (ii) the
calendar year in which occurs the Retirement of the Participant. For
Plan Years beginning before December 31, 1996 (and for Plan Years
beginning after December 31, 1996, in the case of a more than five
percent (5%) owner), a Participant's Required Beginning Date is April 1
following the close of the calendar year in which the Participant
attains age seventy and one-half (70 1/2). However, if the Participant,
prior to incurring a
4.
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Separation from Service, attained age seventy and one-half
(70 1/2) by January l, 1988, and, for the five (5) Plan Year
period ending in the calendar year in which he attained age seventy and
one-half (70 1/2) and for all subsequent years, the Participant was not
a more than five percent (5%) owner, the Required Beginning Date is the
April 1 following the close of the calendar year in which the
Participant Separates from Service or, if earlier, the April 1
following the close of the calendar year in which the Participant
becomes a more than five percent (5%) owner. Furthermore, if a
Participant who was not a more than five percent (5%) owner attained
age seventy and one-half (70 1/2) during 1988 and did not incur a
Separation from Service prior to January 1, 1989, his Required
Beginning Date is April 1, 1990. A mandatory distribution at the
Participant's Required Beginning Date will be in lump sum unless the
Participant, pursuant to the provisions of this Article VI, makes a
valid election to receive an alternative form of payment.
(C) DEATH OF THE PARTICIPANT. The ESOP Committee will
direct the Trustee, in accordance with this Section 6.01(C), to
distribute to the Participant's Beneficiary the Participant's
Nonforfeitable Accrued Benefit remaining in the Trust at the time of
the Participant's death.
(1) DECEASED PARTICIPANT'S NONFORFEITABLE
ACCRUED BENEFIT DOES NOT EXCEED $5,000. If the deceased
Participant's Nonforfeitable Accrued Benefit does not exceed
Five Thousand Dollars ($5,000) (Three Thousand Five Hundred
Dollars [$3,500] for Plan Years beginning on or before August
5, 1997), the ESOP Committee must direct the Trustee to
distribute the deceased Participant's Nonforfeitable Accrued
Benefit in a lump sum not later than one (1) year following
the Participant's death or, if later, the date on which the
ESOP Committee receives notification of or otherwise confirms
the Participant's death. Notwithstanding anything to the
contrary in this Paragraph, for distributions made after
December 31, 1992, the Participant's Beneficiary (if such
Beneficiary is the Participant's surviving spouse) may elect
to have his Nonforfeitable Accrued Benefit distributed, in
whole or in part, directly to an Eligible Retirement Plan
specified by the Participant's Beneficiary in a Direct
Rollover and at the time and in the manner prescribed by the
ESOP Committee; provided, however, the Direct Rollover portion
of the distribution qualifies as an Eligible Rollover
Distribution.
(2) DECEASED PARTICIPANT'S NONFORFEITABLE
ACCRUED BENEFIT EXCEEDS $5,000. If the deceased Participant's
Nonforfeitable Accrued Benefit exceeds Five Thousand Dollars
($5,000) (Three Thousand Five Hundred Dollars [$3,500] for
Plan Years beginning on or before August 5, 1997), the ESOP
Committee will direct the Trustee to distribute the deceased
Participant's Nonforfeitable Accrued Benefit at the time and
in the form elected by the Participant or, if applicable, by
the Beneficiary, as permitted under this Article VI. In the
absence of an election, the ESOP Committee will direct the
Trustee to distribute the Participant's undistributed
Nonforfeitable Accrued Benefit in a lump sum as soon as
5.
<PAGE>
administratively practicable following the close of the Plan
Year in which the Participant's death occurs or, if later, the
first distribution date following the date the ESOP Committee
receives notification of or otherwise confirms the
Participant's death.
If the death benefit is payable in full to the
Participant's surviving spouse, the surviving spouse, in
addition to the distribution options provided in this Section
6.0l(C), may elect distribution at any time or in any form
this Article VI would permit for a Participant."
3. Section 6.02 of the Plan entitled "Method of Payment of
Accrued Benefit" is hereby amended by deleting the existing Section 6.02 in its
entirety and by substituting the following new Section 6.02 in its stead as
follows:
"Sec. 6.02. METHOD OF PAYMENT OF ACCRUED BENEFIT. Subject to
any restrictions prescribed by Section 6.03 hereof and subject to
Section 6.05 hereof, a Participant or Beneficiary may elect
distribution under the following methods:
(A) DEATH, DISABILITY OR RETIREMENT. In the event of
death, Disability or the attainment of Normal Retirement Age or Early
Retirement Date, a Participant's Account shall, at the request of such
Participant, be distributed as follows not later than one (1) year
after the close of the Plan Year in which such event occurs:
(1) PLAN YEARS PRIOR TO AUGUST 1, 1994. For Plan
Years beginning prior to August 1, 1994, distribution of the
Participant's Account will be made in a lump sum.
(2) PLAN YEARS BEGINNING ON OR AFTER AUGUST 1,
1994. For Plan Years beginning on or after August 1, 1994,
distribution of the Participant's Account will be made in
substantially equal annual installments over a period of five
(5) years; provided, however, that if the value of such
Account exceeds five hundred thousand dollars ($500,000), the
term of the distribution shall be five (5) years, plus one (1)
year (but not more than five (5) additional years) for each
one hundred thousand dollars ($100,000) (or fraction thereof)
by which the value of such Account exceeds five hundred
thousand dollars ($500,000).
(B) OTHER TERMINATION OF PARTICIPATION. In the event a
Participant terminates employment for reasons other than death,
Disability or the attainment of Normal Retirement Age or Early
Retirement Date, the Participant's vested Account Balance will, at the
request of such Participant, be distributed as follows:
(1) PLAN YEARS BEGINNING PRIOR TO AUGUST 1,
1994. For Plan Years beginning prior to August 1, 1994, if a
Participant is not reemployed before the end of the fifth
(5th) Plan Year following the Plan Year in which the
Participant terminates employment, distribution of the
6.
<PAGE>
Participant's Account will be made in a lump sum not later
than one (1) year after the close of the fifth (5th) Plan Year
following the Plan Year in which the Participant terminates
employment.
(2) PLAN YEARS BEGINNING ON OR AFTER AUGUST 1,
1994. For Plan Years beginning on or after August 1, 1994, if
a Participant is not reemployed before the end of the fifth
(5th) Plan Year following the Plan Year in which the
Participant terminates employment, distribution of the
Participant's Account will commence not later than one (1)
year after the close of the fifth (5th) Plan Year following
the Plan Year in which the Participant terminates employment.
Distribution of such Account will be made in substantially
equal annual installments over a period of five (5) years;
provided, however, that if the value of such Account exceeds
five hundred thousand dollars ($500,000), the term of the
distribution shall be five (5) years, plus one (1) year (but
not more than five (5) additional years) for each one hundred
thousand dollars ($100,000) (or fraction thereof) by which the
value of such Account exceeds five hundred thousand dollars
($500,000).
(3) TIME OF DISTRIBUTION. Notwithstanding
anything in this Section 6.02 to the contrary, effective for
Plan Years beginning on or after August 1, 1993, in the event
a Participant's employment is terminated for reasons other
than death, Disability or attaining Normal Retirement Age or
Early Retirement Date, distribution of the Participant's
Account shall commence no later than one (1) year after the
close of the Plan Year in which the earliest of the following
events occurs:
(a) the Participant's Normal
Retirement Date;
(b) the Participant's death; or
(c) the Participant's Disability.
(C) DIRECT ROLLOVER. At the time the Participant is
entitled to receive a distribution under Subsection (A) or (B) of
Section 6.02 hereof, the Participant's Account, in whole or in part,
shall be distributed directly to an Eligible Retirement Plan specified
by the Participant in a Direct Rollover and at the time and in the
manner prescribed by the ESOP Committee; provided, however, the Direct
Rollover portion of the distribution qualifies as an Eligible Rollover
Distribution.
Distribution options (A) or (B) permitted under this Section
6.02 are available only if the present value of the Participant's
Nonforfeitable Accrued Benefit at the time of the distributions to the
Participant exceeds, or at the time of any prior distribution exceeded,
Five Thousand Dollars ($5,000) (Three Thousand Five Hundred Dollars
[$3,500] for Plan Years beginning on or before August 5, 1997). If a
Participant elects distribution option (C), the Participant's Account,
in
7.
<PAGE>
whole or in part, shall be distributed directly to the Eligible
Retirement Plan specified by the Participant in a Direct Rollover and
at the time and in the manner prescribed by the ESOP Committee;
provided, however, the Direct Rollover portion of the distribution
qualifies as an Eligible Rollover Distribution.
To facilitate installment payments under this Article VI, the
ESOP Committee may direct the Trustee to segregate all or any part of
the Participant's Accrued Benefit in a Segregated Account. The
Participant's Segregated Account will be invested in federally insured
interest bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. A
segregated Account remains a part of the Trust, but it alone shares in
any income it earns, and it alone bears any expense or loss it incurs.
Notwithstanding any other provision herein, the Participant may elect
to commence distribution on any later distribution date as provided
under Treasury Regulation Section 1.411(d)-4.
(D) MINIMUM DISTRIBUTION REQUIREMENTS FOR PARTICIPANTS.
The ESOP Committee may not direct the Trustee to distribute the
Participant's Nonforfeitable Accrued Benefit, nor may the Participant
elect to have the Trustee distribute his Nonforfeitable Accrued
Benefit, under a method of payment which, as of the Required Beginning
Date, does not satisfy the minimum distribution requirements under Code
Section 401(a)(9) and the applicable Treasury Regulations. The minimum
distribution for a calendar year equals the Participant's
Nonforfeitable Accrued Benefit as of the latest Valuation Date
preceding the beginning of the calendar year divided by the
Participant's life expectancy (as determined under Article VIII hereof,
subject to the requirements of the Treasury Regulations under Code
Section 401(a)(9). The ESOP Committee will increase the Participant's
Nonforfeitable Accrued Benefit, as determined on the relevant Valuation
Date, for Employer contributions or Participant Forfeitures allocated
after the Valuation Date and by July 31 of the valuation calendar year,
and will decrease the valuation by distributions made after the
Valuation Date and by July 31 of the valuation calendar year. For
purposes of this valuation, the ESOP Committee will treat any portion
of the minimum distribution for the first distribution calendar year
made after the close of that year as a distribution occurring in that
first distribution calendar year. In computing a minimum distribution,
the ESOP Committee must use the unisex life expectancy multiples under
Treasury Regulation Section 1.72-9. The ESOP Committee, only upon the
Participant's written request, will compute the minimum distribution
for a calendar year subsequent to the first calendar year for which the
Plan requires a minimum distribution by redetermining the applicable
life expectancy. The ESOP Committee may not redetermine the joint life
and last survivor expectancy of the Participant and a nonspouse
designated Beneficiary in a manner which takes into account any
adjustment to a life expectancy other than the Participant's life
expectancy.
If the Participant's spouse is not his designated Beneficiary,
a method of payment to the Participant (whether by Participant election
or by ESOP Committee direction) may not provide more than incidental
benefits to the
8.
<PAGE>
Beneficiary. The Plan must satisfy the minimum distribution incidental
benefit ("MDIB") requirement in the Treasury Regulations issued under
Code Section 401 (a)(9) for distributions made on or after the
Participant's Required Beginning Date and before the Participant's
death. To satisfy the MDIB requirement, the ESOP Committee will
compute the minimum distribution required by this Section 6.02(A)
by substituting the applicable MDIB divisor for the applicable life
expectancy factor, if the MDIB divisor is a lesser number. Following
the Participant's death, the ESOP Committee will compute the minimum
distribution required by this Section 6.02(A) solely on the basis of
the applicable life expectancy factor and will disregard the MDIB
factor. For Plan Years beginning prior to January 1, 1989, the Plan
satisfies the incidental benefit requirement if the distributions
to the Participant satisfied the MDIB requirement or if the present
value of the retirement benefits payable solely to the Participant
is greater than fifty percent (50%) of the present value of the
total benefits payable to the Participant and his Beneficiary. The
ESOP Committee must determine whether benefits to the Beneficiary are
incidental as of the date the Trustee is to commence payment of the
retirement benefits to the Participant, or as of any date the Trustee
redetermines the payment period to the Participant.
The minimum distribution for the first distribution calendar
year is due by the Participant's Required Beginning Date. The minimum
distribution for each subsequent distribution calendar year, including
the calendar year in which the Participant's Required Beginning Date
falls, is due by December 31 of that year. If the Participant receives
distribution in the form of a Nontransferable Annuity Contract, the
distribution satisfies this Section 6.02(A) if the contract complies
with the requirements of Code Section 401(a)(9) and the applicable
Treasury Regulations.
(E) MINIMUM DISTRIBUTION REQUIREMENTS FOR BENEFICIARIES.
The method of distribution to the Participant's Beneficiary must
satisfy Code Section 401(a)(9) and the applicable Treasury Regulations.
If the Participant's death occurs after his Required Beginning Date,
the method of payment to the Beneficiary must provide for completion of
payment over a period which does not exceed the payment period which
had commenced for the Participant. If the Participant's death occurs
prior to his Required Beginning Date, the method of payment to the
Beneficiary must provide for completion of payment to the Beneficiary
over a period not exceeding: (i) five (5) years after the date of the
Participant's death; or (ii) if the Beneficiary is a designated
Beneficiary, the designated Beneficiary's life expectancy. The ESOP
Committee may not direct payment of the Participant's Nonforfeitable
Accrued Benefit over a period described in clause (ii) unless payment
to the designated Beneficiary will commence no later than the December
31 following the close of the calendar year in which the Participant's
death occurred or, if later, and the designated Beneficiary is the
Participant's surviving spouse, December 31 of the calendar year in
which the Participant would have attained age seventy and one-half
(70 1/2). If a distribution will be made in accordance with clause
(ii), the minimum distribution for a calendar year equals the
Participant's Nonforfeitable Accrued
9.
<PAGE>
Benefit as of the latest Valuation Date preceding the beginning of
the calendar year divided by the designated Beneficiary's life
expectancy. The ESOP Committee must use the unisex life expectancy
multiples under Treasury Regulation Section 1.72-9 for purposes of
applying this paragraph. The ESOP Committee, only upon the written
request of the Participant or of the Participant's surviving spouse,
will recalculate the life expectancy of the Participant's surviving
spouse not more frequently than annually, but may not recalculate
the life expectancy of a nonspouse designated Beneficiary after
payment to the designated Beneficiary begins. The ESOP Committee
will apply this paragraph by treating any amount paid to the
Participant's child, which becomes payable to the Participant's
surviving spouse upon the child's attaining the age of majority, as
paid to the Participant's surviving spouse. Upon the Beneficiary's
written request, the ESOP Committee must direct the Trustee to
accelerate payment of all, or any portion, of the Participant's unpaid
Accrued Benefit, as soon as administratively practicable following the
effective date of that request."
4. Section 6.03 of the Plan entitled "Benefit Payment Elections"
is hereby amended by deleting the existing Section 6.03 in its entirety and by
substituting the following new Section 6.03 in its stead as follows:
"Sec. 6.03. BENEFIT PAYMENT ELECTIONS. Not earlier than ninety
(90) days, but not later than thirty (30) days, before the
Participant's Annuity Starting Date, the ESOP Committee must provide a
benefit notice to a Participant who is eligible to make an election
under this Section 6.03. The benefit notice must explain the optional
forms of benefit in the Plan, including the material features and
relative values of those options, and the Participant's right to defer
distribution until he attains Normal Retirement Age or age sixty-two
(62).
If a Participant or Beneficiary makes an election prescribed
by this Section 6.03, the ESOP Committee will direct the Trustee to
distribute the Participant's Nonforfeitable Accrued Benefit in
accordance with that election. Any election under this Section 6.03 is
subject to the requirements of Section 6.02 hereof. The Participant or
Beneficiary must make an election under this Section 6.03 by filing his
election form with the ESOP Committee at any time before the Trustee
otherwise would commence to pay a Participant's Accrued Benefit in
accordance with the requirements of Article VI hereof.
(A) PARTICIPANT ELECTIONS AFTER SEPARATION FROM SERVICE.
If the present value of a Participant's Nonforfeitable Accrued Benefit
exceeds Five Thousand Dollars ($5,000) (Three Thousand Five Hundred
Dollars [$3,500] for Plan Years beginning on or before August 5, 1997),
he may elect to have the Trustee commence distribution as of any
distribution date, but not earlier than October 1 following the close
of the Plan Year in which the Participant's Separation from Service
occurs. The Participant may reconsider an election at any time prior to
the Annuity Starting Date and elect to commence distribution as of any
other distribution date, but not earlier than the date described in the
first sentence of this Paragraph (A). Following his attainment of
Normal Retirement
10.
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Age or Early Retirement Date, a Participant who has Separated
from Service may elect distribution as of any distribution date,
regardless of the restrictions otherwise applicable under this
Section 6.03(A). If the Participant is partially vested in his Accrued
Benefit, an election under this Paragraph (A) to distribute prior to
the Participant's incurring a Forfeiture Break in Service (as defined
in Section 5.08 hereof), must be in the form of a cash-out distribution
(as defined in Article V hereof). A Participant may not receive a
cash-out distribution if, prior to the time the Trustee actually makes
the cash-out distribution, the Participant returns to employment with
the Employer.
(B) PARTICIPANT ELECTIONS PRIOR TO SEPARATION FROM
SERVICE. After a Participant attains Normal Retirement Age or Early
Retirement Date, the Participant, until he retires, has a continuing
election to receive all or any portion of his Accrued Benefit. A
Participant must make an election under this Section 6.03(B) on a form
prescribed by the ESOP Committee at any time during the Plan Year for
which his election is to be effective. In his written election, the
Participant must specify the percentage or dollar amount he wishes
distributed to him. The Participant's election relates solely to the
percentage or dollar amount specified in his election form and his
right to elect to receive an amount, if any, for a particular Plan Year
greater than the dollar amount or percentage specified in his election
form terminates on the Accounting Date. A distribution to a Participant
must be made in accordance with his election under this Section 6.03(B)
within the ninety (90) day period (or as soon as administratively
practicable) after the Participant files his written election with the
ESOP Committee. The balance of the Participant's Accrued Benefit not
distributed pursuant to his election(s) will be distributed in
accordance with the other distribution provisions of this Plan.
(C) DEATH BENEFIT ELECTIONS. If the present value of the
deceased Participant's Nonforfeitable Accrued Benefit exceeds Five
Thousand Dollars ($5,000) (Three Thousand Five Hundred Dollars [$3,500]
for Plan Years beginning on or before August 5, 1997), the
Participant's Beneficiary may elect to have the Participant's
Nonforfeitable Accrued Benefit distributed in a form and within a
period permitted under Section 6.02 hereof. The Beneficiary's election
is subject to any restrictions designated in writing by the Participant
and not revoked as of his date of death.
(D) EMPLOYER SECURITIES ACQUIRED BY AN EXEMPT LOAN.
Notwithstanding anything to the contrary herein, for any Employer
Securities acquired with the proceeds of an Exempt Loan, distribution
under this Section shall not be required until the first distribution
date following the close of the Plan Year in which such loan has been
fully repaid subject to the minimum distribution requirements of
Section 401(a)(9) of the Code and subject to the Participant's death,
Disability, or reaching Normal Retirement Age or Early Retirement Date.
(E) ELECTION TO POSTPONE DISTRIBUTION OF BENEFITS. If the
present value of a Participant's Nonforfeitable Accrued Benefit exceeds
Five Thousand
11.
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Dollars ($5,000) (Three Thousand Five Hundred Dollars [$3,500] for
Plan Years beginning on or before August 5, 1997), he may elect to
postpone the distribution of the Nonforfeitable Accrued Benefit under
the Plan as provided in Sections 6.02 and 6.03(A) hereof. Upon
request, the ESOP Committee will direct the Trustee to provide the
Participant electing to postpone his distribution of his Nonforfeitable
Accrued Benefit with the necessary election forms.
(F) DIRECT ROLLOVER ELECTION. Notwithstanding anything to
the contrary herein, for distributions made after December 31, 1992, at
the time the Participant is entitled to receive a distribution, any
Participant who is considered a "Distributee" and who receives an
Eligible Rollover Distribution may elect to have all or any portion of
the distribution transferred directly to an Eligible Retirement Plan.
Upon request, the ESOP Committee will direct the Trustee to provide the
Distributee with the necessary forms.
(G) ADVANCE DISTRIBUTIONS. At the request of a
Participant who is then one hundred percent (100%) vested in his
Accrued Benefit, and who has participated in this Plan for eight (8) or
more years subsequent to July 31, 1988, the ESOP Committee shall direct
the Trustee to pay to the Participant an advance distribution not to
exceed twenty-five percent (25%) of the Participant's vested Accrued
Benefit as then estimated by the ESOP Committee, provided the
Participant is then employed by the Employer.
Notwithstanding the foregoing, advance distributions shall not
be permitted with respect to any amounts allocated to a Participant's
Account after December 1, 1985, except for distributions necessary to
meet a hardship constituting immediate and heavy financial need.
The ESOP Committee, in its sole discretion, shall determine in
a uniform and nondiscriminatory manner, whether the Participant's
hardship constitutes an immediate and heavy financial need, based on
all relevant facts and circumstances. The following are financial needs
considered immediate and heavy: medical expenses (within the meaning of
Section 213(d) of the Code) incurred by the Participant, the
Participant's spouse, or dependents; the purchase (excluding mortgage
payments) of a principal residence for the Participant; payment of
tuition and related educational fees for the next twelve (12) months of
post-secondary education for the Participant, the Participant's spouse,
children, or dependents; or the need to prevent eviction of the
Participant from, or a foreclosure on the mortgage of, the
Participant's principal residence. Notwithstanding the foregoing, a
distribution will not be considered as necessary to satisfy an
immediate and heavy financial need of the Participant unless (i) the
Participant has obtained all distributions, other than hardship
distributions, and all nontaxable loans under all plans maintained by
the Employer, and (ii) the distribution is not in excess of the amount
of an immediate and heavy financial need.
12.
<PAGE>
If an advance distribution is made, a Participant shall again
be eligible to receive an additional ten percent (10%) advance
distribution for reason of hardship constituting immediate and heavy
financial need, provided the Participant is then employed by the
Employer, one time during each five (5) calendar year interval
subsequent to the calendar year in which the Participant received the
first advance distribution. If any advance distribution is made, the
Participant's Accrued Benefit when computed will be reduced by the
amount of such advance.
(H) PAYMENT OF BENEFITS. Notwithstanding anything in this
Plan to the contrary, payment of a Participant's Accrued Benefit will
commence, unless the Participant otherwise elects, no later than the
sixtieth (60th) day after the close of the Plan Year (or if later after
the Accrued Benefit is determined) in which the latest of the following
events occur:
(1) The attainment by the Participant of age
sixty-five (65);
(2) The Participant's actual retirement from the
employ of the Employer; or
(3) The tenth (10th) anniversary of the year in
which the Participant commenced participation in the Plan.
5. Section 6.07 of the Plan entitled "Distributions Under
Domestic Relations Order" is hereby amended by deleting the existing Section
6.07 in its entirety and by substituting the following new Section 6.07 in its
stead as follows:
"Sec. 6.07. DISTRIBUTIONS UNDER DOMESTIC RELATIONS ORDERS.
Nothing contained in this Plan prevents the ESOP Committee from
complying with the provisions of a qualified domestic relations order
(as defined in Code Section 414(p)). This Plan specifically permits
distribution to an Alternate Payee under a qualified domestic relations
order at any time regardless of whether the Participant has attained
his earliest retirement age (as defined under Code Section 414(p))
under the Plan. A distribution to an Alternate Payee prior to the time
the Participant reaches his earliest retirement age is available only
if: (1) the order specifies distribution at that time or permits an
agreement between the Plan and the Alternate Payee to authorize an
earlier distribution; and (2) the order requires the Alternate Payee's
consent to such distribution prior to the Participant's attainment of
his earliest retirement age if the present value of the Alternate
Payee's benefits under the Plan exceeds Five Thousand Dollars ($5,000)
(Three Thousand Five Hundred Dollars [$3,500] for Plan Years beginning
on or before August 5, 1997). Nothing in this Section 6.07 allows a
Participant a right to receive distribution at a time otherwise not
permitted under the Plan nor does it permit the Alternate Payee to
receive a form of payment not otherwise permitted under the Plan. For
any Employer Securities acquired with the proceeds of an Exempt Loan,
distribution under this Section 6.07 shall not be required until such
Exempt Loan is repaid in full unless required by the Code.
13.
<PAGE>
The ESOP Committee must establish reasonable procedures to
determine the qualified status of a domestic relations order. Upon
receiving a domestic relations order, the ESOP Committee promptly will
notify the Participant and any Alternate Payee named in the order, in
writing, of the receipt of the order and the Plan's procedures for
determining the qualified status of the order. Within a reasonable
period of time after receiving the domestic relations order, the ESOP
Committee must determine the qualified status of the order and must
notify the Participant and each Alternate Payee, in writing, of its
determination. The ESOP Committee must provide notice under this
paragraph by mailing to the individual's address specified in the
domestic relations order, or in a manner consistent with Department of
Labor regulations.
If any portion of the Participant's Nonforfeitable Accrued
Benefit is payable during the period the ESOP Committee is making its
determination of the qualified status of the domestic relations order,
the ESOP Committee must make a separate accounting of the amounts
payable. If the ESOP Committee determines the order is a qualified
domestic relations order within eighteen (18) months of the date
amounts first are payable following receipt of the order, the ESOP
Committee will direct the Trustee to distribute the payable amounts in
accordance with the order. If the ESOP Committee determines that the
order is not a qualified domestic relations order or does not make its
determination of the qualified status of the order within the eighteen
(18) month determination period, the ESOP Committee will direct the
Trustee to distribute the payable amounts in the manner the Plan would
distribute if the order did not exist and will apply the order
prospectively if the ESOP Committee later determines the order is a
qualified domestic relations order.
To the extent it is not inconsistent with the provisions of
the qualified domestic relations order, the ESOP Committee may direct
the Trustee to invest any partitioned amount in a segregated subaccount
or separate account and to invest the account in federally insured,
interest-bearing savings account(s) or time deposit(s) (or a
combination of both), or in other fixed income investments. A
segregated subaccount remains a part of the Plan, but it alone shares
in any income it earns, and it alone bears any expense or loss it
incurs. Any payments or distributions required under this Section 6.07
will be made by separate benefit checks or other separate distribution
to the Alternate Payee(s)."
6. Section 8.11 of the Plan entitled "Participant Voting Rights -
Employer Securities" is hereby amended by deleting the existing Section 8.11 of
the Plan, as amended, in its entirety, and by substituting the following new
Section 8.11 in its stead, as follows:
"Sec. 8.11. PARTICIPANT VOTING RIGHTS - EMPLOYER SECURITIES.
Notwithstanding any provision contained in the Plan to the contrary,
voting rights on Employer Securities shall be as follows:
(A) With respect to Employer Securities held in the
Participants' Employer Securities Accounts which are not part of a
registration-type class of
14.
<PAGE>
securities (as defined in Code Section 409(e)(4)), a Participant has
the right to direct the Trustee regarding the voting of such Employer
Securities allocated to his Employer Securities Account with respect
to any corporate matter which involves the approval or disapproval of
any corporate merger or consolidation, recapitalization,
reclassification, liquidation, dissolution, sale of substantially
all assets of a trade or business, or such similar transaction as
the Department of Treasury may prescribe in regulations. On other
corporate matters requiring a vote of the shareholders, the Trustee
shall properly vote such Employer Securities which are held in the
Employer Securities Accounts of the Participants. As to any Employer
Securities allocated to the Participant's Employer Securities Account
which are part of a registration-type class of securities, the voting
rights providing in this Section 8.11 extend to all corporate matters
requiring a vote of stockholders. The Trustee shall vote Employer
Securities held in Participant Employer Securities Accounts for which
it has not received direction or for which it has not received a
valid direction from a Participant (or Beneficiary) as part of the
Plan Assets.
Each Participant (or Beneficiary) who timely provides
instructions to the Trustee shall be entitled to direct the Trustee how
to vote Employer Securities allocated to such Participant's Employer
Securities Account in accordance with this Section 8.11. In order to
implement these voting directions, the Trustee shall provide each
Participant (or Beneficiary) with proxy solicitation materials or other
notices or information statements which are distributed to Company
shareholders, together with a form requesting confidential
instructions, as to the manner in which Employer Securities allocated
to the Participants' Employer Securities Accounts are to be voted. Each
Participant (or Beneficiary) shall, as a named fiduciary (as described
in Section 403(a)(1) of ERISA), direct the Trustee with respect to the
vote of such Employer Securities which are allocated to the Employer
Securities Account of the Participant. Reasonable means shall be
employed by the Trustee to provide confidentiality with respect to the
voting by such Participant (or Beneficiary) and the Trustee shall hold
such directions in confidence and shall not divulge or release such
directions to any person, including the Company or any director,
officer, employee or agent of the Company, it being the intent of this
provisions of this Section 8.11 to ensure that the Company (and its
directors, officers, employees and agents) cannot determine the
direction given by any Participant (or Beneficiary). Such instructions
shall be in such form and shall be filed in such manner and at such
time as the Trustee may prescribe.
(1) With respect to shares of Employer
Securities held in the Unallocated Employer Securities Account
which are part of a registration-type class of securities, and
which are not part of a registration-type class of securities,
the Trustee shall properly vote such Employer Securities which
are held in the Unallocated Employer Securities Account for or
against any proposal. If all Employer Securities are held in
the Unallocated Employer Securities Accounts on the date when
a matter is
15.
<PAGE>
submitted to a vote of the Company's shareholders,
the Trustee shall properly vote such Employer Securities for
or against any proposal.
(2) Notwithstanding any provision contained in
this Section 8.11, the Trustee shall not vote as directed by
and shall not effectuate the Participant (or Beneficiary)
directions in a manner which are or would result in a
violation of ERISA or would not be in the best interest of the
Participant (or Beneficiary). In the event of the items set
forth in the preceding sentence, the Trustee, in its
discretion, shall properly vote the Employer Securities as
part of the Plan Assets in a manner which is in the best
interest of the Participants (or Beneficiaries).
(3) If any provision contained in or action
required by this Section 8.11 violates any provision of ERISA,
the Trustee shall comply with the provisions of ERISA."
7. Section 9.01 of the Plan entitled "Members' Compensation,
Expenses" is hereby amended by deleting the existing Section 9.01 in its
entirety and by substituting the following new Section 9.01 in its stead as
follows:
"Sec. 9.01. ESOP COMMITTEE MEMBERS. The Company may appoint an
ESOP Committee to administer the Plan, the members of which may or may
not be Participants in the Plan, or which may be the Plan Administrator
acting alone. In the absence of an ESOP Committee appointment, the
following shall apply:
(a) the Plan Administrator will assume only
those powers, duties and responsibilities of the ESOP
Committee to fulfill all ministerial functions under the Plan;
and
(b) the Trustee will assume all other powers,
duties and responsibilities of the ESOP Committee to fulfill
all other functions of the ESOP Committee under the Plan.
The members of the ESOP Committee will serve without
compensation for services as such, but the Employer will pay all
expenses of the ESOP Committee, except to the extent the Trust properly
pays for such expenses."
8. Article XIII of the Plan entitled "Miscellaneous" is hereby
amended by added a new Section 12.28 as follows:
"Sec. 12.28. USERRA COMPLIANCE. Notwithstanding any provision
of this Plan to the contrary, contributions, benefits and service
credit with respect to qualified military service will be provided in
accordance with Section 414(u) of the Code."
9. Section 13.06 of the Plan entitled "Complete Termination" is
hereby amended by deleting the existing Section 13.06 in its entirety and by
substituting the following new Section 13.06 in its stead as follows:
16.
<PAGE>
"Sec. 13.06. COMPLETE TERMINATION. Upon termination of the
Plan, the distribution provisions of Article VI hereof remain
operative, with the following exceptions:
(A) If the present value of the Participant's
Nonforfeitable Accrued Benefit does not exceed Five Thousand Dollars
($5,000)(Three Thousand Five Hundred Dollars [$3,500] for Plan Years
beginning on or before August 5, 1997), the ESOP Committee will direct
the Trustee to distribute the Participant's Nonforfeitable Accrued
Benefit to him in lump sum as soon as administratively practicable
after the Plan terminates; and
(B) if the present value of the Participant's
Nonforfeitable Accrued Benefit exceeds Five Thousand Dollars
($5,000)(Three Thousand Five Hundred Dollars [$3,500] for Plan Years
beginning on or before August 5, 1997), the Participant or the
Beneficiary, in addition to the distribution events permitted under
Article VI hereof, may elect to have the Trustee commence distribution
of his Nonforfeitable Accrued Benefit as soon as administratively
practicable after the Plan terminates.
To liquidate the Trust, the ESOP Committee will purchase, or
direct the Trustee to purchase, a deferred annuity contract for each
Participant which protects the Participant's distribution rights under
the Plan, if the Participant's Nonforfeitable Accrued Benefit exceeds
Five Thousand Dollars ($5,000) (Three Thousand Five Hundred Dollars
[$3,500] for Plan Years beginning on or before August 5, 1997) and the
Participant does not elect an immediate distribution pursuant to
Paragraph (B) of this Section 13.06. The Trust will continue until the
Trustee, in accordance with the direction of the ESOP Committee, has
distributed all of the benefits under the Plan.
On each Valuation Date, the ESOP Committee will credit, or
direct the Trustee to credit, any part of a Participant's Accrued
Benefit retained in the Trust with its proportionate share of the
Trust's income, expenses, gains and losses, both realized and
unrealized. Upon termination of the Plan, the amount, if any, in a
suspense account under Article III hereof will revert to the Employer,
subject to the conditions of the Treasury Regulations permitting such a
reversion. A resolution or amendment to freeze all future benefit
accrual, but otherwise to continue maintenance of this Plan, is not a
termination for purposes of this Section 13.06."
IN ALL OTHER RESPECTS, the Plan is hereby ratified and confirmed.
17.
<PAGE>
IN WITNESS WHEREOF, the Company has executed this Amendment Number One
to the Plan in multiple copies on this 12 day of JUNE ,1998, to be effective the
1st day of August, 1997, unless otherwise specified or required by law.
COMPANY:
T.A. KYSER CO.
By: \s\ C. Garry HendrickS
-------------------------------------------
C. Garry Hendricks, Chief Executive Officer
18.
<PAGE>
Exhibit 10.22
AMENDMENT NUMBER TWO TO THE
T.A. KYSER COMPANY
EMPLOYEE STOCK OWNERSHIP PLAN
(AS AMENDED AND RESTATED, EFFECTIVE MARCH 17, 1997)
T.A. KYSER CO., a corporation organized under the laws of the State of
Nevada (hereinafter referred to as "Company"), makes this AMENDMENT NUMBER TWO
TO THE T.A. KYSER COMPANY EMPLOYEE STOCK OWNERSHIP PLAN (AS AMENDED AND
RESTATED, EFFECTIVE MARCH 17, 1997) (hereinafter referred to as "Plan"). It is
intended that this Amendment Number Two, Amendment Number One, and the Plan
qualify under Sections 401(a) and 4975(e)(7) of the Internal Revenue Code of
1986, as amended ("Code"), and Section 407(d)(6) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). It is also intended that the
T.A. Kyser Company Employee Stock Ownership Trust (As Amended and Restated,
Effective March 17, 1997) be exempt from tax under Section 501(a) of the Code.
Amendment Number Two, Amendment Number One, and the Plan shall be interpreted
whenever possible, to comply with the terms of the Code, ERISA and all formal
regulations and rulings.
WITNESSETH:
WHEREAS, the Company (formerly known as "Kyser Company") established the
Kyser Company Employee Stock Ownership Plan on July 5, 1989, effective August 1,
1988;
WHEREAS, the Kyser Company Employee Stock Ownership Plan was amended by
Amendment Number 1 on September 10, 1990, which was effective August 1, 1988;
WHEREAS, Kyser Company subsequently changed its name to "T.A. Kyser Co.;"
WHEREAS, the Kyser Company Employee Stock Ownership Plan was amended by
Amendment Number 2 on October 25, 1990, which was effective October 25, 1990;
WHEREAS, Amendment Number 2 to the Kyser Company Employee Stock Ownership
Plan changed the name of the Kyser Company Employee Stock Ownership Plan to the
"T.A. Kyser Company Employee Stock Ownership Plan;"
WHEREAS, the T.A. Kyser Company Employee Stock Ownership Plan was amended
and restated on June 30, 1995, effective August 1, 1989 (except that the
provisions which were required to be effective before this date in accordance
with the Tax Reform Act of 1986 were generally applicable to the Plan Years
beginning after 1988, unless an earlier or later effective date was required
pursuant to a statute or Treasury Regulation or as stated in such plan);
WHEREAS, the T.A. Kyser Company Employee Stock Ownership Plan was amended
by Amendment Number 1 on April 18, 1996, which was effective August 1, 1989;
WHEREAS, the Company amended and substituted the T.A. Kyser Company
Employee Stock Ownership Plan, in restated form, on July 2, 1997, effective
March 17, 1997, known as the T.A. Kyser Company Employee Stock Ownership Plan
(As Amended and Restated, Effective March 17, 1997);
1.
<PAGE>
WHEREAS, the Company continued, in a separate instrument, the T.A. Kyser
Company Employee Stock Ownership Trust (As Amended and Restated, Effective March
17, 1997) which is and becomes a part of the T.A. Kyser Company Employee Stock
Ownership Plan (As Amended and Restated, Effective March 17, 1997);
WHEREAS, the Company adopted Amendment Number One to the Plan on June 12,
1998 to clarify certain provisions of the Plan and to bring the Plan into
compliance with the Reemployment Rights Act of 1994, the Small Business Job
Protection Act of 1996 and the Taxpayer Relief Act of 1997;
WHEREAS, the Company desires to adopt Amendment Number Two to the Plan to
be effective simultaneously upon the Effective Time (as defined in Section 1.12
of the Agreement and Plan of Merger and Reorganization among METRON TECHNOLOGY
B.V., a Netherlands corporation, Metron Acquisition Sub, Inc., and the Company)
(referred to herein as the "Kyser Effective Date") to clarify certain provisions
of the Plan as a result of the Plan owning stock of METRON TECHNOLOGY B.V.
governed by the laws of the Netherlands;
WHEREAS, it is intended that all provisions be interpreted, construed and
implemented in the administration of the Plan to comply with the terms of the
Code, ERISA and all regulations and rulings;
WHEREAS, Section 13.02 of the Plan authorizes the Company to make
amendments to the Plan; and
NOW, THEREFORE, in consideration of the above premises, the Company hereby
amends the Plan in accordance with this Amendment Number Two. Amendment Number
Two is hereby adopted as an appendix to the Plan to be effective on the Kyser
Effective Date.
1. Section 1.31 of the Plan entitled "Employer Securities" is hereby
amended by deleting the existing Section 1.31 in its entirety and by
substituting the following new Section 1.31 in its stead as follows:
"Sec. 1.31. EMPLOYER SECURITIES. "Employer Securities" means common
stock issued by METRON TECHNOLOGY B.V., or by a corporation which is a
member of the same controlled group of METRON TECHNOLOGY B.V., which is
readily tradeable on an established securities market. If there is no
common stock which meets such requirements, the term "Employer Securities"
or "Company Stock" shall mean common stock issued by METRON TECHNOLOGY B.V.
or by a corporation which is a member of the same controlled group of
METRON TECHNOLOGY B.V., having a combination of voting power and dividend
rights equal to or in excess of:
(a) that class of common stock of METRON TECHNOLOGY B.V. (or any
other such corporation) having the greatest voting power; and
(b) that class of common stock of METRON TECHNOLOGY B.V. (or any
other such corporation) having the greatest dividend rights.
2.
<PAGE>
Noncallable preferred stock shall also be treated as "Employer Securities"
if such stock is convertible at any time into stock which meets the
qualifications above, and if such conversion is at a conversion price which
(at the date of the acquisition by the Trust) is reasonable. For purposes
of the preceding sentence, preferred stock shall be treated as noncallable
if after the call there will be a reasonable opportunity for a conversion
which meets such requirements."
2. Section 1.54 of the Plan entitled "Company" is hereby amended by
deleting the existing Section 1.54 in its entirety and by substituting the
following new Section 1.54 in its stead as follows:
"Sec. 1.54. COMPANY. 'Company' means METRON TECHNOLOGY B.V., a
Netherlands corporation or its successor."
3. Section 3.01 of the Plan entitled "Amount" is hereby amended by
deleting the existing Section 3.01 in its entirety and by substituting the
following new Section 3.01 in its stead as follows:
"Sec. 3.01. AMOUNT. The Employer will contribute to the Plan, for each
Plan Year, the amount which its board of directors may from time to time
deem advisable. The Employer may contribute to this Plan regardless of
whether it has Net Profits. Employer contributions for each Plan Year shall
never be less than the amount required to enable the Trust to discharge its
Current Obligations and General Obligations and notwithstanding whether
some or all of such contributions may fail to qualify for income tax
deductions by the Employer. However, the Employer may not make a
contribution to the Plan for any Plan Year to the extent the contribution
would exceed the Participants' Maximum Permissible Amounts pursuant to Part
2 of this Article III.
The Employer contributes to this Plan on the condition its
contribution is not due to a mistake of fact and the Internal Revenue
Service will not disallow the deduction for its contribution. Upon written
request from the Employer, the amount of the Employer's contribution made
by the Employer by mistake of fact or the amount of the Employer's
contribution disallowed as a deduction under Code Section 404 must be
returned to the Employer unless such contribution is necessary to discharge
the Plan's Current Obligations.
The Employer may make its contribution in cash or in Employer
Securities as the Employer from time to time may determine provided the
contribution in Employer Securities is not a prohibited transaction under
the Code or ERISA. The Employer may make its contribution of Employer
Securities at fair market value determined at the time of contribution.
Any shares of METRON TECHNOLOGY B.V. (or of another Dutch B.V.
Company) issued to the Plan shall be issued in consideration for a cash
payment in Netherlands Guilders by the Plan to METRON TECHNOLOGY B.V. (or
such other B.V. Company, as the case may be) in an amount not less than the
aggregate par value of the shares issued to the Plan to the extent
permitted by applicable law. At least twenty-five
3.
<PAGE>
percent (25%) of such payment shall be made to METRON TECHNOLOGY B.V.
(or such other B.V. Company, as the case may be) at the time of such
issuance."
4. Section 3.05 of the Plan entitled "Treatment of Employer Securities
Purchased Under Installment Payment Contracts or With Borrowed Funds" is hereby
amended by deleting the existing Section 3.05 in its entirety and by
substituting the following new Section 3.05 in its stead as follows:
"Sec. 3.05. TREATMENT OF EMPLOYER SECURITIES PURCHASED UNDER
INSTALLMENT PAYMENT CONTRACTS OR WITH BORROWED FUNDS.
(a) DEBT PURCHASE OF EMPLOYER SECURITIES. Any Employer Securities
purchased by the Plan under an installment payment contract or with
borrowed funds shall initially be allocated to the Unallocated Employer
Securities Account.
(b) REALLOCATION FROM UNALLOCATED EMPLOYER SECURITIES ACCOUNT. As of
the Accounting Date of each Plan Year, and as of any special Valuation Date
if directed by the ESOP Committee, there shall be transferred from the
Unallocated Employer Securities Account to the Participant Employer
Securities Accounts, a portion of the Employer Securities purchased under
an installment purchase contract or with funds borrowed by the Plan equal
to the number of shares determined by taking the shares so purchased which
have not theretofore been released from the Unallocated Employer Securities
Account multiplied in a manner specified in Section 12.21 (F) hereof. Each
Participant's share of the Employer Securities to be allocated pursuant to
the preceding sentence shall be determined by multiplying the number of
shares of Employer Securities to be allocated in a manner specified in
Section 12.21(F) hereof.
(c) PAYMENTS ON INSTALLMENT PURCHASE CONTRACTS AND LOAN OBLIGATIONS
OF THE PLAN. As of the Accounting Date of each Plan Year, and as of any
special Valuation Date if directed by the ESOP Committee, installment
payments, including principal and interest, made by the Plan out of
Employer contributions made with respect to the period then ending, under
installment purchase contracts for the purchase of Employer Securities, or
under loan agreements covering funds borrowed by the Plan to finance the
purchase of Employer Securities, will reduce Participant General
Investments Accounts in the same proportion that Employer contributions are
allocated under the provisions of Section 3.04(A)(1)(d) hereof. Unless
required by law or herein, dividends paid on Employer Securities held in
the Unallocated Employer Securities Account shall be allocated in
accordance with Section 3.04(A)(1)(d)(iii) hereof. For purposes of
determining payments on installment purchase contracts and loan obligations
of the Plan, each such installment purchase contract and/or loan obligation
shall provide for payment of principal and interest substantially in
accordance with the following: All income ("specified income") allocable to
the Unallocated Employer Securities Account and Unallocated General
Investments Account that is attributable to collateral for the obligation
or attributable to Employer contributions made in order to meet the Plan's
obligation under such a loan shall be used, before any Employer
contributions are so used, to pay principal amounts due under such
installment purchase contracts or loan
4.
<PAGE>
obligations; Employer contributions shall be first applied to repay
interest under installment purchase contracts or loan obligations with any
excess used to fund current principal requirements not otherwise funded by
the specified income; if the specified income of the Unallocated Employer
Securities Account and Unallocated General Investments Account is not
sufficient to pay principal due under the installment purchase contract or
loan obligation, then Employer contributions shall be used to fund the
difference; if the specified income exceeds the amount necessary to pay
principal due on installment purchase contracts and loan obligations for
the Plan Year, then such excess amount shall be first used to pay interest
currently due with respect to the installment purchase contracts or loan
obligations and any remaining amount of income may, at the direction of
the ESOP Committee, be used to prepay principal due on installment
purchase contracts and loan obligations in succeeding Plan Years. To the
extent that the provisions of the Plan violate or conflict with the
provisions of Article 207c, Book 2, of the Dutch Civil Code, no loan to
purchase shares of METRON TECHNOLOGY B.V., and no installment purchase
contract with respect to shares of METRON TECHNOLOGY B.V., may be entered
into by the Plan.
(d) DIVIDENDS USED TO REPAY LOAN. If dividends on allocated shares
are to be used to repay an Exempt Loan (as defined in Section 1.32 hereof),
the following provisions shall apply:
(1) Employer Securities at least equal in value to the dividends
used to make loan payments shall be allocated to the Account that would
otherwise have received the dividend allocations; and
(2) remaining released Employer Securities shall be allocated as
a contribution pursuant to Section 3.04(A)(1)(d)(iii) hereof.
If dividends on allocated shares and unallocated shares are not used
to repay an Exempt Loan (as defined in Section 1.32 hereof), such dividends
shall be allocated to the Participant's General Investments Account and
Participants Unallocated General Investments Account pursuant to Section
3.04(A)(1)(d)(i) or (ii) hereof as income. The ESOP Committee shall direct
the Trustee to distribute the cash to the Participants (and Beneficiaries)
within ninety (90) days after the close of the Plan Year in which the
dividends have been paid to the extent of each Participant's respective
Nonforfeitable vesting percentages determined as of the close of the Plan
Year pursuant to Section 5.03 hereof."
5. Section 9.04 of the Plan entitled "General" is hereby amended by
deleting the last sentence of the last paragraph in its entirety and by
substituting the following new sentence in its stead as follows:
"All decisions, determinations, directions, interpretations, and
applications of the Plan by the ESOP Committee shall be final and binding
upon all persons, including (but not limited to) the Company, Employer,
Trustee, and all Participants, Former Participants, Beneficiaries and
Alternate Payees unless in violation of the Plan, the Trust,
5.
<PAGE>
ERISA, the Code, any federal or state laws, Dutch law or the Articles of
Association of the Company."
6. Section 10.01 of the Plan entitled "Put Option" is hereby amended by
deleting the existing Section 10.01 in its entirety and by substituting the
following new Section 10.01 in its stead as follows:
"Sec. 10.01. PUT OPTION. In the event Employer Securities are not
readily tradable on an established market, the Company will issue a "put
option" to each Participant receiving a distribution of Employer Securities
from his Employer Securities Account. The put option will permit the
Participant to sell the Employer Securities to the Company, at any time
during two (2) option periods, at the current fair market value. The first
put option period runs for a period of at least sixty (60) days commencing
on the date of distribution of Employer Securities to the Participant. The
second put option period runs for a period of at least sixty (60) days
commencing on the first day of the subsequent Plan Year. If a Participant
(or Beneficiary) exercises his put option, the Company must purchase the
Employer Securities at fair market value upon the terms provided under
Section 10.04 hereof. The Company may grant the Trust an option to assume
the Company's rights and obligations at the time a Participant exercises an
option under this Section 10.01. Notwithstanding the provisions of this
Section 10.01, in the event the Company is unable to honor a Participant's
(or Beneficiary's) put option for any reason, then METRON TECHNOLOGY B.V.
shall honor such put option. No repurchase of shares of METRON TECHNOLOGY
B.V. (or of another Dutch B.V. Company) shall be effected other than in
compliance with the applicable provisions of Dutch law and the Articles of
Association of METRON TECHNOLOGY B.V. (or of such other Dutch B.V.
Company)."
7. Section 10.02 of the Plan entitled "Restrictions on Employer
Securities" is hereby amended by deleting the existing Section 10.02 in its
entirety and by substituting the following new Section 10.02 in its stead as
follows:
"Sec. 10.02. RESTRICTION ON EMPLOYER SECURITIES. Except upon the prior
written consent of the Company, no Participant (or Beneficiary) may sell,
assign, give, pledge, encumber, transfer or grant a limited right (BEPERKT
RECHT) with respect to, or otherwise dispose of any Employer Securities now
owned or subsequently acquired by him without complying with the terms of
this Article X. If a Participant (or Beneficiary) pledges or encumbers any
Employer Securities with the required prior written consent, any security
holder's rights with respect to such Employer Securities are subordinate
and subject to the rights of the Company."
8. Section 10.06(e) of the Plan is hereby amended by deleting the
existing Section 10.06(e) in its entirety and by substituting the following new
Section 10.06(e) in its stead as follows:
"(e) Stock that is not "readily tradable" is stock that is not
publicly traded or that is subject to a trading limitation. A security is
'publicly traded' if it is listed on a registered
6.
<PAGE>
national securities exchange or is quoted on a system sponsored by a
registered national securities exchange. A 'trading limitation' is a
restriction under any federal or state securities law or regulation
or under Netherlands law or under the Company's Articles of
Association or an agreement that makes the security not as freely
tradable as one not subject to the restriction."
9. Section 10.08 of the Plan entitled "Trustee's Put Option" is hereby by
amended by adding the following last sentence to Section 10.08 as follows:
"No repurchase of shares of METRON TECHNOLOGY B.V. (or another Dutch
B.V. Company) shall be effected other than in compliance with the
applicable provisions of Dutch law and the Articles of Association of
METRON TECHNOLOGY B.V. (or of such other B.V. corporation)."
10. Section 12.19 of the Plan entitled "Securities and Exchange Commission
Approval" is hereby amended by deleting the existing Section 12.19 in its
entirety and by substituting the following new Section 12.19 in its stead as
follows:
"Sec. 12.19. SECURITIES AND EXCHANGE COMMISSION APPROVAL. The Company
may request an interpretive letter from the Securities and Exchange
Commission stating that the transfers of Employer Securities contemplated
thereunder do not involve transactions requiring a registration of such
Employer Securities under the Securities Exchange Act of 1933 or an
interpretive letter or an exemption from the Dutch Securities Board
(STICHTING TOEZICHT EFFECTENVERKEER) under Article 4 of the Dutch
Securities Act (WET TOEZICHT EFFECTENVERKEER 1995). In the event a
favorable interpretative letter or an exemption is not obtained, the
Company reserves the right to amend the Plan in accordance with Section
13.02 of the Plan, to amend the Plan in accordance with Section 13.02 of
the Plan, retroactively for an effective date to obtain a favorable
interpretative letter or an exemption or to terminate the Plan."
11. Section 12.21 of the Plan entitled "Exempt Loan" is hereby amended by
deleting the existing Section 12.21 in its entirety and by substituting the
following new Section 12.21 in its stead as follows:
"Sec. 12.21. EXEMPT LOAN. This Section 12.21 specifically authorizes
the Trustee to enter into an Exempt Loan transaction. The Board may empower
the Company to authorize the guarantee or making by the Employer of any
such loan. The following terms and conditions will apply to any Exempt
Loan.
(A) The proceeds of the loan will be used within a reasonable time after
receipt only for any or all of the following purposes: (i) to acquire
Employer Securities, (ii) to repay such loan, or (iii) to repay a prior
Exempt Loan. Except as provided under Article X hereof, no Employer
Securities acquired with the proceeds of an Exempt Loan may be subject to a
put, call or other option, or buy-sell or similar arrangement while held by
and when distributed from this Plan, whether or not this Plan is then an
employee stock ownership plan.
(B) The interest rate of the loan may not be more than a reasonable rate
of interest.
7.
<PAGE>
(C) Any collateral pledged to the creditor must consist only of the assets
purchased by the borrowed funds and those assets used as collateral on the
prior Exempt Loan repaid with the proceeds of the current Exempt Loan.
(D) The creditor may have no recourse against the Plan under the loan
except with respect to such collateral given for the loan, contributions
(other than contributions of Employer Securities) that the Employer makes
to the Plan to meet its obligations under the loan, and earnings
attributable to such collateral and the investment of such contributions.
The payment made with respect to an Exempt Loan by the Plan during a Plan
Year must not exceed an amount equal to the sum of such contributions and
earnings received during or prior to the year less such payments in prior
years.
(E) In the event of default upon the loan, the value of Plan Assets
transferred in satisfaction of the loan must not exceed the amount of the
default, and if the lender is a Disqualified Person, the loan must provide
for transfer of Plan Assets upon default only upon and to the extent of the
failure of the Plan to meet the payment schedule of the loan.
(F) All assets acquired with the proceeds of an Exempt Loan must be added
to and maintained in a Suspense Account. In withdrawing assets from the
Suspense Account, the provisions of Treasury Regulation Sections
54.4975-7(b)(8) and (15) will be applied as if all securities in the
Suspense Account were encumbered. Notwithstanding any other provision
herein, upon the payment of any portion of the loan, assets in the
Suspense Account shall be released from encumbrances. For each Plan Year
during the duration of the loan, the number of Employer Securities
released must equal the number of encumbered Employer Securities held
immediately before release for the current Plan Year multiplied by a
fraction of (i) the numerator of which is the amount of principal paid
under the purchase contract or the loan agreement for the current Plan
Year; (ii) the denominator of which is the total of the all principal to
be paid for the current and all future Plan Years during the term of the
note (determined without reference to any possible extensions or
renewals thereof); provided the terms of the Exempt Loan satisfy all the
requirements under Treasury Regulation Section 54.4975-7(b)(8)(ii). At
the option of the Company, or if the Exempt Loan does not contain the
following characteristics: (1) the annual payments of principal and
interest (at a cumulative rate) are at least as rapid as level annual
payments of such amounts over ten years, (2) the portion of each loan
payment treated as interest does not exceed the amount of payment that
would be treated as interest under standard loan amortization tables,
and (3) the loan term (including extensions and renewals) does not
exceed ten years, then interest paid and to be paid in the future on the
Exempt Loan shall be included in the numerator and denominator of the
fraction. The number of future Plan Years under the loan must be
definitely ascertainable and must be determined without taking into
account any possible extension or renewal periods. If the interest rate
under the loan is variable, the interest to be paid in future Plan Years
must be computed by using the interest rate applicable as of the end of
the Plan Year. If the collateral includes more than one class of
Employer Securities, the number of Employer Securities of each class to
be released for a Plan Year must be determined by applying the same
fraction to each such class. The ESOP Committee will direct the Trustee
to allocate assets withdrawn from the Suspense Account to the Accounts
of Participants who otherwise share in the allocation of the Employer's
contribution for the
8.
<PAGE>
Plan Year for which the portion of the loan resulting in the release of
the assets has been paid in accordance with the provisions of subparagraph
(d)(ii) of paragraph (1) subsection (A) of Section 3.04. The ESOP
Committee will direct the Trustee to consistently make this allocation
as of each Accounting Date, and of any special Valuation Date if
directed by the ESOP Committee, on the basis of non-monetary units,
taking into account the relative Compensation of all such Participants
for such Plan Year.
(G) A loan may be obtained provided the loan is primarily for the
benefit of the Plan Participants and Beneficiaries of the Plan.
(H) Notwithstanding any other provision herein, the same proportion of
each class of Qualifying Employer Securities shall be forfeited, subject to
the Exempt Loan provisions herein allocable to the Participant's Account,
if more than one class of Qualifying Employer Securities subject to the
Exempt Loan provisions have been allocated to a Participant's Employer
Securities Account.
(I) No Exempt Loan to acquire shares of METRON TECHNOLOGY B.V. (or of
another Dutch B.V. Company) shall be entered into except in compliance with
the provisions of Section 207c, Book 2, of the Dutch Civil Code and the
Articles of Association of METRON TECHNOLOGY B.V. (or of such other Dutch
B.V. Company)."
12. Section 12.25 of the Plan entitled "Distribution of Trust Fund" is
hereby amended by deleting the existing Section 12.25 in its entirety and by
substituting the following new Section 12.25 in its stead as follows:
"Sec. 12.25. DISTRIBUTION OF TRUST FUND.
(A) UNREGISTERED EMPLOYER SECURITIES. If Employer Securities held in a
Participant Employer Securities Account are unregistered Employer
Securities, all distributions under the Plan will be made in cash subject
to the approval of the ESOP Committee. The Participant (or his
Beneficiary), however, may elect in writing to have his Accounts
distributed in Employer Securities. At the discretion of the ESOP
Committee, the Trustee may pay in cash any fractional security share and
any funds in the Participant General Investments Account to which a
Participant or his Beneficiary is entitled. At the discretion of the ESOP
Committee, the Trustee may apply any balance in a Participant General
Investments Account to provide whole shares of Employer Securities for
distribution.
(B) REGISTERED EMPLOYER SECURITIES. If Employer Securities held in a
Participant Employer Securities Account are registered Employer Securities,
all distributions under the Plan will be made only as directed by the ESOP
Committee valued at the time of distribution. Distribution of a
Participant's Account(s) will be made in whole shares of Employer
Securities, cash or a combination thereof, as determined by the ESOP
Committee; provided, however, that the ESOP Committee shall notify the
Participant of his right to demand distribution of his Account(s) entirely
in whole shares of Employer Securities. At the discretion of the ESOP
Committee, the Trustee may pay in cash any
9.
<PAGE>
fractional security share to which a Participant or his Beneficiary is
entitled. In the event the Trustee is to make a distribution in shares
of Employer Securities, any balance in a Participant General Investments
Account may be applied to provide whole shares of Employer Securities
for distribution at the then value.
(C) SPECIAL RULE IF RESTRICTIONS CONTAINED IN CHARTER OR BYLAWS.
Notwithstanding the preceding provisions of this Section 12.25, all
distributions under the Plan will be made in cash if the charter or bylaws
of the Company restrict the ownership of substantially all outstanding
Employer Securities to Employees or to a trust described in Code Section
401(a).
(D) DIVIDENDS. Notwithstanding the preceding provisions of this Section
12.25, the Trustee, if directed in writing by the ESOP Committee, shall pay
to the Participant, in cash, any cash dividends on Employer Securities
allocated, or allocable to Participant Employer Securities Accounts
pursuant to Section 3.05(d) of the Plan. The ESOP Committee's direction
must state whether the Trustee is to pay the cash dividend distributions
currently, or within the ninety (90) day period following the close of the
Plan Year in which the Employer pays the dividends to the Trust. The ESOP
Committee may request the Employer to pay dividends on Employer Securities
directly to Participants."
13. Section 13.02 of the Plan entitled "Amendment By Company" is hereby
amended by deleting all reference to "Company" and by substituting "Company and
Employer" in its stead.
IN ALL OTHER RESPECTS, the Plan and Amendment Number One are hereby
ratified and confirmed.
10.
<PAGE>
IN WITNESS WHEREOF, the Comply and METRON TECHNOLOGY, B.V. have executed
this Amendment Number Two to the Plan in multiple copies on this 13th day of
July, 1998, to be effective as of the Kyser Effective Date.
COMPANY:
T.A. KYSER CO.
By: \s\ C. Garry Hendricks
---------------------------------
C. Garry Hendricks
Chief Executive Officer
METRON TECHNOLOGY B.V.
By: \s\ E. Segal
---------------------------------
Name: ED SEGAL
Title: MANAGING DIRECTOR
11.
<PAGE>
Exhibit 10.23
--------------------------------------------------------
METRON SEMICONDUCTORS EUROPA B.V.
INVESTOR RIGHTS AGREEMENT
JULY 6,1995
--------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
1. REGISTRATION RIGHTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.1 Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
1.2 Company Registration . . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.3 Form S-3 Registration. . . . . . . . . . . . . . . . . . . . . . . . . . .3
1.4 Obligations of the Company . . . . . . . . . . . . . . . . . . . . . . . .4
1.5 [intentionally omitted]. . . . . . . . . . . . . . . . . . . . . . . . . .5
1.6 Expenses of Registration . . . . . . . . . . . . . . . . . . . . . . . . .5
1.7 Furnish Information. . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.8 Indemnification. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5
1.9 Reports Under Exchange Act . . . . . . . . . . . . . . . . . . . . . . . .7
1.10 Assignment of Registration Rights. . . . . . . . . . . . . . . . . . . . .8
1.11 Limitations on Subsequent Registration Rights. . . . . . . . . . . . . . .8
1.12 "Market Stand-off" Agreement . . . . . . . . . . . . . . . . . . . . . . .8
1.13 Delay of Registration. . . . . . . . . . . . . . . . . . . . . . . . . . .8
1.14 Termination of Registration Rights . . . . . . . . . . . . . . . . . . . .8
2. RIGHT OF FIRST REFUSAL AND FIRST OFFER. . . . . . . . . . . . . . . . . . . . .9
2.1 "New Securities" . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9
2.2 Notice of Proposed Issuance. . . . . . . . . . . . . . . . . . . . . . . .9
2.3 Sale of New Securities . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
2.5 Termination of Right of First Refusal. . . . . . . . . . . . . . . . . . 10
3. CO-SALE RIGHTS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.1 Sales by an Investor . . . . . . . . . . . . . . . . . . . . . . . . . . 10
3.2 Exempt Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
3.3 Prohibited Transfers . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.4 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
3.5 Termination of Co-Sale Rights. . . . . . . . . . . . . . . . . . . . . . 12
3.6 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
4. COMPANY RECORDS AND POLICY. . . . . . . . . . . . . . . . . . . . . . . . . . 13
5. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
i.
<PAGE>
<CAPTION>
<S> <C>
5.1 Governing Law. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.2 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
5.3 Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.4 Notices, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.5 Amendments; Waivers. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.6 Delays or Omissions. . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.7 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
5.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
ii.
<PAGE>
METRON SEMICONDUCTORS EUROPA B.V.
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT is made as of the 6th day of July, 1995,
by and among Metron Semiconductors Europa B.V., a corporation organized and
existing under the laws of The Netherlands (the "Company"), and the investors
listed on the Schedule of Investors attached hereto as Schedule A (the
"Investors").
RECITALS
A. That certain Agreement and Plan of Reorganization (the
"Reorganization Agreement") dated as of April 3, 1995 calls for the Company and
the Investors to enter into this Investor Rights Agreement granting to the
Investors the rights set forth herein.
B. As of the date of this Agreement, the Company has an authorized
share capital of One Million Dutch Guilders (NLG 1,000,000) divided in ten
million shares with a par value of NLG 0.10 per share each. Upon consummation
of the transactions contemplated by the Reorganization Agreement, the issued
share capital of the Company is approximately NLG 292,193 divided into 2,921,930
shares.
C. In entering into this Agreement, the parties have assumed that any
initial public offering of the Company's shares will take place principally in
the United States of America, and be registered under the Securities Act of
1933, as amended.
D. The unofficial English translations of the current Articles of
Association of the Company and of the proposed Articles of Association of the
Company which each contain further restrictions applicable to the Company's
shares, are attached hereto as Exhibits A and B, respectively.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing premises and the mutual
covenants set forth herein, the parties agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
(a) "EXCHANGE ACT" shall mean the Securities Exchange
Act of 1934, as amended;
(b) "FORM S-3" shall mean such form under the Securities
Act as in effect on the date hereof or any successor form promulgated by the SEC
(including Form F-3 and its successors);
1.
<PAGE>
(c) "HOLDER" shall mean any person who is the legal
owner of Registrable Securities which have not previously been registered under
the Securities Act and sold, but only if such person is an Investor or an
assignee or transferee thereof in accordance with Section 1.10 hereof. For all
purposes of this Agreement, the Company and the other parties hereto are
expressly authorized to treat those persons registered in the Shareholders'
Register as the legal owners of the Company's shares;
(d) "QUALIFIED INITIAL PUBLIC OFFERING" shall mean the
first public offering of the Company's shares in the United States, registered
under the Securities Act and involving net proceeds to the Company of more than
US$7,500,000 and a gross offering price of at least US$8.00 per share with a par
value of NLG 0.10 each (as adjusted from time to time to reflect stock splits,
stock dividends, recapitalizations, combinations or the like);
(e) The terms "REGISTER", "REGISTERED" and
"REGISTRATION" shall mean a registration effected through the preparation and
filing of a registration statement or similar document in compliance with the
Securities Act;
(f) "REGISTRABLE SECURITIES" shall mean any and all
Shares issued and outstanding immediately after the closing of the
reorganization pursuant to the Reorganization Agreement and the shares or other
securities of the Company issued in a stock split or reclassification of, or a
stock dividend or other distribution on or in substitution or exchange for, or
otherwise in connection with, the Shares, or the shares or other securities of
the Company or other entity issued in a merger or consolidation involving the
Company or a sale of all or substantially all of the Company's assets; excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which rights under this Section 1 are not assigned;
(g) "REGISTRATION EXPENSES" shall mean all expenses
incurred by the Company in effecting any registration pursuant to this
Agreement, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration and fees and disbursements of
counsel for the underwriter or underwriters of such securities (if the Company
is required to bear such fees and disbursements);
(h) "SECURITIES ACT" shall mean the Securities Act of
1933, as amended;
(i) "SEC" shall mean the Securities and Exchange
Commission;
(j) "SELLING EXPENSES" shall mean the fees and
disbursements of counsel and accountants for the Holders, all underwriting
discounts, selling commissions and stock transfer taxes applicable to the
securities registered by the Holders and any other expenses incurred by the
Holders not expressly included as a Registration Expense.
(k) "SHARES" shall mean the shares of the Company with a
par value of NLG 0.10 each held by Investors as of the date hereof.
2.
<PAGE>
1.2 COMPANY REGISTRATION.
(a) If the Company shall determine to issue new shares
in its share capital and to register those shares, upon issue, for its own
account in connection with an underwritten offering, including a Qualified
Initial Public Offering, on a form which would permit the registration of
Registrable Securities, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under applicable blue sky laws) and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within twenty (20) days after mailing or personal delivery of
such written notice from the Company, by any Holders, except as set forth in
Section 1.2(b); provided, however, that nothing herein shall prevent the Company
from, at any time, abandoning or delaying any such registration initiated by it.
(b) UNDERWRITING. If the registration of which the
Company gives notice is for a Qualified Initial Public Offering, the Company
shall so advise the Holders as a part of the written notice given pursuant to
Section 1.2(a) (i). The right of any Holder to registration pursuant to this
Section 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Shares through such underwriting shall (together with the Company) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding any
other provision of this Section 1.2, if the underwriter determines that
inclusion of Registrable Securities by the selling Holders would adversely
affect the marketing of such proposed offering, the number of Registrable
Securities of such Holders to be included in the registration and underwriting
may be reduced or may be excluded entirely from such registration and
underwriting by the Company. The Company shall so advise all Holders whose
securities would otherwise be registered and underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders requesting
inclusion in such registration in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time of
filing the registration statement. If any Holder disapproves of the terms of
any such underwriting, such Holder may elect to withdraw therefrom by written
notice to the Company and the underwriter. Any securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration and shall not
be sold or otherwise transferred prior to one hundred eighty (180) days after
the effective date of the registration statement relating thereto.
1.3 FORM S-3 REGISTRATION. In case the Company shall receive
from any Holder or Holders a written request or requests that the Company effect
a registration on Form S-3 for a public offering of at least 125,000 Registrable
Securities (as adjusted from time to time to reflect stock splits, stock
dividends, recapitalizations, combinations or the like), and the Company is
entitled to use Form S-3 to register the Registrable Securities for such an
offering, the Company will:
3.
<PAGE>
(a) promptly give written notice of the proposed
registration to all
other Holders; and
(b) as soon as practicable, effect such registration to
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 1.3: (i) if
the Company has, within the twelve (12) month period preceding the date of such
request, already effected one (1) registration on Form S-3 for any Holder or
Holders pursuant to this Section 1.3; (ii) if the Company has, within the one
hundred eighty (180) days preceding the date of such request, completed its
first registered offering to the public for its own account; (iii) if the
Company shall furnish to the requesting Holders a certificate signed by one or
more Managing Directors of the Company stating that, in the good faith judgment
of a majority of the members of the Supervisory Board of the Company, it would
be seriously detrimental to the Company and its shareholders for such Form S-3
registration statement to be effected at such time, in which event the Company
shall have the right to defer the filing of the Form S-3 registration statement
for a period of not more than one hundred thirty (130) days after receipt of the
request of the Holder or Holders under this Section 1.3, provided that the
Company shall not utilize this right more than once in any twelve (12) month
period.
Subject to the foregoing, the Company shall file a registration statement
covering the Registrable Securities so requested to be registered as soon as
practicable after receipt of the request or requests of the Holders.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously and as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective and, upon the request
of the Holders or a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days or until the Holder or Holders have completed the distribution
described in the registration statement, whichever first occurs.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for the same time period as
under Section 1.4(a).
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
4.
<PAGE>
(d) In the event of any underwritten public offering,
use reasonable best efforts to perform its obligations under such underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also use
reasonable best efforts to perform his, her or its obligations under such
agreement.
(e) The Company and the Holders shall each comply with
all requirements of and pursuant to the Dutch Act on the Supervision of the
Securities Trade and shall instruct the underwriters to comply with such
requirements.
(f) Use its best efforts to register or qualify the
Registrable Securities covered by such registration statement under such state
securities or blue sky laws of such jurisdictions as such participating Holders
may reasonably request in writing within 120 days following the original filing
of such registration statement, except that the Company shall not for any
purpose be required to file a general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction wherein it
is not so qualified.
1.5 [INTENTIONALLY OMITTED].
1.6 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, filing, qualification or
compliance pursuant to this Section 1 shall be borne by the Company. All
Selling Expenses relating to securities registered by the Holders shall be borne
by the Holders. However, the Company shall not be required to pay Registration
Expenses for any registration begun pursuant to Section 1.3, the request for
which has been subsequently withdrawn by the initiating Holders, in which case,
such Registration Expenses shall be borne by the Holders requesting such
withdrawal.
1.7 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to this Section 1
that the selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them, and the intended method of
disposition of such securities as shall be required to effect the registration
of their Registrable Securities and qualification under applicable state
securities or blue sky law.
1.8 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder of Registrable Securities included in a
registration statement pursuant to the provision of this Section 1 (excluding
Holders who are then Managing Directors or Supervisory Directors of the
Company), each of the officers, directors and partners of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or Exchange Act, against any losses, claims, damages or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon: (i) any untrue statement or alleged untrue statement
of a material fact contained
5.
<PAGE>
in such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto; (ii)
the omission or alleged omission to state therein a material fact required to
be stated therein, or necessary to make the statements therein not
misleading; or (iii) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act, any state
securities law or the Dutch Act on the Supervision of the Securities Trade in
connection with the offer or sale of the shares Included in the registration
statement; and the Company will reimburse each such Holder, officer or
director, underwriter or controlling person for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this Section 1.8(a) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability,
oraction if such settlement is effected without the consent of the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission so made
in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
officer or director, underwriter or controlling person.
(b) To the extent permitted by law, each Holder of
Registrable Securities which are included in a registration pursuant to the
provisions of this Section 1 will indemnify and hold harmless the Company, each
of its Managing Directors and Supervisory Directors, each person, if any, who
controls the Company within the meaning of the Securities Act, each underwriter
(within the meaning of the Securities Act) of the Company's securities covered
by such a registration statement, any person who controls such underwriter, and
any other Holder selling securities in such registration statement and each of
its directors, officers or partners or any person who controls such Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
the Company or any such underwriter, other Holder, director, officer or
controlling person may become subject under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by the Holder of the Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act, any state securities law or the
Dutch Act on the Supervision of Securities Trade in connection with the offer or
sale of the shares included in the registration statement, provided that in the
case of (i) and (ii) above the indemnification obligation of such Holder shall
only be to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use in connection
with such registration, and each such Holder will reimburse any legal or other
expenses reasonably incurred by the Company or any such underwriter, other
Holder, Managing Director, Supervisory Director, or controlling person in
connection with investigating or defending any such loss, claim, damage,
liabiity, or action; provided, however, that the indemnity agreement contained
in this Section 1.8(b) shall not apply to amounts paid in
6.
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settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld.
(c) Promptly after receipt by an indemnified party under
this Section 1.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.8, notify the
indemnifying party in writing of the commencement thereof, and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, if the defendants in any action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or additional to those available to the indemnifying party, or if there is
a conflict of interest which would prevent counsel for the indemnifying party
from also representing the indemnified party, the indemnified party or parties
shall have the right to select separate counsel to participate in the defense of
such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof, the indemnifying party will not be liable to such
indemnified party pursuant to the provisions of paragraph (a) or (b) above for
any legal or other expense subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the proviso of the preceding sentence, (ii) the indemnifying
party shall not have employed counsel satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after the notice of the
commencement of the action or (iii) the indemnifying party has authorized
theemployment of counsel for the indemnified party at the expense of the
indemnifying party. The failure of any indemnified party to notify an
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of liability to the indemnified party under this Section 1.8
only to the extent that such failure to give notice shall materially prejudice
the indemnifying party in the defense of any such claim or any such litigation,
but the omission so to notify the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under this
Section 1.8.
1.9 REPORTS UNDER EXCHANGE ACT. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) from and after such time as it has securities
registered pursuant to Section 12 of the Exchange Act, or has securities
registered pursuant to the Securities Act, make timely filing of such reports as
are required to be filed by it with the SEC so that Rule 144 or Form S-3 under
the Securities Act or any successor provision thereto will be available to the
Holders who are otherwise able to take advantage of the provisions of such Rule
or Form;
(b) as applicable, furnish to any Holder so long as the
Holder owns any Registrable Securities, forthwith upon request, (i) a written
statement by the Company that it has complied with the reporting requirements of
the Securities Act and the Exchange Act (at any
7.
<PAGE>
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed
by the Company with the SEC and (iii) such other information as may be
reasonably requested in availing any Holder of any rule or regulation of the
SEC which permits the selling of any such securities without registration or
pursuant to such form.
1.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned by a Holder to a transferee or assignee of all Registrable Securities
held by the transferor or assignor, provided that the Company is, within a
reasonable time after such transfer, furnished with written notice of the name
and address of such transferee or assignee and the securities with respect to
which such registration rights are being assigned and such transferee or
assignee agrees in writing to be bound by the terms of this Agreement; provided,
however, that such assignment of rights shall be effective only if immediately
following such transfer the Registrable Securities so transferred or assigned
continue to constitute "restricted securities" (as defined in Rule 144 under the
Securities Act) in the hands of such transferee or assignee.
1.11 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder to include such securities in any registration filed under Section 1.2 or
1.3 hereof, unless under the terms of such agreement such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his or her securities will not reduce the amount of the
Registrable Securities of the Holders which is included.
1.12 "MARKET STAND-OFF" AGREEMENT. If requested by the Company,
or an underwriter of Shares (or other securities) of the Company, each Holder
hereby agrees that it will not sell or otherwise transfer or dispose of any
Registrable Securities, except Shares included in such registration, during the
one hundred eighty (180) day period following the effective date of a
registration statement of the Company filed under the Securities Act.
In order to enforce the foregoing covenant and to the extent permissible
under applicable laws, the Company may impose stop-transfer instructions with
respect to the Registrable Securities of each Holder (and the shares or
securities of every other person subject to the foregoing restriction) until the
end of such 180-day period.
1.13 DELAY OF REGISTRATION. Subject to applicable law, no
Holder shall have any right to obtain or seek an injunction restraining or
otherwise delaying any such registration as the result of any controversy that
might arise with respect to the interpretation or implementation of this Section
1.
1.14 TERMINATION OF REGISTRATION RIGHTS. The right of any
Holder to exercise any right provided under Section 1.2 or 1.3 shall terminate
after three (3) years following the consummation of the sale of securities
pursuant to a registration statement filed by the Company under the Securities
Act in connection with the initial firm commitment underwritten offering of
8.
<PAGE>
its securities to the general public, or such earlier date as all shares of
Registrable Securities held by such Holder may immediately be sold under Rule
144 or any successor provision during any 90-day period.
2. RIGHT OF FIRST REFUSAL. The Company hereby grants to each
Investor the right of first refusal to purchase its pro rata share of any New
Securities (as defined in Section 2.1) that the Company may, from time to time
propose to issue - only if the statutory pre-emptive rights under Section 206(a)
of Book 2 of the Dutch Civil Code have been excluded by a resolution of the
General Meeting of Shareholders or, if the Supervisory Board has been designated
to resolve upon the issuance of shares, by resolution of the Supervisory Board
of the Company - or propose to sell, in case the Articles of Association require
shareholders' approval for the transfer of shares, only if such sale has been
approved by a resolution of the General Meeting of Shareholders, and in case the
Articles of Association provide for pre-emptive rights for the transfer of
shares held by the Company in its own capital, only if such pre-emptive rights
have been excluded by a resolution of the General Meeting of Shareholders or, if
the Supervisory Board has been designated to resolve upon the issuance of
shares, by resolution of the Supervisory Board. An Investor's pro rata share,
for purpose of this right of first refusal, is the ratio of the number of Shares
legally owned by such Investor immediately prior to the issuance of New
Securities to the total number of Shares legally owned by all of the Investors
immediately prior to the issuance of New Securities. This right of first
refusal shall be subject to the following provisions:
2.1 "NEW SECURITIES". "New Securities" shall mean any shares
of the Company, whether or not now authorized, and rights, options or warrants
to purchase such shares, and securities of any type whatsoever that are or may
become convertible into shares of the Company; provided, however, that the term
"New Securities" shall not include (i) securities issued pursuant to the
Reorganization Agreement or issued prior to the date of this Agreement, (ii)
securities issued pursuant to the acquisition of another business entity or
business segment of any such entity by the Company by merger, purchase of
substantially all the assets of such entity or business segment or other
reorganization, (iii) securities issued to officers, directors, employees or
consultants of or to the Company pursuant to any stock option, stock purchase or
stock bonus plan, agreement or arrangement approved by the Managing Board or
Supervisory Board of the Company, (iv) securities issued in any public offering
which is firmly underwritten, (v) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company, and (vi) any right,
option or warrant to acquire any security convertible into the securities
excluded from the definition of New Securities pursuant to subsections (i)
through (v) above.
2.2 NOTICE OF PROPOSED ISSUANCE. In the event the Company
proposes to undertake an issuance or sale of New Securities, it shall give each
Investor written notice of its intention, describing the type of New Securities,
their price and the general terms upon which the Company proposes to issue such
New Securities. Each Investor shall have twenty (20) days after any such notice
is delivered to exercise its option to purchase up to its pro rata portion of
such New Securities at the price and upon the terms specified in the notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.
9.
<PAGE>
2.3 SALE OF NEW SECURITIES. In the event the Investors fail to
exercise fully the right of first refusal and first offer within said twenty
(20) day period, the Company shall have ninety (90) days thereafter to sell or
issue or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of such agreement) to sell or issue the New Securities respecting which the
Investors' right of first refusal set forth in this Section 2 is not exercised,
at a price and upon terms no more favorable to the purchasers thereof than are
specified in the Company's notice to Investors pursuant to Section 2.2. In the
event the Company has not sold the New Securities within the foregoing period,
the Company shall not thereafter issue or sell any New Securities without first
again offering such securities to the Investors in the manner provided in
Section 2.2 above.
2.4 ASSIGNMENT. The rights granted by the Company pursuant to
this Section 2 may be assigned by any Investor to a transferee or assignee of
not less than all of the Shares held by such Investor, provided that such
assignment may otherwise be effected in accordance with applicable securities
laws and that the Company is given written notice at the time of said assignment
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such rights are being assigned, and such
transferee or assignee agrees in writing to be bound by the terms and conditions
of this Agreement.
2.5 TERMINATION OF RIGHT OF FIRST REFUSAL. The right of first
refusal granted under this Section 2 shall terminate upon the effectiveness of
the first registration statement filed by the Company involving a Qualified
Initial Public Offering.
3. CO-SALE RIGHTS.
3.1 SALES BY AN INVESTOR.
(a) Except as otherwise provided in this Section 3,
in the event that any Investor proposes to sell or transfer all or any of the
Shares then held by such Investor (a "Selling Investor") to any non-Investor
(other than the Company), such Selling Investor shall promptly give written
notice (the "Co-Sale Notice") simultaneously to the Company and each Investor
at least twenty (20) days prior to the closing of such sale or transfer. The
Co-Sale Notice shall describe the proposed sale or transfer in reasonable
detail including, without limitation, the number of Shares to be sold or
transferred, the consideration to be paid, and the name and address of each
prospective purchaser or transferee.
(b) Each Investor shall have the right, exercisable upon
written notice to the Selling Investor within fifteen (15) days after receipt of
the Co-Sale Notice, to participate in such sale of Shares to the extent set
forth in Section 3.1 (c) on the same terms and conditions as are set forth in
the Co-Sale Notice. To the extent that one or more of the Investors exercises
such right of participation, the number of shares that the Selling Investor may
sell in the transaction shall be correspondingly reduced. Each Investor who
elects to participate in such sale is referred to herein as a "Participant."
(c) Each Investor may sell up to such Investor's pro
rata portion of the number of Shares offered for sale by the Selling Investor.
An Investor's pro rata portion for purposes of this co-sale right is determined
by multiplying (i) the number of Shares to be sold by
10.
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the Selling Investor by (ii) a fraction, the numerator of which is the number
of Shares held by such Investor and the denominator of which is the sum of
the number of Shares held by the Selling Investor and by all other Investors.
(d) To the extent that any prospective purchaser or
purchasers refuses to purchase shares from a Participant in connection with the
exercise of his or its rights of co-sale hereunder, the Selling Investor shall
not sell to such prospective purchaser or purchasers any Shares unless, prior to
or simultaneously with such sale, the Selling Investor purchases such Shares
from Participant.
(e) Any sale of shares covered by the Co-Sale Notice and
any sale of shares by a Selling Investor exercising its co-sale right pursuant
to such Co-Sale Notice shall be consummated, other than compliance with the
share transfer restrictions in the Articles of Association of the Company and
with the formal requirements of Netherlands law to effect the transfer of such
Shares, within sixty (60) days after delivery of the Co-Sale Notice and shall be
on terms and conditions no more favorable to the Selling Investor than the terms
specified in the Co-Sale Notice. Any sale of such Shares after such 60-day
period shall again be subject to the obligations set forth in Sections 3.1(a)
through (e). Each such sale shall constitute a separate transaction between the
Participant and the Selling Investor on the one hand and the purchaser(s) on the
other hand.
(f) The exercise or non-exercise of the rights of any
Investor hereunder to participate in one or more sales of Shares made by any
Investor shall not adversely affect such Investor's rights to participate in
subsequent sales of Shares subject to this Section 3.1.
3.2 EXEMPT TRANSFERS.
(a) Notwithstanding any other provision of this
Agreement, the provisions of Section 3.1 shall not apply to:
(i) any pledge of Shares made pursuant to a bona
fide loan transaction that creates a mere security interest including the
foreclosure of any such pledge;
(ii) any transfer to an Investor's ancestors,
descendants or spouse, or to trusts for the benefit of such persons or such
Investor; or
(iii) any bona fide gift;
provided that the Investor making an exempt transfer pursuant to this Section
3.2(a) shall provide the other Investors and the Company with prior written
notice of the transfer, and the proposed transferee shall furnish the Investors
with a written agreement to be bound by and comply with all provisions of this
Agreement, such that the transferee shall be treated as a "Investor" for
purposes of this Section 3 with respect to the shares received in the exempt
transfer.
(b) Notwithstanding any other provision of this
Agreement, the provisions of Section 3.1 shall not apply to any sale of Shares
(i) to the public pursuant to a registration statement filed with, and declared
effective by, the SEC under the Securities Act, (ii)
11.
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in connection with a merger, exchange offer or tender offer pursuant to which
all shareholders of the Company are given the opportunity to sell or exchange
their shares or (iii) pursuant to the terms of that certain Buy and Sell
Agreement of even date herewith and that certain Stock Repurchase Agreement
dated as of November 14, 1994.
3.3 PROHIBITED TRANSFERS.
In the event a Selling Investor sells any Shares in
violation of the terms of this Agreement (a "Prohibited Transfer"), each
Investor, in addition to such other remedies as may otherwise be available,
shall have the right, subject to compliance with the terms of the Articles of
Association of the Company, to sell to the Selling Investor the type and number
of Shares equal to the number of shares each Investor would have been entitled
to transfer to the purchaser under Section 3.1(c) had the Prohibited Transfer
been effected in compliance with the terms hereof. Such sale shall be made on
the following terms and conditions:
(a) The price per share at which the shares are to be
sold to the Selling Investor shall be equal to the price per share paid by the
purchaser to the Selling Investor in the Prohibited Transfer. The Selling
Investor shall also reimburse each Investor for any and all fees and expenses,
including legal fees and expenses, incurred pursuant to the exercise or the
attempted exercise of the Investor's rights under Section 3.1.
(b) Within thirty (30) days after the earlier of the
dates on which the Investor (A) received notice of the Prohibited Transfer or
(B) otherwise became aware of the prohibited Transfer, each Investor shall, if
exercising the option created hereby, transfer to the Selling Investor the
Shares to be sold in accordance with requirements of Netherlands law and in such
event the Selling Investor shall buy and accept the aforementioned Shares.
(c) The Selling Investor shall, upon receipt of the
Shares to be sold by an Investor pursuant to this Section 3.3, pay the aggregate
purchase price therefor and the amount of reimbursable fees and expenses
determined pursuant to paragraph (a) in cash or by other means acceptable to the
Investor.
3.4 ASSIGNMENT. The rights of any Investors under this Section
3 may be assigned only to an assignee or transferee of all of the Shares held by
such Investor, provided that such assignment may otherwise be effected in
accordance with applicable securities laws and that the Company is given written
notice at the time of said assignment stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
rights are being assigned and such transferee or assignee agrees in writing to
be bound by the terms and conditions of this Agreement.
3.5 TERMINATION OF CO-SALE RIGHTS. The rights of co-sale
granted under this Section 3 shall terminate upon the effectiveness of the first
registration statement filed by the Company involving a Qualified Initial Public
Offering.
3.6 WAIVER. With respect to a transfer or sale of shares by a
party to this Agreement which complies with the provisions of this Agreement and
to the extent that the Company's Articles of Association require shareholder
approval of the transfer or sale of shares and/or provide shareholders with a
right of first refusal with respect to such sale or transfer, each
12.
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of the parties to this Agreement agrees to approve such transfer or sale,
undertakes to waive such right of first refusal and/or vote in favor of
exemption of such transfer or sale from such right of first refusal if
requested by the Company or a party to this Agreement, whether at a
shareholder meeting, by shareholder resolution, shareholders agreement or any
other written instrument and further agrees to execute documents reasonably
requested of them to reflect such approval or waiver.
4. COMPANY RECORDS AND POLICY.
(a) The Managing Board of the Company shall note on the
Register of Shareholders that the Investor's Shares are subject to this
Agreement.
(b) In the event that certificates are issued
representing the Shares, such certificates shall bear the following legend:
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
INVESTORS RIGHTS AGREEMENT BY AND BETWEEN THE
SHAREHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF
SHARES OF THE CORPORATION. COPIES OF SUCH AGREEMENT
MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION.
(c) Any offer, including the prospect to hold out an
offer, issuance, transfer or sale of all Shares is further subject to all
restrictions on transfer imposed by Dutch, Federal and applicable state
securities laws. Accordingly, it is understood and agreed that the certificates
representing the Shares shall bear any legends required by Dutch authorities,
any applicable state securities administrator or commissioner and by Federal
securities law.
(d) Each Investor agrees that the Company may impose
transfer restrictions on the Shares subject to this Agreement to enforce the
provisions of this Agreement. The restrictions shall be removed upon
termination of this Agreement. Upon termination of the Agreement and request by
the Shareholder, the Company shall, if certificates have been issued
representing the Shares, issue a new share certificate without a legend when the
legended certificate has been forwarded to the Company.
5. MISCELLANEOUS.
5.1 GOVERNING LAW. Section 1 of this Agreement shall be
governed in all respects by the laws of the State of California applicable to
contracts entered into and wholly to be performed within California by
California residents. Sections 2, 3, 4 and 5.2 - 5.8 of this Agreement shall be
governed in all respects by the laws of the Netherlands.
5.2 ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement among the Company and the Investors with respect to the subject matter
hereof and supersedes
13.
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all previous agreements and understandings, written or oral, concerning the
subject matter hereof.
5.3 SUCCESSORS AND ASSIGNS. Subject to the exceptions and
requirements specifically set forth in this Agreement, the terms and conditions
of this Agreement shall inure to the benefit of and be binding upon the
respective heirs, successors, administrators, executors and assigns of the
parties hereto.
5.4 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed
effectively given upon personal delivery or on the day sent by facsimile
transmission if a true and correct copy is sent the same day by first class
mail, postage prepaid, or by dispatch by an internationally recognized express
courier service, and in each case addressed (a) if to an Investor at the address
set forth on Schedule A hereto, or at such other address as such Investor shall
have furnished to the Company and to the other Investors by ten (10) days'
notice in writing, (b) if to the Company, at its principal office, or at such
other address as the Company shall have furnished to each Holder in writing or
(c) if to a Holder, at the address thereof reflected in the Shareholders
Register of the Company.
5.5 AMENDMENTS; WAIVERS. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively) by the written
consent of the Company and of Investors holding at least ninety-five percent
(95%) in interest of the Shares held by all the Investors (including any Shares
issued upon conversion thereof, and including Shares transferred to any assignee
of the right or obligation to be amended). Any Investor may waive any of his,
her or its rights hereunder without obtaining the consent of any other Investor.
Any amendment or waiver effected in accordance with the first sentence of this
Section 5.5 shall be binding upon each holder of any of the Shares, his, her or
its successors and assigns, and the Company. Any waiver effected in accordance
with the second sentence of this Section 5.5 shall be binding upon the waiving
Investor and the successors and assignees of such Investor.
5.6 DELAYS OR OMISSIONS. No delay or omission to exercise any
right, power or remedy accruing to any Investor, upon any breach or default of
the Company or any other Investor under this Agreement, shall impair any such
right, power or remedy of such Investor, nor shall it be construed to be a
waiver of any such breach or default, or any acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Investor of any breach or default under
this Agreement, or any waiver on the part of any Investor of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies either under
this Agreement, or by law or otherwise afforded to any Holder, shall be
cumulative and not alternative.
5.7 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
14.
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5.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
15.
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SIGNATURE PAGE OF INVESTOR RIGHTS AGREEMENT
IN WITNESS WHEREOF, each of undersigned or their respective duly
authorized officers or representatives have executed this Agreement as of the
date first above written.
METRON SEMICONDUCTORS EUROPA B.V.
By: /s/ James Dauwalter
---------------------------------
Its: Managing Director
--------------------------------
INVESTORS:
FLUOROWARE INC.
By: /s/ James Dauwalter
---------------------------------
Its: Executive V.P.
--------------------------------
FSI INTERNATIONAL, INC.
By: /s/ Benno G. Sand
---------------------------------
Its: Executive V.P. and CFO
--------------------------------
/s/ Udo Jaensch
------------------------------------
Udo Jaensch
/s/ J.C. Levett-Prinsep
------------------------------------
J.C. Levett-Prinsep
/s/ Keith Reidy
------------------------------------
Keith Reidy
/s/ Brad Sargent
------------------------------------
Brad Sargent
/s/ Ed Segal
------------------------------------
Edward J. Segal
16.
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Exhibit 10.24
ACCESSION AGREEMENT
THE UNDERSIGNED,
1. Metron Technology B.V., a limited liability company organized
and existing under the laws of the Netherlands (the
"Company");
2. FSI International, Inc., a Minnesota corporation ("FSI");
3. Fluoroware, Inc., a Minnesota corporation ("Fluoroware");
4. Edward Segal;
5. Brad Sargent;
6. Keith Reidy;
7. Udo Jaensch;
8. Chris Levett-Prinsep (the parties mentioned at 1 through 8
hereinafter to be referred to as the "Original Parties");
9. Segal Investments, L.P., a California limited partnership
("Segal Investments");
10. Matthew Dean Segal ("Mathew Segal");
11. Ned Douglas Segal ("Ned Segal");
12. Matthew Segal, acting in its capacity as trustee of the
Matthew Dean Segal 1997 Trust; and
13. Ned Segal, acting in its capacity as trustee of the Ned
Douglas Segal 1997 Trust.
WHEREAS
The Original Parties have entered into the following agreements:
- An Amended and Restated Buy and Sell Agreement effective as of
July 6, 1995 (the "Buy-Sell Agreement");
- An Investor Rights Agreement effective as of July 6, 1995 (the
"Investor Rights Agreement": the Buy-Sell Agreement and the
Investor Rights Agreement together also referred to as the
"Agreements"); and
- A Confirmation Agreement effective as of October 15, 1998;
(a) Edward Segal transferred to each of his sons, Matthew
Segal and Ned Segal, (i) on December 27, 1995, 3,600
shares in the share capital of the Company, numbered
5,317,927 through 5,321,526, respectively 5,321,527
1.
<PAGE>
through 5,325,126, (ii) on June 13, 1996, 2,850
shares in the share capital of the Company, numbered
5,702,391 through 5,705,240, respectively 5,705,241
through 5,708,090, (iii) on February 17, 1997, 1,666
shares in the share capital of the Company, numbered
5,326,793 through 5,328,458, respectively 5,325,127
through 5,326,792, and (iv) on March 26, 1998 1,600
shares in the share capital of the Company, numbered
5,414,812 through 5,416,411, respectively 5,416,412
through 5,418,011;
(b) Edward Segal furthermore wishes to transfer 129,528
shares in the share capital of the Company, numbered
7,886,812 through 8,016,339 to Segal Investments, a
partnership the general partners of which are Edward
Segal and his wife Lynne Newhouse Segal; (the share
transfers mentioned at (b) and (c) hereinafter to be
referred to as the "Share Transfers");
(c) In view of Section 3(b) of the Buy-Sell Agreement and
Section 3.2 of the Investor Rights Agreement Segal
Investments, Matthew Segal and Ned Segal wish to
become parties to the Agreements;
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
Segal Investments, Matthew Segal and Ned Segal hereby agree (i) to
become parties to the Agreements and the Original Parties hereby accept Segal
Investments, Matthew Segal and Ned Segal as parties to the Agreements,
effective as of the date on which the respective shares will be, or have
been, as the case may be, transferred pursuant to the Share Transfers, as a
result of which Segal Investments, Matthew Segal, Ned Segal shall have the
same rights and obligations under the Agreement with respect to the shares
transferred or to be transferred, to them pursuant to the Share Transfers, as
Edward Segal would have under the Agreements with respect to such shares as
if he were still the holder of such shares, and (ii) to fully comply with the
terms of the Agreements.
ARTICLE 2
Matthew Segal and Ned Segal severally represent with respect to the
shares which have been transferred to each of them pursuant to the Share
Transfers mentioned at (b) above that as and from the date on which such
shares were transferred to each of them neither one of them has acted in
violation of his obligations under the Agreements with respect to such shares
which each of them acknowledges has applied to such shares at all times as
and after each such transfer.
ARTICLE 3
Segal Investments represents that the only partners of Segal
Investments are Ed Segal and Lynne Newhouse Segal and that Segal Investments
is a partnership for the benefit of Ed Segal and Lynne Newhouse Segal only,
with the understanding that after the transfer of shares to Segal Investments
pursuant to the Share Transfers mentioned above at (d) limited partnership
interests will be transferred to two trusts established for the benefit of
Matthew Segal and Ned Segal, respectively. Segal Investments agrees to be
bound by the terms of the Agreements and subject
2.
<PAGE>
to their provisions with respect to any (i) shares in the share capital of
the Company held by Segal Investments, as provided in Article 1 above or (ii)
transfer or proposed transfer of partnership interests in Segal Investments,
if Segal Investments owns any shares in the share capital of the Company.
Matthew Segal in his capacity as trustee of the Matthew Dean Segal
1997 Trust and Ned Segal in his capacity as trustee of the Ned Douglas Segal
1997 Trust, each agree to be bound by the terms of the Agreements and subject
to their provisions with respect to any (i) shares in the share capital of
the Company held by them or (ii) transfer or proposed transfer of partnership
interests in Segal Investments, if Segal Investments owns any shares in the
share capital of the Company.
ARTICLE 4
The Company, FSI and Fluoroware confirm that in respect of the Share
Transfers they waive the right to receive a Notice of Proposed Disposition
for Value as described in Section 4.2 (a) of the Buy-Sell Agreement. The
Company, FSI and Fluoroware also confirm that they waive the Right of First
Refusal and the right to purchase the shares (to be) transferred pursuant to
the Share Transfers, respectively, as described in Section 4.2 (b) of the
Buy-Sell Agreement.
ARTICLE 5
This Accession Agreement shall be governed by and construed in
accordance with the laws of the Netherlands.
3.
<PAGE>
ARTICLE 6
This Accession Agreement may be executed in one or more
counterparts, all of which when taken together shall constitute one
instrument.
METRON TECHNOLOGY B.V. FSI INTERNATIONAL, INC.
\s\ Michael Grandinetti
\s\ Peter V. Leigh \s\ J.A. Elftmann
- -----------------------------------
By: By: J.A. Elftmann
------------------------------- ----------------------
Its: Its: CEO
------------------------------- ----------------------
FLUOROWARE, INC. EDWARD SEGAL
\s\ Edward Segal
- ----------------------------------- ---------------------------
By: \s\ James Dauwalter
------------------------------
Its: Exec V.P.
------------------------------
BRAD SARGENT KEITH REIDY
\s\ Keith Reidy
------------------------------- ---------------------------
UDO JAENSCH CHRIS LEVETT-PRINSEP
\s\ Udo Jaensch \s\ Chris Levett-Prinsep
- ----------------------------------- ---------------------------
4.
<PAGE>
SEGAL INVESTMENTS, L.P. MATTHEW DEAN SEGAL
\s\ Ed Segal \s\ Matthew Dean Segal
- --------------------------------- -----------------------------
By: Ed Segal
Its: General Partner
SEGAL INVESTMENTS, L.P. NED DOUGLAS SEGAL
\s\ Lynne Newhouse Segal \s\ Ned Douglas Segal
- ---------------------------------- -----------------------------
By: Lynne Newhouse Segal
Its: General Partner
MATTHEW SEGAL (IN ITS CAPACITY AS NED SEGAL (IN ITS CAPACITY AS
TRUSTEE FOR THE MATTHEW DEAN SEGAL TRUSTEE FOR THE NED DOUGLAS
1997 TRUST) SEGAL 1997 TRUST)
\s\ Matthew Segal \s\ Ned Segal
- ---------------------------------- -----------------------------
5.
<PAGE>
Exhibit 10.25
CONFIRMATION AGREEMENT
THE UNDERSIGNED,
1. Metron Technology B.V., a limited liability company organized and
existing under the laws of the Netherlands (the "Company");
2. Fluoroware, Inc., a Minnesota corporation;
3. FSI International, Inc., a Minnesota corporation;
4. Edward Segal;
5. Brad Sargent;
6. Keith Reidy;
7. Udo Jaensch; and
8. Chris Levett-Prinsep.
WHEREAS
(a) The undersigned have entered into the following agreements:
- An Amended and Restated Buy and Sell Agreement
effective as of July 6, 1995 (the "Buy-Sell
Agreement); and
- An Investor Rights Agreement effective as of July 6,
1995 (the "Investor Rights Agreement": the Buy-Sell
Agreement and the Investor Rights Agreement together
also referred to as the "Agreements");
(b) The undersigned wish to clarify the intention which they had
at the moment of signing of the Agreements with respect to
those matters described herein, without amending the
Agreements, by entering into this Confirmation Agreement (in
Dutch: "vaststellingsovereenkomst");
NOW, THEREFORE, it is agreed as follows:
ARTICLE 1
The undersigned acknowledge and agree that whereas Section 3.1 (b) of
the Buy-Sell Agreement states
"Each Significant Shareholder irrevocably and unconditionally
undertakes that any transfer, other than transfers pursuant to Sections
4.1, 4.2 (b), 5.1 or 5.2 of this Agreement, and/or pledge by such
Significant Shareholder of any of his Metron Securities during the term
of this Agreement shall be subject to the
1.
<PAGE>
requirement that the transferee or the pledgee, as the case may be,
agrees in writing to the terms of, and becomes a party to this
Agreement."
And as such does not explicitly state that such transferee or pledgee when it
becomes a party to the Buy-Sell Agreement will acquire the same rights, benefits
and obligations under the Buy-Sell Agreement with respect to the shares
transferred and/or pledged to it as the transferring and/or pledging Significant
Shareholder would have under the Buy-Sell Agreement with respect to such shares,
had such transfer of pledge, as the case may be, not taken place.
The undersigned also acknowledge that it has been and still is their intention
that such transferee or pledgee acquires such rights and benefits, including but
not limited to the Put Rights described in Section 5 of the Buy-Sell Agreement,
and assumes such obligations when it becomes a party to the Buy-Sell Agreement.
ARTICLE 2
The undersigned acknowledge and agree that whereas Section 3.2 (a) sub
(ii) of the Investor Rights Agreement states that
"Notwithstanding any other provisions of this Agreement, the provisions
of Section 3.1 shall not apply to: (...) (ii) any transfer to an
Investor's ancestors, descendants or spouse, or trust for the benefit
of such persons or such Investor (...)",
it has been and still is their intention that the provisions of Section 3.1 of
the Investor Rights Agreement shall also not apply to a transfer to a
partnership (i) the sole partners of which are the transferring Investor and/or
one or more of his ancestors and/or descendants and/or spouse and/or one or more
trust for the benefit of such person(s) of the transferring Investor, and (ii)
which is formed and maintained for the exclusive benefit of such person(s)
and/or the transferring Investor.
ARTICLE 3
This Confirmation Agreement shall be governed and construed in accordance with
the laws of the Netherlands.
2.
<PAGE>
ARTICLE 4
This Confirmation Agreement may be executed in one or more counterparts, all of
which when taken together shall constitute one instrument.
Signed at Burlingame, CA USA on October 15, 1998
METRON TECHNOLOGY B.V. FSI INTERNATIONAL, INC.
\s\ Michael A. Grandinetti
\s\ Peter V. Leigh \s\ J.A. Elftmann
- -------------------------------- -------------------------
By: By: J.A. Elftmann
----------------------------- ----------------------
Its: Its: CEO
----------------------------- ----------------------
FLUOROWARE, INC. EDWARD SEGAL
\s\ Edward Segal
- -------------------------------- ------------------------
By: \s\ James Dauwalter
-----------------------------
Its: Exec V.P.
-----------------------------
BRAD SARGENT KEITH REIDY
\s\ Brad Sargent \s\ Keith Reidy
- ------------------------------- ------------------------
UDO JAENSCH CHRIS LEVETT-PRINSEP
\s\ Udo Jaensch \s\ Chris Levett-Prinsep
- -------------------------------- -------------------------
3.
<PAGE>
Exhibit 10.26
ACCESSION AGREEMENT
THIS ACCESSION AGREEMENT (the "Accession Agreement") is entered into as
of July 13, 1998 by the holders (each a "Stockholder" and, collectively,
"Stockholders") of the common shares of METRON TECHNOLOGY B.V., a Netherlands
corporation ("Metron"), issued pursuant to that certain Agreement and Plan of
Merger and Reorganization ("Merger Agreement"), dated as of June 12, 1998, by
and among Metron, Metron Acquisition Sub, Inc., a Nevada corporation ("Merger
Sub"), T.A. Kyser, a Nevada corporation ("Kyser"), and the stockholders of Kyser
who joined in the execution of the Merger Agreement by executing a Joinder
Agreement with respect thereto (the "Signing Stockholders"). The Stockholders
are executing this Accession Agreement for the purpose of joining as Investors
to that certain Investor Rights Agreement (the "Investor Rights Agreement"),
dated as of July 6, 1995, by and among Metron and the "Investors" (as defined
therein). Certain capitalized terms used in this Accession Agreement are defined
in the Investor Rights Agreement.
RECITALS
A. Metron, Merger Sub, Kyser and the Signing Stockholders have entered
into the Merger Agreement to effect a merger of Merger Sub with and into Kyser
in accordance with the Merger Agreement (the "Merger"). Upon consummation of the
Merger, Merger Sub will cease to exist, Kyser will become a wholly-owned
subsidiary of Metron, and the Stockholders will be issued capital stock of
Metron (the "Purchaser Capital Stock").
B. The Merger Agreement requires Metron to grant to the Stockholders
the rights set forth in the Investor Rights Agreement with respect to the shares
of Purchaser Capital Stock issued in connection with the Merger.
C. The Investors have approved this Accession Agreement pursuant to
that certain Consent Agreement, dated as of July 13, 1998, in accordance with
the terms of the Investor Rights Agreement.
D. The Stockholders signing below intend to join the Investor Rights
Agreement as Investors on the terms and conditions specified in this Accession
Agreement and the Investor Rights Agreement.
E. As of the date of this Accession Agreement, Metron has an authorized
share capital of twenty three million five hundred thousand (23,500,000) common
shares and one million five hundred thousand (1,500,000) preferred shares with a
par value of NLG 0.96 per share each.
AGREEMENT
Stockholders, intending to be legally bound, agree as follows:
1. ACCESSION TO INVESTOR RIGHTS AGREEMENT. Upon the terms and subject to
the conditions set forth in this Accession Agreement, effective as of
the "Effective Time" (as defined in the Merger Agreement) each
Stockholder agrees to join into and be bound by the terms of the
Investor Rights
1.
<PAGE>
Agreement, joining such Investor Rights Agreement as an "Investor"
(as defined in the Investor Rights Agreement). Each Stockholder
further agrees that the shares of Purchaser Capital Stock issued to
such Stockholder pursuant to the Merger shall be deemed "Shares" as
defined in the Investor Rights Agreement (except that the Shares now
have a par value of NLG 0.96 per share) and shall be subject to the
rights and restrictions as set forth therein. Each Stockholder
further agrees that "Registrable Securities" as defined in the
Investor Rights Agreement shall include those shares of Purchaser
Capital Stock issued to such Stockholder pursuant to the Merger.
2. NOTICES. Any notices to the Stockholders under this Accession Agreement
or pursuant to Section 5.4 of the Investor Rights Agreement shall be
sent to the address set forth below under such Stockholder's name (or
to such other address or telecopier number as such party shall have
specified in a written notice given to the other parties hereto and the
other parties to the Investor Rights Agreement).
3. COUNTERPARTS. This Accession Agreement may be executed and delivered in
counterparts and shall be effective with respect to any Stockholder as
of the date of execution by such Stockholder.
2.
<PAGE>
The parties hereto have caused this Accession Agreement to be executed and
delivered and to be effective as of the date first written above.
/s/ Gregory M. Claeys
----------------------------------
Gregory M. Claeys
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Shares:
-------------------
/s/ Rebekah A. Claeys
----------------------------------
Rebekah A. Claeys
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Shares:
-------------------
/s/ C. Garry Hendricks
----------------------------------
C. Garry Hendricks
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Kyser Shares: 42,500
-------------
/s/ Boyd E. Hurst, Jr.
----------------------------------
Boyd E. Hurst, Jr.
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Shares:
-------------------
3.
<PAGE>
----------------------------------
Sam F. Soules
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Shares:
-------------------
/s/ Colin M. Henderson
----------------------------------
Colin M. Henderson, as Trustee of
the T.A. Kyser Company Employee Stock
Ownership Trust (As Amended and
Restated, Effective March 17, 1997)
Address:
----------------------------------
----------------------------------
----------------------------------
No. of Kyser Shares: 27,920,131
-------------
4.
<PAGE>
Exhibit 10.27
CONSENT AGREEMENT
THIS CONSENT AGREEMENT (the "Consent Agreement") is entered into as of
July 13, 1998 by and among METRON TECHNOLOGY B.V., a Netherlands corporation
("Metron"), and the investors ("Investors") listed on Exhibit A attached to that
certain Investor Rights Agreement (the "Investor Rights Agreement"), dated as of
July 6, 1995, by and among Metron and the "Investors" (as defined therein). The
Investors are executing this Consent Agreement for the purpose of granting their
consent to the joining of certain holders of common shares of Metron as
"Investors" to the Investor Rights Agreement.
RECITALS
A. Metron, Metron Acquisition Sub, Inc. ("Merger Sub"), T.A. Kyser Co.
("Kyser") have executed an Agreement and Plan of Merger and Reorganization
("Merger Agreement"), dated as of June 12, 1998, and stockholders of Kyser
joined in the execution of the Merger Agreement by executing a Joinder Agreement
with respect thereto (the "Signing Stockholders"). Metron, Merger Sub, Kyser and
the Signing Stockholders have entered into the Merger Agreement to effect a
merger of Merger Sub with and into Kyser in accordance with the Merger Agreement
(the "Merger"). Upon consummation of the Merger, Merger Sub will cease to exist,
Kyser will become a wholly-owned subsidiary of Metron, and the stockholders of
Kyser ("Stockholders") will be issued capital stock of Metron (the "Purchaser
Capital Stock").
B. The Merger Agreement requires Metron to grant to the Stockholders
the rights set forth in the Investor Rights Agreement with respect to the shares
of Purchaser Capital Stock issued in connection with the Merger.
C. The Stockholders shall execute an Accession Agreement ("Accession
Agreement") to join into the Investor Rights Agreement on the terms and
conditions specified in the Accession Agreement and the Investor Rights
Agreement.
D. Investors signing below consent to joining the Stockholders to the
Investor Rights Agreement on the terms set forth herein.
E. As of the date of this Consent Agreement, Metron has an authorized
share capital of twenty three million five hundred thousand (23,500,000) common
shares and one million five hundred thousand (1,500,000) preferred shares with a
par value of NLG 0.96 per share each.
Investors, intending to be legally bound, agree as follows:
AGREEMENT
1. CONSENT.
Each of the Investors consents to the execution and delivery by Metron of the
Accession Agreement and further agrees that (i) any shares of Purchaser Capital
Stock issued pursuant to the Merger shall be deemed to be "Shares" for purposes
of the Investor Rights Agreement (except that the Shares now have a par value of
NLG 0.96 per share), (ii) the initial holders thereof shall be deemed to be
"Investors" for purposes of the Investor Rights Agreement and (iii)
1.
<PAGE>
"Registrable Securities" as defined in the Investor Rights Agreement shall
include the shares of Purchaser Capital Stock issued pursuant to the Merger.
2.
<PAGE>
The parties hereto have caused this CONSENT AGREEMENT to be executed
and delivered as of the date set forth above.
METRON TECHNOLOGY B.V. INVESTOR
By: /s/ Michael A. Grandinetti By: /s/ Udo Jaensch
---------------------------- ----------------------------
Print Name: Micheal A. Grandinetti Print Name: Udo Jaensch
-------------------- -------------------
Title: Ex. V.P.-Mng. Dir. B Title: Ex. V.P.-Mang. Dir. B
------------------------- ------------------------
INVESTOR
By: /s/ Peter V. Leigh By: /s/ Keith Reidy
---------------------------- ----------------------------
Print Name: Peter V. Leigh Print Name: Keith Reidy
-------------------- -------------------
Title: Managing Director Title: Dir. Product Dev.
Vice President Finance ------------------------
-------------------------
INVESTOR
Flouroware, Inc.
By: /s/ James Dauwalter
----------------------------
Print Name: James E. Dauwalter
--------------------
Title: Executive Vice President
& COO
-------------------------
INVESTOR
By: /s/ J.C. Levett-Prinsep
----------------------------
Print Name: J.C. Levett-Prinsep
--------------------
Title: Ex. V.P. Equipment
-------------------------
3.
<PAGE>
- --------------------------------------------------------------------------
METRON TECHNOLOGY B.V.
AMENDED AND RESTATED BUY AND SELL
AGREEMENT
EFFECTIVE AS OF
JULY 6, 1995
- --------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
1. EFFECTIVE TIME; STOCK SUBJECT TO AGREEMENT...............................................................2
1.1 Effective Date of this Agreement................................................................2
1.2 Stock Subject to Agreement......................................................................2
2. DEFINITIONS..............................................................................................2
2.1 "Adjusted Book Value"...........................................................................2
2.2 "Adjusted Book Value Per Share".................................................................3
2.3 "Adjusted Net Income"...........................................................................3
2.4 "Annual Cap"....................................................................................3
2.5 "Appraised Fair Market Value"...................................................................3
2.6 "Book Value"....................................................................................3
2.7 "Book Value Per Share"..........................................................................3
2.8 "Closing".......................................................................................3
2.9 "Closing Date"..................................................................................4
2.10 "Company".......................................................................................4
2.11 "Company Call Right"............................................................................4
2.12 "Company's Register of Shareholder".............................................................4
2.13 "Exercising Party"..............................................................................4
2.14 "GAAP"..........................................................................................4
2.15 "Increased Book Value"..........................................................................4
2.16 "Increased Book Value Per Share"................................................................4
2.17 "Investor Rights Agreement".....................................................................4
2.18 "LIBOR".........................................................................................4
2.19 "Managing Board"................................................................................4
2.20 "Metron Securities".............................................................................4
2.21 "Non-Exercising Party"..........................................................................5
2.22 "Notice Date"...................................................................................5
2.23 "Notice of Exercise of a Right".................................................................5
2.24 "Options".......................................................................................5
2.25 "Option Shares".................................................................................5
2.26 "Original Shares"...............................................................................5
i
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
2.27 "Permanent Disability"..........................................................................5
2.28 "Proposed Disposition for Value"................................................................5
2.29 "Purchase Price"................................................................................5
2.30 "Put Right".....................................................................................5
2.31 "Qualified Initial Public Offering".............................................................5
2.32 "Right".........................................................................................6
2.33 "Right of First Refusal"........................................................................6
2.34 "Supervisory Board".............................................................................6
2.35 "Total Number of Shares Outstanding"............................................................6
2.36 "Transfer by Legal Process".....................................................................6
2.37 "Transferee"....................................................................................6
2.38 "Transferee Call Right".........................................................................6
2.39 "Triggering Event"..............................................................................6
2.40 "Unaffiliated Third Party"......................................................................6
3. EFFECT OF AGREEMENT......................................................................................7
3.1 Restrictions on Transfer........................................................................7
3.2 Record of Agreement.............................................................................7
3.3 Notification in Shareholder Register............................................................7
4. CALL RIGHTS AND RIGHT OF FIRST REFUSAL...................................................................7
4.1 Call Rights.....................................................................................7
4.2 Right of First Refusal..........................................................................8
5. SIGNIFICANT SHAREHOLDER'S PUT RIGHTS....................................................................10
5.1 Original Share Put Right.......................................................................10
5.2 Option Share Put Rights........................................................................10
6. CALL RIGHT AND PUT RIGHT VALUATION......................................................................11
6.1 Original Share Valuation for Transpacific Founders.............................................11
6.2 Original Share Valuation for Jaensch and Levett-Prinsep........................................12
6.3 Option Share Valuation.........................................................................12
6.4 Option Valuation...............................................................................12
ii
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
7. PROCEDURES FOR ADMINISTRATION OF RIGHTS.................................................................12
7.1 Termination of Right...........................................................................12
7.2 Exercise of Right..............................................................................13
7.3 Key Man Life Insurance.........................................................................13
7.4 Termination or Reduction of Insurance..........................................................13
7.5 Use of Key Man Life Insurance Policy Proceeds..................................................14
7.6 Purchase Price and Method of Payment...........................................................15
7.7 Calculation of Purchase Price and Annual Cap...................................................17
7.8 Closing........................................................................................17
7.9 Power of Attorney by Significant Shareholders; Taking of Necessary Action......................18
7.10 Blue Sky Requirements..........................................................................18
8. TERMINATION OF RESTRICTIONS.............................................................................18
8.1 Termination Events.............................................................................18
8.2 Removal of Notation from Share Registry........................................................19
9. CONTROLLING PROVISIONS..................................................................................19
10. OWNERSHIP, VOTING RIGHTS, DUTIES........................................................................19
10.1 No Effect Except As Agreed.....................................................................19
10.2 Vote in Favor of Agreement.....................................................................19
10.3 Execute Material Documents.....................................................................19
10.4 Reduction in Total Share Capital...............................................................19
10.5 Approval of Accounts...........................................................................19
10.6 Waiver.........................................................................................19
11. ADJUSTMENT OF SHARES....................................................................................20
12. ENFORCEMENT.............................................................................................20
13. CONSENT TO PURCHASES OF SHARES BY COMPANY...............................................................20
14. CONDITIONS PRECEDENT TO COMPANY PURCHASE................................................................20
15. GENERAL.................................................................................................21
15.1 Notices........................................................................................21
15.2 Binding Effect.................................................................................21
iii
<PAGE>
<CAPTION>
TABLE OF CONTENTS
(CONTINUED)
PAGE
15.3 Severability...................................................................................21
15.4 Governing Law..................................................................................21
15.5 Entire Agreement...............................................................................21
15.6 Counterparts...................................................................................22
15.7 Spousal Consent................................................................................22
15.8 Example........................................................................................22
</TABLE>
iv
<PAGE>
AMENDED AND RESTATED
BUY AND SELL AGREEMENT
THIS AMENDED AND RESTATED BUY AND SELL AGREEMENT (the "Agreement")
to be effective as of July 6, 1995 for all purposes, by and among METRON
TECHNOLOGY B.V. (formerly "Metron Semiconductors Europa B.V."), a corporation
organized and existing under the laws of The Netherlands (the "Company"), FSI
INTERNATIONAL, INC. ("FSI"), a Minnesota corporation, FLUOROWARE, INC.
("FI"), a Minnesota corporation, EDWARD SEGAL ("Segal"), BRAD SARGENT
("Sargent"), KEITH REIDY ("Reidy") (collectively Segal, Sargent and Reidy are
referred to as the "Transpacific Founders"), UDO JAENSCH ("Jaensch") and
CHRIS LEVETT-PRINSEP ("Levett-Prinsep") (collectively Jaensch, Levett-Prinsep
and the Transpacific Founders are referred to as the "Significant
Shareholders"). Each of the Significant Shareholders, FSI, FI and the Company
agree as follows:
RECITALS
This Agreement is being executed by the parties to amend and restate
the original Buy and Sell Agreement (the "Original Agreement") executed by
such parties pursuant to the terms of that certain Agreement and Plan of
Reorganization among the Company, Transpacific Technology Corporation
("Transpacific"), Edward Segal and Metron Technology, Inc. (now known as
Metron Technology Corporation "MTC") dated as of April 3, 1995 (the
"Reorganization Agreement") in order to clarify certain provisions of the
Original Agreement and to incorporate the terms of the Amendment to Buy and
Sell Agreement executed by the same parties to be effective as of July 6,
1995.
Each of the Transpacific Founders as of the Effective Time (as
defined in the Reorganization Agreement) has become an employee of MTC or its
subsidiaries and each of Jaensch and Levett-Prinsep has continued as a
managing director of the Company and one or more of its subsidiaries. Also,
as of the Effective Time, the Company adopted a Stock Option Plan and issued
options to purchase shares of the Company pursuant to that Plan to the
Significant Shareholders. In connection with such employment relationships
and issuance of options certain rights and obligations were created under the
Original Agreement with respect to the transfer of the shares in the capital
of the Company owned by the Significant Shareholders and the transfer of any
contractual options to purchase shares in the capital of the Company that
have been granted or are granted in the future to the Significant
Shareholders.
The unofficial English translation of the Articles of Association of
the Company dated as of December 12, 1995, which contain provisions regarding
restrictions on the transfer of the Company's shares and rights to acquire
shares (as well as other provisions set forth in Exhibit B of the Original
Agreement), which the parties had agreed to consider as being effective on
July 6, 1995 for purposes of the Original Agreement is attached to this
Agreement as Exhibit A.
<PAGE>
1. EFFECTIVE TIME; STOCK SUBJECT TO AGREEMENT.
1.1 EFFECTIVE DATE OF THIS AGREEMENT. This Agreement
is effective for all purposes as of the Effective Time as defined in the
Reorganization Agreement.
1.2 STOCK SUBJECT TO AGREEMENT.
(a) As of the Effective Time, each of the
Significant Shareholders owned, or had the right to subscribe for the
following number of shares in the capital of the Company with a per share par
value of NLG 0.10, which have been registered and numbered consecutively but
are not represented by certificates.
<TABLE>
<CAPTION>
Name Number of Original Shares
---- -------------------------
<S> <C> <C>
Edward Segal 195,082
Brad Sargent 24,952
Keith Reidy 24,952
Udo Jaensch 220,267
J. Chris Levett-Prinsep 206,904
</TABLE>
(b) In addition, as of the Effective Time,
each of the Significant Shareholders had been granted a stock option for the
purchase of the following number of shares in the NLG 0.10 per share par
value capital of the Company pursuant to the terms of the Company's 1995
Stock Option Plan and an Option Agreement entered or to be entered into under
that Plan with such Significant Shareholder.
<TABLE>
<CAPTION>
Number of Shares
Name Subject to Stock Option
---- -----------------------
<S> <C> <C>
Edward Segal 175,316
Brad Sargent 30,000
Keith Reidy 30,000
Udo Jaensch 30,000
J. Chris Lovett-Prinsep 30,000
</TABLE>
(c) Subsequent to the Effective Time, the
Company's Articles of Association were amended to reflect a two-for-one share
split. As a result, the par value of each share in the capital of the Company
was reduced to NLG 0.05 and the number of Original Shares and the number of
shares subject to outstanding stock options were doubled.
2. DEFINITIONS.
As used herein, the following definitions shall apply:
2.1 "ADJUSTED BOOK VALUE" shall mean the Book Value,
as defined herein, increased by the excess of the Appraised Fair Market Value
of any of the Company's real estate assets over their book value (defined as
cost as reflected on the Company's books net of accumulated depreciation for
such real estate assets then recorded on the Company's books) as expressed in
U.S. Dollars.
<PAGE>
2.2 "ADJUSTED BOOK VALUE PER SHARE" shall mean the
quotient, carried to the third decimal point (and rounded up to the next
highest number, i.e., 10.3211 becomes 10.322 for this calculation), which
results from dividing Adjusted Book Value by the Total Number of Shares
Outstanding.
2.3 "ADJUSTED NET INCOME" shall mean the consolidated
net income (loss) of the Company and its subsidiaries determined in
accordance with GAAP and expressed in U.S. Dollars as reflected in the
financial statements accompanying the report of the Company's independent
auditors for its most recently completed fiscal year, increased by non-cash
accounting charges such as depreciation or amortization and decreased by the
proceeds from any key man life insurance received or to be received by the
Company upon the death of a Significant Shareholder during such year.
2.4 "ANNUAL CAP" shall mean fifty (50%) percent of the
Company's Adjusted Net Income for the immediately preceding fiscal year.
2.5 "APPRAISED FAIR MARKET VALUE" shall mean the
estimated fair market value determined by an independent appraiser or
appraisers selected by the Company with the consent of the party or parties
to whom or from whom a Notice of Exercise of a Right has been made (other
than the Company), which consent shall not be unreasonably withheld or
delayed. Solely with respect to the fair market valuation of real estate of
the Company, the appraiser of such real estate shall be located or
established in the country or region where the real property is situated and
for purposes of such valuation shall assume that the land and buildings are
occupied for their designated use.
2.6 "BOOK VALUE" shall mean the total shareholders'
equity in the Company and its subsidiaries as of the fiscal year-end
preceding the Triggering Event to which the calculation relates (exclusive of
any shares owned by the Company in its own capital and any shares in the
capital of the Company owned by any subsidiaries of the Company), as
determined in accordance with GAAP (as defined in Section 2.15) and expressed
in U.S. Dollars, as reflected in the consolidated balance sheet accompanying
the report of the Company's independent auditors with respect to such fiscal
year; provided that the amount thereof shall be decreased by the proceeds of
any key man life insurance received by the Company upon the death of a
Significant Shareholder and increased by the amount of proceeds that would be
received by the Company upon the exercise of outstanding and vested or
exercisable stock options, warrants, or rights of purchase, subscription,
conversion or exchange.
2.7 "BOOK VALUE PER SHARE" shall mean the quotient,
carried to the third decimal point (and rounded up to the next number, i.e.,
10.3211 becomes 10.322 for this calculation), which results from dividing
Book Value by the Total Number of Shares Outstanding.
2.8 "CLOSING" shall mean to time and place at which
the selling Significant Shareholder executes the documents necessary to
effect the repurchase or resale of any Metron Securities pursuant to the
exercise or a Right and the Company and/or the Transferees tender payment
therefor.
<PAGE>
2.9 "CLOSING DATE" shall mean the date on which a Closing
shall occur as determined in accordance with the applicable provisions of this
Agreement.
2.10 "COMPANY" shall mean Metron Technology B.V. (formerly
"Metron Semiconductors Europa B.V."), a corporation organized and existing under
the laws of The Netherlands.
2.11 "COMPANY CALL RIGHT" shall mean the right of the
Company to require a Significant Shareholder to resell his Metron Securities to
the Company upon the exercise of such Right by the Company pursuant to Section
4.1 (a) or (c) of this Agreement.
2.12 "COMPANY'S REGISTER OF SHAREHOLDER" shall mean the
register in which the Company keeps a list of all of its Shareholders pursuant
to its Articles of Association and Netherlands law.
2.13 "EXERCISING PARTY" shall mean that party (whether the
Company, one or both Transferees, a Significant Shareholder, the Significant
Shareholder's estate or the successors or assigns of any of the foregoing,
including a Transfer by Legal Process) who is exercising (as applicable) a
Company Call Right, Transferee Call Right, Put Right or Right of First Refusal.
2.14 "GAAP" shall mean accounting principles generally
accepted in the United States as in effect from time to time.
2.15 "INCREASED BOOK VALUE" shall mean Book Value,
increased by the aggregate amount of accumulated real estate depreciation as of
the date of the determination of Book Value as reflected on the Company's books,
expressed in U.S. Dollars.
2.16 "INCREASED BOOK VALUE PER SHARE" shall mean the
quotient, carried to the third decimal point (and rounded up to the next highest
number, i.e., 10.3211 becomes 10.322 for this calculation), which results from
dividing Increased Book Value by the Total Number of Shares Outstanding.
2.17 "INVESTOR RIGHTS AGREEMENT" shall mean that certain
Investor Rights Agreement dated as of July 6, 1995 by and among the same persons
who are parties to this Agreement.
2.18 "LIBOR" shall mean the London Interbank Offered Rate
per annum quoted in the National Edition of the WALL STREET JOURNAL for the date
in question, or if none on the date in question, in the immediately preceding
issue, for one year deposits of United States Dollars and shall be computed on
the basis of days elapsed in a year of 360 days.
2.19 "MANAGING BOARD" shall mean the Board of Managing
Directors of the Company.
2.20 "METRON SECURITIES" shall mean any or all of the
Original Shares, Option Shares or Options held by a Significant Shareholder
during the term of this Agreement.
<PAGE>
2.21 "NON-EXERCISING PARTY" shall mean the party (whether
the Company, one or both Transferees, a Significant Shareholder, the Significant
Shareholder's estate or the successors or assigns of any of the foregoing,
including a Transfer by Legal Process) who is entering into a transaction as a
result of the exercise of a Right by the Exercising Party.
2.22 "NOTICE DATE" shall mean the date on which the Notice
of Exercise of a Right is properly given pursuant to Section 7.2 of this
Agreement.
2.23 "NOTICE OF EXERCISE OF A RIGHT" shall mean a written
notice of an election to exercise a Right by an Exercising Party which specifies
the number and type of Metron Securities subject to the exercise of the Right
and is delivered to the Non-Exercising Party by the Exercising Party.
2.24 "OPTIONS" shall mean the options to purchase shares
in the capital of the Company described in Section 1.2(b) of this Agreement and
shall include any other options to purchase shares in the capital of the Company
held by a Significant Shareholder during the term of this Agreement.
2.25 "OPTION SHARES" shall mean all shares acquired by a
Significant Shareholder upon the exercise of the Options (and any other
outstanding stock option(s) of the Company hereinafter granted to such
Significant Shareholder by the Company).
2.26 "ORIGINAL SHARES" shall mean the shares of the
Company owned by a Significant Shareholder as set forth in Section 1.2(a) of
this Agreement.
2.27 "PERMANENT DISABILITY" shall mean, as to a
Significant Shareholder, a disability of such Significant Shareholder that
prevents him from performing his duties as an employee of the Company and/or its
direct and indirect subsidiaries, which disability has continued for a period of
more than ninety (90) days. As used herein, the term "disability" shall have the
same meaning provided in Section 22(e)(3) of the U.S. Internal Revenue Code of
1986, as amended, except that the period of "12 months" used therein shall be
replaced with the ninety (90)-day period provided herein.
2.28 "PROPOSED DISPOSITION FOR VALUE" shall mean the offer
by a Significant Shareholder of any of his Metron Securities for purchase by a
third party during the term of this Agreement.
2.29 "PURCHASE PRICE" shall mean the total amount in U.S.
Dollars payable by the Company or the Transferee(s), as the case may be, for the
Metron Securities to be purchased and sold upon the exercise of a Right in
accordance with the applicable provisions of this Agreement.
2.30 "PUT RIGHT" shall mean the right of a Significant
Shareholder to require the Company to repurchase his Original Shares and Option
Shares upon the exercise of a Right by the Significant Shareholder pursuant to
Sections 5.1 and 5.2 of this Agreement.
2.31 "QUALIFIED INITIAL PUBLIC OFFERING" shall have the
meaning prescribed in the Investor Rights Agreement.
<PAGE>
2.32 "RIGHT" shall mean a Company Call Right, Transferee
Call Right, Put Right, Right of First Refusal or a combination of such Rights,
as the context requires.
2.33 "RIGHT OF FIRST REFUSAL" shall mean the right of the
Company and/or the Transferees to purchase Metron Securities offered for sale by
a Significant Shareholder to a third party upon the exercise of such Right
pursuant to the provisions of Section 4.2 of this Agreement.
2.34 "SUPERVISORY BOARD" shall mean the Board of
Supervisory of the Company, or, if so determined by the Supervisory Board of
Directors or the shareholders of the Company by appropriate resolution, shall
mean a committee thereof, or such other body as may be designated in any such
resolution.
2.35 "TOTAL NUMBER OF SHARES OUTSTANDING" shall mean that
number which results from adding (i) the total number of shares of the Company's
share capital issued and held by any person other than the Company itself; (ii)
all shares issuable by the Company pursuant to options to purchase such shares
which are vested and (iii) all shares issuable by the Company pursuant to a
vested warrant or similar right to purchase shares of the Company's share
capital, all determined as of the date of the Triggering Event for which the
calculation is being made.
2.36 "TRANSFER BY LEGAL PROCESS" shall mean any transfer
of any Metron Securities of a Significant Shareholder pursuant to such
Significant Shareholder's bankruptcy or pursuant to a levy of execution,
foreclosure of pledge, garnishment, attachment, divorce or separation decree, or
other legal process by which such Significant Shareholder has no discretion over
the decision to effectuate such transfer to the extent such transfer is
permitted under and complies with Netherlands law and the Company's Articles of
Association, as well as with the provisions of Section 3.1 of this Agreement.
2.37 "TRANSFEREE" shall mean FSI International, Inc., a
Minnesota corporation, and/or Fluoroware, Inc., a Minnesota corporation, as
applicable.
2.38 "TRANSFEREE CALL RIGHT" shall mean the right of
either or both of the Transferees to require a Significant Shareholder to resell
his Metron Securities to the Transferee(s) upon the exercise of such Right
pursuant to Section 4.1(b) or (d) of this Agreement.
2.39 "TRIGGERING EVENT" shall mean any of the following as
to a Significant Shareholder: (i) termination of employment with each of the
Company and/or its subsidiaries (whether voluntary or involuntary); (ii) death;
or (iii) Permanent Disability. A Triggering Event also shall include the failure
by the Company to complete a Qualified Initial Public Offering by July 6, 2000.
2.40 "UNAFFILIATED THIRD PARTY" shall mean any entity (i)
in which the Company does not own a majority interest, or (ii) which is not a
shareholder of the Company or related to such shareholder by blood or marriage.
<PAGE>
3. EFFECT OF AGREEMENT
3.1 RESTRICTIONS ON TRANSFER.
(a) Each transfer of Original Shares and/or
Option Shares and any assignment of Options (to the extent permitted by the
applicable stock option agreement or plan pursuant to which such Options have
been issued) by a Significant Shareholder shall be subject to the transfer
restrictions provided for in the Articles of Association of the Company as
attached hereto as Exhibit A and as the same may be amended from time to time
(the "Articles").
(b) Each Significant Shareholder irrevocably
and unconditionally undertakes that any transfer, other than transfers
pursuant to Sections 4.1, 4.2(b), 5.1 or 5.2 of this Agreement, and/or pledge
by such Significant Shareholder of any of his Metron Securities during the
term of this Agreement shall be subject to the requirement that the
transferee or the pledgee, as the case may be, agrees in writing to the terms
of, and becomes a party and subject to this Agreement.
3.2 RECORD OF AGREEMENT. An original copy of this
Agreement, duly executed by all of the parties, shall be maintained by the
Managing Board at the Company's principal office available for inspection by any
party to this Agreement requesting to see it.
3.3 NOTIFICATION IN SHAREHOLDER REGISTER.
(a) The Company's Registry of Shareholders
shall note that such Significant Shareholder's Original Shares and Option
Shares, if any, are subject to this Agreement.
(b) Any transfer or sale of Metron Securities
by a Significant Shareholder is further subject to all the restrictions on
transfer or sale imposed by applicable Dutch, California and federal
securities laws.
4. CALL RIGHTS AND RIGHT OF FIRST REFUSAL
4.1 CALL RIGHTS.
(a) At such time, if any, as any Transpacific
Founder ceases to have an employment relationship with the Company and its
direct or indirect subsidiaries by reason of the voluntary termination of his
employment, the Company shall have the immediate right (except as otherwise
provided in Section 5.2), for up to sixty (60) days following the date of
such voluntary termination, but not the obligation, to buy, and the
Transpacific Founder shall have the obligation to sell all (and only all) of
such Transpacific Founder's Metron Securities as of the date of the
Triggering Event at the prices determined in accordance with the provisions
of Article 6 hereof upon the exercise by the Company of the Company Call
Right through the delivery of a Notice of Exercise of a Right during such
sixty (60)-day period.
(b) If the Company does not exercise the
Company Call Right within such sixty (60)-day period, then each of the
Transferees, either together (in which case they shall each participate on a
pro rata basis in that proportion which the total number of shares of the
<PAGE>
Company's share capital owned by each such Transferee bears to the total
number of shares of the Company's share capital owned by both Transferees
(the "Transferee's Pro Rata Interest") as of the Notice Date of the Company's
Notice of Exercise of a Right) or, individually, shall have the right to
purchase, and the Transpacific Founder shall have an obligation to sell, all
(but not less than all) of the Metron Securities that were subject to the
Company Call Right on the same terms and conditions as provided in Section
4.1 (a) upon the exercise of the Transferee Call Right by either or both of
the Transferees through the delivery of a Notice of Exercise of a Right to
the Transpacific Founder (or his permitted assign or successor) within ten
(10) business days following the expiration of the sixty (60)-day period
referenced in Section 4.1(a). Each Transpacific Founder agrees to promptly
inform the Transferees if he has voluntarily terminated his employment with
the Company and all of its direct and indirect subsidiaries. The Company
agrees to promptly inform the Transferees whether it has exercised the
Company Call Right.
(c) At such time, if any, as Jaensch or
Levett-Prinsep, ceases to have an employment relationship with the Company
and its direct or indirect subsidiaries by reason of the voluntary
termination of his employment or his death, and such termination is the first
occurrence of a Triggering Event as to Jaensch or Levett-Prinsep,
respectively, the Company shall have the immediate right (except as otherwise
provided in Section 5.2) commencing as of the third anniversary of the date
of such voluntary termination of employment or death of Jaensch or
Levett-Prinsep, as the case may be, for up to sixty (60) days following the
date of such third anniversary, but not the obligation, to buy all (and only
all), and Jaensch or Levett-Prinsep (or his estate or heirs in the event of
his death), as the case may be, shall have the obligation to sell all (and
only all) of such individual's Metron Securities as of the date of the
Triggering Event at the prices determined in accordance with the provisions
of Article 6 hereof upon the exercise, by the Company of the Company Call
Right through the delivery of a Notice of Exercise of a Right during the
sixty (60)-day period following the third anniversary of the termination of
employment or death of Jaensch or Levett-Prinsep, as the case may be.
(d) If the Company does not exercise the
Company Call Right within the sixty (60)-day period referred to in Section
4.1 (c), the Transferees, either together (in which case they shall each
participate in accordance with each Transferee's Pro Rata Interest as of the
third anniversary of the applicable Triggering Event) or each individually
shall have the right to purchase, and Jaensch or Levett-Prinsep, as the case
may be, shall have the obligation to sell, all (but not less than all) of the
Metron Securities that were subject to the Company Call Right on the same
terms as provided in Section 4.1 (c) by exercise of the Transferee Call Right
through the delivery of a Notice of Exercise of a Right to Jaensch or
Levett-Prinsep (or his permitted assigns or successors) within ten (10)
business days following the expiration of the sixty (60)-day period referred
to in Section 4.1(c). Jaensch and Levett-Prinsep each agrees to promptly
inform the Transferees if he has voluntarily terminated his employment with
the Company and all of its direct and indirect subsidiaries. The Company
agrees to promptly inform the Transferees whether it has exercised the
Company Call Right.
4.2 RIGHT OF FIRST REFUSAL.
(a) If a Significant Shareholder wishes to sell
or transfer any of his Metron Securities in a Proposed Disposition for Value,
the Significant Shareholder shall promptly provide the Company and the
Transferees with written notice of the Proposed
<PAGE>
Disposition for Value, which shall provide, in reasonable detail, the
identity of the proposed transferee, the price, type and number of Metron
Securities to be transferred and the terms and conditions of such transfer (a
"Notice of Proposed Disposition for Value"). Any and all such Proposed
Dispositions for Value shall be subject to the provisions of this Agreement,
including but not limited to this Section 4.2.
(b) For a period of thirty (30) days after
the date on which the Significant Shareholder delivers the Notice of Proposed
Disposition for Value, the Company shall have a Right of First Refusal
exercisable either by itself or in combination with the Transferees (in which
case each Transferee shall participate in accordance with each Transferee's
Pro Rata Interest as of the Notice Date of the Notice of Proposed Disposition
for Value unless otherwise agreed to in writing by such Transferees) to
purchase, and the Significant Shareholder shall have an obligation to sell,
all (but not less than all) of the Metron Securities identified in the Notice
of Proposed Disposition for Value, on terms no less favorable to the
Significant Shareholder than those contained in such Notice by providing a
Notice of Exercise of a Right to such Significant Shareholder. If the Company
does not deliver its Notice of Exercise of a Right to the Significant
Shareholder within such thirty (30)-day period, the Transferees, either
together (in which case they shall each participate in accordance with each
Transferee's Pro Rata Interest as determined in the preceding sentence) or
individually shall have the right to purchase, and a Significant Shareholder
shall have the obligation to sell, all (but not less than all) of the Metron
Securities identified in the Notice of Proposed Disposition for Value terms
no less favorable to the Significant Shareholder than those contained in the
Notice of Proposed Disposition for Value by delivering a Notice of Exercise
of a Right to such Significant Shareholder within five (5) business days
following the expiration of the thirty (30)-day period referred to above.
Notice of any change in the price, type, terms of payment or other material
terms of the Proposed Disposition for Value between such Significant
Shareholder and the proposed transferee named in the Notice of Proposed
Disposition for Value shall be promptly provided in writing to the Company
and each of the Transferees, and upon receipt such notice shall be deemed to
constitute a new Notice of Proposed Disposition for Value with respect to the
Metron Securities covered by such Notice and shall correspondingly extend the
period of time during which the Right of First Refusal can be exercised by
the Company and the Transferees.
(c) The provisions of Section 4.1 shall take
precedence during such period, if any, that the Company and/or the
Transferees have the ability to exercise a Company Call Right, Transferee
Call Right or Right of First Refusal with respect to the same Metron
Securities of a Significant Shareholder.
5. SIGNIFICANT SHAREHOLDER'S PUT RIGHTS.
5.1 ORIGINAL SHARE PUT RIGHT.
(a) Upon the first occurrence of any
Triggering Event with respect to a Transpacific Founder, such Transpacific
Founder (or his estate or heirs in the event of his death) shall have the
right, but not the obligation, for up to sixty (60) days from the date of the
first such Triggering Event to exercise a Put Right to sell some or all of
the Original Shares of such Transpacific Founder to the Company, and the
Company shall have the obligation to buy such
<PAGE>
Original Shares, upon the exercise of such Put Right, subject to the
Transpacific Founder's compliance with the notice and other requirements of
Section 7.
(b) Upon the first occurrence of a Triggering
Event (other than a voluntary termination of employment) with respect to
Jaensch or Levett-Prinsep, Jaensch or Levett-Prinsep (or his estate or heirs
in the event of his death), as the case may be, shall have the right, but not
the obligation, for up to sixty (60) days from the date of such Triggering
Event to exercise a Put Right to sell some or all of his Original Shares to
the Company, and the Company shall have the obligation to buy such Original
Shares, upon the exercise of such Put Right, subject to Jaensch's or
Levett-Prinsep's, as the case may be, compliance with the notice and other
requirements of Section 7.
(c) If the first Triggering Event is the
voluntary termination of the employment of Jaensch or Levett-Prinsep, then
Jaensch or Levett-Prinsep, as the case may be, shall have a period of three
(3) years commencing on the date of his voluntary termination (instead of
sixty (60) days) to exercise a Put Right to sell some or all of his Original
Shares to the Company, and the Company shall be obligated to buy such
Original Shares, upon the exercise of such Put Right, subject to Jaensch's or
Levett-Prinsep's, as the case may be, compliance with the notice and other
requirements of Section 7.
5.2 OPTION SHARE PUT RIGHTS
(a) Upon the first occurrence of any
Triggering Event with respect to a Transpacific Founder, such Transpacific
Founder (or his estate in the event of his death) shall have the right, but
not the obligation, for up to two hundred forty (240) days from the date of
the first such Triggering Event to exercise a Put Right to sell some or all
of the Option Shares of such Transpacific Founder to the Company, and the
Company shall be obligated to buy such Option Shares, upon the exercise of
such Put Right subject to the Transpacific Founder's compliance with the
notice and other requirements of Section 7; provided that the Company shall
be obligated to buy only the Option Shares that have been owned by the
Transpacific Founder for at least six (6) months prior to the Notice Date of
his Notice of Exercise of a Right (including any period for which such Option
Shares have been owned by his estate or other successor in interest).
(b) Upon the first occurrence of a Triggering
Event (other than a voluntary termination of employment), including death,
with respect to Jaensch or Levett-Prinsep (or his estate in the event of his
death), as the case may be, shall have the right, but not the obligation, for
up to two hundred forty (240) days from the date of such Triggering Event to
exercise a Put Right to sell some or all of his Option Shares to the Company,
and the Company shall be obligated to buy such Option Shares, upon the
exercise of such Put Right, subject to Jaensch's or Levett-Prinsep's, as the
case may be, compliance with the notice and other requirements of Section 7;
provided that the Company shall be obligated to buy only the Option Shares
that have been owned by Jaensch or Levett-Prinsep, as the case may be, for at
least six (6) months prior to the Notice Date of his Notice of Exercise of a
Right (including any period for which such Option Shares have been owned by
their respective estates or other successors in interest).
<PAGE>
(c) If the first Triggering Event with
respect to Jaensch or Levett-Prinsep is a voluntary termination of
employment, Jaensch or Levett-Prinsep, as the case may be, shall have a
period of three (3) years commencing on the date of his voluntary termination
of employment (instead of two hundred forty (240) days) in which to exercise
a Put Right to sell some or all of his Option Shares to the Company, and the
Company shall be obligated to buy such Option Shares, upon the exercise of
such Put Right, subject to his compliance with the notice and other
requirements of Section 7; provided that the Company shall be obligated to
buy only the Option Shares that have been owned by Jaensch or Levett-Prinsep,
as the case may be, for at least six (6) months prior to the Notice Date of
his Notice of Exercise of a Right (including any period for which such Option
Shares have been owned by their respective estates or other successors in
interest).
(d) The provisions of this Section 5.2 shall
take precedence during such period, if any, that the Company and/or the
Transferees have the ability to exercise the Company Call Right or the
Transferee Call Right with respect to the Option Shares of a Significant
Shareholder; provided that the Company and/or the Transferees may exercise
their respective Call Rights and may purchase all other Metron Securities of
such Significant Shareholder at a Closing therefor, and shall not be excused
from the condition that all such Call Rights be exercised within the periods
specified in Section 4.1. No such exercise of a Call Right shall be effective
with respect to the Option Shares of a Significant Shareholder for any
purposes of calculating or determining any Purchase Price payments due under
Section 7.6, nor shall the Closing for the purchase of such Option Shares
pursuant to Section 7 upon the otherwise valid exercise of such Call Right
occur, until the expiration of the period during which the Significant
Shareholder may exercise a Put Right with respect to his Option Shares,
unless he (or his estate or other successor in interest) shall have
previously relinquished such Put Right in writing.
6. CALL RIGHT AND PUT RIGHT VALUATION.
6.1 ORIGINAL SHARE VALUATION FOR TRANSPACIFIC
FOUNDERS. For purposes of this Agreement the price for each Original Share to
be acquired from the Transpacific Founders, upon the exercise of any Right
other than (a) Right of First Refusal, shall be the higher of (i) four times
Book Value Per Share applicable on the date of the Triggering Event but not
more than the per share amount below* for the prescribed periods or and (ii)
the Adjusted Book Value Per Share applicable on the date of the Triggering
Event:
<TABLE>
<CAPTION>
PERIOD LIMIT PER ORIGINAL SHARE
<S> <C>
July 6, 1995 through May 31, 1996 $17.14 (4,200,000 DIVIDED BY 244,986)
June 1, 1996 through May 31, 1997 $17.96 (4,400,000 DIVIDED BY 244,986)
June 1, 1997 through May 31, 1998 $18.78 (4,600,000 DIVIDED BY 244,986)
June 1, 1998 through May 31, 1999 $19.59 (4,800,000 DIVIDED BY 244,986)
June 1, 1999 through May 31, 2000 $20.41 (5,000,000 DIVIDED BY 244,986)
</TABLE>
6.2 ORIGINAL SHARE VALUATION FOR JAENSCH AND
LEVETT-PRINSEP. For purposes of this Agreement, the price for each Original
Share to be acquired from Jaensch or Levett-Prinsep upon the exercise of any
Right other than the Right of First Refusal shall be Adjusted Book Value Per
Share applicable on the date of the Triggering Event, except that in no event
shall the amount thereof for purposes of this Section 6.2 be less than
Adjusted Book Value
<PAGE>
Per Share of the Company as of May 31, 1995, without including in such
calculation at May 31, 1995 the results of operations, revenues or income of
any of the MSA Group (as such term is defined in the Reorganization
Agreement) or the consolidated results of operations, revenues or income of
Transpacific Technology Corporation and its subsidiaries.
6.3 OPTION SHARE VALUATION. The price for each Option
Share to be acquired from the Significant Shareholders upon the exercise of
the Company Call Right or the Transferee Call Right shall be the Increased
Book Value Per Share applicable on the date of the Triggering Event. The
price for each Option Share to be acquired upon the exercise of a Put Right
shall be the Appraised Fair Market Value of such Option Share on the Notice
Date of the Notice of Exercise of a Right by a Significant Shareholder with
respect thereto.
6.4 OPTION VALUATION. The price for each Option to be
acquired from the Significant Shareholders upon the exercise of the Company
Call Right or the Transferee Call Right shall be equal to the excess (or
spread) between the Increased Book Value Per Share and the exercise price of
such Option applicable on the date of the Triggering Event.
7. PROCEDURES FOR ADMINISTRATION OF RIGHTS.
7.1 TERMINATION OF RIGHT. The Managing Board subject to
the approval by the Supervisory Board, may terminate, in whole or in part,
the Company's obligation to repurchase Original Shares and/or Option Shares
pursuant to the exercise of a Put Right only if and to the extent that one or
both of the Transferees shall have irrevocably agreed in writing to purchase
the Original Shares and/or Option Shares from the Significant Shareholder on
the same terms and conditions as the Company would have had to repurchase
those Metron Securities pursuant to the exercise of the Put Right. The
Company shall retain and remain responsible for all of its obligations with
respect to the non-terminated portion of its original obligation to
repurchase such Metron Securities pursuant to the exercise of the Put Right,
if any. In the event the Company terminates its obligations with respect to a
Put Right, as between themselves, the Transferees will have the obligation or
responsibility to purchase that proportion of the Exercising Party's Original
Shares and/or Option Shares that the total number of shares in the Company's
share capital owned by such Transferee bears to the total number of shares
then owned by both of the Transferees. The Company shall continue to be
obligated to perform its original obligation to repurchase such Metron
Securities pursuant to the exercise of the Put Right to the extent that one
or both Transferees default in the performance of any of its or their
purchase obligations assumed pursuant to this Section 7.1.
7.2 EXERCISE OF RIGHT. A Right may be exercised and
shall be deemed to be exercised upon delivery to the Non-Exercising Party by
the Exercising Party of a Notice of Exercise of a Right specifying the number
and type of Metron Securities involved in the exercise of the Right, with a
copy forwarded to the Company and to each Transferee (except to the extent
any of them is an Exercising or Non-Exercising Party). A Right may be
exercised only by the delivery of a Notice of Exercise of a Right to the
Non-Exercising Party within the period specified by the applicable provisions
of Section 4 and Section 5.
7.3 KEY MAN LIFE INSURANCE.
<PAGE>
(a) INSURANCE ON SEGAL. In order to provide a
fund for the repurchase of Segal's Metron Securities in accordance with
Sections 4 and 5 in the event of his death, the Company shall obtain an
insurance policy on the life of Segal in the amount of at least $4,000,000,
if Segal is insurable and qualifies for such insurance at reasonable,
standard rates (the "Segal Policy") all as more fully set forth in the
Reorganization Agreement. The proceeds of the Segal Policy upon Segal's death
shall be used (to the extent necessary) to repurchase Segal's Metron
Securities in accordance with terms of this Agreement prior to and in
priority over any other use or application of such proceeds by the Company.
The Company shall be the owner and beneficiary of the Segal Policy. The
Company shall pay all premiums on the Segal Policy, but if the Company fails
to pay any premium when due, Segal may pay it and, although the Company shall
remain the beneficiary of the Segal Policy, he shall be entitled to
reimbursement by the Company for the amount of premiums paid, upon demand
therefor. Segal agrees to cooperate with the Company by promptly complying
with reasonable requests made by the Company or an insurance company with
respect to obtaining or maintaining the Segal Policy.
(b) The Company, if it so determines, may
seek to obtain and to maintain key man life insurance on one or more
Significant Shareholders in addition to Segal in order to fund the repurchase
of such Significant Shareholder's Metron Securities in the event of the death
of the Significant Shareholder, and each such Significant Shareholder agrees
to cooperate with the Company by promptly complying with all reasonable
requests made by the Company or an insurance company with respect to
obtaining or maintaining key man life insurance on the life of such
Significant Shareholder, including a physical examination by one or more
medical doctors, if requested.
(c) Each of the Significant Shareholders upon
reasonable request shall be entitled to receive evidence that the key man
insurance policies referred to in subsections (a) and (b), above, are in full
force and effect, and that the Company is current in its payment of all
premiums on any such policies.
7.4 TERMINATION OR REDUCTION OF INSURANCE.
(a) The obligation of the Company to carry the
insurance policy described in Section 7.3(a) ceases upon the earlier of:
(i) A determination that Segal is not
insurable as provided in Section 7.3(a);
(ii) Thirty (30) days after the
termination of this Agreement as provided in Section 8.1; or
(iii) Thirty (30) days after Segal ceases
to own any Original Shares or Option Shares.
During either of the thirty (30)-day
periods provided in clause (ii) or (iii) above, Segal shall have the right to
purchase the Segal Policy on terms mutually acceptable to the Company and
Segal.
(b) If a Right has been exercised with
respect to any of Segal's Metron Securities (unless the applicable Triggering
Event was Segal's death) and payments have been
<PAGE>
made to Segal (or his successor in interest) for some but not all of such
Metron Securities, the Company, at its sole and exclusive direction, may
reduce the face value of the Segal Policy by an amount equal to the amount
that has been paid to Segal (or his successor in interest) under this
Agreement.
(c) Except for the Segal Policy, the Company
may reduce the face value of, or terminate, any key man life insurance
purchased by it on the life of a Significant Shareholder at any time for any
reason.
7.5 USE OF KEY MAN LIFE INSURANCE POLICY PROCEEDS.
(a) Upon the death of Segal, the Company
shall collect the proceeds from the Segal Policy payable to it by reason of
Segal's death, if any, and shall apply such proceeds to the purchase of his
Original Shares and/or Option Shares pursuant to the provisions of Sections
7.6-7.8, if the Company has received a Notice of Exercise of a Right with
respect to such Original Shares and/or Option Shares in accordance with the
provisions of Sections 5.1 and 5.2. If a Right has been exercised with
respect to all of such Original Shares and/or Option Shares, any remaining
life insurance proceeds after the repurchase of the Original Shares and/or
Option Shares shall be retained by the Company. If such proceeds are not
sufficient to purchase all of the Original Shares and/or Option Shares
subject to Segal's Notice of Exercise of a Right, the balance of the Purchase
Price shall be paid in full as provided in Section 7.6(a).
(b) Upon the death of any Significant
Shareholder other than Segal, and for whom the Company shall have in effect
as of the date of death of such Significant Shareholder a key man life
insurance policy, the Company shall collect the proceeds from the insurance
policy payable to it by reason of the Significant Shareholder's death and
shall apply such proceeds to the purchase of such Significant Shareholder's
Original Shares and/or Option Shares pursuant to the provisions of Sections
7.6-7.8, if it has received a Notice of Exercise of a Right with respect to
such Original Shares and/or Option Shares pursuant to the provisions of
Sections 5.1 and 5.2. If a Right has been exercised with respect to all of
such Original Shares and/or Option Shares, any remaining life insurance
proceeds after payment of the Purchase Price for such Original Shares and/or
Option Shares shall be retained by the Company. If such proceeds are not
sufficient to purchase all of the Original Shares and/or Option Shares, the
balance of the Purchase Price shall be paid as provided in Section 7.6.
7.6 PURCHASE PRICE AND METHOD OF PAYMENT. Upon receipt
of a Notice of Exercise of a Right, the Purchase Price for the Metron
Securities subject to the Right that has been exercised shall be calculated
as provided in Section 7.7 and following such calculation, payment thereof
shall be made in cash or by certified cashier's check as follows:
(a) in the event of Segal's death, if the
Segal Policy is in force and effect as provided in Section 7.3(a), the
Purchase Price shall be paid in full at Closing;
(b) in the event the Company terminates its
Right and one or both Transferees elects to fulfill the Company's obligations
as provided in Section 7.1, the Purchase Price for the Metron Securities to
be acquired by the Transferee(s) due to the terminated Right shall be paid in
full at Closing;
<PAGE>
(c) in the event the Company, either by
itself or in conjunction with one or both Transferees, exercises a Right of
First Refusal, the Purchase Price for the Metron Securities subject to the
Proposed Disposition for Value shall be paid at Closing in the manner
provided for in the Notice of Proposed Disposition for Value (or such other
terms no less favorable to the Significant Shareholder as shall have been
agreed to in writing by such Shareholder);
(d) in the event either or both of the
Transferees exercise the Transferee Call Right pursuant to the provisions of
Section 4.1, the Purchase Price shall be paid in full at Closing;
(e) in all other instances, with respect to a
particular Right the Company shall pay as much of the Purchase Price and
interest with respect to an exercised Right as possible up to the amount of
the Annual Cap less any payments previously made under this Agreement during
such fiscal year and adjusted pro rata for payments (including interest) to
be made to other Exercising Parties and Non-Exercising Parties with respect
to whom a Notice of Exercise of a Right has been made prior to the Closing
Date as to such Right. The pro rata adjustment shall be based upon the
percentage of the total amount to be paid by the Company pursuant to the
Annual Cap represented by the amount that (x) the Purchase Price and interest
payable as a consequence of the valid exercise of a particular Right bears to
(y) the amount which is equal to the Purchase Price and interest payable as a
consequence of the valid exercise of all Rights for which a Notice of
Exercise of a Right has been made or received by the Company prior to the
Closing as to such Right minus the amount if any previously paid by the
Company with respect to such Right(s) during that fiscal year.
(f) in the event that due to the limitations
imposed by the provisions of Section 7.6(e), the Company has not paid in full
the Purchase Price for all Metron Securities for which a Right has been
exercised, then during the following fiscal year, the Company shall pay for
as many of the Metron Securities subject to such Right as is permitted under
this subsection; provided that such payments (including interest) shall not
be made until after the Annual Cap has been calculated as provided in Section
7.7, and such payments shall be limited to the amount of the Annual Cap, and
adjusted pro rata as follows. The pro rata adjustment shall be based upon the
percentage of the total amount to be paid by the Company pursuant to the
Annual Cap represented by the amount that (x) the Purchase Price and interest
remaining unpaid as to a particular Right, as of the day preceding the
calculation of the Annual Cap bears to (y) the amount which is equal to the
Purchase Price and interest for all Rights for which a Notice of Exercise of
a Right has been made or received by the Company as of such date minus the
amount, if any, previously paid by the Company with respect to such Right(s)
as of the same date.
(g) in the event that due to the limitations
imposed by the provisions of Sections 7.6(e) and (f), the Company has not paid
in full the Purchase Price for all Metron Securities for which a Right has been
exercised, then during the fiscal year following the fiscal year referenced in
Section 7.6(f), the Company shall pay for as many of the Metron Securities
subject to such Right as is permitted under this subsection; provided that such
payments (including interest) shall not be made until after the Annual Cap has
been calculated as provided in Section 7.7, and such payments shall be limited
to the amount of the Annual Cap, and adjusted
<PAGE>
pro rata as follows. The pro rata adjustment shall be based upon the
percentage of the total amount to be paid by the Company pursuant to the
Annual Cap represented by the amount that (x) the Purchase Price and interest
remaining unpaid as to a particular Right as of the day preceding the
calculation of the Annual Cap bears to (y) the amount which is equal to the
Purchase Price and interest for all Rights for which a Notice of Exercise of
a Right has been made or received by the Company as of such date minus the
amount, if any, previously paid by the Company with respect to such Right(s)
as of the same date.
(h) Notwithstanding the provisions of Section
7.6(g), to the extent that payment for Metron Securities for which a Right
has been exercised has not been made in full, then as of the third
anniversary of the Notice Date for the exercise of the Right with respect to
such Metron Securities any and all amounts of the Purchase Price remaining
outstanding, including interest as provided in Section 7.6(i) below, shall be
paid as of such third anniversary date. Any and all such payments, however,
shall be included in determining the Annual Cap for any Right that has been
exercised, has not been paid in full and for which not more than three (3)
full years have elapsed since the Notice Date for such Right.
(i) Except as provided otherwise herein, all
payments of the Purchase Price for any Metron Securities with respect to the
exercise of a Right shall bear interest at LIBOR, until paid in full,
commencing as of the date of the Triggering Event to which the transfer
relates, with LIBOR adjusted annually as of the date of such Triggering Event
until such amount has been paid in full; provided, however that interest
shall not be compounded: and provided further that in the case of the
exercise of a Put Right with respect to Option Shares interest shall be
calculated commencing as of the Notice Date of the exercise of such Right
instead of the date of the Triggering Event to which the Notice of Exercise
relates. Purchase Price payments for the Metron Securities of any Significant
Shareholder acquired pursuant to exercise of the Company Call Right or the
Transferee Call Right or for Metron Securities acquired pursuant to a Put
Right exercised upon Jaensch's or Levett-Prinsep's voluntary termination of
employment shall not bear interest.
(j) In the event of a Qualified Initial
Public Offering or an acquisition of 50% or more of the then outstanding
shares in the share capital of the Company (other than shares that have been
repurchased by and are held by the Company), the unpaid portion of the
Purchase Price for the Metron Securities subject to a previously exercised
Right shall become due and payable within ten (10) days thereafter.
7.7 CALCULATION OF PURCHASE PRICE AND ANNUAL CAP. All
determinations of the Purchase Price and the Annual Cap, and the amount that
may be paid thereunder with respect to a Right, shall be made by the
Company's independent auditors and be subject to the review and approval of
the Supervisory Board and, with respect to a Right exercised in a prior year
for which the Purchase Price has not been paid in full, such determination
shall be made within one hundred five (105) days following the end of the
fiscal year with respect to which such determination is to be made. Upon
completion of the calculation of the Purchase Price, the results of the
calculation shall be provided promptly to the Significant Shareholder (or
other party) to whom the calculation relates, and such party shall promptly
provide the Supervisory Board with any comments or objections thereto, which
the Supervisory Board shall consider. Subject to the completion of any
appraisal necessitated by the terms of this Agreement, the
<PAGE>
determination of the Purchase Price, the Annual Cap and the amount to be paid
thereunder shall be made within forty-five (45) days following the applicable
Notice Date, except for a Notice Date within sixty (60) days following the
fiscal year-end, in which case the determination shall be made, subject to
the completion of any appraisal, within one hundred five (105) days following
such fiscal year-end. Furthermore, nothing in this Agreement shall require
that the real estate assets of the Company be appraised more than once during
any fiscal year.
7.8 CLOSING.
(a) To the extent permitted by the provisions
of Section 7.6, and except as otherwise provided in Section 5.2(d), within
fourteen (14) days after the determination of the Purchase Price, the Annual
Cap and the amount to be paid thereunder as to a Right (other than the Right
of First Refusal) that has been exercised and for which full payment has not
previously been made, the Company or the Transferee(s), shall tender the
Purchase Price for any Metron Securities with respect to which such Right has
been exercised and/or shall provide notice of the effect, if any, of the
provisions of Section 7.6 on the amount of the Purchase Price to be paid at
Closing and of the scheduled Closing Date to the Exercising or Non-Exercising
Party. The Closing Date specified in such notice shall not be more than five
(5) business days following the date on which such notice is given by the
Company or the Transferee(s), as the case may be.
(b) Within fourteen (14) days after the
Notice Date for the exercise of a Right of First Refusal, the Company and/or
the Transferees shall tender the Purchase Price for the Metron Securities to
be purchased pursuant to the exercise of such Right.
(c) All Closings for the purchase of Metron
Securities pursuant to this Agreement shall take place at the principal
office of the Company or at such other place as shall be mutually agreed upon.
(d) The purchase and transfer of Metron
Securities pursuant to this Agreement shall be effected by a deed of transfer
made before a notary in The Netherlands as required by the laws of The
Netherlands; and each party hereto agrees to comply with all reasonable
requests of the other parties subject to the exercise of a Right in order to
comply with this requirement such that the legal transfer before a notary is
completed within sixty (60) days following the Closing Date.
7.9 POWER OF ATTORNEY BY SIGNIFICANT SHAREHOLDERS;
TAKING OF NECESSARY ACTION. To the extent a Right is exercised with respect
to Options, the Exercising or Non-Exercising Party with respect thereto, as
the case may be, agrees to execute documentation requested by the Company in
order to cancel such Options upon Closing. Each Significant Shareholder, and
each Significant Shareholder's spouse (if applicable), hereby authorizes and
directs the Managing Board of the Company to transfer the Original Shares and
Option Shares or to cancel the Options which the Company or the Transferee
(as the case may be) has purchased hereunder upon proper tender of the
Purchase Price therefor by the purchaser thereof at the Closing.
<PAGE>
7.10 BLUE SKY REQUIREMENTS. If any offer, issuance or
transfer of the Metron Securities pursuant to this Agreement requires the
consent of, or the filing of documents with, the California Commissioner of
Corporations, any other state securities administrator or commissioner, or
compliance with the Dutch Act on the Supervision of the Securities Trade, the
time periods specified herein shall be extended for such periods as is
necessary to comply with such requirements. All parties agree to cooperate in
making such request for transfer, and no offer, issuance or transfer shall be
effected without such consent or filing if required by applicable law.
8. TERMINATION OF RESTRICTIONS.
8.1 TERMINATION EVENTS. This Agreement shall terminate,
except to the extent of any outstanding payment obligations owed to one or
more Significant Shareholders (or their successors or assigns), upon any of
the following:
(a) on the termination of this Agreement by
the unanimous agreement of all of the named parties to this Agreement or
their respective legal representatives;
(b) at such time as a Qualified Initial
Public Offering is completed pursuant to the terms of the Investor Rights
Agreement;
(c) the purchase by the Company or the
Transferees of all of the Metron Securities subject to this Agreement;
(d) if more than fifty percent (50%) of the
outstanding shares in the Company's share capital entitled to vote are sold,
redeemed or exchanged in any: (i) merger, consolidation, or reorganization
involving the Company and one or more unaffiliated corporations; (ii)
exchange of shares of the Company for shares of any unaffiliated corporation;
or (iii) sale of all or substantially all of the assets of the Company to an
unaffiliated corporation. For purposes of this subparagraph an "unaffiliated
corporation" means any corporation that is not controlled by or under common
control with, directly or indirectly, the Company or any or all of the
Significant Shareholders; or
(e) bankruptcy ("faillissement"), moratorium
of payments ("surseance van betaling") or dissolution ("ontbinding") of the
Company.
8.2 REMOVAL OF NOTATION FROM SHARE REGISTRY. In the
event the restrictions imposed by this Agreement shall be terminated as
herein provided, the notation in the Company's Registry of Shareholders
referred to in Section 3.3(a), above, shall be deleted.
9. CONTROLLING PROVISIONS.
To the extent that there may be any conflict between the provisions
of this Agreement and the provisions contained in the Company's Articles of
Association on the transfer or restriction on transfer of any Metron
Securities, the terms of this Agreement shall be controlling to the maximum
extent practicable under Dutch Law. This Agreement may not be modified except
in a writing signed by all parties to this Agreement.
<PAGE>
10. OWNERSHIP, VOTING RIGHTS, DUTIES.
10.1 NO EFFECT EXCEPT AS AGREED. This Agreement shall
not affect in any way the ownership, voting rights or other rights or duties
of any shareholder except as specifically provided herein.
10.2 VOTE IN FAVOR OF AGREEMENT. Each of the Company,
FSI, Fl, each Significant Shareholder and any party to whom any Metron
Securities subject to this Agreement are transferred shall take such actions
at general meetings, special meetings or voting in lieu of any such meetings
as will give full force and effect to this Agreement. Specifically, but
without limitation, each Significant Shareholder shall vote in favor of any
transfer of Original Shares or Option Shares that otherwise complies with the
terms and conditions of the Agreement, shall take such action as is necessary
to satisfy the conditions set forth in Article 14 of this Agreement and shall
not vote to change the Company to an N.V., unless such change is in
contemplation of a Qualified Initial Public Offering or is made with the
consent of all parties to this Agreement.
10.3 EXECUTE MATERIAL DOCUMENTS. At or following any
Closing, each of the Significant Shareholders agrees to promptly execute and
return to the Company or its agents any and all documents necessary to effect
the purchase and transfer of any Metron Securities that are subject to the
exercise of a Right under this Agreement pursuant to a deed of transfer made
before a notary of The Netherlands.
10.4 REDUCTION IN TOTAL SHARE CAPITAL. Subject to the
provisions of Section 14(c), to the extent that the Company has repurchased
any Original Shares or Option Shares pursuant to this Agreement, and to the
extent consistent with Netherlands law and the Company's Articles of
Association, the Company shall use reasonable efforts to reduce the total
share capital in an amount equal to the number of Original Shares and/or
Option Shares repurchased by it.
10.5 APPROVAL OF ACCOUNTS. The Company shall use its
best efforts to have its fiscal year-end accounts approved at a General
Meeting of its Shareholders within six (6) months following such fiscal
year-end.
10.6 WAIVER. With respect to a sale or transfer of
Metron Securities by a party to this Agreement which complies with the
provisions of this Agreement and to the extent that the Company's Articles of
Association require shareholder approval of the sale or transfer of Metron
Securities and/or provide shareholders with a right of first refusal with
respect to such sale or transfer, each of the parties to this Agreement
agrees to approve such transfer, undertakes to waive such right of first
refusal and/or vote in favor of exemption of such sale or transfer from such
right of first refusal if requested by the Company or a party to this
Agreement, whether at a shareholders meeting, by shareholder resolution, by
shareholder agreement or any other written instrument, and further agrees to
execute documents reasonably requested of them to reflect such approval or
waiver.
11. ADJUSTMENT OF SHARES.
The number of Original Shares, Option Shares and shares subject to
options subject to this Agreement, as well as the authorized share capital of
the Company with respect thereto, shall
<PAGE>
be proportionately adjusted for any increase or decrease in the authorized
share capital of the Company resulting from a subdivision or consolidation of
shares, or the payment of a stock dividend or any other increase or decrease
in the outstanding shares in the share capital of the Company effected
without receipt of consideration by the Company. The Original Shares, Option
Shares and shares subject to Options, as adjusted, together with all shares
and right to acquire shares of the Company issued to the Significant
Shareholders after the date of this Agreement, shall be subject to the terms
of this Agreement, and the term "shares" shall be deemed to also refer to any
such additional shares and right to acquire shares.
12. ENFORCEMENT.
Each of the parties to this Agreement agrees that a violation of the
terms of this Agreement by any of them may cause irreparable damage to the
Company, the exact amount of which is impossible to ascertain, and for that
reason the parties, and each of them, agree that the Company, FSI, FI and all
other Significant Shareholders will be entitled to a decree of specific
performance of the terms of this Agreement or an injunction restraining
further violation thereof, said right to be in addition to any other remedies
of the parties.
13. CONSENT TO PURCHASES OF SHARES BY COMPANY
Each of the parties to this Agreement by executing this Agreement,
hereby irrevocably consents to the purchase of any Metron Securities from any
of the Significant Shareholders pursuant to the terms of this Agreement.
14. CONDITIONS PRECEDENT TO COMPANY PURCHASE.
Notwithstanding the other provisions of this Agreement to the
contrary, to the extent necessary to comply with the laws of The Netherlands,
the Company's right or obligation to purchase any Metron Securities pursuant
to this Agreement, to the extent applicable, is subject to each of the
following:
(a) The Articles of Association of the Company as in
effect at the time thereof permit the purchase of the shares.
(b) The shares are fully paid up.
(c) The shareholders' equity of the Company after
deduction of the Purchase Price paid shall not be less than the sum of the
paid and called part of the issued share capital and the reserves which must
be maintained by the laws of The Netherlands or the Articles of Association.
(d) Authorization for the repurchase of shares by the
Company pursuant to this Agreement has been given by the General Meeting of
Shareholders or another corporate body designated thereto in the Articles of
Association or by the General Meeting of Shareholders.
(e) The par value of the Original Shares or Option Shares
to be repurchased by the Company, when added to the shares already held by the
Company and its
<PAGE>
subsidiaries, shall not exceed fifty (50%) percent of the issued share
capital of the Company. Should the Company change its legal form to that of a
N.V., the Original Shares and Option Shares to be repurchased by the Company,
when added to the shares already held by the Company or any of its
subsidiaries, shall not exceed ten (10%) percent of the issued share capital
of the Company.
(f) If any Closing Date is more than six (6) months
after the fiscal year-end, the Company's accounts for such fiscal year must
have been previously adopted at a General Meeting of the Company's
Shareholders.
15. GENERAL.
15.1 NOTICES. Notices required hereunder shall be given in
person or by registered or certified mail, return receipt requested, to the
address shown on the records of the Company for FSI, FI and the Significant
Shareholders, and to the Company at the principal executive office of MTC.
Notice shall be deemed to have been given on the date of receipt by the
person(s) to whom such notice has been addressed or his, its or their agents or
other representatives.
15.2 BINDING EFFECT. This Agreement shall apply to and be
binding upon the parties, their permitted transferees, heirs, legatees,
executors, administrators and legal successors, who shall hold the Metron
Securities subject to the terms hereof, and is for the benefit of the Company
and its successors and assigns.
15.3 SEVERABILITY. The invalidity or illegality of any
provision of this Agreement shall not be deemed to affect the validity of any
other provision of this Agreement.
15.4 GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of The Netherlands, without
application of provisions of conflicts of laws.
15.5 ENTIRE AGREEMENT. This Agreement supersedes all
previous or contemporaneous written or oral agreements between or among the
parties regarding the subject matter hereof, and constitutes the entire
agreement of the parties regarding such subject matter. This Agreement may not
be modified or terminated except by a writing executed by all of the parties
hereto.
15.6 COUNTERPARTS. This Agreement may be executed in one
or more counterparts, all of which when taken together shall constitute one
instrument.
15.7 SPOUSAL CONSENT. Each of the Transpacific Founders
agrees that his spouse's written consent in the form of Attachment A is a
precondition to the operation and effectiveness of this Agreement.
15.8 EXAMPLE. An example of the operation of the
provisions of this Agreement is attached as Exhibit B (11 pages). It is for
illustrative purposes only and the actual purchase prices to be used shall be as
provided in this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to
be effective as of the date first written above.
FSI INTERNATIONAL, INC. METRON TECHNOLOGY B.V.
By: /s/ Joel Elftmann By: /s/ Edward Segal
----------------------------------- -----------------------------
Its: Chief Executive Officer and President Its: President
----------------------------------- -----------------------------
FLUOROWARE, INC. THE SIGNIFICANT SHAREHOLDERS
By: /s/ James Dauwalter /s/ Udo Jaensch
----------------------------------- -----------------------------
Its: Executive Vice President Udo Jaensch
----------------------------------- -----------------------------
/s/ J. Chris Levett-Prinsep
-----------------------------
J. Chris Levett-Prinsep
/s/ Keith Reidy
-----------------------------
Keith Reidy
/s/ Brad Sargent
-----------------------------
Brad Sargent
/s/ Edward Segal
-----------------------------
Edward Segal
<PAGE>
Exhibit 21.1
METRON TECHNOLOGY N.V.
LIST OF SUBSIDIARIES OF THE REGISTRANT
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
NAME OF SUBSIDIARY JURISDICTION OF INCORPORATION OF SUBSIDIARY
- ---------------------------------------------------------------------------------------------------------------------
<S> <C>
Metron Technology (Asia) Ltd. Hong Kong
Metron Technology (Benelux) B.V. Netherlands
Metron Technology (Deutschland) Gmbh Germany
Metron Technology (Far East) Ltd. Hong Kong
Metron Technology (France) EURL France
Metron Technology (Hong Kong) Ltd. Hong Kong
Metron Technology (Ireland) Ltd. Ireland
Metron Technology (Israel) Ltd. Israel
Metron Technology (Italia) S.r.L. Italy
Metron Technology (Korea) Ltd. Korea
Metron Technology (Malaysia) Sdn Bhd Malaysia
Metron Technology (Nordic) AB Sweden
Metron Technology (Singapore) Pte. Ltd. Singapore
Metron Technology (Taiwan) Ltd. Taiwan
Metron Technology (Thailand) Ltd. Thailand
Metron Technology (United Kingdom) Ltd. United Kingdom
Metron Technology Corporation United States of America (California)
Metron Technology Distribution Corporation United States of America (California)
Metron Technology Holding Ltd. Thailand
T.A. Kyser Co. United States of America (Nevada)
Transpacific Technology Ltd. United Kingdom
Transpacific Technology S.A. France
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
EXHIBIT 23.1
WHEN METRON TECHNOLOGY B.V. CONVERTS FROM A B.V. TO AN N.V. UNDER THE LAWS OF
THE NETHERLANDS, WE WILL BE IN A POSITION TO RENDER THE FOLLOWING CONSENT:
/s/ KPMG LLP
The Board of Directors and Shareholders
Metron Technology N.V.
The audits referred to in our report dated July 22, 1999, included the
related financial statement schedule as of May 31, 1999, and for each of the
years in the three-year period ended May 31, 1999, included in the registration
statement. This financial statement schedule is the responsibility of the
Company's management. Our responsibility is to express an opinion on this
financial statement schedule based on our audits. In our opinion, such financial
statement schedule, when considered in relation to the basic consolidated
financial statements taken as a whole, present fairly in all material respects
the information set forth therein.
We consent to the use of our reports included herein and to the references
to our firm under the headings "Selected Consolidated Financial Data" and
"Experts" in the prospectus.
KPMG LLP
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM METRON
TECHNOLOGY N.V. CONSOLIDATED BALANCE SHEETS, CONSOLIDATED STATEMENTS OF INCOME,
CONSOLIDATED STATEMENTS OF CASH FLOWS AND NOTES TO CONSOLIDATED FINANCIAL
STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C> <C> <C>
<PERIOD-TYPE> YEAR YEAR YEAR
<FISCAL-YEAR-END> MAY-31-1999 MAY-31-1998 MAY-31-1997
<PERIOD-START> JUN-01-1998 JUN-30-1997 JUN-30-1996
<PERIOD-END> MAY-31-1999 MAY-31-1998 MAY-31-1997
<CASH> 10,601 10,387 0
<SECURITIES> 0 0 0
<RECEIVABLES> 42,150 53,216 0
<ALLOWANCES> 1,312 815 0
<INVENTORY> 24,079 25,881 0
<CURRENT-ASSETS> 86,956 97,859 0
<PP&E> 8,152 9,901 0
<DEPRECIATION> 9,962 8,495 0
<TOTAL-ASSETS> 99,625 114,161 0
<CURRENT-LIABILITIES> 64,326 73,390 0
<BONDS> 3,371 2,722 0
0 0 0
0 0 0
<COMMON> 3,030 3,177 0
<OTHER-SE> 26,925 32,872 0
<TOTAL-LIABILITY-AND-EQUITY> 99,625 114,161 0
<SALES> 228,618 275,024 298,576
<TOTAL-REVENUES> 228,618 275,024 298,576
<CGS> 189,295 222,028 241,675
<TOTAL-COSTS> 189,295 222,028 241,675
<OTHER-EXPENSES> 45,941 49,878 49,675
<LOSS-PROVISION> 3,047 2,911 2,748
<INTEREST-EXPENSE> 913 1,110 1,260
<INCOME-PRETAX> (6,748) 2,550 6,897
<INCOME-TAX> (2,214) 1,448 2,699
<INCOME-CONTINUING> (6,618) 3,118 7,226
<DISCONTINUED> 0 0 0
<EXTRAORDINARY> 0 0 0
<CHANGES> 0 0 0
<NET-INCOME> (4,534) 1,102 4,198
<EPS-BASIC> (0.44) 0.11 0.40
<EPS-DILUTED> (0.44) 0.10 0.37
</TABLE>
