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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): June 9, 1995
VARIAN ASSOCIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 1-7598 94-2359345
(State or other (Commission File (IRS Employer
jurisdiction of Number) Identification No.)
incorporation)
3050 Hansen Way, Palo Alto, CA 94304-1000
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (415) 493-4000
Inapplicable
(Former name or former address, if changed since last report)
Item 5. Other Events.
On June 9, 1995, Varian Associates, Inc., a Delaware corporation (the
"Registrant"), entered into a Stock Sale Agreement (the "Stock Sale Agreement")
with Communications & Power Industries Holding Corporation, a Delaware
corporation ("Buyer"), a corporation formed at the direction of Leonard Green &
Partners, L.P., pursuant to which the Registrant agreed to sell to Buyer
substantially all of the assets of its Electron Devices business. A copy of the
Stock Sale Agreement, without the exhibits and schedules thereto, is attached
hereto as Exhibit 2 and incorporated herein by reference. A copy of the
Registrant's press release announcing this event is attached hereto as Exhibit
99 and incorporated herein by reference.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Exhibit Number Exhibit
2 Stock Sale Agreement by and between Varian
Associates, Inc., a Delaware corporation, and
Communications & Power Industries Holding
Corporation, a Delaware corporation, dated as
of June 9, 1995 (The Registrant hereby agrees
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to furnish supplementally to the Securities
and Exchange Commission upon request a copy
of any omitted exhibit or schedule, all of
which are listed in the table of contents to
the Stock Sale Agreement).
99 Press Release of Varian Associates, Inc.
issued on June 12, 1995.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
VARIAN ASSOCIATES, INC.
(Registrant)
Date: June 13, 1995 By:
Joseph B. Phair
Vice President, General
Counsel and Secretary
EXHIBIT INDEX
Exhibit Number Exhibit
2 Stock Sale Agreement by and between Varian
Associates, Inc., a Delaware corporation, and
Communications & Power Industries Holding
Corporation, a Delaware corporation, dated as
of June 9, 1995 (The Registrant hereby agrees
to furnish supplementally to the Securities
and Exchange Commission upon request a copy
of any omitted exhibit or schedule, all of
which are listed in the table of contents to
the Stock Sale Agreement).
99 Press Release of Varian Associates, Inc.
issued on June 12, 1995.
2
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Exhibit Number 2:
[Conformed Copy]
================================================================================
STOCK SALE AGREEMENT
by and between
VARIAN ASSOCIATES, INC.,
a Delaware corporation,
and
COMMUNICATIONS & POWER
INDUSTRIES HOLDING CORPORATION,
a Delaware corporation
dated as of
June 9, 1995
================================================================================
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STOCK SALE AGREEMENT
TABLE OF CONTENTS
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms . . . . . . . . . . . . . . . . . . . 2
1.2 Other Defined Terms . . . . . . . . . . . . . . . . . . . . 8
ARTICLE II
PURCHASE AND SALE OF STOCK AND ASSETS;
FORMATION OF EDB SUBSIDIARY
2.1 Sale of Stock . . . . . . . . . . . . . . . . . . . . . . . 8
2.2 Formation of EDB Subsidiary . . . . . . . . . . . . . . . . 8
2.3 Assets to be Contributed to EDB Subsidiary . . . . . . . . . 8
2.4 Sale of Varian Canada Assets and Foreign Assets . . . . . . 11
2.5 Disclaimers . . . . . . . . . . . . . . . . . . . . . . . . 11
2.6 Excluded Assets . . . . . . . . . . . . . . . . . . . . . . 12
2.7 EDB Subsidiary Not to Assume Any Liabilities . . . . . . . . 13
2.8 Purchase Price and Payment . . . . . . . . . . . . . . . . . 13
2.9 No Assignment in Certain Circumstances . . . . . . . . . . . 14
2.10 Certain Accounts . . . . . . . . . . . . . . . . . . . . . . 15
ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 Assumption of Liabilities . . . . . . . . . . . . . . . . . 15
3.2 Retained Liabilities . . . . . . . . . . . . . . . . . . . . 16
3.3 Liabilities of Subsidiaries of Seller . . . . . . . . . . . 17
ARTICLE IV
CLOSING
4.1 Closing . . . . . . . . . . . . . . . . . . . . . . . . . . 18
4.2 Seller Obligations at Closing . . . . . . . . . . . . . . . 18
4.3 Buyer Obligations at Closing . . . . . . . . . . . . . . . . 18
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER
5.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 19
5.3 Non-Contravention . . . . . . . . . . . . . . . . . . . . . . . . 21
5.4 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . 21
5.5 Absence of Certain Changes . . . . . . . . . . . . . . . . . . . . 22
5.6 Title to Assets and Stock . . . . . . . . . . . . . . . . . . . . 23
5.7 Real Property . . . . . . . . . . . . . . . . . . . . . . . . . . 23
5.8 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . 24
5.9 Litigation; Legal Matters . . . . . . . . . . . . . . . . . . . . 25
5.10 Employee Benefit Plans . . . . . . . . . . . . . . . . . . . . . . 25
5.11 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . 26
5.12 Contracts and Commitments . . . . . . . . . . . . . . . . . . . . 26
5.13 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.14 Permits and Other Operating Rights . . . . . . . . . . . . . . . . 28
5.15 Capitalization of EDB Subsidiary . . . . . . . . . . . . . . . . . 28
5.16 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.17 Disclaimer . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
6.1 Organization . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.2 Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . 29
6.3 Non-Contravention. . . . . . . . . . . . . . . . . . . . . . . . . 30
6.4 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
6.5 Acquisition for Investment . . . . . . . . . . . . . . . . . . . . 30
6.6 No Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE VII
CERTAIN COVENANTS
7.1 Access to Information . . . . . . . . . . . . . . . . . . . . . . 31
7.2 Conduct of Business Pending Closing . . . . . . . . . . . . . . . 31
7.3 No Solicitation of Transactions . . . . . . . . . . . . . . . . . 32
7.4 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . . . 33
7.6 Acknowledgement by Buyer . . . . . . . . . . . . . . . . . . . . . 35
7.7 News Releases . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.8 Certain Actions . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.9 Notification . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
7.10 Bulk Sale Compliance . . . . . . . . . . . . . . . . . . . . . . . 36
7.11 Use of Properties and Groundwater . . . . . . . . . . . . . . . . 36
7.12 Seller Performance of Site Remediation in Beverly, Massachusetts . 36
7.13 Seller Obligations With Respect to Management Stock Purchases . . 37
7.14 Certain PGTP Tooling . . . . . . . . . . . . . . . . . . . . . . . 37
7.15 Certain Lease Agreements . . . . . . . . . . . . . . . . . . . . . 37
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ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
8.1 Accuracy of Representations and Warranties . . . . . . . . . . . . 38
8.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.3 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.4 Absence of Governmental Orders . . . . . . . . . . . . . . . . . . 38
8.5 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . . . 38
8.6 Officers' Certificates . . . . . . . . . . . . . . . . . . . . . . 38
8.7 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . 38
8.8 Suits, Proceedings, Investigations . . . . . . . . . . . . . . . . 39
8.9 Instruments of Conveyance . . . . . . . . . . . . . . . . . . . . 39
8.10 Material Adverse Change . . . . . . . . . . . . . . . . . . . . . 39
8.11 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
8.12 Financing . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF SELLER
9.1 Accuracy of Representations and Warranties . . . . . . . . . . . . 39
9.2 Performance . . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.3 Authorizations . . . . . . . . . . . . . . . . . . . . . . . . . . 39
9.4 Absence of Governmental Orders . . . . . . . . . . . . . . . . . . 40
9.5 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . 40
9.6 Officers' Certificates . . . . . . . . . . . . . . . . . . . . . . 40
9.7 Certain Agreements . . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE X
INDEMNIFICATION
10.1 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
10.2 Indemnification by Seller . . . . . . . . . . . . . . . . . . . . 40
10.3 Indemnification by Buyer . . . . . . . . . . . . . . . . . . . . . 42
10.4 General Indemnification Provisions . . . . . . . . . . . . . . . . 43
10.5 Limitations on Indemnification. . . . . . . . . . . . . . . . . . 45
10.6 Tax Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
ARTICLE XI
TAX MATTERS
11.1 Tax Characterization . . . . . . . . . . . . . . . . . . . . . . . 49
11.2 Allocation of Purchase Price. . . . . . . . . . . . . . . . . . . 49
11.3 Taxes Before and After the Closing Date . . . . . . . . . . . . . 50
11.4 Access . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
11.5 Notification and Defense . . . . . . . . . . . . . . . . . . . . . 51
11.6 Tax Returns . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.7 Payroll Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . 52
11.8 Consolidated Tax Liability . . . . . . . . . . . . . . . . . . . . 52
11.9 Taxes Relating to Transactions Contemplated by This Agreement . . 52
11.10 Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
</TABLE>
ARTICLE XII
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EMPLOYEES AND EMPLOYEE BENEFIT PLANS
12.1 Employees . . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.2 Benefit Plans . . . . . . . . . . . . . . . . . . . . . . . . . . 53
12.3 Certain PGTP Employees . . . . . . . . . . . . . . . . . . . . . . 55
12.4 COBRA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
12.5 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . 56
12.6 Cessation of Participation Under Seller's Plans . . . . . . . . . 56
12.7 Termination of Confidentiality and Related Agreements. . . . . . . 56
ARTICLE XIII
TERMINATION
13.1 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . 56
13.2 Written Notice . . . . . . . . . . . . . . . . . . . . . . . . . . 57
13.3 Effect of Termination . . . . . . . . . . . . . . . . . . . . . . 57
13.4 Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
ARTICLE XIV
GENERAL PROVISIONS
14.1 Expenses, Taxes, Etc. . . . . . . . . . . . . . . . . . . . . . . 57
14.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 57
14.3 Disclosure Schedule . . . . . . . . . . . . . . . . . . . . . . . 59
14.4 Interpretation . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.5 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.6 Assignment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 59
14.7 No Third-Party Beneficiaries . . . . . . . . . . . . . . . . . . . 59
14.8 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 60
14.9 No Other Remedies . . . . . . . . . . . . . . . . . . . . . . . . 60
14.10 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . 60
14.11 Mutual Drafting . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.12 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 61
14.13 Dispute Resolution . . . . . . . . . . . . . . . . . . . . . . . . 61
14.14 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
14.15 Entire Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 62
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EXHIBITS:
EXHIBIT 8.5 . . . . . . . . . . . . . . . . . . . Opinions of Counsel to Seller
EXHIBIT 8.7(a) . . . . . . . . . . . . . . . . . . . Noncompetition Agreement
EXHIBIT 8.7(b) . . . . . . . . . . . . . . . . . . . . . Real Estate Documents
EXHIBIT 8.7(c) . . . . . . . . . . . . . . . . . . . . . Site Access Agreement
EXHIBIT 8.7(d) . . . . . . . . . . . . . . . . . . . . . . . . . Cross-License
EXHIBIT 8.7(e) . . . . . . . . . . . . . . . . Transitional Services Agreement
EXHIBIT 8.7(f) . . . . . . . . . . . . . . . . . . . . . . . Supply Agreements
EXHIBIT 8.7(g) . . . . . . . . . . . . . . . . . . . . . . . Trademark License
EXHIBIT 9.5 . . . . . . . . . . . . . . . . . . . . Opinion of Counsel to Buyer
SCHEDULES:
SCHEDULE 1.1 . . . . . . . . . . . . . . . . . . . . . . . . . Permitted Liens
SCHEDULE 2.3(a)(i) . . . . . . . . . . . . . . . . . . EDB Owned Real Property
SCHEDULE 2.3(a)(ii)(1) . . . . . . . . . . . . . . . EDB Leased Real Property
SCHEDULE 2.3(a)(vii) . . . . . . Patents, Trademarks & Copyright Registrations
SCHEDULE 2.3(a)(xi) . . . . . . . . . . . . . . . . . . . . . . Certain Assets
SCHEDULE 2.6 . . . . . . . . . . . . . . . . . . . . . Certain Excluded Assets
SCHEDULE 2.8(b) . . . . . . . . . . . . . . . . . . . . Adjusted Balance Sheet
SCHEDULE 6.2(b) . . . . . . . . . . . . . . . . . . . . . Buyer Authorizations
SCHEDULE 7.2(a) . . . . . . . . . . . . . . . . . . . . . . Conduct of Business
SCHEDULE 7.13 . . . . . . . . . . . . . . . . . . . . . . Management Investors
SCHEDULE 7.14 . . . . . . . . . . . . . . . . . . . . . . Certain PGTP Tooling
SCHEDULE 8.3 . . . . . . . . . . . . . . . . . . . . . . . . . Authorizations
SCHEDULE 12.1 . . . . . . . . . . . . . . . . . . . . . . . . Certain Employees
SCHEDULE 14.4 . . . . . . . . . . . . . . . . . . Knowledge of Certain Persons
DISCLOSURE SCHEDULE:
SECTION 5.2(c) . . . . . . . . . . . . . . . . . . . . . . . . Consents, Etc.
SECTION 5.3 . . . . . . . . . . . . . . . . . . . . . . . . . Non-Contravention
SECTION 5.4(a) . . . . . . . . . . . . . . . . . . . . . Financial Statements
SECTION 5.4(b) . . . . . . . . . . . . . . . . . Seller's Accounting Practices
SECTION 5.5 . . . . . . . . . . . . . . . . . . . . Absence of Certain Changes
SECTION 5.6 . . . . . . . . . . . . . . . . . . . . . Title to Assets and Stock
SECTION 5.7(a) . . . . . . . . . . . . . . . . . . . . . . Owned Real Property
SECTION 5.7(b) . . . . . . . . . . . . . . . . . . . . . Leased Real Property
SECTION 5.8(a) . . . . . . . . . . . . . . . . . . . . Patents and Trademarks
SECTION 5.8(b) . . . . . . . . . . . . . . . . . . . . . . . . . . . Licenses
SECTION 5.9 . . . . . . . . . . . . . . . . . . . . . . . . . . . . Litigation
SECTION 5.10(a) . . . . . . . . . . . . . . . . . . . . Employee Benefit Plans
SECTION 5.11(a) . . . . . . . . . . . . . . . . . . . . . . Environmental Laws
SECTION 5.11(b) . . . . . . . . . . . . . . . . . . . . . Environmental Actions
SECTION 5.11(c) . . . . . . . . . . . . . . . . . . . . . Environmental Permits
SECTION 5.11(d) . . . . . . . . . . . . . . . . . . . . . . . . . . . Disposal
SECTION 5.12 . . . . . . . . . . . . . . . . . . . . Contracts and Commitments
SECTION 5.13(b) . . . . . . . . . . . . . . . . . . . . . . . . . . Tax Matters
SECTION 5.14(a) . . . . . . . . Permits and Other Operating Rights / Exceptions
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SECTION 5.14(b) . . . . . . . . . . . . . . Permits and Other Operating Rights
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STOCK SALE AGREEMENT
STOCK SALE AGREEMENT (together with all schedules and exhibits
hereto, the "Agreement"), dated as of June 9, 1995, by and among Varian
Associates, Inc., a Delaware corporation, and Communications & Power Industries
Holding Corporation, a Delaware corporation.
RECITALS
A. Seller, directly and indirectly through various
foreign and domestic Affiliates of Seller, is engaged in the business of
developing, manufacturing and distributing microwave tubes, power grid tubes,
microwave amplifiers, modulators and various other power supply equipment
through its Electron Devices Business (the "Business").
B. Seller and such Affiliates of Seller desire to sell
and cause to be transferred to Buyer (including Affiliates of Buyer organized
for that purpose), and Buyer (including such Affiliates) desires to purchase
and accept the transfer from Seller and such Affiliates of Seller,
substantially all of the assets and properties of Seller and such Affiliates of
Seller used or usable primarily in the Business, as hereinafter specifically
provided.
C. Seller and Buyer desire to facilitate such sale by,
among other things, contributing certain of such assets, properties and
business to a newly formed subsidiary of Seller and effecting a sale from
Seller to Buyer of the stock thereof, as provided in this Agreement.
In consideration of the premises and the respective
representations, warranties and agreements herein contained, the parties hereto
hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms shall have the following meanings (such definitions to be
equally applicable to both the singular and plural forms of the terms defined):
"Action" means any claim, action, suit, audit, assessment or
arbitration, or any proceeding or investigation, by or before any Governmental
Authority.
"Adverse Effect" means a Liability, expense, damage, fine or
penalty in excess of $2,000,000 suffered or incurred by the Business.
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"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations under the Securities Exchange Act of 1934, as amended.
"Agreement" means this Stock Sale Agreement, including all
schedules and exhibits hereto, as it may be further amended from time to time
as herein provided.
"Agreement Date" means June 9, 1995.
"Ancillary Agreements" means the Noncompetition Agreement,
Real Estate Documents, Site Access Agreement, Cross-License, Transitional
Services Agreement, Supply Agreements, and Trademark License substantially in
the forms attached hereto as Exhibits 8.7(a), 8.7(b), 8.7(c), 8.7(d), 8.7(e),
8.7(f) and 8.7(g) , respectively, which are required by this Agreement to be
executed by the parties hereto.
"Assets" means, collectively, the EDB Assets, the Foreign
Assets and the Varian Canada Assets.
"Assumed Liabilities" has the meaning specified in Section 3.1.
"Balance Sheet" has the meaning specified in Section 5.5.
"Books and Records" has the meaning specified in subsection
2.3(a)(viii).
"Business" has the meaning specified in the Recitals to this
Agreement.
"Buyer" means Communications & Power Industries Holding
Corporation, a Delaware corporation, and, as applicable, Affiliates of Buyer
formed for the purpose of consummating the transactions contemplated by this
Agreement.
"Buyer Indemnified Environmental Claim" has the meaning
specified in Section 10.3.
"Buyer Loss" has the meaning specified in Section 10.2.
"Bylaws" means a corporation's bylaws, code of regulations or
equivalent document.
"Charter" means a company's articles of incorporation,
certificate of incorporation or equivalent organizational documents.
"Closing" means the closing of the transactions contemplated
by this Agreement as specified in Section 4.1.
"Closing Balance Sheet" has the meaning specified in
subsection 2.8(b).
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"Closing Date" has the meaning specified in Section 4.1.
"Closing Date Book Value" has the meaning specified in
subsection 2.8(b).
"Code" means the Internal Revenue Code of 1986 and any
successor statute thereto, as amended.
"Commitments" has the meaning specified in Section 5.12.
"Confidentiality Agreement" means the letter agreement, dated
December 19, 1994, between Seller and Green Equity Investors II, L.P.
"Consolidated Return" means (a) consolidated federal Tax
Return within the meaning of Section 1501 of the Code and the Treasury
Regulations under Section 1502 of the Code and (b) any combined joint or
consolidated Tax Return under the laws of any Taxing Authority.
"Cross-License" means the Cross-License Agreement
substantially in the form of Exhibit 8.7(d).
"Disclosure Schedule" means the Disclosure Schedule dated as
of the date hereof delivered to Buyer by Seller and forming a part of this
Agreement.
"Domestic Seller Group" means Seller and Varian Realty,
individually and collectively, except where the context otherwise requires.
"EDB Assets" has the meaning specified in Section 2.3.
"EDB Leased Real Property" has the meaning specified in
subsection 2.3(a)(ii)(1).
"EDB Owned Real Property" has the meaning specified in
subsection 2.3(a)(i).
"EDB Stock" has the meaning specified in Section 2.1.
"EDB Subsidiary" has the meaning specified in Section 2.2.
"Encumbrance" means any interest (including any security
interest or financing statement), pledge, mortgage, lien, charge, adverse claim
or other right of third parties.
"Environmental Claims" means any and all Actions, claims,
demands, demand letters, liens, notices of non-compliance or violation, consent
orders or consent agreements (collectively, "Claims") arising out of (a) any
violation or alleged violation of any Environmental Law, Environmental Permit
or Governmental Order occurring or allegedly occurring as a result of
conditions existing or activities at any properties currently or formerly
owned, leased
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or operated by Seller or any of its Affiliates which are included in the Assets
(including the Real Property), (b) the presence of any Hazardous Material in
the soils, groundwater, surface water or air on, under or about or emanating
from any of such properties, or (c) any Liability arising under any
Environmental Law with respect to any Hazardous Material released at any such
properties or at any other property; clauses (a) through (c) above shall
include (i) any and all Claims by Governmental Authorities for enforcement,
cleanup, removal, treatment, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (ii) any and all Claims by
any third Person seeking damages, contribution, indemnification, cost recovery,
compensation or injunctive relief resulting from any matters set forth in
clauses (a) through (c) above or arising from alleged injury or threat of
injury to public health or safety or the environment.
"Environmental Laws" means all laws, regulations, ordinances,
codes, policies, Governmental Orders and consent decrees, and any judicial and
administrative interpretations thereof, of Governmental Authorities, relating
to pollution or protection of the environment, natural resources and public
health and safety, including those relating to emissions, discharges, Releases
or threatened Releases of Hazardous Material into the environment (including
ambient air, surface water, groundwater or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Material. When used with respect to Buyer
Indemnified Environmental Claims, Environmental Laws shall refer to
Environmental Laws in effect as of the Closing Date or enacted or amended
thereafter. Except as expressly provided elsewhere in this Agreement, when
used with respect to Seller Indemnified Environmental Claims, Environmental
Laws shall refer only to those Environmental Laws as amended and in effect on
the Closing Date.
"Environmental Permits" means all permits, approvals,
identification numbers, licenses and other authorizations required under any
applicable Environmental Law.
"ERISA" has the meaning specified in subsection 5.10(a).
"Excluded Assets" has the meaning specified in Section 2.6.
"Financial Statements" has the meaning specified in Section
5.4.
"Foreign Assets" has the meaning specified in subsection
2.4(b).
"Foreign Sellers" means the following Affiliates of Seller:
Varian Asia, Ltd., a Delaware corporation, Varian Australia Proprietary
Limited, an Australian corporation, Varian A.B., a Swedish corporation, Varian
Belgium N.V., a Belgian corporation, Varian GmbH, a German corporation, Varian
International A.G., a Swiss corporation, Varian Ltd., a Delaware
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corporation, Varian Nederland B.V., a Dutch corporation, Varian S.A., a French
corporation, Varian S.p.A., an Italian corporation, and any other Affiliate of
Seller (excluding Affiliates organized in the United States) owning assets to
be sold pursuant to this Agreement, individually and collectively except where
the context otherwise requires.
"GAAP" means generally accepted accounting principles applied
on a consistent basis.
"Governmental Authority" means any federal or national, state
or provincial, municipal or local government, governmental authority,
regulatory or administrative agency, governmental commission, department,
board, bureau, agency or instrumentality, political subdivision, court,
tribunal, official arbitrator or arbitral body in each case whether domestic or
foreign.
"Governmental Claims" means any claim, action, suit, audit,
assessment, inquiry, proceeding or investigation, including any private party
"whistleblower" or comparable claims, made or initiated by or for the benefit
of any (a) Governmental Authority, (b) any contractor to any Governmental
Authority or (c) any subcontractor to any such contractor, in any such case
arising from the conduct of the Business, including both criminal and civil
penalties (including doubled and trebled damages and government enforcement
costs).
"Governmental Order" means any order, writ, rule, judgment,
injunction, decree, stipulation, determination or award entered by or with any
Governmental Authority.
"Hazardous Material" means (a) all substances, materials,
chemicals, compounds, pollutants or wastes regulated by, under or pursuant to
any Environmental Laws, including the Resource Conservation and Recovery Act,
42 U.S.C. Sections 6901 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. Sections 9601 et seq. ("CERCLA"), the
Clean Water Act, 33 U.S.C. Sections 1251 et seq., the Clean Air Act, 42 U.S.C.
Sections 7401 et seq., the Toxic Substances Control Act, 15 U.S.C. Sections
2601 et seq., the Emergency Planning and Community Right-to-Know Act of 1986,
Title III of Public Law 99-499, the Safe Drinking Water and Toxic Enforcement
Act, Cal. Health and Safety Code Sections 25249.5 et seq., and any and all
foreign (whether national, provincial or local), state or local counterparts
thereto or other similar foreign (whether national, provincial or local), state
or local laws and orders, including (i) the Environmental Protection Act
(Ontario), the Gasoline Handling Act (Ontario), the Dangerous Goods
Transportation Act (Ontario), the Ontario Water Resources Act, the
Transportation of Dangerous Goods Act (Canada) and the Canadian Environmental
Protection Act and (ii) any and all rules and regulations promulgated
thereunder, or any common law theory based on nuisance, negligence, product
liability, trespass, ultrahazardous activity or strict liability, and (b)
asbestos, petroleum and any fraction or product of crude oil or petroleum.
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"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, Section 7A of the Clayton Act, 15 U.S.C. Section 18A,
and the regulations promulgated thereunder.
"Income Tax" means (a) any income, alternative or add-on
minimum tax, gross income, gross receipts, franchise, profits, including
estimated taxes relating to any of the foregoing, or other similar tax or other
like assessment or charge of similar kind whatsoever, except Other Taxes,
together with any interest and any penalty, addition to tax or additional
amount imposed by any Governmental Authority (a "Taxing Authority") responsible
for the imposition of any such Tax (domestic or foreign); or (b) any liability
for the payment of any taxes, interest, penalty, addition to tax or like
additional amount resulting from the application of Treas. Reg. Section
1.1502-6 or comparable provisions of any Taxing Authority in respect of a
Consolidated Return.
"Incremental Costs" has the meaning specified in subsection
10.5(h).
"Intellectual Property" has the meaning specified in
subsection 2.3(a)(vii).
"Leased Real Property" means the real property subject to the
leases of and agreements pertaining to the real property as listed in
Disclosure Schedule Section 5.7(b).
"Liabilities" means any and all debts, liabilities and
obligations of any nature whatsoever, whether accrued or fixed, absolute or
contingent, mature or unmatured or determined or indeterminable.
"Material Adverse Effect" means any event(s) with respect to,
change(s) in, or effect(s) on, the Assets or the Business which, individually
or in the aggregate, may be adverse to the results of operations or the
financial condition of the Business in a manner that is material to the
Business taken as a whole.
"Other Tax" means any sales, use, ad valorem, business
license, goods and services, withholding, payroll, employment, excise, stamp,
transfers, recording, occupation, premium, property, capital, value added,
custom duty, severance, windfall profit tax, license, or other tax,
governmental fee or other similar assessment or charge, together with any
interest and any penalty, addition to tax or additional amount imposed by any
Taxing Authority responsible for the imposition of any such tax (domestic or
foreign); but specifically excluding liability for an Income Tax.
"Owned Real Property" means the real property listed in
Disclosure Schedule Section 5.7(a).
"Permitted Liens" means any (a) mechanics', carriers',
workers' and other similar liens arising in the ordinary course of business and
which in the aggregate are not material in amount, do not interfere with the
use of the Assets to which they apply and
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have not arisen other than in the ordinary course of business; (b) liens for
current real property Taxes and assessments not yet due and payable; (c) usual
and customary non-monetary real property Encumbrances that do not and will not
materially interfere with the operation of that portion of the Business
conducted on such property; (d) Encumbrances securing purchase money
obligations or obligations under equipment leases which, in the aggregate, are
not material in amount and have not arisen other than in the ordinary course of
business; (e) all applicable zoning ordinances and land use restrictions (i)
with which Seller and its Affiliates have complied in all material respects and
which do not interfere materially with the operation of that portion of the
Business currently conducted on the property subject to such ordinances or
restrictions or (ii) which are set forth on Schedule 1.1; (f) the Encumbrances
described on Schedule 1.1; and (g) with respect to any Asset which consists of
a leasehold or other possessory interest in real property, all liens,
mortgages, covenants, imperfections in title, charges, easements, restrictions,
encumbrances and other title matters (whether or not the same are recorded) not
known to Seller to which the underlying fee estate in such real property is
subject, which were not created by or incurred by Seller or any of Seller's
Affiliates and which do not interfere materially with the operation of that
portion of the Business currently conducted on such property.
"Person" shall include any individual, trustee, firm,
corporation, partnership, limited liability company, Governmental Authority or
other entity, whether acting in an individual, fiduciary or any other capacity.
"Privileged Documents" means all documents (and compilations
of documents completed by, for or on behalf of counsel) that are subject to any
legal privilege, including the attorney-client privilege or the attorney work
product protection, which relate to any Action involving Seller or to any
Retained Liability or other claim or liability for which Seller may be
responsible; provided, however, that Privileged Documents shall not include any
such documents relating to (a) Assumed Liabilities, (b) Actions that are
asserted or threatened to be asserted against Buyer, its subsidiaries or
Affiliates (including EDB Subsidiary) and that may give rise to liabilities
other than Retained Liabilities, or (c) Actions between Seller (including its
Affiliates) and Buyer (including its Affiliates) or any other matters as to
which the interests of such parties are otherwise adverse to each other
(including any claim for indemnification pursuant to Article X of this
Agreement).
"Real Estate Documents" means the documents substantially in
the form of Exhibit 8.7(b).
"Real Property" means the Owned Real Property and the Leased
Real Property.
"Reference Amount" shall mean ONE HUNDRED TWENTY ONE MILLION
FIVE HUNDRED FORTY NINE THOUSAND DOLLARS ($121,549,000).
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"Release" means any release (as defined under any
Environmental Law) of any Hazardous Material.
"Retained Liabilities" means the Liabilities retained by
Seller pursuant to Section 3.2.
"Section 338(h)(10) Election" means a timely election
described in Section 338(h)(10) of the Code with respect to the sale of the EDB
Stock to Buyer pursuant to this Agreement. Section 338(h)(10) Election shall
include any corresponding election under any other relevant Tax Laws, if an
election is made under Section 338(h)(10) of the Code.
"Section 338 Forms" means all returns, documents, statements,
and other forms that are required to be submitted to any federal, state, county
or other local Taxing Authority in connection with a Section 338(h)(10)
Election.
"Seller" means Varian Associates, Inc., a Delaware corporation.
"Seller Group" means Seller, the Foreign Sellers, Varian
Canada and Varian Realty.
"Seller Indemnified Environmental Claim" has the meaning
specified in Section 10.2.
"Seller Indemnified Parties" has the meaning specified in
Section 10.3.
"Seller Loss" has the meaning specified in Section 10.3.
"Service" means the Internal Revenue Service or any successor
entity.
"Supply Agreements" means, collectively, the Key Components
Product Supply Agreement, the Semiconductor Equipment Supply Agreement, the
Reciprocal Supply Agreement and the Varian Tempe Electronics Center Purchase
Agreement substantially in the form of Exhibit 8.7(f).
"Tax" means Income Taxes and Other Taxes as the context
requires.
"Tax Laws" means the Code, federal, state, county, local or
foreign (national, local or provincial) laws relating to Taxes and any
regulations or official administrative pronouncements released thereunder.
"Tax Return" means any return, report, information return,
schedule, certificate, statement or other document (including any related or
supporting information) filed or required to be filed with a Taxing Authority
in connection with any Tax, or, where none is required to be filed with a
Taxing Authority, the
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statement or other document issued by a Taxing Authority in connection with any
Tax.
"Taxing Authority" has the meaning set forth under "Income
Tax."
"10.2 Proviso" has the meaning set forth in Section 10.2.
"Trademark License" means the Trademark License Agreement
substantially in the form of Exhibit 8.7(g).
"Varian Canada" means Varian Canada Inc., an Ontario
corporation.
"Varian Canada Assets" has the meaning specified in subsection
2.4(a).
"Varian Realty" means Varian Realty Inc., a California
corporation, a wholly owned subsidiary of Seller.
1.2 OTHER DEFINED TERMS. In addition to the terms
defined in Section 1.1, certain other terms are defined elsewhere in this
Agreement and, whenever such terms are used in this Agreement, they shall have
their respective defined meanings.
ARTICLE II
PURCHASE AND SALE OF STOCK AND ASSETS;
FORMATION OF EDB SUBSIDIARY
2.1 SALE OF STOCK. Subject to the terms and conditions
herein set forth and in consideration of the payment of the Purchase Price
allocable to the EDB Assets and the assumption by Buyer of the Assumed
Liabilities (other than liabilities of the Foreign Sellers and Varian Canada),
at the Closing Seller shall sell, assign, transfer and deliver to Buyer, and
Buyer shall purchase from Seller, all the issued and outstanding shares of
capital stock of EDB Subsidiary (the "EDB Stock").
2.2 FORMATION OF EDB SUBSIDIARY. Seller shall form a new
wholly owned subsidiary corporation under the laws of the State of Delaware
("EDB Subsidiary"). The capital structure of EDB Subsidiary as of the Closing
shall be as described in Section 5.15. Seller shall own all the issued and
outstanding EDB Stock after such formation and as of the Closing.
2.3 ASSETS TO BE CONTRIBUTED TO EDB SUBSIDIARY. (a) On
the date prior to the Closing Date, Seller shall, and shall cause Varian Realty
to, contribute, convey, assign, transfer and deliver to EDB Subsidiary, and EDB
Subsidiary shall accept and acquire from the Domestic Seller Group, all of the
rights, title and interests of the Domestic Seller Group in and to the assets,
properties, operations and businesses and all other rights and privileges of
every nature, kind and description, whether tangible or intangible (including
goodwill), whether accrued, contingent or otherwise,
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used or held for use primarily (or as otherwise specified in clauses (i) to
(xi) below) in the conduct of the Business as such assets, properties,
operations, businesses, rights and privileges may exist on the date of the
contribution and as of the Closing, and the leasehold and subleasehold estates
to be created in favor of EDB Subsidiary pursuant to the Real Estate Documents
(other than the Excluded Assets, the Varian Canada Assets and the Foreign
Assets) (collectively, the "EDB Assets"), including the following:
(i) the real property described on Schedule
2.3(a)(i) (the "EDB Owned Real Property");
(ii) (1) the leases of and agreements
pertaining to the real property as described on Schedule
2.3(a)(ii)(1), together with all rights and privileges under such
leases and all leasehold improvements or fixtures owned by the
Domestic Seller Group located on the real property subject to such
leases (the "EDB Leased Real Property"), and (2) the leasehold and
subleasehold estates to be created in favor of EDB Subsidiary pursuant
to the Real Estate Documents (the "Newly Created Leaseholds");
(iii) all machinery, equipment, computers,
computer software owned by the Domestic Seller Group, tapes, data
bases, office furniture, furnishings, automobiles, trucks, vehicles,
tools, supplies and parts and other tangible personal property owned
by the Domestic Seller Group which are reflected as assets on the
Closing Balance Sheet or used primarily in the conduct of Business;
(iv) all raw materials and inventories,
including inventories of work in process, stores, supplies and
finished goods, owned by the Domestic Seller Group which are reflected
as assets on the Closing Balance Sheet or used primarily in the
conduct of the Business;
(v) all machinery, equipment, furnishings,
tools, supplies, parts and other tangible personal property (whether
or not attached to real property or considered a fixture or trade
fixtures) owned by the Domestic Seller Group which are located in Salt
Lake City, Utah and are used primarily in the conduct of the Business;
(vi) subject to Section 2.9, all of the
Domestic Seller Group's rights under leases of personal property and
equipment (including deposits held by Seller pursuant thereto) and all
contracts, agreements, arrangements, orders and commitments (including
bids, proposals and other responses to solicitations) relating
primarily to the ownership of the Assets or the conduct of the
Business, including any contracts for the purchase
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of raw materials, contracts for inventory, work-in-process and
goods-in-transit, contracts for services and supplies, contracts or
other arrangements pursuant to which Seller or its Affiliates are
entitled to use certain assets that are owned by a Governmental
Authority or other Person in the conduct of the Business, and any
options to purchase real or personal property;
(vii) subject to the Trademark License and to
joint ownership interests retained pursuant to the Cross-License, all
of the following which are used primarily in the conduct of the
Business or otherwise constitute a part of the technology usable
primarily in or related primarily to the Business (which shall be
deemed to include the items listed on Schedule 2.3(a)(vii)): (1) all
patents, pending patent applications and patent applications in
process but not yet filed, and all pending invention disclosures
throughout the world listed on Schedule 2.3(a)(vii); (2) all
registered trademarks and service marks and applications therefor
throughout the world listed on Schedule 2.3(a)(vii), and any other
unregistered trademarks, service marks, trade names and user names
throughout the world; (3) all copyright registrations and applications
therefor throughout the world listed on Schedule 2.3(a)(vii), and any
other unregistered copyrights; (4) all designs, drawings,
specification sheets, schematics, test data, technical literature,
manufacturing and process information, know-how, trade secrets, in
process research efforts and technical data; and (5) to the extent not
listed on the foregoing Schedule 2.3(a)(vii), any other item listed on
Disclosure Schedule Sections 5.8(a) and 5.8(b) hereto (collectively,
the "Intellectual Property");
(viii) all of the following that pertain to the
conduct of the Business (collectively, the "Books and Records"):
books, records, manuals and other documents, accounting books and
records, files, computer tapes, data bases, advertising matter,
correspondence, mailing lists, lists of customers and suppliers,
distribution lists, photographs, sales and promotional materials and
records, purchasing materials and records, credit records, blueprints,
records, media materials and plates, sales order files and litigation
files, except for personnel records and files, copies of which will be
provided to Buyer to the extent permitted by applicable law, and
except for Books and Records which the Domestic Seller Group is
legally required to retain (which in each case shall be made available
to Buyer for inspection and review as provided in Section 7.5);
provided, however, that Books and Records shall not include Privileged
Documents;
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(ix) all accounts and notes receivable arising
from the conduct of the Business and other assets and properties
reflected on the Closing Balance Sheet;
(x) to the extent their transfer is permitted
by law, all governmental licenses, permits, approvals, license
applications, license amendment applications and product
registrations; and
(xi) the assets listed on Schedule 2.3(a)(xi).
(b) Notwithstanding any other provision of this
Agreement, no Foreign Assets or Varian Canada Assets shall be contributed to
EDB Subsidiary.
2.4 SALE OF VARIAN CANADA ASSETS AND FOREIGN ASSETS. (a)
Subject to the terms and conditions herein set forth and in consideration of
the payment of the portion of the Purchase Price allocable to the Varian Canada
Assets in accordance with subsection 2.8(a) and the assumption by Buyer's
Affiliate of the Assumed Liabilities which are Liabilities of Varian Canada, at
the Closing Seller shall cause Varian Canada to sell, assign, transfer and
deliver to Buyer's Affiliate, and Buyer's Affiliate shall purchase from Varian
Canada, all of the rights, title and interests of Varian Canada in and to the
assets, properties, operations and businesses and all other rights and
privileges of every nature, kind and description, whether tangible or
intangible (including goodwill), whether accrued, contingent or otherwise, used
or held for use primarily in the conduct of the Business by Varian Canada as
such assets, properties, operations, business, rights and privileges may exist
as of the Closing, including all assets that are used or held for use by Varian
Canada primarily in the conduct of the Business and that (i) are reflected as
assets on the Closing Balance Sheet or (ii) fall within a category comparable
to any of the categories enumerated in subsections 2.3(a)(i) through 2.3(a)(x)
above (including by way of example all Owned Real Property located in Canada)
(other than the Excluded Assets and Foreign Assets) (collectively, the "Varian
Canada Assets").
(b) Subject to the terms and conditions herein set forth
and in consideration of the payment of the portion of the Purchase Price
allocable to the Foreign Assets in accordance with subsection 2.8(a) and the
assumption by Buyer's Affiliates of the Assumed Liabilities which are
Liabilities of the Foreign Sellers, at the Closing Seller shall cause the
Foreign Sellers to sell, assign, transfer and deliver to Buyer's Affiliates,
and Buyer's Affiliates shall purchase from the Foreign Sellers, all of the
rights, title and interests of the Foreign Sellers in and to the assets,
properties, operations and businesses and all other rights and privileges of
every nature, kind and description, whether tangible or intangible (including
goodwill), whether accrued, contingent or otherwise, used or held for use
primarily in the conduct of the Business by the Foreign Sellers as such assets,
properties, operations, businesses, rights and privileges may exist as of the
Closing, including all assets that are used or held for use by the
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Foreign Sellers primarily in the conduct of the Business and that (i) are
reflected as assets on the Closing Balance Sheet or (ii) fall within a category
comparable to any of the categories enumerated in subsections 2.3(a)(i) through
2.3(a)(x) above (including by way of example all leases of and agreements
pertaining to Leased Real Property held by the Foreign Sellers and all
leasehold and subleasehold estates to be created in favor of Buyer's Affiliates
pursuant to the Real Estate Documents) (other than the Excluded Assets and the
Varian Canada Assets) (collectively, the "Foreign Assets").
(c) Subject to the terms and conditions herein set forth,
Seller shall cause the Foreign Sellers and Varian Canada to consummate the
transfers of the Foreign Assets and the Varian Canada Assets, respectively, to
Buyer and its Affiliates as provided herein. Subject to the terms and
conditions herein set forth, Buyer shall cause its Affiliates accepting such
Assets to consummate such transfers as provided herein. Seller shall be
responsible for, and shall indemnify Buyer and its Affiliates against, all
Liabilities Buyer and such Affiliates incur and all claims therefor asserted
against Buyer and such Affiliates as a result of any matter arising from such
transfers that relate to or are based upon any fraudulent conveyance claim,
withholding tax claim or other comparable claim asserted under the law of any
jurisdiction, domestic or foreign, pertaining to Seller's allocation or payment
of a portion of the Purchase Price to the Foreign Sellers and Varian Canada.
2.5 DISCLAIMERS. The contribution of the EDB Assets to
EDB Subsidiary required by Section 2.3 and the sale of the Varian Canada Assets
and the Foreign Assets provided by Section 2.4 shall, except as otherwise
expressly provided in this Agreement or the Ancillary Agreements, be without
any representations or warranties of any kind or nature, express or implied, as
to the title to, or the condition, value or quality of, the Assets or the
Business and, except as otherwise expressly provided in this Agreement or the
Ancillary Agreements, Seller SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR
WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR
PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART THEREOF, OR AS TO THE
WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS THEREIN, WHETHER LATENT OR
PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS SHALL BE SO CONTRIBUTED OR SOLD
"AS IS, WHERE IS" AND IN THEIR PRESENT CONDITION. Such contribution or sale,
as the case may be, shall be effected by instruments of conveyance, transfer
and assignment (including grant deeds as to the Owned Real Property located in
California, deeds with quit claim covenants as to the Owned Real Property
located in Massachusetts and Transfer/Deeds as to the Real Property included in
the Varian Canada Assets; assignment and assumption agreements and/or subleases
with respect to leases; assignment and assumption agreements with respect to
contracts and agreements; intellectual property assignments; bills of sale; and
agreements as referenced in subsection 4.2(b)) as Buyer may reasonably request
that are reasonably necessary to vest in (a) EDB Subsidiary all of the rights,
title and interests of Seller in the EDB Assets and,
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subject to the obtaining of any required authorizations, approvals, consents
and waivers to such contribution of the EDB Assets, to put EDB Subsidiary in
full and actual possession, enjoyment and operating control of the Assets; (b)
Buyer or Buyer's Affiliate all of the rights, title and interests of Varian
Canada in the Varian Canada Assets and, subject to the obtaining of any
required authorizations, approvals, consents and waivers to such sale of the
Varian Canada Assets, to put Buyer or such Affiliate in full and actual
possession, enjoyment and operating control of the Varian Canada Assets; and
(c) Buyer or Buyer's Affiliates all of the rights, title and interests of the
Foreign Sellers in the Foreign Assets and, subject to the obtaining of any
required authorizations, approvals, consents and waivers to such sale of the
Foreign Assets, to put Buyer or such Affiliates in full and actual possession,
enjoyment and operating control of the Foreign Assets. All such instruments of
conveyance, transfer and assignment shall not contain any representations or
warranties by, or recourse against, Seller or any of its Affiliates, on the one
hand, or Buyer or any of its Affiliates, on the other, except as expressly
provided in this Agreement and the Ancillary Agreements, and shall be subject
to the same disclaimers as set forth in this Section 2.5.
2.6 EXCLUDED ASSETS. Nothing in this Agreement shall
constitute or be construed as conferring on EDB Subsidiary or Buyer, and
neither EDB Subsidiary nor Buyer shall acquire hereby, any right, title or
interest to or in (a) any cash, cash deposits, other cash equivalent
investments, cash refunds, insurance policies or rights thereunder, security
bonds or deposits (other than deposits held by Seller in connection with leases
of personal property and equipment, which deposits shall be contributed to EDB
Subsidiary), or bank accounts; (b) patents, trademarks, trade names, user
names, service marks, copyrights, know- how or other intellectual property of
Seller or any of its subsidiaries or Affiliates not used primarily in the
conduct of the Business and that does not otherwise constitute a part of the
technology usable primarily in or related primarily to the Business and which
is not listed on Schedule 2.3(a)(vii); (c) for three years after the Closing,
the right to assert a claim for and to collect damages for infringement of the
Intellectual Property by a third Person prior to the Closing, but only to the
extent that Seller has a Retained Liability for, or has an obligation pursuant
to Article X to indemnify Buyer for, a claim of patent infringement made by
such third Person, (d) the Licensed Trademarks (as defined in the Trademark
License); (e) the assets of Varian Canada and the Foreign Sellers which are not
used primarily in the conduct of the Business; (f) without limiting Buyer's
rights pursuant to Section 7.14, the real property and real property
improvements located in Salt Lake City, Utah, as more particularly described in
Schedule 2.6; (g) any refund of Taxes or any claim for a refund of Taxes for
periods before the Closing; (h) the assets and properties related to or used in
the conduct of the Business described in Schedule 2.6; (i) any properties or
assets of Seller or any of its subsidiaries or Affiliates not described in
Sections 2.3 and 2.4, including Seller's Semiconductor Equipment business,
Health Care
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Systems business and Instruments business; (j) other than (1) accounts or notes
receivable, (2) any Asset reflected on the Closing Balance Sheet, (3) rights
described in clause (vi) of Section 2.3 with respect to leases, contracts,
agreements, arrangements, orders and commitments which constitute Assets and
remain executory, and (4) Intellectual Property infringement claims (which are
dealt with separately in clause (c) of this Section 2.6), any claims or rights
against third Persons arising from the ownership of the Assets or the conduct
of the Business before the Closing Date; or (k) any business, operation,
subsidiary or division of Seller other than the Business (collectively, the
"Excluded Assets").
2.7 EDB SUBSIDIARY NOT TO ASSUME ANY LIABILITIES.
Notwithstanding any other provision of this Agreement, EDB Subsidiary shall not
assume any Liabilities of Seller or any of Seller's Affiliates.
2.8 PURCHASE PRICE AND PAYMENT. (a) Subject to the terms
and conditions herein set forth, and in consideration of the sale, assignment,
transfer and delivery to Buyer or its Affiliates of the EDB Stock, the Varian
Canada Assets and the Foreign Assets, (i) Buyer or its Affiliates shall pay to
Seller (acting on behalf of itself and as agent for the Foreign Sellers) and
Varian Canada (or a subsidiary thereof), at the Closing, an aggregate of ONE
HUNDRED NINETY SIX MILLION TWO HUNDRED THOUSAND DOLLARS ($196,200,000) (as
adjusted pursuant to this Section 2.8, the "Purchase Price"); and (ii) Buyer or
its Affiliates shall assume, as of the Closing, the Assumed Liabilities as
provided in Article III. In the event that the Closing Date Book Value,
determined as provided in this Section 2.8, is greater or less than the
Reference Amount, then the Purchase Price set forth in clause (i) shall be
increased or decreased as provided in this Section 2.8. The Purchase Price and
the Purchase Price as adjusted pursuant to this Section 2.8 (including in each
case the Assumed Liabilities) shall be allocated in accordance with Section
11.2. To the extent that the allocation of the Purchase Price, as adjusted,
differs from the allocation of the Purchase Price at the Closing Date,
appropriate adjustments (refunds or additional payments) shall be made.
(b) Within 60 days after the Closing Date (or such longer
period of time as may be reasonably required), Buyer shall prepare and deliver
to Seller a balance sheet of the Business as of the Closing Date (the "Closing
Balance Sheet"). Such Closing Balance Sheet (i) shall be prepared on the same
basis (i.e., including and excluding the same categories of assets and
liabilities) as the Adjusted Balance Sheet attached hereto as Schedule 2.8
(which Adjusted Balance Sheet was derived from the Balance Sheet) and, to the
extent consistent therewith, in accordance in all material respects with GAAP
and, to the extent consistent therewith, Seller's accounting practices and
procedures that were employed in the preparation of the Balance Sheet, (ii)
shall be audited by Buyer's independent certified public accountants, KPMG Peat
Marwick, which audit shall apply the same accounting principles specified in
the preceding clause (i), and
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(iii) shall indicate the Closing Date Book Value, which shall equal the total
assets of the Business (excluding capitalized items reflected on the Closing
Balance Sheet as provided for in the Transitional Services Agreement) as of the
Closing Date minus the total liabilities of the Business as of the Closing Date
as shown on the "As Adjusted" column of the Closing Balance Sheet calculated on
the same basis (i.e., including and excluding the same categories of assets and
liabilities) as the Adjusted Balance Sheet. Buyer shall further instruct KPMG
Peat Marwick to determine and report to Buyer and Seller its calculation of the
Closing Date Book Value and to afford Seller's internal auditors and
independent certified public accountants full access to all non-proprietary
work papers generated in connection with the preparation by Buyer of the
Closing Balance Sheet and to all books, records, information and employees of
Buyer or EDB Subsidiary involved in the preparation of the Closing Balance
Sheet. In connection with the preparation of the Closing Balance Sheet, Seller
shall make available to Buyer such supporting documentation as Buyer may
reasonably request for the purpose of agreeing on the allocation provided for
in Section 11.2.
(c) Such determination of the Closing Date Book Value
shall be final, binding and conclusive on the parties, unless Seller notifies
Buyer in writing (within 60 days after Seller's receipt of KPMG Peat Marwick's
determination of the Closing Date Book Value) that Seller disagrees with the
computation of the Closing Date Book Value by KPMG Peat Marwick, which
notification shall specify in detail the particulars of such disagreement and
Seller's proposed alternative calculation of the Closing Date Book Value.
(d) If, within 30 days after Seller's notification to
Buyer described in clause (c) above, Buyer and Seller are unable to resolve
such disagreement, Buyer and Seller shall submit the disagreement for
resolution by arbitration as provided in Section 14.13. The arbitrators shall
resolve such dispute as promptly as practicable after submission. The
arbitrators' determinations regarding the matters in dispute shall be final,
binding and conclusive on the parties.
(e) On the fourth business day following the completion
and acceptance by the parties of the Closing Balance Sheet or the resolution of
all disputes with respect thereto, either (i) Seller shall pay to Buyer, as a
downward adjustment of the Purchase Price, the amount, if any, by which the
Reference Amount exceeds the Closing Date Book Value, or (ii) Buyer shall pay
to Seller, as an upward adjustment of the Purchase Price, the amount, if any,
by which the Closing Date Book Value exceeds the Reference Amount. Any such
payment (including any interest thereon as provided in the next sentence) shall
be made by wire transfer of immediately available funds to an account
designated by the recipient of such payment. Any such payment shall bear
interest, from the Closing Date until such payment is paid, at the prime rate
announced from time to time by Bank of America, National Trust & Savings
Association.
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2.9 NO ASSIGNMENT IN CERTAIN CIRCUMSTANCES.
Notwithstanding anything else contained in this Agreement to the contrary, this
Agreement shall not constitute an agreement to sell, convey, assign, transfer
or deliver any interest in any instrument, commitment, contract, lease, permit
or other agreement or arrangement or any claim, right or benefit arising
thereunder or resulting therefrom, if a sale, conveyance, assignment, transfer
or delivery or an attempt to make such a sale, conveyance, assignment, transfer
or delivery without the authorization, approval, consent or waiver of a third
Person would constitute a breach or violation thereof or affect adversely the
rights of Buyer, Buyer's Affiliates, EDB Subsidiary, Varian Canada, the Foreign
Sellers or Seller thereunder; and any sale, conveyance, assignment, transfer or
delivery to Buyer, an Affiliate of Buyer or EDB Subsidiary of any interest
under any such instrument, commitment, contract, lease, permit or other
agreement or arrangement that requires the authorization, approval, consent or
waiver of a third Person shall be made subject to such authorization, approval,
consent or waiver being obtained. In the event that any such authorization,
approval, consent or waiver is not obtained on or prior to the Closing Date,
Seller shall, and it shall cause its Affiliates to, continue to use their
commercially reasonable efforts to obtain any such authorization, approval,
consent or waiver until December 31, 1996 (provided that, in obtaining any such
authorization, approval, consent or waiver, Seller shall not, and shall cause
its Affiliates not to, agree to any amendment, modification or supplement of
any such instrument, commitment, contract, lease, permit or other agreement or
arrangement, except with Buyer's consent, which consent shall not be
unreasonably withheld), and Seller (at its cost and expense) shall, and it
shall cause its Affiliates to, to the greatest extent permitted by law and any
such instrument, commitment, contract, lease, permit or other agreement or
arrangement (including by acting as an agent of Buyer, its Affiliates or EDB
Subsidiary), hold such instrument, commitment, contract, lease, permit or other
agreement or arrangement or any claim, right or benefit arising thereunder or
resulting therefrom in trust for the benefit of Buyer, its Affiliates or EDB
Subsidiary or otherwise for the exclusive use and benefit of Buyer, its
Affiliates or EDB Subsidiary such that Buyer, its Affiliates or EDB Subsidiary
receives the interest of Seller in the benefits therefrom until such time as
such authorization, approval, consent or waiver is obtained; provided, however,
that, in connection with the foregoing, Seller shall not be obligated to
commence or prosecute any Action or pay any amount to any third Person, other
than at the sole expense of Buyer or an Affiliate of Buyer.
2.10 CERTAIN ACCOUNTS. Notwithstanding any other
provision of this Agreement, all indebtedness (other than Liabilities created
by this Agreement) and all accounts receivable and accounts payable of the
Business, in each case arising from transactions between the Business or
Seller, on the one hand, and other businesses, operations, subsidiaries or
Affiliates of Seller, on the other, shall be cancelled effective as of the
Closing, and no such indebtedness, accounts receivable or accounts payable
shall be reflected on the Closing Balance Sheet.
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ARTICLE III
ASSUMPTION OF LIABILITIES
3.1 ASSUMPTION OF LIABILITIES. Effective as of the
Closing, Buyer (or its Affiliates, as provided in Section 3.3) shall, without
any further responsibility or liability of or recourse to Seller or any of
Seller's Affiliates, subsidiaries, stockholders, officers, directors,
employees, agents, successors or assigns, absolutely and irrevocably assume,
pay, perform and be liable and responsible for any and all of the following
Liabilities, whether the payment obligation becomes due prior to or on or after
the Closing Date (collectively, the "Assumed Liabilities"):
(a) all Liabilities reflected on the Closing Balance
Sheet, including trade accounts payable, accrued expenses and accrued
liabilities for goods delivered or to be delivered to Seller or its
subsidiaries or Affiliates and for services performed or to be performed for
Seller or its subsidiaries or Affiliates in connection with the Business;
(b) all Liabilities arising out of or in connection with
any attempted or actual product returns (whether due to contract, law,
regulation, Governmental Order or voluntary action by EDB Subsidiary or Buyer)
or any product warranties, whether implied or express, with respect to the
Assets, the Business or any product designed, manufactured or sold by or on
behalf of the Business, including all warranty claims pending as of the
Closing; provided, however, with respect to any Liability arising from Seller's
breach before the Closing of any contract, agreement, purchase order or
commitment of the Business, Buyer's only obligation shall be to repair, replace
or maintain products or components thereof at Seller's sole expense;
(c) all Liabilities for bodily injury or property damage
arising from occurrences after the Closing as a result of any alleged or actual
defects in products designed or manufactured by or on behalf of Seller, any
subsidiary or Affiliate thereof, or the Business or assembled by Seller or any
of its subsidiaries or Affiliates in connection with the Business (including
Liabilities for negligence, failures to warn, and breach of express or implied
warranty); provided, however, that the foregoing Liabilities shall constitute
Assumed Liabilities only to the extent that sales of the products involved are
shipped from and after the Closing;
(d) all Liabilities arising from or related to all
unperformed or unmatured obligations and covenants of all contracts,
agreements, arrangements, orders, leases, licenses, permits, purchase orders
and commitments included in the Assets;
(e) all Liabilities otherwise expressly undertaken by
Buyer pursuant to this Agreement or with respect to which Buyer either has
released or agreed to indemnify the Seller Indemnified Parties pursuant to
Article X; and
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(f) the obligations of Buyer or any of its Affiliates
with respect to Taxes as and to the extent provided in Article XI.
3.2 RETAINED LIABILITIES. Except as provided in Section
3.1, Buyer and its Affiliates shall not assume and shall not be responsible
for, and there shall not be transferred to Buyer, any of its Affiliates or EDB
Subsidiary, any Liabilities of Seller and its Affiliates arising from the
operations, activities or transactions of the Business up through and including
the Closing Date or any other operations, activities or transactions of Seller
and its Affiliates at any time, all of which Liabilities shall be and remain
the sole responsibility of Seller and its Affiliates, including all of the
following (collectively, all of the Liabilities described in this Section 3.2
being referred to as the "Retained Liabilities"):
(a) any Liabilities arising out of the Actions listed on
Disclosure Schedule Section 5.9, other than any Assumed Liability consisting of
a product warranty claim specifically set forth and identified as such in
Disclosure Schedule Section 5.9;
(b) any Liability that, in accordance with GAAP, should
have been reflected on the Closing Balance Sheet and was not so reflected;
(c) any Seller Indemnified Environmental Claim;
(d) all Liabilities arising from Governmental Claims
arising from the conduct of the Business on or before the Closing Date (other
than Buyer's obligation to repair, replace or maintain products or components
thereof at Buyer's sole expense as and to the extent provided in subsection
3.1(b));
(e) all Liabilities arising from Seller's breach before
the Closing of any contract, agreement, purchase order, lease, license or
commitment included in the Assets (other than Buyer's obligation to repair,
replace or maintain products or components thereof at Buyer's sole expense as
and to the extent provided in subsection 3.1(b));
(f) any Liability associated with employee health or
safety to the extent relating to the period up to and including the Closing
Date;
(g) with respect to leases of real property and other
contracts, agreements, purchase orders, leases, licenses and commitments
included in the Assets, any Liability of Seller or its Affiliates arising
thereunder up to and including the Closing Date, whether or not such real
property lease, contract, agreement, purchase order, lease, license or
commitment is assumed by Buyer or its Affiliates in connection with the
contribution of such Assets to EDB Subsidiary or the assignment thereof to
Buyer or its Affiliates (regardless of any contrary provisions in any
instrument of assumption or conveyance);
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(h) the obligations of Seller or any of its Affiliates
with respect to Taxes as and to the extent provided in Article XI;
(i) with respect to any account receivable that is
included in the Assets and is owing from any Governmental Authority, any
reduction or offset thereof claimed or asserted by such Governmental Authority;
(j) any Liability imposed upon or incurred by Buyer or
its Affiliates by operation of any applicable law or Governmental Order which
Liability, if not for the operation of such law or Governmental Order, would
have been a Retained Liability;
(k) any Liability of Varian Canada or any Foreign Seller
that, if it had been a direct Liability of Seller, would have constituted a
Retained Liability; and
(l) any Liability of Seller's Affiliates (including
Varian Canada and the Foreign Sellers, but from and after the Closing Date
excluding EDB Subsidiary) under any of the Ancillary Agreements, whether such
Liability arises before, on or after the Closing Date.
3.3 LIABILITIES OF SUBSIDIARIES OF SELLER. Buyer
acknowledges that certain of the Assumed Liabilities are Liabilities of the
Foreign Sellers and Varian Canada. Accordingly, at the Closing and in
consideration of the transfer of the Foreign Assets and the Varian Canada
Assets to Buyer and its Affiliates, Buyer and the respective Affiliates of
Buyer acquiring particular Assets shall assume the Assumed Liabilities
associated with such Assets from the applicable Foreign Sellers or Varian
Canada, as the case may be, on the same terms as the Assumed Liabilities
assumed by Buyer from Seller pursuant to Section 3.1. The foregoing
notwithstanding, Buyer shall cause EDB Subsidiary to be responsible for its
Assumed Liabilities and for the satisfaction and performance of all other
Assumed Liabilities.
ARTICLE IV
CLOSING
4.1 CLOSING. Subject to the fulfillment or waiver of the
conditions precedent set forth in Articles VIII and IX, the consummation of the
purchase and sale of the EDB Stock, the Varian Canada Assets and the Foreign
Assets (the "Closing") shall take place at Seller's principal executive offices
located at 3050 Hansen Way, Palo Alto, California, at 7:00 a.m., local time, on
the later of July 28, 1995, or such later date when all conditions to the
obligations of Buyer and Seller hereunder have been fulfilled, satisfied or
waived. The date and time of the Closing are referred to herein as the
"Closing Date."
4.2 SELLER OBLIGATIONS AT CLOSING. At the Closing,
Seller shall deliver or cause to be delivered to Buyer:
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(a) A certificate representing the EDB Stock, duly
endorsed in blank for transfer or accompanied by duly executed stock powers
assigning the EDB Stock in blank;
(b) All bills of sale and other instruments of
conveyance, transfer and assignment (in recordable form with respect to real
property interests) and agreements, other than estoppel certificates, as Buyer
may reasonably request that are reasonably necessary to vest in EDB Subsidiary
all of the rights, title and interests of the Domestic Seller Group in the EDB
Assets and in Buyer or its Affiliates all of the rights, title and interests of
the Foreign Sellers and Varian Canada in the Foreign Assets and the Varian
Canada Assets, free and clear of all Encumbrances, other than Permitted Liens,
and to reflect the allocation provided for in Section 11.2;
(c) The opinions of counsel to Seller referred to in
Section 8.5;
(d) Certificates of duly authorized officers of Seller,
dated the Closing Date, certifying as to the matters set forth in Section 8.6;
(e) The Ancillary Agreements, duly executed by Seller or
its Affiliates;
(f) Resignations effective as of the Closing of all the
officers and directors of EDB Subsidiary; and
(g) The Charter and Bylaws, as amended to date, minute
books, stock transfer books and corporate seal of EDB Subsidiary.
4.3 BUYER OBLIGATIONS AT CLOSING. At the Closing, Buyer
(on behalf of itself and/or its Affiliates) shall deliver or cause to be
delivered:
(a) (x) To Seller (acting on behalf of itself and as
agent for the Foreign Sellers), the Purchase Price (other than the portion
allocable to the Varian Canada Assets in accordance with Section 2.8(a)), by
wire transfer of immediately available funds to Seller's account at Bank of
America National Trust and Savings Association, San Francisco Main Branch
(Account No. 12338-51938; ABA transit routing number 121000758), and (y) to
Varian Canada (or a subsidiary thereof), the portion of the Purchase Price
allocable to the Varian Canada Assets in accordance with Section 2.8(a), by
wire transfer of immediately available funds to Varian Canada's account as
designated by Varian Canada two business days before the Closing;
(b) The opinion of Irell & Manella, counsel to Buyer,
referred to in Section 9.5;
(c) Certificates of duly authorized officers of Buyer,
dated the Closing Date, certifying as to the matters set forth in Section 9.6;
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(d) The Ancillary Agreements, duly executed by Buyer or
EDB Subsidiary, as the case may be; and
(e) Such instruments as are reasonably necessary to
evidence the assumption by Buyer and its Affiliates of the Assumed Liabilities
as and to the extent provided in this Agreement.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
OF SELLER
Seller represents and warrants to Buyer as follows:
5.1 ORGANIZATION. (a) Seller is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has full corporate power and authority to own the Assets owned by
it and conduct the Business as and where it is being conducted.
(b) Each Foreign Seller and Varian Canada is a
corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation and has full corporate power and
authority to own its assets and properties and to conduct its business as and
where it is being conducted.
(c) From the date of its formation through the Closing
Date, EDB Subsidiary will be a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware and have full
corporate power and authority to own the Assets contributed to it pursuant to
this Agreement and to conduct the Business as and where it is being conducted.
5.2 AUTHORIZATION. (a) Seller has full corporate power
and authority to enter into this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby (i) have been duly authorized
by all necessary corporate action on the part of Seller and (ii) do not require
approval of Seller's shareholders. This Agreement has been duly executed and
delivered by Seller. This Agreement constitutes, and upon the execution and
delivery thereof by Seller each Ancillary Agreement will constitute, a legal,
valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms, except as the enforceability thereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and general principles
of equity (regardless of whether enforceability is considered in a proceeding
at law or in equity).
(b) Each of EDB Subsidiary, the Foreign Sellers and
Varian Canada will have full corporate power and authority to enter into the
Ancillary Agreements to which it will be a party and to consummate the
transactions contemplated thereby. The execution
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and delivery of such Ancillary Agreements and the consummation of the
transactions contemplated thereby will have been duly authorized by all
necessary corporate action on the part of each of EDB Subsidiary, the Foreign
Sellers and Varian Canada. When executed and delivered by EDB Subsidiary, each
such Ancillary Agreement will constitute a legal, valid and binding obligation
of EDB Subsidiary, enforceable against EDB Subsidiary in accordance with its
terms, except as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity).
(c) Except (i) for compliance with the notification
filing and waiting period requirements of the HSR Act, (ii) as provided under
41 U.S.C. Section 15 or 31 U.S.C. Section 3727 and (iii) as otherwise set
forth in Disclosure Schedule Section 5.2(c), no consent, waiver, approval,
order or authorization of, notice to, or registration, declaration,
designation, qualification or filing with, any Governmental Authority or third
Person, domestic or foreign, is or has been or will be required on the part of
the Seller Group in connection with the execution and delivery of this
Agreement or any Ancillary Agreement or the consummation by them of the
transactions contemplated hereby or thereby, other than where the failure to
obtain such consents, waivers, approvals, orders or authorizations or to make
or effect such registrations, declarations, designations, qualifications or
filings does not have an Adverse Effect; provided, however, that no
representation or warranty is made as to any such action with respect to any
contract, agreement, arrangement, purchase order, commitment, Environmental
Permit, other permit, license, order, approval or authorization other than
those listed in Disclosure Schedule Sections 5.11(c), 5.12 and 5.14(b).
(d) Except (i) for compliance with the notification
filing and waiting period requirements of the HSR Act, (ii) as provided under
41 U.S.C. Section 15 or 31 U.S.C. Section 3727 and (iii) as otherwise set
forth in Disclosure Schedule Section 5.2(c), no consent, waiver, approval,
order or authorization of, notice to, or registration, declaration,
designation, qualification or filing with, any Governmental Authority or third
Person, domestic or foreign, is or has been or will be required on the part of
EDB Subsidiary in connection with the execution and delivery of any Ancillary
Agreement to which EDB Subsidiary will be a party or the consummation by EDB
Subsidiary of the transactions contemplated thereby, other than where the
failure to obtain such consents, waivers, approvals, orders or authorizations
or to make or effect such registrations, declarations, designations,
qualifications or filings does not have an Adverse Effect; provided, however,
that no representation or warranty is made as to any such action with respect
to any contract, agreement, arrangement, purchase order, commitment,
Environmental Permit, other permit, license, order, approval or authorization
other than those listed in Disclosure Schedule Sections 5.11(c), 5.12 and
5.14(b).
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5.3 NON-CONTRAVENTION. (a) Neither the execution and
delivery of this Agreement or any Ancillary Agreement, nor the consummation of
the transactions contemplated hereby or thereby, will violate or conflict with
or provide a right of termination to any Person under (i) any provision of the
Charters or Bylaws of any member of the Seller Group, (ii) in any material
respect any law, rule, regulation or Governmental Order to which the Seller
Group or the Business and the Assets are bound or subject or (iii) any
agreement, indenture, undertaking, permit, license or other instrument to which
the Seller Group is a party or by which any of them or any of their properties
may be bound or affected, except for contracts as to which a consent to
assignment reasonably satisfactory in form and substance to Buyer is obtained
and delivered to Buyer prior to or at the Closing, other than (x) the
requirements of any applicable bulk sales or bulk transfer laws or as provided
under 41 U.S.C. Section 15 or 31 U.S.C. Section 3727, (y) as set forth in
Disclosure Schedule Section 5.3 or (z) such violations and conflicts referred
to in clauses (ii) and (iii) which do not have an Adverse Effect; provided,
however, that no representation or warranty is made as to any such violation,
conflict or right with respect to any contract, agreement, arrangement,
purchase order, commitment, Environmental Permit, other permit, license, order,
approval or authorization other than those listed in Disclosure Schedule
Sections 5.11(c), 5.12 and 5.14(b).
(b) Neither the execution and delivery of any Ancillary
Agreement to which EDB Subsidiary will be a party, nor the consummation of the
transactions contemplated hereby or thereby, will violate or conflict with or
provide a right of termination to any Person under (i) any provision of EDB
Subsidiary's Charter or Bylaws, (ii) in any material respect any law, rule,
regulation or Governmental Order to which EDB Subsidiary or the Business and
the EDB Assets are bound or subject or (iii) any agreement, indenture,
undertaking, permit, license or other instrument to which EDB Subsidiary is a
party or by which it or any of its properties may be bound or affected, except
for contracts as to which a consent to assignment reasonably satisfactory in
form and substance to Buyer is obtained and delivered to Buyer prior to or at
the Closing, other than (x) the requirements of any applicable bulk sales or
bulk transfer laws or as provided under 41 U.S.C. Section 15 or 31 U.S.C.
Section 3727, (y) as set forth in Disclosure Schedule Section 5.3 or (z) such
violations and conflicts referred to in clauses (ii) and (iii) which do not
have an Adverse Effect; provided, however, that no representation or warranty
is made as to any such violation, conflict or right with respect to any
contract, agreement, arrangement, purchase order, commitment, Environmental
Permit, other permit, license, order, approval or authorization other than
those listed in Disclosure Schedule Sections 5.11(c), 5.12 and 5.14(b).
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5.4 FINANCIAL STATEMENTS. Disclosure Schedule Section
5.4(a) sets forth the audited balance sheets for the Business as at October 2,
1992, October 1, 1993, September 30, 1994 and March 31, 1995 and the audited
statements of operations and cash flows of the Business for each of the fiscal
years in the period ended September 30, 1994, October 1, 1993 and October 2,
1992 and the six-month period ended March 31, 1995 (including the notes
thereto, collectively, the "Financial Statements"). Except as set forth in
Disclosure Schedule Section 5.4(b), the Financial Statements have been prepared
in accordance, in all material respects, with GAAP and, to the extent
consistent therewith, Seller's accounting practices and procedures. Except as
set forth in Disclosure Schedule Section 5.4(a), such balance sheets present
fairly in all material respects in accordance with GAAP the financial condition
of the Business as at their respective dates and the statements of operations
included in the Financial Statements present fairly in all material respects in
accordance with GAAP the results of operations of the Business for the periods
covered thereby. Seller's accounting practices applicable to the Business are
described in Disclosure Schedule Section 5.4(b). Such balance sheets, as at
their respective dates, include all provisions for liabilities, obligations and
commitments which, in accordance in all material respects with GAAP, are
required to have been accrued or otherwise provided for. The books and records
of Seller from which the Financial Statements were prepared were complete and
accurate in all material respects at the time of such preparation. Seller
maintains a system of internal accounting controls sufficient to provide
reasonable assurance that (a) material transactions are executed in accordance
with management's general or specific authorization; (b) material transactions
are recorded as necessary to permit preparation of financial statements in
conformity, in all material respects, with GAAP and to maintain accountability
for material assets; (c) access to material assets is permitted only in
accordance with management's general or specific authorization; and (d) the
recorded accountability for material assets is compared with the existing
material assets at reasonable intervals and appropriate action is taken with
respect to any material differences. Except to the extent a reserve included
in the Balance Sheet has not been accrued or otherwise provided for in
accordance in all material respects with GAAP and except for any reserve
omitted therefrom which should have been so included in accordance in all
material respects with GAAP, Seller makes no additional representation or
warranty as to the adequacy of the reserves included in the Balance Sheet.
5.5 ABSENCE OF CERTAIN CHANGES. Except as described in
Disclosure Schedule Section 5.5, since the date of the audited balance sheet as
at March 31, 1995 included in the Financial Statements (the "Balance Sheet"):
(a) except to the extent reflected in the Closing Balance
Sheet and as an adjustment of the Purchase Price pursuant to Section 2.8, there
has not been any change in the financial condition or results of operations of
the Business taken as whole, other than any change due to an event or
development generally
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affecting the industries in which the Business operates, which has an Adverse
Effect;
(b) except as reflected in the Closing Balance Sheet as
an adjustment of the Purchase Price pursuant to Section 2.8, the Seller Group
has not suffered any damage, destruction or other casualty affecting the
Business which has an Adverse Effect;
(c) except as reflected in the Closing Balance Sheet as
an adjustment of the Purchase Price pursuant to Section 2.8, the Seller Group
has not incurred, assumed or become subject to, with respect to the Business or
the Assets, whether directly or by way of guarantee or otherwise, any Liability
in excess of $2,000,000, including indebtedness for money borrowed or purchase
money indebtedness, except for obligations incurred in the ordinary course of
business and consistent with past practice (including purchase money
indebtedness);
(d) the Seller Group has not made any change in the
compensation levels of the executives of the Business, any changes in the
manner in which other employees of the Business are compensated, or any
provision of additional or supplemental benefits for employees of the Business
other than normal periodic increases or promotions effected in the ordinary
course of business and consistent with past practice;
(e) the Business has been operated in its usual, regular
and ordinary manner, substantially in the same manner heretofore conducted; and
(f) the Seller Group has not agreed, whether in writing
or otherwise, to take any action described in this Section 5.5.
5.6 TITLE TO ASSETS AND STOCK. (a) Except as described
in Disclosure Schedule Section 5.6, except for the Intellectual Property
(covered separately in Section 5.8), except for assets or properties held under
lease and except for the Excluded Assets and the Real Property, as to which
Seller makes no representation or warranty in this Section 5.6, (i) Seller and
its Affiliates have (until contributed to EDB Subsidiary pursuant to Section
2.3), and as of the Closing Date EDB Subsidiary will have, good and marketable
title to all of the EDB Assets, free and clear of any Encumbrances, other than
Permitted Liens; (ii) Varian Canada has good and marketable title to all of the
Varian Canada Assets, free and clear of any Encumbrances, other than Permitted
Liens; and (iii) each Foreign Seller has good and marketable title to the
Foreign Assets owned by it, free and clear of any Encumbrances, other than
Permitted Liens. At the Closing, (1) Varian Canada will transfer to Buyer or
its Affiliate all of the rights, title and interests of Varian Canada in the
Varian Canada Assets, free and clear of any Encumbrances, other than Permitted
Liens, and (2) the Foreign Sellers will transfer to Buyer or its Affiliates all
of the rights, title and interests of the Foreign Sellers in the Foreign
Assets, free and clear of any Encumbrances.
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(b) From the date of the formation of EDB Subsidiary
through the Closing Date, all of the issued and outstanding shares of capital
stock of EDB Subsidiary will be owned by Seller, free and clear of any
Encumbrances. Assuming that Buyer pays to Seller the Purchase Price and that
Buyer has no notice of any adverse claim, the delivery of the EDB Stock to
Buyer as provided in this Agreement will transfer to Buyer good title thereto,
free and clear of any Encumbrances.
(c) The Assets include all of the assets and properties
used or held for use primarily in the conduct of the Business as of the
Agreement Date, other than the Excluded Assets and Assets disposed of since the
Agreement Date as permitted by this Agreement, so as to permit (assuming
performance of the Ancillary Agreements and receipt of all authorizations,
approvals, orders, consents and waivers necessary to consummate the
transactions contemplated hereby or otherwise required to conduct the Business)
the conduct of the Business by Buyer and its subsidiaries and Affiliates
immediately after the Closing Date in substantially the same manner and
substantially to the same extent that the Business was being conducted as of
the Agreement Date.
5.7 REAL PROPERTY. (a) Disclosure Schedule Section
5.7(a) lists all of the real property owned by the Seller Group as of the
Agreement Date and used primarily in the conduct of the Business. As of the
Agreement Date: (i) no member of the Seller Group has conveyed or agreed to
convey (except as contemplated by this Agreement) its estate in the Owned Real
Property, or any right, title, or interest therein, to any Person, except for
Permitted Liens; and (ii) the estate of the Seller Group in the Owned Real
Property is free from any Encumbrance, except for Permitted Liens. As of the
Closing Date: (i) EDB Subsidiary shall not have conveyed its estate in the EDB
Owned Real Property, or any right, title, or interest therein, to any Person
except for Permitted Liens; and (ii) EDB Subsidiary's estate in the EDB Owned
Real Property shall be free from any Encumbrance, except for Permitted Liens.
(b) Disclosure Schedule Section 5.7(b) contains an
accurate and complete list of all real property leased or subleased by the
Seller Group as of the Agreement Date and used primarily in the conduct of the
Business. As of the Agreement Date, all leases and subleases of the Leased
Real Property (i) are valid and binding obligations of the Seller Group listed
as lessees in Disclosure Schedule Section 5.7(b) (for purposes of this Section
5.7, the "Applicable Lessee"), and to Seller's knowledge the other parties
thereto, enforceable against the Applicable Lessee, as appropriate, and to
Seller's knowledge the other parties thereto, in accordance with their terms,
except as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the enforcement of
creditors' rights generally and general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity), and
are in full force and effect, and (ii) originals or copies of which that were
true and complete as of the date provided have been
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delivered to Buyer (in accordance with the terms of the Confidentiality
Agreement) for review. As of the Closing Date, all such leases and subleases
of the EDB Leased Real Property will have been contributed by the Applicable
Lessee to EDB Subsidiary and will be valid and binding obligations of EDB
Subsidiary and, to Seller's knowledge the other parties thereto, enforceable
against EDB Subsidiary and, to Seller's knowledge the other parties thereto, in
accordance with their terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity), and will be in full force and effect. As of
the Agreement Date: (i) the Applicable Lessee has not conveyed or agreed to
convey (except as contemplated by this Agreement) its estate in the Leased Real
Property, or any right, title, or interest therein, to any Person, except for
Permitted Liens; and (ii) the Applicable Lessee's estates in the Leased Real
Property are free from any Encumbrance, except for Permitted Liens. As of the
Closing Date: (i) EDB Subsidiary shall not have conveyed its estate in the EDB
Leased Real Property, or any right, title, or interest therein, to any Person
except for Permitted Liens; and (ii) EDB Subsidiary's estate in the EDB Leased
Real Property shall be free from any Encumbrance, except for Permitted Liens.
5.8 INTELLECTUAL PROPERTY. Disclosure Schedule Sections
5.8(a) and 5.8(b) contain an accurate and complete list, except for
intellectual property included in the Excluded Assets, of all (a) patents,
pending patent applications, patent applications in process but not yet filed,
and pending invention disclosures, all registered trademarks and service marks
and applications therefor, and all copyright registrations and applications
therefor throughout the world, used primarily by Seller and its subsidiaries as
of the Agreement Date in the conduct of the Business or that otherwise
constitute a part of the technology primarily usable in or related primarily to
the Business, (b) written licenses relating to patents, trademarks, trade
secrets and other know-how which are material to the conduct of the Business
and are used primarily therein by Seller and its subsidiaries as of the
Agreement Date or that otherwise constitute a part of the technology primarily
usable in or related primarily to the Business as of the Agreement Date, and
(c) manufacturing, process, and other technology transfer and license
agreements which are material and appropriate to the conduct of the Business in
the manner conducted as of the Agreement Date. As of the Agreement Date,
Seller and its subsidiaries own or have the right to use, sell, license or
dispose of all such Intellectual Property. As of the Closing Date, EDB
Subsidiary will own or have the right to use, sell, license or dispose of all
such Intellectual Property included in the EDB Assets free and clear of any
Encumbrance of any Person (other than Permitted Liens, claims constituting
Assumed Liabilities, any license or agreement listed in the Disclosure Schedule
or otherwise as disclosed in this Agreement) and other than as provided in the
Ancillary Agreements. To the knowledge of Seller, the use of any such
Intellectual Property in the conduct of
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the Business does not violate any license agreement between Seller and any
third Person. With respect to such Intellectual Property, to the knowledge of
Seller, Seller has not been notified in writing by any Person of any alleged
infringement on the rights of any third Person. Except as set forth in
Disclosure Schedule Section 5.9, there is no pending Action of which Seller has
received formal written notice or, to the knowledge of Seller, threatened
Action contesting the validity, ownership or right to use, sell, license or
dispose of any Intellectual Property used in the Business.
5.9 LITIGATION; LEGAL MATTERS. Except as listed on
Disclosure Schedule Section 5.9, there is no pending Action of which Seller has
received formal written notice or, to the knowledge of Seller, threatened
Action against Seller or any of its Affiliates which relates to the Business or
the Assets, whether at law or in equity, or before or by any Governmental
Authority, nor is there any Governmental Order to which Seller or any of its
Affiliates or any of their properties or assets are subject or bound which
relates to the Business (other than any Governmental Order that may be
applicable generally to the industry in which the Business operates). To the
knowledge of Seller and except with respect to the matters covered by Sections
5.10 and 5.11, the Business is being conducted as of the Agreement Date, and
will be conducted through the Closing Date, in compliance in all material
respects with all applicable laws, rules, regulations and Governmental Orders,
except where the failure to so comply would constitute a Retained Liability.
Except as listed on Disclosure Schedule Section 5.9, to the knowledge of
Seller, there is no Action by any contractor to any Governmental Authority, or
any subcontractor to such contractor, pending or threatened against Seller or
any of its Affiliates which relates to the Business or the Assets.
5.10 EMPLOYEE BENEFIT PLANS. (a) Disclosure Schedule
Section 5.10(a) contains an accurate and complete list of all employment
contracts, severance agreements, consulting agreements or other employee
agreements and all retirement, profit-sharing, 401(k), bonus, incentive or
deferred compensation and stock option plans or arrangements, and all
termination pay, medical, dental, life insurance, disability, paid personal
leave, vacation pay or other employee benefit plans, programs or policies
maintained by Seller and its Affiliates providing for compensation or benefits
for individuals who are currently employees of the Business (a "Plan"). With
respect to each Plan, Seller has heretofore delivered to Buyer complete copies
of each of the following documents (if applicable): (i) the Plan (as amended),
(ii) the latest annual report for the Plan, (iii) the latest summary plan
description (as amended), (iv) the trust for the Plan, and (v) the latest
Internal Revenue Service ("IRS") determination letter regarding the Plan's
qualification under Section 401(a) of the Code. With respect to each Plan
intended to qualify under Section 401(a) of the Code, Seller has received a
favorable determination letter regarding the Plan's qualification, or within
the applicable remedial amendment period under such Section 401(b), Seller has
applied or will apply for such a determination letter. Seller will
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make all changes to the Plan necessary to obtain such letter. Each Plan's
administration is in substantial compliance with its terms and applicable law,
and to the knowledge of Seller, there are no pending or threatened claims which
would have a material adverse effect on any Plan. To the knowledge of Seller,
neither Seller nor any of its Affiliates has engaged in any prohibited
transaction or breached any fiduciary duty under the Employee Retirement Income
Security Act of 1974, as amended ("ERISA"), or the Pension Benefits Act
(Ontario), with respect to any Plan, and no "reportable event" (as defined in
Section 4043(b) of ERISA) has occurred for which the 30-day notice requirement
of the Pension Benefit Guaranty Corporation has not been waived. No Plan is a
"multiemployer plan" (as defined in Section 401(a)(3) of ERISA or the Pension
Benefits Act) or a "multiple employer plan" (within the meaning of Section
413(c) of the Code). Neither Seller nor any entity required to be taken into
account with Seller under the provisions of Sections 414(b), (c), (m), or (o)
of the Code shall as of the Closing Date have incurred any unsatisfied
liability to the Pension Benefit Guaranty Corporation, any multiemployer
pension plan (as defined in Section 414(f) of the Code), the Service or any
other Person under Title IV of ERISA, Section 4980B of the Code or Part 6 of
Title I of ERISA. Except as listed in Disclosure Schedule Section 5.10(a), to
the knowledge of Seller, neither Seller nor any Affiliate of Seller has
represented to any Employee that such Employee is or may become entitled to
medical benefit coverage after such Employee's retirement or termination of
service with Seller or any Affiliate thereof, except as may be required under
Part 6 of Title I of ERISA or any other law, rule, regulation or Governmental
Order.
(b) Seller has heretofore delivered to Buyer (i) a copy
of the annual information return filed in respect of the Old Ontario Plan (as
defined in subsection 12.2(b)) with Revenue Canada and the Pension Commission
of Ontario for each of the last three years, and (ii) the most recent letter
confirming registration of the Old Ontario Plan pursuant to the Income Tax Act
(Canada) and the Pension Benefits Act (Ontario) and a copy of the old Ontario
Plan and related trust agreements. All required employer contributions have
been made to the Old Ontario Plan in accordance with the Pension Benefits Act
(Ontario). All employee contributions to the Old Ontario Plan have been
properly withheld and have been fully paid into the funding arrangements for
the Old Ontario Plan in accordance with the Pension Benefits Act (Ontario).
There has been no withdrawal by Varian Canada of assets from the Old Ontario
Plan and no application for approval of a withdrawal of assets has been made to
Revenue Canada or the Pension Commission of Ontario. No employee benefit plan
of Varian Canada provides as of the Agreement Date a defined benefit to pension
members.
5.11 ENVIRONMENTAL MATTERS. Except as listed in
Disclosure Schedule Section 5.11(a), to the knowledge of Seller, the Seller
Group, the Assets and the Business are not in material violation of any
Environmental Law or Environmental Permit arising out of their ownership, use
or operation (at any time) of the Assets or operation (at any time) of the
Business. Except as
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listed in Disclosure Schedule Section 5.11(b), there are no pending Actions of
which Seller has received formal written notice or, to Seller's knowledge,
threatened or actual Actions with respect to the Business' compliance with
Environmental Laws. Except as noted in Disclosure Schedule Section 5.11(c), as
of the Agreement Date, the Seller Group has in full force and effect all
Environmental Permits required by Environmental Laws for the conduct of the
Business by the Seller Group as of the Agreement Date (other than any
Environmental Permit the absence of which does not have an Adverse Effect), all
of which are also listed in Disclosure Schedule Section 5.11(c). Except as
listed in Disclosure Schedule Section 5.11(d): to Seller's knowledge, no member
of the Seller Group has disposed of, transported or arranged for the disposal
of any Hazardous Material at any site listed or proposed for listing on the
National Priorities List or any similar state list; and, to Seller's knowledge,
no member of the Seller Group has received any formal notice that it is a
responsible party or potentially responsible party under CERCLA or comparable
formal notice under any similar Environmental Law.
5.12 CONTRACTS AND COMMITMENTS. (a) Disclosure Schedule
Section 5.12 contains an accurate and complete list of each contract,
agreement, arrangement, purchase order or commitment (including all amendments
and modifications thereto), complete and correct copies of which have been made
available to Buyer, relating primarily to the ownership of the Assets or the
conduct of the Business to which any member of the Seller Group is, as of the
Agreement Date, bound and which (i) requires total payments to or from Seller
or any subsidiary thereof of at least $1,000,000 annually (whether in a lump
sum or in installments), (ii) were entered into, or arose, outside of the
ordinary course of business and are material to the conduct of the Business,
(iii) are contracts or commitments currently affecting ownership of, title to,
use of, or any interest in, the Real Property, (iv) are intangible property
licensing agreements or other agreements or commitments with respect to the
Intellectual Property material and appropriate to the conduct of the Business,
(v) constitute collective bargaining agreements or other contracts or
commitments to or with any labor unions or other employee representatives or
groups of employees in the Business or (vi) relate to purchase money
indebtedness or capital lease obligations in an amount in excess of $500,000
that constitute or will constitute an Assumed Liability (collectively, the
"Commitments").
(b) Assuming that all consents, novations, waivers,
approvals, orders, authorizations, notices, registrations, declarations,
designations, qualifications or filings required by the terms of the
Commitments and all applicable laws, regulations and Governmental Orders with
respect to the execution and delivery of this Agreement and the Ancillary
Agreements and the consummation of the transactions contemplated hereby or
thereby have been obtained, received, made or effected:
(i) As of the Agreement Date, each
Commitment is a legal, valid and binding obligation of a member of the
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Seller Group, enforceable against it in accordance with its terms and,
to the knowledge of Seller, the other party or parties thereto in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally
and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity);
(ii) As of the Closing Date, each
Commitment included in the EDB Assets will be a legal, valid and
binding obligation of EDB Subsidiary, enforceable against EDB
Subsidiary in accordance with its terms and, to the knowledge of
Seller, the other party or parties thereto in accordance with its
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and
general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
(iii) As of the Agreement Date, (1) the
Seller Group has performed all material obligations required pursuant
to each of the Commitments to have been performed by them before the
Agreement Date, and Seller has no reason to believe that the Seller
Group will not be able to fulfill, when due, all of their material
obligations under each such Commitment which remain to be performed
after the Agreement Date, and (2) there has not occurred any material
default under any such Commitment on the part of the Seller Group or,
to the knowledge of Seller, on the part of any other party thereto,
nor has any event occurred which with the giving of notice or the
lapse of time, or both, would constitute a material default on the
part of a member of the Seller Group under such Commitment nor, to the
knowledge of Seller, has any event occurred which with the giving of
notice or lapse of time, or both, would constitute a material default
on the part of any other party to such Commitment; and
(iv) As of the Closing Date, (1) the
Seller Group and EDB Subsidiary will have performed all material
obligations required pursuant to each Commitment to be performed by
them before the Closing Date, and as of the Closing Date, to the
knowledge of Seller, Seller will have no reason to believe that EDB
Subsidiary will not be able to fulfill, when due, all of its material
obligations under each such Commitment included in the EDB Assets
which remain to be performed by it after the Closing Date, and (2)
there will not have occurred any material default under any such
Commitment included in the EDB Assets on the part of Seller or EDB
Subsidiary or, to the knowledge of Seller as of the Closing Date, on
the part of any other party thereto, nor will any event have occurred
which with the giving of notice or lapse of time, or both, would
constitute a material default on the
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part of Seller under such Commitment included in the EDB Assets nor to
the knowledge of the Seller as of the Closing Date, will any event
have occurred which with the giving of notice or lapse of time, or
both, would constitute a material default on the part of any other
party to such Commitment included in the EDB Assets.
(c) As of the Closing Date, Disclosure Schedule Section
5.12 will be updated by Seller to reflect the Commitments of Seller and its
Affiliates in effect as of the Closing Date.
5.13 TAX MATTERS. (a) EDB Subsidiary was formed for
purposes of the transactions contemplated by this Agreement and no Tax Returns
have been required to be filed by it up to and including the Closing Date.
(b) Except as set forth in Disclosure Schedule Section
5.13(b), neither EDB Subsidiary nor the Assets is subject to any joint venture,
partnership or other arrangement or contract which is treated by Seller as a
partnership for federal income tax purposes, or to the knowledge of Seller,
treated by any other party thereto as a partnership for federal income tax
purposes.
5.14 PERMITS AND OTHER OPERATING RIGHTS. Except as set
forth in Disclosure Schedule Section 5.14(a) and except with respect to
Environmental Permits (which are covered separately in Section 5.11), the
Seller Group possesses as of the Agreement Date all material permits, licenses,
orders, approvals and authorizations then required by applicable law, statute,
regulation, Governmental Order or by the property and contract rights of third
Persons for the conduct of the Business in the manner in which it then is being
conducted and to permit the current occupancy of the Real Property (other than
any permit, license, order, approval or authorization the absence of which does
not have an Adverse Effect). All such permits, licenses, orders, approvals or
authorizations are listed in Disclosure Schedule Section 5.14(b).
5.15 CAPITALIZATION OF EDB SUBSIDIARY. From the date of
its formation through the Closing Date, the authorized capital stock of EDB
Subsidiary will consist of 1,000 shares of common stock, $.01 par value per
share, all of which will be owned by Seller and will be validly issued, fully
paid and nonassessable. During such time period, no other equity securities of
EDB Subsidiary, no securities convertible into, exchangeable for or carrying
the right to acquire equity securities of EDB Subsidiary, or other arrangements
or commitments (other than this Agreement) obligating EDB Subsidiary to issue
or dispose of any of its equity securities or any ownership interest therein,
will be authorized, issued or outstanding.
5.16 NO BROKERS. Except with respect to Seller's
engagement of Morgan Stanley & Co. Incorporated, the fees and expenses of which
will be paid by Seller, neither Seller nor any of its directors, officers or
employees has employed any broker,
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finder or investment banker or incurred any liability for any brokerage fees,
commissions, finders' fees or similar fees in connection with the transactions
contemplated by this Agreement.
5.17 DISCLAIMER. Except as otherwise expressly set forth
in this Agreement or any Ancillary Agreement, Seller expressly disclaims any
representations or warranties of any kind or nature, express or implied, as to
the condition, value or quality of the Assets or the Business and Seller
SPECIFICALLY DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY,
USAGE, SUITABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE
ASSETS, OR ANY PART THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE
OF ANY DEFECTS THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT,
EXCEPT AS SO OTHERWISE EXPRESSLY PROVIDED, SUCH ASSETS ARE BEING ACQUIRED "AS
IS, WHERE IS" ON THE CLOSING DATE, AND IN THEIR PRESENT CONDITION, AND BUYER
SHALL RELY ON ITS OWN EXAMINATION AND INVESTIGATION THEREOF.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows
(notwithstanding anything herein to the contrary, references to "Affiliates" of
Buyer in this Article VI shall not be deemed to include EDB Subsidiary or any
other Affiliates of Seller that are organized for the purpose of accepting the
transfer of Assets and whose stock is sold to Buyer or EDB Subsidiary in
connection with the transactions contemplated hereby):
6.1 ORGANIZATION. Buyer is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has full corporate power and authority to carry on its business as and
where it is now being conducted.
6.2 AUTHORIZATION. (a) Buyer has full corporate power
and authority to enter into this Agreement and the Ancillary Agreements and to
consummate the transactions contemplated hereby and thereby. The execution and
delivery of this Agreement and the Ancillary Agreements and the consummation of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action on the part of Buyer. This Agreement has been
duly executed and delivered by Buyer. This Agreement constitutes, and upon the
execution and delivery thereof by Buyer, each Ancillary Agreement will
constitute, a legal, valid and binding obligation of Buyer, enforceable against
Buyer in accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and general
principles of equity (regardless of whether enforceability is considered in a
proceeding at law or in equity).
(b) Except as described in Schedule 6.2(b), no consent,
waiver, approval, order or authorization of, notice to, or registration,
declaration, designation, qualification or filing
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with, any Governmental Authority or third Person, domestic or foreign, is or
has been or will be required on the part of Buyer or any of its Affiliates in
connection with the execution and delivery of this Agreement or any Ancillary
Agreement or the consummation of the transactions contemplated hereby or
thereby, other than where the failure to obtain such consents, waivers,
approvals, orders or authorizations or to make or effect such registrations,
declarations, designations, qualifications or filings is not reasonably likely
to (i) prevent or materially delay consummation of the transactions
contemplated by this Agreement or (ii) prevent Buyer and its Affiliates from
performing their obligations under this Agreement.
6.3 NON-CONTRAVENTION. Neither the execution and
delivery of this Agreement or any Ancillary Agreement, nor the consummation of
the transactions contemplated hereby or thereby, will violate or conflict with
(a) any provision of the Charter or Bylaws of Buyer or any of its Affiliates,
(b) in any material respect any law, rule, regulation or Governmental Order to
which Buyer or any such Affiliate or any of their business or assets are bound
or subject or (c) any agreement, indenture, undertaking, permit, license or
other instrument to which Buyer or any such Affiliate is a party or by which
any of them or any of their properties may be bound or affected, other than
such violations and conflicts which are not reasonably likely to (i) prevent or
materially delay consummation of the transactions contemplated by this
Agreement or (ii) prevent Buyer and its Affiliates from performing their
obligations under this Agreement.
6.4 FINANCING. An Affiliate of Buyer has financing
commitments for $45 million (including commitments for $2.4 million required
from the expected management of EDB Subsidiary), representing the equity
portion of Buyer's funding of the Purchase Price.
6.5 ACQUISITION FOR INVESTMENT. Buyer acknowledges that
the EDB Stock has not been registered under the Securities Act of 1933, as
amended, or qualified or registered under any state or foreign securities law
on the ground that no distribution or public offering of the EDB Stock is to be
effected and that no public market now exists for the EDB Stock and that a
public market may never exist therefor. Buyer is acquiring the EDB Stock
solely for its own account and not as nominee or agent for any other Person
(except that Seller acknowledges that Buyer has been formed by Green Equity
Investors II, L.P. to consummate the acquisition contemplated hereby) and not
with a view to, or for sale in connection with, any distribution thereof.
Buyer has no contract, undertaking, agreement or arrangement with any Person to
sell, transfer or pledge to such Person, or to any other Person, the EDB Stock,
and Buyer has no present plans or intentions to enter into any such contract,
undertaking, agreement or arrangement.
6.6 NO BROKERS. Except with respect to Buyer's
engagement of placement agents with respect to the financing referred to in
Section 8.12, as to which Seller will have no
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liability, neither Buyer nor any of its directors, officers or employees has
employed any broker, finder or investment banker or incurred any liability for
any brokerage fees, commissions, finders' fees or similar fees in connection
with the transactions contemplated by this Agreement.
ARTICLE VII
CERTAIN COVENANTS
7.1 ACCESS TO INFORMATION. (a) From the date hereof until the
Closing, but subject to any rights of third Persons, upon reasonable notice,
Seller shall (i) afford the officers, employees and authorized agents and
representatives of Buyer reasonable access during normal business hours to the
offices, properties, personnel and Books and Records of the Seller Group
relating to the Assets and the Business and (ii) furnish to the officers,
employees and authorized agents and representatives of Buyer such additional
financial and operating data and other information regarding the Assets and the
Business (or legible copies thereof) as Buyer may from time to time reasonably
request; provided, however, that such investigation shall not unreasonably
interfere with any of the businesses or operations of the Seller Group. Without
limiting the generality of the foregoing, the Seller Group shall cooperate fully
with Buyer's investigation of the Assets and the Business and provide copies of
such documents in its possession as Buyer may reasonably request to confirm the
title to any and all properties or assets used in the Business. No investigation
by Buyer or knowledge by Buyer of a breach of a representation or warranty of
Seller shall affect the representations and warranties of Seller or Buyer's
recourse under any provision of this Agreement (including Article X) or the
Ancillary Agreements with respect thereto.
(b) Subsection 7.1(a) notwithstanding, Buyer's right of
examination and access pending the Closing with respect to environmental matters
relating to the Real Property shall be limited to an examination of existing
records and interviews with Seller's personnel and other Persons and conducting
Phase I environmental studies and other investigations not involving physical
testing of the Real Property for the presence of Hazardous Material or
contacting officials of any Governmental Authority.
7.2 CONDUCT OF BUSINESS PENDING CLOSING. From the Agreement
Date until the Closing, except as required or permitted by this Agreement or
otherwise consented to or approved by Buyer in writing, and except for any
transactions reasonably related to the Excluded Assets which do not materially
affect the Business, the Assets or the Assumed Liabilities:
(a) Except as set forth in Schedule 7.2(a), Seller shall and
shall cause the Seller Group to operate the Business only in its usual, regular
and ordinary manner and substantially in the same manner as heretofore
conducted. Seller shall and shall cause the Seller Group to use commercially
reasonable efforts to (i) preserve the Business, including its relationships
with customers
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and suppliers, and (ii) keep available to Buyer the services of the present
officers, employees, agents and independent contractors of the Business.
(b) With respect to the Assets and the Business, Seller shall
not, and shall cause the Seller Group not to, without the prior written consent
of Buyer, which consent shall not be unreasonably withheld:
(i) incur, or assume or become subject to,
whether directly or by way of guarantee or otherwise, any indebtedness
for borrowed money or other Liability, including purchase money
indebtedness, except trade or business obligations or Liabilities
incurred in the ordinary course of business and consistent with past
practice;
(ii) permit or allow any of the Assets to be
subject to any additional Encumbrance (other than Permitted Liens) or
sell, transfer, lease or otherwise dispose of any such Assets, except
in the ordinary course of business and consistent with past practice;
(iii) grant any increase in salaries or commissions
payable or to become payable to any employee of the Business, or to any
sales agent or representative of the Business, except normal increases
in salaries and commissions in accordance with Seller's existing
compensation practice;
(iv) make any capital expenditure or commitment
therefor for additions to property, equipment or facilities in excess
of $1,000,000 individually and $3,000,000 in the aggregate during the
period from the Agreement Date through the Closing, or enter into,
outside of the ordinary course of business, any operating lease that,
if it had existed on the Agreement Date, would have constituted a
Commitment;
(v) license, sell, transfer, pledge, modify,
disclose, dispose of or permit to lapse any right under or respecting,
or enter into any settlement regarding the breach or infringement of,
any material Intellectual Property;
(vi) amend, modify or supplement (1) any
Commitment, except in the ordinary course of business and consistent
with past practice, or (2) any other contract, agreement, arrangement,
purchase order or commitment that is included in the Assets, if such
amendment, modification or supplement is entered into in connection
with the obtaining of a consent or waiver of a third Person to the
consummation of the transactions contemplated hereby; or
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(vii) agree, whether in writing or otherwise, to do
any of the foregoing.
7.3 NO SOLICITATION OF TRANSACTIONS. From the Agreement Date
through the Closing Date, neither Seller nor any of its representatives,
Affiliates, directors, officers, employees, subsidiaries or agents will solicit,
consider, encourage or accept any other offers to acquire any of the Assets
(other than in the ordinary course) or the Business or assist any third Person
in preparing or soliciting such an offer. Seller shall not have, and shall cause
such representatives, Affiliates, directors, officers, employees, subsidiaries
and agents not to have, any discussions, conversations, negotiations or other
communication with any Person(s) expressing an interest in any such offer.
7.4 AUTHORIZATIONS. (a) Each of Buyer and Seller, as promptly
as practicable after the Agreement Date, shall and shall cause its Affiliates to
(i) deliver, or cause to be delivered, all notices and make, or cause to be
made, all such declarations, designations, registrations, filings and
submissions under all laws, rules and regulations applicable to it as may be
required for it to consummate the transfer of the Assets, the sale of the EDB
Stock and the other transactions contemplated hereby in accordance with the
terms of this Agreement; (ii) use commercially reasonable efforts to obtain, or
cause to be obtained, all authorizations, approvals, orders, consents and
waivers from all Persons necessary to consummate the foregoing; and (iii) use
commercially reasonable efforts to take, or cause to be taken, all other actions
necessary, proper or advisable in order for it to fulfill its respective
obligations hereunder and to carry out the intentions of the parties expressed
herein. The preceding sentence notwithstanding, Seller shall have no obligation
to take any action with respect to any contract, agreement, arrangement,
purchase order, commitment, Environmental Permit, other permit, license, order,
approval or authorization listed in Disclosure Schedule Sections 5.11(c), 5.12
and 5.14(b) which is not also listed in Disclosure Schedule Section 5.2(c).
(b) If required by the HSR Act, Buyer and Seller shall comply
promptly with the notice and reporting requirements of the HSR Act and shall
reasonably cooperate with one another with respect thereto. Buyer and Seller
shall comply substantially with any additional requests for information,
including requests for production of documents and production of witnesses for
interviews or depositions, by the Antitrust Division of the United States
Department of Justice, the United States Federal Trade Commission or the
antitrust or competition law authorities of any other jurisdiction (whether
U.S., foreign or multi-national) (the "Antitrust Authorities").
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(c) Buyer and Seller shall exercise commercially reasonable
efforts, and shall cooperate with each other, to prevent the entry in any Action
brought by an Antitrust Authority or any other Person of any Governmental Order
which would prohibit, make unlawful or delay the consummation of the
transactions contemplated by this Agreement.
(d) Buyer and Seller each shall cooperate in good faith with
the Antitrust Authorities and undertake promptly any and all commercially
reasonable actions to facilitate the completion lawfully of the transactions
contemplated by this Agreement.
7.5 BOOKS AND RECORDS. From and after the Closing Date, and
without limiting the parties' rights under the Ancillary Agreements: (a) Buyer
and Seller shall, and shall cause their respective Affiliates to, at the request
of the other party, make available to such other party from time to time on a
reasonable basis the Books and Records in their possession and in the possession
of EDB Subsidiary, the Foreign Sellers and Varian Canada. Notwithstanding the
foregoing, if the party to which a request for access to Books and Records is
directed indicates that it believes that the Books and Records requested relate
to a matter as to which the parties are adverse (including any claim for
indemnification pursuant to Article X of this Agreement), then such party may
deny access to those Books and Records, unless the requesting party reasonably
establishes that it requires such access in order to assess or discharge a
Retained Liability, in the case of Seller or any Affiliate of Seller, or an
Assumed Liability, in the case of Buyer or any Affiliate of Buyer. Books and
Records shall be held by the party in possession thereof for seven years after
the Closing Date (provided that the inadvertent failure by either party or its
Affiliates, after the exercise of reasonably good faith efforts, to retain such
Books and Records shall not give rise to any Liability of such party or its
Affiliates) and the other party shall have the right, at its expense, to inspect
and make copies of such Books and Records upon such party's request; provided,
however, that (i) all such access and copying shall be done in such a manner so
as not to unreasonably interfere with the normal conduct of the operations of
the party requested to provide access to such Books and Records and (ii) the
party requesting access to such Books and Records shall treat the same and the
contents thereof as confidential and not disclose such Books and Records or the
contents thereof to any Person except as required by applicable law or
Governmental Authority. A party so gaining access to such Books and Records
shall (i) hold them in strict confidence, except as required by applicable law,
Governmental Authority or subpoena; (ii) not make any copies thereof; and (iii)
not provide such Books and Records or copies thereof, or reveal the contents
thereof, to any of its employees or agents, other than those who need to know
such information in order to perform duties for or provide services to such
party, or to any other Person, including any Governmental Authority. In
addition, after the Closing Date, at Seller's request, Buyer shall make
available to Seller and its Affiliates, representatives and agents those
employees of the Business then employed by Buyer requested by
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Seller in connection with any Action, other than an Action between Buyer and
Seller or any Action as to which the interests of Buyer and Seller are adverse,
including to provide testimony, to be deposed, to act as witnesses and to assist
counsel; provided, however, that (x) such access to such employees shall not
unreasonably interfere with the normal conduct of the operations of Buyer or EDB
Subsidiary or any Affiliate thereof and (y) Seller shall reimburse Buyer or EDB
Subsidiary or any Affiliate thereof, as the case may be, for the out-of-pocket
costs reasonably incurred by Buyer or EDB Subsidiary or any Affiliate thereof in
making such employees available to Seller. Also, after the Closing Date, at
Buyer's request, Seller shall, and shall cause its Affiliates to, make available
to Buyer and its Affiliates, representatives and agents those former employees
of the Business, as well as such other employees of Seller and its Affiliates
whose responsibilities before the Closing related in any significant respect to
the Business, in each case only if then employed by Seller or an Affiliate
thereof and requested by Buyer in connection with any Action, other than an
Action between Buyer and Seller or any Action as to which the interests of Buyer
and Seller are adverse, including to provide testimony, to be deposed, to act as
witnesses and to assist counsel; provided, however, that (x) such access to such
employees shall not unreasonably interfere with the normal conduct of the
operations of Seller and its subsidiaries and Affiliates and (y) Buyer shall
reimburse Seller or its subsidiaries and Affiliates, as the case may be, for the
out-of-pocket costs reasonably incurred by Seller or such subsidiaries and
Affiliates in making such employees available to Buyer. The parties intend that
the transfer of Books and Records to Buyer and its Affiliates pursuant to this
Agreement shall not constitute a waiver of any legal privilege relating to any
documents included in such Books and Records.
(b) All Privileged Documents shall be deemed to remain in the
sole custody and control of Seller regardless of the location in which they may
be found. Seller represents that it has made a diligent attempt to remove all
such Privileged Documents from the premises of the Business; provided, however,
that any inaccuracy in such representation shall not affect Buyer's obligations
set forth in this Section 7.5. In the event Buyer or any of its subsidiaries or
Affiliates discovers any such Privileged Documents in its possession and has
actual knowledge that such documents constitute Privileged Documents, it (i)
shall hold them in strict confidence; (ii) shall not make any copies of them;
(iii) shall not provide such Privileged Documents or copies thereof, or reveal
the contents thereof, to any of its employees or agents, or to any other Person,
including any Governmental Authority; and (iv) shall promptly return the same,
and all copies thereof, to Seller, except in each of the foregoing instances as
otherwise provided by applicable law, Governmental Order or subpoena. In the
event any request, demand, subpoena or process is received by Buyer or any of
its subsidiaries or Affiliates seeking any Privileged Documents, they shall to
the extent practicable provide prompt notice thereof to Seller, including
therewith a copy of such request, demand, subpoena or process, to enable Seller
to timely assert any and all
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privileges against disclosure it may have with respect thereto or to seek an
appropriate protective order. Receipt of any such request, demand, subpoena or
process shall not alter Buyer's obligations under this Agreement, including the
obligation to promptly provide Seller with Privileged Documents and all copies
thereof, except as otherwise required by applicable law or Governmental Order.
Following receipt of any such request, demand, subpoena or process, Buyer shall,
at Seller's election and expense, seek an appropriate protective order with
respect to the Privileged Documents which are the subject of such request,
demand, subpoena or process. In no event shall Buyer or any of its subsidiaries
or Affiliates knowingly take any action which might have the effect of waiving
any claim of legal privilege with respect to any Privileged Document which
either it or Seller may have, except as otherwise required by applicable law or
Governmental Order.
7.6 ACKNOWLEDGEMENT BY BUYER. THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE ANCILLARY AGREEMENTS
CONSTITUTE THE SOLE AND EXCLUSIVE REPRESENTATIONS AND WARRANTIES OF SELLER TO
BUYER IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED HEREBY. THERE ARE NO
REPRESENTATIONS, WARRANTIES, COVENANTS, UNDERSTANDINGS OR AGREEMENTS, ORAL OR
WRITTEN, IN RELATION THERETO BETWEEN THE PARTIES OTHER THAN THOSE INCORPORATED
HEREIN AND TO BE DELIVERED HEREUNDER. EXCEPT FOR THE REPRESENTATIONS AND
WARRANTIES EXPRESSLY SET FORTH IN THIS AGREEMENT AND THE ANCILLARY AGREEMENTS,
BUYER DISCLAIMS RELIANCE ON ANY REPRESENTATIONS OR WARRANTIES, EITHER EXPRESS OR
IMPLIED, BY SELLER OR ITS AFFILIATES, EMPLOYEES, REPRESENTATIVES OR AGENTS.
7.7 NEWS RELEASES. Until the Closing Date, neither Buyer,
Seller nor the representatives of either of them shall issue to the media any
news release with respect to this Agreement or the transactions contemplated
hereby without the prior written consent of the other party hereto. The
foregoing notwithstanding, any such news release may be made if required by
applicable law or a securities exchange rule, provided that the party required
to make such news release shall confer with the other party concerning the
timing and content of such news release before the same is made.
7.8 CERTAIN ACTIONS. Buyer acknowledges that Seller is
retaining responsibility for, and sole control of, certain pending Actions
relating to the Business, which Actions are listed in Disclosure Schedule
Section 5.9. From and after the Closing Date, Buyer shall, at Seller's sole cost
and expense, reasonably cooperate with and assist Seller in defending and
prosecuting such Actions, including by permitting Seller's counsel to represent
Buyer's employees who are Seller's former employees of the Business for purposes
of any such Action.
7.9 NOTIFICATION. Seller shall give prompt notice to Buyer, and
Buyer shall give prompt notice to Seller, of (a) the occurrence, or failure to
occur, of any known event which occurrence or failure would be likely to cause
any representation or warranty contained in this Agreement to be untrue or
inaccurate in any material respect at any time from the Agreement Date through
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the Closing Date; or (b) any known failure of Seller or Buyer to comply with,
perform or satisfy in any material respect any covenant or comply with, perform
or satisfy any condition contained in this Agreement to be complied with,
performed or satisfied by either such party. From time to time prior to the
Closing Date, Seller will promptly supplement or amend the Disclosure Schedule
with respect to any matter hereafter arising or discovered which, if existing or
occurring at or discovered prior to the Agreement Date, would have been required
to be set forth or described in the Disclosure Schedule or which is necessary to
correct any information in the Disclosure Schedule or in any representation and
warranty of Seller contained in Article V which has been rendered inaccurate
thereby; provided, however, that no supplement or amendment to the Disclosure
Schedule shall affect Buyer's rights and remedies for a breach of any
representation or warranty based upon the content of the Disclosure Schedule as
originally prepared and attached to this Agreement as of the Agreement Date.
7.10 BULK SALE COMPLIANCE. Seller and Buyer waive compliance
with the provisions of any Bulk Sales Act or similar law of any jurisdiction in
respect of the transactions contemplated by this Agreement and the Ancillary
Agreements. Seller hereby agrees to indemnify and hold EDB Subsidiary, Buyer and
Buyer's Affiliates harmless from and against any and all Buyer Losses in
connection with any Action incurred or suffered by EDB Subsidiary, Buyer or any
Affiliate of Buyer arising out of or related to such waiver, unless and to the
extent that such Buyer Losses constitute Assumed Liabilities.
7.11 USE OF PROPERTIES AND GROUNDWATER. Notwithstanding any
other provision of this Agreement or the Ancillary Agreements to the contrary,
Buyer shall:
(a) not develop the Real Property set forth in clauses (i) and
(ii) below to residential uses or other uses requiring remediation of such
properties to cleanup standards substantially similar to standards set for
residential uses according to the following schedules:
(i) for the Real Property located in Beverly,
Massachusetts -- on or before the date 10 years from Seller's receipt
of Buyer's written notice to Seller of Buyer's intention to so develop
such Real Property; and
(ii) for the Real Property located in San Carlos,
California -- at any time;
(b) not extract or use in any way the groundwater at the Real
Property at any time, except as required by any Governmental Authority or as
allowed by Seller. The continued extraction following the Closing Date of
groundwater from the basement in Building 3 at the Real Property located in San
Carlos, California and from the elevator area at the Real Property located in
Georgetown, Ontario, in a manner substantially consistent with the
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extraction being undertaken as of the Agreement Date shall not be deemed a
violation of this covenant;
(c) require any successors or assigns to Buyer's interest in
the Real Property to abide by the covenants in this Section 7.11; and
(d) record against the Real Property with appropriate
Governmental Authorities such deed restrictions as are reasonably requested by
Seller in furtherance of this Section 7.11.
7.12 SELLER PERFORMANCE OF SITE REMEDIATION IN BEVERLY,
MASSACHUSETTS. Seller shall perform all response actions (including, as
appropriate, cleanup, removal, remedial or treatment actions) ("Massachusetts
Response Work") necessary to enable Buyer, its Affiliates and EDB Subsidiary to
obtain a Covenant Not to Sue from the State of Massachusetts under its Clean
Sites Initiative (the "Initiative"). Buyer shall, at the request of Seller,
provide all notices, obtain all approvals and perform such other work (other
than Massachusetts Response Work) necessary to assist Seller in complying with
this subsection, including where the Initiative requires Buyer (as opposed to
any other party) to perform such work. Seller shall be relieved of its
obligations under this Section 7.12 (but is not otherwise relieved of its
obligations to perform response actions) in the event that Buyer provides the
notice described in subsection 7.11(a)(i). Nothing in this Section 7.12 shall
affect in any way the discretion vested in Seller pursuant to the first sentence
of Section 10.5(d).
7.13 SELLER OBLIGATIONS WITH RESPECT TO MANAGEMENT STOCK
PURCHASES. With respect to each of the employees of the Business listed on
Schedule 7.13 (each, a "Management Investor") who enters into a Management
Subscription and Stockholders Agreement among himself, Buyer and Green Equity
Investors II, L.P. (a "Subscription Agreement"), prior to the Closing and as an
additional inducement of Buyer to execute and deliver this Agreement: (i) Seller
shall pay to such Management Investor an amount which, net of all taxes
reasonably expected to be owed by such Management Investor thereon, is equal to
at least one third of the purchase price due to Buyer from such Management
Investor for Buyer's capital stock purchased pursuant to the Subscription
Agreement, provided, however, that Seller shall not be obligated to so pay more
than $800,000 (net of such taxes) in the aggregate to all Management Investors;
and (ii) Seller shall execute and deliver to Buyer a Guaranty, substantially in
the form described in the Subscription Agreement, with respect to the promissory
note, if any, delivered to Buyer by such Management Investor in partial payment
of the purchase price due to Buyer from such Management Investor for Buyer's
capital stock purchased pursuant to the Subscription Agreement.
7.14 CERTAIN PGTP TOOLING. Schedule 7.14 lists certain tooling
located at Seller's X-Ray Tube Products business in Salt Lake City, Utah
("XRTP") which is not reflected on the Balance Sheet and which is currently used
by both XRTP and the Business (together with substantially similar items
currently used by both
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XRTP and the Business which are not reflected on such Schedule 7.14, "Shared
Tooling"). At such time that Buyer relocates its Salt Lake City manufacturing
operation, Seller shall convey, assign, transfer and delivery to Buyer, at no
cost to Buyer, and Buyer shall accept and acquire from Seller, all of the
rights, title and interests of Seller in and to any of the Shared Tooling which
Buyer then requires to continue the Business and to the extent Buyer does not at
such time have comparable tooling at its Power Grid Tube Products business in
San Carlos, California ("PGTP"); provided, however, that Buyer shall provide
Seller with at least 30 days' written notice prior to any such relocation of the
Business which will require Seller to so convey any of the Shared Tooling to
Buyer.
7.15 CERTAIN LEASE AGREEMENTS. In the event that EDB Subsidiary
desires to amend any provision of a lease document relating to the EDB Leased
Real Property located in the Stanford Research Park or Santa Clara, California,
as to which Seller or its Affiliate is a party or bound, if the lessor with
respect to such EDB Leased Real Property requires, in connection with such
amendment, the consent thereto of Seller or such Affiliate, Seller shall, or
shall cause its Affiliate to, provide such consent at Buyer's sole cost and
expense. Neither Seller nor such Affiliate shall be obligated to provide such
consent if, in connection therewith, either's obligations under such document
would be increased. Buyer shall be liable for, and shall indemnify Seller and
its Affiliate from and against, any Liability Seller and its Affiliate may
suffer or incur in connection with the provision of such consent.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF BUYER
The obligations of the Buyer to effect the transactions contemplated
herein shall be subject to the fulfillment or satisfaction, on or before the
Closing Date, of each of the following conditions:
8.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Seller contained herein shall be true and
correct in all material respects at and as of the Closing Date with the same
effect as though made at and as of the Closing Date, except (a) that
representations and warranties made as of, or in respect of, only a specified
date or period shall be true and correct in all material respects in respect of,
or as of, such date or period, and (b) to the extent that any failure of such
representations and warranties to be true and correct as aforesaid (together
with any failures to have complied with or obtained the matters referred to in
Sections 8.2 and 8.3 and any statements or omissions referred to in Section
8.11) when taken in the aggregate does not have a Material Adverse Effect.
8.2 PERFORMANCE. Seller shall have performed and complied with
all agreements and obligations required by this
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Agreement to be performed or complied with by it on or prior to the Closing
Date, except where the failure to so perform or comply (together with any
failures to have complied with or obtained the matters referred to in Sections
8.1 and 8.3 and any statements or omissions refered to in Section 8.11) when
taken in the aggregate does not have a Material Adverse Effect.
8.3 AUTHORIZATIONS. Seller shall have or shall have caused to
be delivered, made or obtained, and Buyer, EDB Subsidiary and Buyer's Affiliates
shall have or shall have caused to be obtained, all notices to, declarations,
designations, registrations, filings or submissions with, and authorizations,
approvals, orders, consents or waivers from Governmental Authorities and other
Persons (copies of which shall have been provided to Buyer) listed on Schedule
8.3, and the same shall not have been withdrawn, suspended or modified.
8.4 ABSENCE OF GOVERNMENTAL ORDERS. No temporary or permanent
Governmental Order shall be in effect which prohibits or makes unlawful
consummation of the transactions contemplated hereby.
8.5 OPINIONS OF COUNSEL. Seller shall have delivered to Buyer
the opinions of its General Counsel and Orrick, Herrington & Sutcliffe, counsel
to Seller, each dated the Closing Date, substantially in the forms attached
hereto as Exhibit 8.5.
8.6 OFFICERS' CERTIFICATES. Seller shall have furnished Buyer
with such certificates of the Chief Financial Officer of Seller certifying as to
compliance with the conditions set forth in this Article VIII as may be
reasonably requested by Buyer.
8.7 CERTAIN AGREEMENTS. All of the parties (other than Buyer
and its Affiliates) specified as parties to any of the Noncompetition Agreement,
Real Estate Documents, Site Access Agreement, Cross-License, Transitional
Services Agreement, Supply Agreements and Trademark License shall have executed
such agreement or document substantially in the forms attached hereto as
Exhibits 8.7(a), 8.7(b), 8.7(c), 8.7(d), 8.7(e), 8.7(f), and 8.7(g)
respectively.
8.8 SUITS, PROCEEDINGS, INVESTIGATIONS. No Action shall be
pending or, to knowledge of Seller, threatened, before any Governmental
Authority wherein an unfavorable judgment, decree, or order would prevent the
carrying out of this Agreement or any Ancillary Agreement, or otherwise would
constitute a Material Adverse Effect.
8.9 INSTRUMENTS OF CONVEYANCE. Seller (including its
Affiliates, as applicable) shall have executed and delivered, or caused to be
executed and delivered, to EDB Subsidiary or to Buyer or to another Affiliate of
Buyer, as the case may be, the bills of sale and other instruments of
conveyance, transfer and assignment contemplated by subsection 4.2(b), which
instruments shall be in form and substance reasonably satisfactory to Buyer and
its counsel.
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8.10 MATERIAL ADVERSE CHANGE. No event shall have occurred
after the Agreement Date that, if it had occurred at the beginning of the
12-month period immediately preceding the Closing Date, would have resulted in a
material adverse change in the revenues, cash flow or the assets of the Business
(taken as a whole) during such 12-month period.
8.11 DISCLOSURE. This Agreement (including the Ancillary
Agreements and the Exhibits and Schedules), as of the Closing Date, shall not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements contained herein (and therein), in light of the
circumstances under which they were made, not misleading, except to the extent
any such untrue statement or omission (together with any failures to have
complied with or obtained the matters referred to in Sections 8.1, 8.2 and 8.3)
when taken in the aggregate does not have a Material Adverse Effect.
8.12 FINANCING. Buyer shall have made arrangements for or
obtained, on terms satisfactory to Buyer in its sole discretion, all financing
necessary to consummate the transactions contemplated by this Agreement.
ARTICLE IX
CONDITIONS TO THE OBLIGATIONS OF SELLER
The obligations of Seller to effect the transactions
contemplated herein shall be subject to the fulfillment or satisfaction, on or
before the Closing Date, of each of the following conditions:
9.1 ACCURACY OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties of Buyer contained herein shall be true and
correct in all material respects at and as of the Closing Date with the same
effect as though made at and as of the Closing Date.
9.2 PERFORMANCE. Buyer shall have performed and complied in all
material respects with all agreements and obligations required by this Agreement
to be performed or complied with by it on or prior to the Closing Date.
9.3 AUTHORIZATIONS. Any waiting period (and any extension
thereof) under the HSR Act applicable to the transactions contemplated hereby
shall have expired or shall have been terminated.
9.4 ABSENCE OF GOVERNMENTAL ORDERS. No temporary or permanent
Governmental Order shall be in effect which prohibits or makes unlawful
consummation of the transactions contemplated hereby.
9.5 OPINION OF COUNSEL. Buyer shall have delivered to Seller
the opinion of Irell & Manella, counsel to Buyer, dated the
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Closing Date, substantially in the form attached hereto as Exhibit 9.5.
9.6 OFFICERS' CERTIFICATES. Buyer shall have furnished Seller
with such certificates of its officers certifying as to compliance with the
conditions set forth in this Article IX as may be reasonably requested by
Seller.
9.7 CERTAIN AGREEMENTS. Buyer (including its Affiliates, as
applicable) shall have executed and delivered to Seller the Noncompetition
Agreement, Real Estate Documents, Site Access Agreement, Cross-License,
Transitional Services Agreement, Supply Agreements and Trademark License
substantially in the forms attached hereto as Exhibits 8.7(a), 8.7(b), 8.7(c),
8.7(d), 8.7(e), 8.7(f) and 8.7(g), respectively.
ARTICLE X
INDEMNIFICATION
10.1 SURVIVAL. All representations and warranties of Seller and
Buyer and their Affiliates in this Agreement or the Ancillary Agreements
(including all schedules and exhibits hereto and thereto and all instruments
specifically and expressly required to be furnished pursuant to this Agreement
and the Ancillary Agreements) shall survive only through and until December 31,
1996. If written notice of a claim for breach of such representations and
warranties has been given on or before December 31, 1996 by a party in whose
favor such representations and warranties have been made to the party that made
such representations and warranties, then the relevant representations and
warranties shall survive as to such claim, until the claim has been finally
resolved. Except as provided in Section 10.5, all indemnification obligations of
Seller and Buyer in this Agreement or the Ancillary Agreements (including all
schedules and exhibits thereto and all instruments expressly required to be
furnished pursuant to this Agreement and the Ancillary Agreements) shall survive
indefinitely.
10.2 INDEMNIFICATION BY SELLER. Except as otherwise limited by
this Article X, Buyer, its parent, subsidiaries and Affiliates, any assignee or
successor thereof, and each officer, director and employee of each of the
foregoing (the "Buyer Indemnified Parties") shall be indemnified and held
harmless by Seller for any and all losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including reasonable legal fees and
costs) suffered or incurred by them (hereinafter a "Buyer Loss") arising out of
or resulting directly or indirectly from (a) any breach of any representation or
warranty of Seller or its Affiliates in this Agreement or the Ancillary
Agreements (including all schedules and exhibits hereto and thereto and all
instruments and undertakings specifically and expressly required to be furnished
pursuant to this Agreement and the Ancillary Agreements); (b) any breach of any
covenant or agreement of Seller or its Affiliates in this Agreement or the
Ancillary Agreements (including all schedules and exhibits hereto and thereto
and all
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instruments and undertakings specifically and expressly required to be furnished
pursuant to this Agreement and the Ancillary Agreements); (c) any Retained
Liability other than any Liability arising from or related to Environmental
Claims; (d) any and all Liabilities arising from or related to Environmental
Claims arising from (i) the ownership, lease, use, possession or operation of
the Assets or the Business before the Closing, (ii) any violation, or any
purported violation alleged by a third party, existing before the Closing, of
any Environmental Law, Environmental Permit or Governmental Order as a result of
conditions or activities before the Closing at any Real Property owned, leased,
used, possessed or operated by Seller or any of its subsidiaries or Affiliates
before the Closing, (iii) the presence, before the Closing, of any Hazardous
Material in the soils, groundwater, surface water or air on, under, about or
emanating from any of the properties owned, leased, used, possessed or operated
by Seller or any of its subsidiaries or Affiliates which are included in the
Assets (including the Real Property), including to the extent that such
Hazardous Material remains and/or migrates (except to the extent indemnified by
Buyer in subsection 10.3(e)(v)) after Closing, (iv) any disposal,
transportation, or arranging for disposal, in each case other than by Buyer or
Buyer's agents, of Hazardous Material generated by Seller or any of its
subsidiaries or Affiliates prior to the Closing, or (v) any Release by Seller or
its subsidiaries or Affiliates of any Hazardous Material at any property not
included in the Assets, including any Release of any Hazardous Material at any
property included in the Excluded Assets or any Release of Hazardous Material
otherwise caused by Seller's operation of its business (any such Environmental
Claim referred to in this clause (d) is referred to elsewhere herein as a
"Seller Indemnified Environmental Claim"); (e) the failure of Seller to obtain
the consent of The Leland Stanford Junior University or of the lessor of
Seller's Santa Clara, California, facility to the contribution of the leases and
subleases of Leased Real Property located in the Stanford Research Park and in
Santa Clara, California, respectively, to EDB Subsidiary pursuant to Section
2.3, the sale of the stock of EDB Subsidiary to Seller or the sublease from
Buyer to Seller contemplated by the Real Estate Documents; (f) any eviction or
other adverse action taken by the lessor of the EDB Leased Real Property located
in the Stanford Research Park or Santa Clara, California as a result of or
arising from any actions or omissions of Seller or any of its Affiliates,
including any breach by Seller or any such Affiliate of the related real
property lease, the Real Estate Documents or any other agreement between such
lessor and Seller or its Affiliate, except where and to the extent such eviction
or other adverse action results or arises from a breach by Buyer or any of its
Affiliates of the Real Estate Documents or any other agreement between such
lessor and Buyer or its Affiliate; and (g) any Buyer Loss arising from the
circumstances with respect to the Old Ontario Plan referred to in the last
sentence of subsection 12.2(b)(ii); provided, however, that Buyer or its
Affiliate shall have an obligation to reimburse Seller to the extent of any
recovery related to such Buyer Loss. Without limitation of the foregoing and
notwithstanding any other provision of this Agreement (other than the
limitations set forth
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in clauses (i) to (iv) of subsection 10.5(c)), Seller Indemnified Environmental
Claims shall include any Buyer Losses arising out of or resulting from any
Liabilities arising from any Environmental Claim arising from any condition at
any Real Property included in the Assets, together with any Release of Hazardous
Material resulting from such condition (whether such Release occurs before or
after the Closing Date as a result of Buyer's or Seller's operation of the
Business), provided that such condition (i) constitutes a violation of any
Environmental Law, Environmental Permit or Government Order as of the Closing
Date, (ii) existed at the Closing Date and continues to exist at any time during
the six-month period following the Closing Date, and (iii) is discovered by
Buyer within six months following the Closing Date and is reported in writing by
Buyer to Seller as soon as reasonably practicable following discovery (provided
no failure to so report shall limit Seller's obligations under this sentence
except to the extent Seller is actually and materially prejudiced by such
failure). The previous sentence (the "10.2 Proviso") and subsection 10.2(d)
shall not apply to any Buyer Losses resulting from (1) any incremental increase
in the volume of Hazardous Materials arising from the exacerbation resulting
from Buyer's or Buyer's agent's actions of any condition described in the 10.2
Proviso, (2) any new Release of Hazardous Material arising from a condition
described in the 10.2 Proviso after such condition has been fully and
appropriately repaired by Seller to the reasonable satisfaction of Buyer, or (3)
any matters to the extent indemnified by Buyer in subsection 10.3(e)(v). The
extent of Seller's indemnification for Hazardous Materials after Closing shall
not be addressed or covered by Section 10.2(d)(i) or (ii), except to the extent
covered by the 10.2 Proviso. The term "condition" as used in the 10.2 Proviso is
not meant to refer to the mere presence of Hazardous Material in the soils,
groundwater, surface water or air on, under, about or emanating from any Real
Property that does not result from some other condition that constitutes a
violation under subsection 10.2(d)(ii).
10.3 INDEMNIFICATION BY BUYER. Except as otherwise limited by
this Article X, Seller, its subsidiaries and Affiliates, any assignee or
successor thereof, and each officer, director and employee of each of the
foregoing (the "Seller Indemnified Parties") shall be indemnified and held
harmless by Buyer for any and all losses, damages, claims, costs and expenses,
interest, awards, judgments and penalties (including reasonable legal fees and
costs) suffered or incurred by them (hereinafter a "Seller Loss") arising out of
or resulting directly or indirectly from (a) any breach of any representation or
warranty of Buyer or its Affiliates in this Agreement or the Ancillary
Agreements (including all schedules and exhibits hereto and thereto and all
instruments specifically and expressly required to be furnished pursuant to this
Agreement and the Ancillary Agreements or made in connection herewith and
therewith); (b) any breach of any covenant or agreement of Buyer or its
Affiliates in this Agreement or the Ancillary Agreements (including all
schedules and exhibits hereto and thereto and all instruments specifically and
expressly required to be furnished pursuant to this Agreement and the Ancillary
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Agreements or made in connection herewith and therewith); (c) any Assumed
Liability; (d) any Liabilities (except to the extent such a Liability
constitutes a Retained Liability) arising from the ownership, use, possession or
operation of the Assets and the Business after the Closing; (e) any and all
Liabilities arising from or related to Environmental Claims (other than as
provided in the 10.2 Proviso) arising from (i) the ownership, lease, use,
possession or operation of the Assets or the Business after the Closing, (ii)
any violation, or any purported violation alleged by a third party, existing
after the Closing, of any Environmental Law, Environmental Permit or
Governmental Order as a result of any condition or activities after the Closing
at any Real Property owned, leased, used, possessed or operated by Buyer after
the Closing, (iii) any Incremental Costs incurred by Seller as a result of the
introduction, after the Closing, of any Hazardous Material that was not already
present before the Closing in the soils, groundwater, surface water or air on,
under, about or emanating from any of the properties owned, leased, used,
possessed or operated by Seller or any of its subsidiaries which are included in
the Assets (including the Real Property), (iv) any disposal, transportation, or
arranging for disposal, at any time, in each case by Buyer or Buyer's agent
after the Closing, of Hazardous Material generated by Buyer or any of its
subsidiaries or Affiliates after the Closing or generated by Seller, its
subsidiaries or Affiliates at the Real Property before Closing, and (v) any
movement after the Closing of any Hazardous Material present before the Closing
or the exacerbation of any existing environmental condition, but only to the
extent that either results from Buyer's or Buyer's agent's active negligent
conduct (and provided that any Liability arising from any movement of Hazardous
Material present before the Closing resulting from any cause other than Buyer's
or Buyer's agent's active negligent conduct shall be deemed to be part of a
Seller Indemnified Environmental Claim) (any such Environmental Claim referred
to in this clause (e) is referred to elsewhere herein as a "Buyer Indemnified
Environmental Claim"); and (f) the Seller Losses referred to in the last
sentence of subsection 10.5(e). As used in subsection 10.3(e)(ii), the term
"condition arising after Closing" is not meant to include the mere "condition"
of Buyer's status as an owner or operator of the Real Property without some
other condition that exists after Closing or activity by Buyer after Closing
that constitutes a violation or purported violation under subsection
10.3(e)(ii). Notwithstanding subsection 10.3(e)(ii), it shall be Seller's
obligation to repair any condition that existed before Closing (to the extent
covered by subsection 10.2(d)(ii) and the 10.2 Proviso) that continues to exist
after Closing. This obligation of Seller does not extend, however, to any fines
or penalties attributable to or assessed for the period after Closing, to any
Releases of Hazardous Materials after Closing, or to any other Buyer Losses
attributable to or assessed for the period after Closing associated with such
conditions, except as set forth in the 10.2 Proviso.
10.4 GENERAL INDEMNIFICATION PROVISIONS. (a) For the purposes
of this Section 10.4 and Section 10.5, the term "Indemnitee" shall refer to the
Person or Persons indemnified, or
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entitled, or claiming to be entitled, to be indemnified, pursuant to the
provisions of Section 10.2 or 10.3, as the case may be; the term "Indemnitor"
shall refer to the Person having the obligation to indemnify pursuant to such
provisions; and "Losses" shall refer to Seller Losses or Buyer Losses, as the
case may be.
(b) The amount of any Losses suffered or incurred by any
Indemnitee shall be reduced by the amount of any insurance proceeds or other
cash receipts paid to the Indemnitee or any Affiliate thereof as a reimbursement
with respect to such Losses (and no right of subrogation shall accrue to any
insurer hereunder, except to the extent that such waiver of subrogation would
prejudice any applicable insurance coverage), including any indemnification
received by the Indemnitee or such Affiliate from an unrelated party with
respect to such Losses.
(c) Within a reasonable time following the determination
thereof, an Indemnitee shall give the Indemnitor written notice of any matter
which such Indemnitee has determined has given rise to a right of
indemnification under this Agreement (regardless of whether a claim for
indemnification otherwise would be limited or prohibited by Section 10.5(a)),
stating the amount of the Loss, if known, and method of computation thereof, all
with reasonable particularity and containing a reference to the provisions of
this Agreement in respect of which such right of indemnification is claimed or
arises (subject to the last sentence of this paragraph). The obligations and
Liabilities of any party under this Article X with respect to Losses arising
from claims, assertions, events or proceedings of any third party (including
claims by any assignee or successor of the Indemnitee or any Governmental
Authority), which are subject to the indemnification provided for in this
Article X ("Third Party Claims") shall be governed by and be subject to the
following additional terms and conditions: If any Indemnitee shall receive
written notice of any Third Party Claim, the Indemnitee shall promptly give the
Indemnitor written notice of such Third Party Claim (subject to the last
sentence of this paragraph) and shall permit the Indemnitor, at its option, to
participate in the defense of such Third Party Claim by counsel of its own
choice and at its expense. If the Indemnitor acknowledges in writing its
obligation to indemnify the Indemnitee hereunder against any Loss (without
limitation) that may result from such Third Party Claim, then the Indemnitor
shall be entitled, at its option, to assume and control the defense against such
Third Party Claim at its expense and through counsel of its choice if it gives
written notice of its intention to do so to the Indemnitee within 15 calendar
days of the receipt of notice of such Third Party Claim from Indemnitee, unless,
in the reasonable opinion of counsel for the Indemnitee, there is a conflict or
a potential conflict of interest between the Indemnitee and the Indemnitor in
such Action, in which event the Indemnitee shall be entitled to direct the
defense with respect to those issues as to which such conflict exists. In the
event the Indemnitor exercises its right to undertake the defense against any
such Third Party Claim as provided above, the Indemnitee shall cooperate with
the Indemnitor in such defense and make available to the Indemnitor, at
Indemnitor's expense, all witnesses, pertinent
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records, materials and information in its possession or under its control
reasonably relating thereto as is required by the Indemnitor. Similarly, in the
event the Indemnitee is, directly or indirectly, conducting the defense against
any Third Party Claim, the Indemnitor shall cooperate with the Indemnitee in
such defense and make available to it all witnesses, pertinent records,
materials and information in its possession or under its control reasonably
relating thereto as is reasonably required by the Indemnitee. No such Third
Party Claim, except the settlement thereof which involves (i) the payment of
money only either by a party or parties other than the Indemnitee or for which
the Indemnitee is totally indemnified (without limitation) by the Indemnitor and
(ii) the unconditional release from all related liability of the Indemnitee, may
be settled by the Indemnitor without the written consent of the Indemnitee.
Except as provided in the immediately following sentence, in the event a Third
Party Claim that is being defended in good faith by the Indemnitor is settled by
an Indemnitee without the written consent of the Indemnitor, such settlement
without the Indemnitor's written consent shall discharge the Indemnitor from all
liability hereunder with respect to the subject matter of such Third Party
Claim. In the event that an Indemnitee reasonably determines, and gives
notification to the Indemnitor, that the failure to resolve a Third Party Claim
is having a material adverse effect on a material portion of the Indemnitee's
ongoing business, and as a result that the Indemnitee proposes a settlement of
the Third Party Claim as to which the Indemnitee will make no admission of
liability or facts or against its interest and the third party or parties will
unconditionally release the Indemnitor from any and all Liabilities relating to
or arising from such Third Party Claim, then a) the Indemnitor agrees that it
will not unreasonably withhold its consent to such settlement, and (1) if the
Indemnitor does not consent to such settlement, the Indemnitee may settle the
Third Party Claim on the terms proposed without discharging the Indemnitor from
its liability hereunder with respect to such Third Party Claim, provided that in
such case (x) the facts and terms of such settlement shall not be disclosed to
the arbitrator in connection with an arbitration pursuant to Section 14.13 and
shall not create any presumption as to the extent of the Indemnitor's
obligations to the Indemnitee hereunder with respect to such Third Party Claim
and (y) the Indemnitee shall not be entitled to recover from the Indemnitor
pursuant to this Agreement or any Ancillary Agreement any portion of the amount
so paid in settlement without first establishing by clear and convincing
evidence that (A) the party or parties making such Third Party Claim would have
prevailed on the merits of such Third Party Claim and would have been entitled
to the relief they requested, and (B) the amount any such party or parties would
have received (in settlement, as damages or otherwise) would have exceeded the
amount of Liability the Indemnitor reasonably expected to incur had such Third
Party Claim not been settled by the Indemnitee. The foregoing notwithstanding,
the failure of any Indemnitee to give any notice required to be given hereunder
shall not affect such Indemnitee's right to indemnification hereunder except to
the extent the Indemnitor from whom such indemnity is sought shall have been
actually and
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materially prejudiced in its ability to defend the claim or action for which
such indemnification is sought by reason of such failure.
(d) Subsection 10.4(c) notwithstanding, if Buyer and Seller are
both alleged to be responsible with respect to a Third Party Claim which
constitutes both a Buyer Indemnified Environmental Claim and a Seller
Indemnified Environmental Claim, Buyer and Seller shall only participate in the
defense thereof with separate counsel of their own choice and at their own
expense, subject to the rights of each party to seek indemnification under
Section 10.2 or 10.3, as the case may be, for such expenses including fees and
costs for attorneys and experts. The liability of Buyer Indemnified Parties, on
the one hand, and Seller Indemnified Parties, on the other, with respect to a
Third Party Claim which constitutes both a Buyer Indemnified Environmental Claim
and a Seller Indemnified Environmental Claim shall be apportioned in accordance
with the provisions of Section 10.2 and 10.3, or to the extent that such
provisions do not allocate responsibility entirely to one of the parties, in
accordance with the parties' (including their respective Affiliates) respective
contributions to the facts and circumstances giving rise to such Third Party
Claim. No such Third Party Claim, except (i) the settlement thereof which
involves the payment of money only (by a party or parties other than the
Indemnitee) or (ii) the investigation, record-keeping, notification, cleanup,
removal, treatment or remediation (by a party or parties other than the
Indemnitee) of Hazardous Material in the air above or in the groundwater,
surface water or soil on, under or about, or emanating from, the properties
included in the Assets and, in either such case, for which the Indemnitee is
released by the third party claimant or is totally indemnified by the
Indemnitor, may be settled by the Indemnitor without the written consent of the
Indemnitee; provided, however, that no such settlement may be effected without
consent if the actions to be taken pursuant to clause (ii) would materially
interfere with the business or operations conducted with the Assets. To the
extent there is a dispute between Buyer and Seller as to the appropriate
allocation of responsibility for an Environmental Claim or other Loss, but Buyer
and Seller nonetheless agree that there is no dispute as to a particular portion
of such Environmental Claim or other Loss, Buyer or Seller, as the case may be,
shall immediately assume full responsibility for that portion of such
Environmental Claim or other Loss, as to which it has acknowledged its
responsibility, provided that such assumption of responsibility shall not
prejudice such party's rights as to the disputed portion of such Environmental
Claim or other Loss.
(e) In any dispute between Buyer and Seller regarding (i)
whether and the extent to which a Release of a Hazardous Material occurred after
Closing or whether and the extent to which it arose before Closing, or (ii)
whether clause (ii) of the 10.2 Proviso has been met with respect to the
existence of a condition at the Closing Date, Seller shall bear the burden of
proof with respect to such matter by a preponderance of evidence. The burden
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and standard of proof in all other matters shall be determined in accordance
with applicable law.
(f) Payment by an Indemnitee to a third Person with respect to
a Loss shall not affect such Indemnitee's rights to indemnification pursuant to
this Article X.
10.5 LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding any
provision to the contrary in this Agreement or any of the Ancillary Agreements,
there shall be no time, dollar or other limitation on indemnification claims of
Buyer made pursuant to clauses (b), (c), (d), (e), (f) or (g) of Section 10.2 or
of Seller made pursuant to clauses (b), (c), (d), (e) or (f) of Section 10.3. No
claim or claims may be made against an Indemnitor for indemnification pursuant
to clause (a) of either Section 10.2 or Section 10.3, as the case may be, unless
and until the Losses of the Indemnitee (including all of its Affiliates) with
respect to such clause shall exceed an aggregate amount equal to $2,000,000, in
which case the Indemnitor shall be obligated to the Indemnitee for the amount of
all Losses of the Indemnitee (including the first $2,000,000 of Losses of the
Indemnitee required to reach such threshold) subject to the limitations provided
in subsection 10.5(b).
(b) No Indemnitor shall be liable for an indemnification claim
made under clause (a) of Section 10.2 or Section 10.3, as the case may be, (x)
to the extent the asserted Seller Losses (in the aggregate) or Buyer Losses (in
the aggregate), as the case may be, exceed an amount equal to 10% of the
Purchase Price, or (y) for which a claim for indemnification is not asserted
hereunder on or before December 31, 1996. The foregoing limitations shall not
affect or apply to any other indemnification provided by this Agreement,
including those asserted under clauses (b)-(g) of Section 10.2 or clauses
(b)-(f) of Section 10.3 or any matters described in Section 10.6.
(c) Notwithstanding any other provision of this Agreement, as
between any Buyer Indemnified Party and Seller, following the Closing Date,
Seller's obligations to any Buyer Indemnified Party with respect to Seller
Indemnified Environmental Claims, whether at law, in equity, pursuant to this
Agreement or otherwise, shall not include the following matters, for which Buyer
hereby forever relieves, releases and discharges the Seller Indemnified Parties
and their successors and assigns from any and all Liabilities, Actions, Buyer
Losses, future claims and causes of action arising therefrom or related thereto:
(i) any Liability for or arising from asbestos, radon, lead paint or other
building or construction materials that are lawfully present, or any lawfully
used or stored Hazardous Material existing, in, inside or on the improvements
(including structures or equipment) located on the Real Property (except that
this subsection 10.5(c)(i) shall not apply to any personal injury action
relating to exposure to such substances prior to Closing); (ii) any Liability
for diminution in property value of any of the Real Property (including lost
profits and lost rent) caused by the presence of Hazardous Material in the
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soils, groundwater, surface water or air on, under, about or emanating from any
of the properties owned, leased, used, possessed or operated by Seller or any of
its subsidiaries which are included in the Assets (including the Real Property);
(iii) any Liability for consequential damages (including lost profits and lost
rent) relating to the presence of Hazardous Material in the soils, groundwater,
surface water or air on, under, about or emanating from any of the properties
owned, leased, used, possessed or operated by Seller or any of its subsidiaries
which are included in the Assets (including the Real Property); or (iv) the
performance of any Response Action (as defined in CERCLA, 42 U.S.C. Section
9601(25)), except as required by this Agreement, by any Governmental Orders or
except as set forth in a fully self-executing Environmental Law or Environmental
Permit (i.e., an Environmental Law or Environmental Permit that requires that
actions be taken without the need for a Governmental Order, such as the
requirement to notify a Governmental Authority in the event of a spill of
Hazardous Material). Subsection 10.5(c)(ii) and (iii) above shall not be deemed
to include lost profits or lost rents or other consequential damages asserted by
a third party other than parties having a subsequent interest in such Real
Property. With regard only to the limited release set forth in the first
sentence of this subsection 10.5(c), Buyer and Seller each acknowledge that it
has read and is familiar with, and hereby waives the benefit of, the provisions
of California Civil Code Section 1542, which is set forth below:
"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."
The inclusion of the Civil Code Section 1542 provision above is not intended and
shall not be deemed to extend the scope of the release provided by this
subsection 10.5(c) beyond the scope of the first sentence of this subsection
10.5(c).
(d) Except as provided in the Ancillary Agreements, Seller
shall have exclusive control of and sole discretion as to all record-keeping,
notifications, investigations, cleanup, removal, treatment or remediation
related to Seller Indemnified Environmental Claims, including as to the work
plans developed and implemented, the methods employed, the consultants and other
agents retained and the optimal time periods for discharging such
responsibility, provided that Seller takes such actions in compliance with all
applicable laws, including Environmental Laws, Environmental Permits and
Governmental Orders and without unreasonably interfering with the conduct of the
Business. In consideration of Buyer's covenant set forth in Section 7.11, Buyer
shall have unlimited rights to discuss with any Governmental Authority its views
with respect to such actions and to take any position in opposition to any
position taken by Seller before any Governmental Authority. Nothing in this
subsection 10.5(d) shall
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be construed as limiting, expanding, modifying or affecting in any way any
rights Buyer may otherwise have to discuss such matters with any Third Party.
Seller shall keep Buyer reasonably informed concerning its activities undertaken
for cleanup, removal, treatment or remediation in connection with any Seller
Indemnified Environmental Claim.
(e) In the event that Buyer determines to improve, repair or
modify any of the properties included in the Assets (including redeveloping any
of the Real Property, remodeling buildings, razing buildings, erecting new
structures or changing land uses) and Buyer requests that Seller, or Seller
otherwise is required as a result of such determination to, move, modify or
replace wells, piping, treatment systems, monitoring systems and other equipment
and instruments previously installed by Seller in connection with Environmental
Claims, Seller shall take such actions within a reasonable time following
approval by appropriate Governmental Authorities, and shall have exclusive
control of and sole discretion as to the taking of such actions. Buyer shall (x)
reimburse Seller for the reasonable expenses and costs Seller bears as a result
of taking such actions and (y) indemnify and hold harmless the Seller
Indemnified Parties from (in accordance with this Article X) all Seller Losses
incurred by the Seller Indemnified Parties in connection with such actions,
except Seller Losses arising out of the negligence or willful misconduct of
Seller or its agents.
(f) Buyer agrees to cooperate with and assist Seller in
undertaking any of the activities covered by subsections 10.5(d) through
10.5(f). In the event that Seller requests Buyer's cooperation or assistance
with the implementation of such activities, such cooperation or assistance shall
be at Seller's sole cost and expense, except with respect to incidental costs
and expenses, which shall be borne by Buyer. Among other things, Buyer will
allow Seller, its agents, contractors and/or subcontractors to move any
temporary structures, equipment, refuse or other materials from surface areas as
Seller or its contractors deem reasonably necessary to implement such
activities. Buyer agrees not to damage any structures or systems installed or
implemented as part of Seller's cleanup, removal, treatment or remediation
activities related to Seller Indemnified Claims.
(g) With respect to the definition of "Hazardous Material" used
in this Agreement, such definition, when used with respect to Seller's
obligations to investigate or remediate any Hazardous Materials otherwise
required under subsection 10.2, shall include any substance that is a Hazardous
Material as of the Closing and any substance that later becomes a Hazardous
Material pursuant to any enactment or amendment of any Environmental Laws.
(h) The term "Incremental Costs" as used in this Article X
shall refer to any costs that Seller actually incurs as a result of any Release
after Closing of any Hazardous Material by Buyer that Seller would not have
incurred but for that Release. With respect to the actual performance of and
payment for any response
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action required as a result, and to the extent, of any Release of any Hazardous
Material by Buyer described in subsection 10.3(e)(iii) above, the parties agree
to the following allocation: (i) Buyer shall perform at its sole expense all
required immediate response actions (e.g., containing the Release, notifying the
appropriate regulatory agencies and taking all other required short-term
actions); (ii) Buyer shall perform at its sole expense all required soil-related
investigation and remediation of such Hazardous Materials in soils areas that
Seller is not obligated to, or has not otherwise agreed to, investigate or
remediate (e.g., a soils removal where required by a Governmental Authority in
an area where Seller is not required to perform a soils removal); (iii) Buyer
shall perform at its sole expense all required groundwater-related investigation
and extraction for such Hazardous Materials in groundwater areas that Seller is
not obligated to, or has not otherwise agreed to, investigate or extract (e.g.,
installation of a source control extraction well if required by a Governmental
Authority); (iv) Seller shall perform at its expense, except for all Incremental
Costs, which shall be paid by Buyer, all required soil-related investigation and
remediation for such Hazardous Materials in soils areas that Seller is obligated
to, or has otherwise agreed to, investigate or remediate; (v) Buyer shall
perform at its sole expense all treatment of groundwater for groundwater that a
Governmental Authority requires to be treated and that cannot feasibly be
treated in any of Seller's existing groundwater treatment systems without
incurring Incremental Costs for modifying such system that would exceed the
costs of Buyer constructing a new and separate treatment system; and (vi) Seller
shall perform at its expense, except for all Incremental Costs, which shall be
paid for by Buyer, all treatment of groundwater for groundwater that a
Governmental Authority requires to be treated and that can feasibly be treated
in any of Seller's existing groundwater treatment systems, in circumstances
where the Incremental Costs of the modifications to such system would not exceed
the costs of Buyer constructing a new and separate treatment system.
Notwithstanding any other provision of this Agreement, as between any Seller
Indemnified Party and Buyer, following the Closing Date, Buyer's obligations to
any Seller Indemnified Party with respect to any Release of any Hazardous
Material by Buyer or its Affiliates after the Closing Date shall be limited to
Incremental Costs. Nothing in this subsection 10.5(h) shall apply to the
performance of any response action that results entirely from a Seller
Indemnified Environmental Claim. "Required" in this subsection 10.5(h) shall
mean as required by any Governmental Order or fully self-executing Environmental
Law.
(i) The provisions of Article X constitute the exclusive
remedies of the Buyer Indemnified Parties with respect to Seller Indemnified
Environmental Claims, except that Buyer's rights under Environmental Laws and
with respect to environmental liabilities shall survive if the indemnification
in clause (d) of Section 10.2 or in the 10.2 Proviso is determined to be
unenforceable pursuant to CERCLA, 42 U.S.C. Section 9607(e), under any
comparable provision under state law, or under any other Environmental Law that
generally prohibits private party indemnification for environmental
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liabilities. The survival of Buyer's rights in the prior sentence and Buyer's
remedies thereunder shall be limited to the extent that Buyer would have
otherwise been entitled to such remedies under the indemnification in clause (d)
of Section 10.2 or in the 10.2 Proviso were it not for the inability of Buyer to
enforce such indemnification as provided in the prior sentence. The survival of
Buyer's rights under this subsection 10.5(i) shall be terminated in the event
that Buyer advocates before any Governmental Authority that the indemnification
in clause (d) of Section 10.2 or in the 10.2 Proviso is unenforceable.
10.6 TAX MATTERS. In addition to this Article X, the rights and
obligations of the parties with respect to indemnification for any and all Tax
matters shall be governed by Article XI to the extent expressly provided
therein.
ARTICLE XI
TAX MATTERS
11.1 TAX CHARACTERIZATION. (a) For Income Tax purposes, Seller
and Buyer shall treat the transactions contemplated by this Agreement, other
than the transactions referred to in Section 2.4, as a sale of the EDB Assets
directly from Seller to Buyer in consideration for the Purchase Price allocable
to the EDB Assets and the Assumed Liabilities (other than Liabilities of Foreign
Sellers or Varian Canada), followed by contribution of the EDB Assets by Buyer
to EDB Subsidiary. Buyer and Seller shall report such purchase and sale under
this Agreement consistent with such treatment; Buyer and Seller shall not take a
position or an action contrary thereto unless required to do so by applicable
Tax Laws with respect to Income Taxes pursuant to a determination as defined in
Section 1313(a) of the Code.
(b) With respect to the purchase and sale of the EDB Stock
hereunder, Seller and Buyer shall jointly make a protective Section 338(h)(10)
Election with respect to EDB Subsidiary in accordance with applicable Tax Laws
and as set forth herein.
(c) Buyer and Seller shall be responsible for the preparation
and timely filing of all protective Section 338 Forms in accordance with
applicable Tax Laws and the terms of this Agreement. Upon request from Buyer,
Seller shall execute and deliver to Buyer such documents or forms as are
reasonably requested and are required by any Tax Laws in order to properly
complete the Section 338 Forms at least 20 days prior to the date such Section
338 Forms are required to be filed. Seller shall provide Buyer with such
information as Buyer reasonably requests in order to prepare the Section 338
Forms within 30 days of Buyer's request for such information or such shorter
period as is necessary to comply with applicable Tax Laws. Notwithstanding the
foregoing, Buyer shall request any such information as promptly as practicable
following the Closing Date.
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11.2 ALLOCATION OF PURCHASE PRICE. Prior to the Closing Date,
Buyer and Seller shall prepare and agree upon an estimate concerning the
computation of the sale price or Modified Aggregate Deemed Sale Price (as
defined under applicable Treasury Regulations), as the case may be, of the
Assets in accordance with the terms hereof (which shall include in the sale
price or Modified Aggregate Deemed Sale Price, as the case may be, the amounts
paid by Buyer or its Affiliates pursuant to Sections 2.8, 3.1 and 3.3) and the
allocation of such sale price or Modified Aggregate Deemed Sale Price, as the
case may be, among such Assets. After the Closing Date, but in no event later
than 60 days after the Closing Date (unless a longer period of time is required
pursuant to Section 2.8(b)), Buyer and Seller shall prepare and agree upon a
final sale price or Modified Aggregate Deemed Sale Price, as the case may be,
and an allocation of such sale price or Modified Aggregate Deemed Sale Price, as
the case may be, among such Assets based upon the fair market value of the
Assets as determined by an appraisal conducted by such firm as Buyer shall
select (the "Appraiser") whose costs, fees and expenses shall be shared equally
by Seller and Buyer. All values contained in the final allocation shall be
consistently reported for Tax purposes in accordance with the procedures
reflected herein.
11.3 TAXES BEFORE AND AFTER THE CLOSING DATE. (a) Seller will
include the Income Tax items of EDB Subsidiary on the Seller's consolidated
federal Income Tax Returns for all periods ending on or before the Closing Date.
Any Income Tax items of EDB Subsidiary will be apportioned to the period up to
and including the Closing Date and the period after the Closing Date by closing
the books of EDB Subsidiary as of the end of the Closing Date.
(b) Notwithstanding any Tax sharing agreement or arrangement to
the contrary, Seller shall be liable for, and shall indemnify Buyer, EDB
Subsidiary and Buyer's other Affiliates from and against, all Taxes payable by,
or due from, Seller, any Foreign Seller, Varian Canada, Buyer, any Affiliate of
Buyer or EDB Subsidiary (other than an Assumed Liability described in Section
3.1(a) or 3.3) attributable to the operations, activities or transactions of the
Business for all periods up to and including the Closing Date and to the
transactions contemplated herein.
(c) Buyer shall be liable for, and shall indemnify Seller, each
Foreign Seller and Varian Canada from and against, all Taxes payable by, or due
from, Buyer, EDB Subsidiary, Buyer's other Affiliates, Seller, each Foreign
Seller or Varian Canada attributable to the operations of the Business after the
Closing Date.
(d) State and local real and personal property Taxes relating
to the Assets for the Tax period in which the Closing Date occurs shall be
prorated between Buyer and Seller on the following basis: Seller shall be
responsible for the payment of all such Taxes for the period up to and including
the Closing Date; and Buyer shall be responsible for payment of all such Taxes
for the period after the Closing Date. All such Taxes assessed on an
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annual basis shall be prorated on the assumption that an equal amount of Tax
applies to each day of the year, regardless of how installment payments are
billed or made. Any supplemental property Taxes or assessments which arise out
of a revaluation of an Asset which revaluation would not have occurred except
for the change in ownership of the Asset shall be borne by Buyer. Any payments
of such Taxes due from one party to the other pursuant to this subsection
11.3(d) shall be paid at the Closing Date. Any amount of such Taxes reflected on
the Closing Balance Sheet shall be deemed to have been paid at the Closing Date;
provisions, accruals, reserves and like items shall be deemed to have been paid
by the Seller (or Foreign Seller or Varian Canada, as the case may be) and
prepaid items shall be deemed to have been paid by the Buyer (or Affiliate of
Buyer, as the case may be). If such Taxes and assessments are not available as
of the Closing Date, for purposes of apportionment between Buyer and Seller and
payment pursuant to this subsection 11.3(d), the amount thereof shall be
estimated on the basis of the prior year's Taxes and assessments and any
incremental payment shall be adjusted after receipt of the final Tax statements,
but in any event within 15 days after such statements are provided by one party
to the other.
(e) Seller shall be entitled to any credits or refunds of any
Tax paid by Seller, any Foreign Seller or Varian Canada, and not indemnified by
Buyer or a Buyer Affiliate, and any interest thereon. Buyer shall be entitled to
any credits or refunds of any Tax paid by Buyer or a Buyer Affiliate and not
indemnified by Seller, a Foreign Seller or Varian Canada, and any interest
thereon. Any amounts of Tax reflected on the Closing Balance Sheet shall be
deemed to have been paid at the Closing Date; provisions, accruals, reserves and
like items shall be deemed to have been paid by Seller (or Foreign Seller or
Varian Canada, as the case may be) and prepaid items shall be deemed to have
been paid by Buyer (or an Affiliate of Buyer, as the case may be). A party
entitled to credit or refund under this Section 11.3(e) shall be entitled to
reasonably prosecute the Action for refund at its own expense and in the name of
the party nominally entitled thereto, which party shall execute all documents
and do any and all things reasonably requested by the party entitled to such
credit or refund, provided that such party is promptly reimbursed by the party
entitled to credit or refund for its costs and expenses in connection therewith
other than general and administrative expense. A party receiving an amount in
respect of a refund or credit to which another party is entitled pursuant to
this subsection 11.3(e) shall make payment thereof to such party in immediately
available funds promptly upon receipt of any such refund or credit.
11.4 ACCESS. Without limiting the generality of Section 7.5,
after the Closing, Buyer and Seller shall make available to the other, and to
any Taxing Authority, as reasonably requested, all information, records or
documents relating to Tax Liabilities or potential Tax Liabilities of or
relating to the Business for all periods prior to or including the Closing Date
and shall preserve all such information, records and documents until the
expiration of any applicable statute of limitations or extensions thereof.
Buyer
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shall prepare and provide to Seller any federal, state, local or foreign Tax
data and other information, including such information reasonably required by
Seller's customary tax and accounting questionnaires, requested by Seller for
Seller's use in preparing its Tax Returns. Such Tax data and other information
shall be prepared by Buyer and provided to Seller within 90 days after the
Closing Date. Each party shall bear its own expenses in complying with the
foregoing provisions.
11.5 NOTIFICATION AND DEFENSE. (a) Buyer shall promptly notify
Seller in writing upon receipt by Buyer, any Affiliate of Buyer or the Business
of notice of any pending or threatened Action (including but not limited to,
determinations as to the timing of payment of Taxes not yet required to be paid)
relating to any Tax of the Business, or to Tax Returns reflecting operations of
the Business, for periods ending on or prior to the Closing Date. Seller shall
have the sole right to represent the taxpayer's interest in any such Action, and
to employ counsel of its choice at its expense, upon reaffirming its obligation
to indemnify Buyer and any of its Affiliates in respect thereof. Seller shall
reasonably keep Buyer advised and shall reasonably consult with Buyer with
respect to such controversy and prior to entering into any consensual resolution
of such controversy that may materially affect Buyer. Buyer agrees that it will
cooperate fully with Seller and its counsel, at Seller's sole cost and expense,
in the defense against or compromise of any claim in any such Action.
(b) Buyer and EDB Subsidiary shall have full responsibility and
discretion in handling of any Tax controversy involving EDB Subsidiary or the
Assets for periods ending after the Closing Date. Seller shall promptly notify
Buyer in writing upon receipt by Seller of notice of any pending or threatened
Action relating to any Tax of the Business, or to Tax Returns reflecting
operations of the Business, for periods after the Closing Date. Buyer shall have
the sole right to represent the taxpayer's interest in any such Action
(including but not limited to, determinations as to the timing of payment of
Taxes not yet required to be paid) and to employ counsel of its choice at its
expense, upon reaffirming its obligation to indemnify Seller and any of its
Affiliates in respect thereof. Buyer shall reasonably keep Seller advised and
shall reasonably consult with Seller with respect to such controversy and prior
to entering into any consensual resolution of such controversy that may
materially affect Seller. Seller agrees that it will cooperate fully with Buyer
and its counsel, at Buyer's sole cost and expense, in the defense against or
compromise of any claim in any such Action.
(c) Notwithstanding the foregoing, any Action with respect to
property taxes for the period in which the Closing Date occurs which relates to
the EDB Assets shall be conducted jointly by Seller and Buyer, and the expenses
thereof shall be prorated in accordance with subsection 11.3(d).
11.6 TAX RETURNS. Seller shall file or cause to be filed when
due all Tax Returns relating to the Business for periods
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ending on or prior to the Closing Date. Buyer shall file or cause to be filed
when due all Tax Returns relating to the Business for all periods ending after
the Closing Date.
11.7 PAYROLL TAXES. Payroll withholding and Tax reporting by
Seller with respect to employees of the Business will be terminated as of the
Closing Date and Seller will pay over to appropriate Governmental Authorities,
in accordance with applicable law and regulations, all amounts withheld on or
before the Closing Date. Seller shall issue, by the date prescribed by the
applicable IRS or Revenue Canada requirements, Forms W-2 and T-4 for wages paid
through the Closing Date. Buyer shall be responsible for all payroll withholding
and Tax reporting resulting from the operation of the Business on and after the
Closing Date. Seller will supply Buyer with such information in its possession
regarding employees of the Business for the period between January 1, 1995 and
the Closing Date as may be reasonably necessary for Buyer and EDB Subsidiary to
carry out their payroll tax withholding and reporting responsibilities.
11.8 CONSOLIDATED TAX LIABILITY. Notwithstanding any Tax
sharing agreement or arrangement to the contrary, Seller shall indemnify Buyer
and EDB Subsidiary for any Income Tax with respect to any Consolidated Return
which includes any member of the Seller Group, except Income Tax described in
subsection 11.3(c).
11.9 TAXES RELATING TO TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT. All Taxes imposed in connection with the transfer of the Assets or
the sale of the EDB Stock contemplated by Article II of this Agreement, whether
such Taxes are assessed initially against Buyer, EDB Subsidiary or any other
Affiliate of Buyer or the Seller Group, shall be borne and paid by the Seller
Group, and Buyer, EDB Subsidiary and any other Affiliate of Buyer shall have no
liability therefor, and Seller agrees to indemnify Buyer, EDB Subsidiary and any
other Affiliate of Buyer from and against any and all such Taxes, if any,
imposed in connection with such transfers of the Assets and such stock.
11.10 PAYMENTS. Unless otherwise provided herein, all payments
of indemnification of Tax to be made under this Article XI shall be made in
immediately available funds within ten (10) Business Days of receipt of a
written notice from the party entitled to indemnification which sets forth in
reasonable detail the basis and an explanation of the claim hereunder, but in no
event earlier than one Business Day before the date on which such Tax is
required to be paid to the relevant Taxing Authority.
ARTICLE XII
EMPLOYEES AND EMPLOYEE BENEFIT PLANS
12.1 EMPLOYEES. (a) Buyer agrees that it shall cause EDB
Subsidiary and other Affiliates of Buyer to offer employment to each of the
employees of the Business who are identified by payroll code or otherwise on
Schedule 12.1 (collectively, "Employees"), such employment to be effective as of
the Closing Date. Such
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employment shall be offered on terms which include, but shall not be limited to,
the position, title and level of responsibility and the rate of wages or salary
that each Employee enjoys and is entitled to receive from Seller immediately
before the Closing and participation in a cash bonus plan and coverage under
health (other than any retiree medical coverage), group term life, disability,
severance, vacation, sickness, and holiday policies or plans that are reasonably
comparable to those that each Employee enjoys as of the Closing Date (provided
that (1) although such policies or plans will be effective as of the Closing
Date, they may be implemented by Buyer either prior to or within a reasonable
time thereafter, and (2) Buyer shall have no obligation to offer any benefits
comparable to those provided under Seller's Employee Stock Purchase Plan,
Omnibus Stock Plan (including each of the stock option, restricted stock and
stock appreciation rights plans thereunder)), and Buyer may establish such other
employment terms and policies as Buyer shall determine in its sole and absolute
discretion (collectively, "Buyer's Employment Policies"). Buyer shall pay, and
shall indemnify Seller against any losses arising from, any and all Liabilities
arising from Buyer's Employment Policies and applicable law subsequent to the
Closing Date.
(b) Seller agrees that it shall pay, and shall indemnify Buyer
against, any Buyer Losses arising from any and all Liabilities arising before,
on or after the Closing Date that (i) result from, directly or indirectly, the
election of any Employee to reject Buyer's or Buyer's Affiliate's offer of
employment under this Section 12.1 or to accept such employment and nonetheless
make a claim for severance or other benefit with respect to such Employee's
employment by Seller or an Affiliate of Seller under Seller's Employment
Policies, or (ii) are attributable to Seller's or its Affiliate's employment
terms and policies applicable to the Employees existing before or on the Closing
Date, including Seller's or its Affiliate's severance policies,
reduction-in-force policy or other wage, salary and bonus arrangements, employee
benefit plans, policies with respect to personal paid leave (regular sick leave
and vacation pay), Seller's Cash Profit-Sharing Plan, all agreements, plans and
arrangements set forth in Disclosure Schedule Section 5.10(a), and any other
employment plans or practices of Seller or its Affiliates as well as any
employment or labor laws applicable to such Employee and his or her employment
with Seller or its Affiliates, whether domestic or foreign ("Seller's Employment
Policies"); provided, however, that, Seller shall not be responsible for payment
or indemnification of any such Liability set forth in clauses (i) or (ii) above
to the extent such Liability is reflected as an accrued liability on the Closing
Balance Sheet; and provided, further, that Buyer shall have no responsibility
under any medical plan it may establish to cover any claim for any medical
expense actually incurred prior to the Closing Date, nor shall Buyer have any
responsibility for the payment of any long-term disability benefit under any
plan, program or practice if liability with respect to such disability shall
have been established under Seller's long-term disability plan prior to the
Closing Date. Seller further
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agrees to indemnify Buyer against any Liabilities arising from claims of
employees of Seller who are not Employees.
12.2 BENEFIT PLANS. (a) Seller shall make company basic and
profit-sharing contributions to its Retirement and Profit Sharing Program (the
"Old Plan") for the plan year ended September 29, 1995 for the benefit of any
Employee who both (i) was a participant in the Old Plan immediately prior to the
Closing, and (ii) was otherwise eligible under the Old Plan to receive such
contributions had he or she remained an employee of Seller. The amount of any
such contribution shall be the amount which would have been contributed with
respect to each such Employee had he or she remained an employee of Seller
through the Closing Date; provided, however, that only compensation paid or
accrued by Seller through the Closing Date shall be taken into account in
determining the amount of such contribution.
(b)(i) As of the Closing Date, Buyer shall cause EDB
Subsidiary to cause the participants in the Old Plan who accept EDB
Subsidiary's offer of employment pursuant to Section 12.1 (the
"Transferred Participants") to be covered by a plan (the "New Plan")
qualified under Section 401 of the Code and substantially similar to
the Old Plan (but with no obligation on the part of Buyer or its
Affiliate to provide the same contribution level) under which the
interests of the Transferred Participants in the Old Plan may be held.
EDB Subsidiary shall at such time or as soon thereafter as is
reasonably practicable notify Seller of the name of such New Plan and
the identity of the trustee and shall provide Seller with such
additional information as Seller may reasonably require to carry out
the terms of this subsection 12.2(b). Promptly after the Closing, EDB
Subsidiary shall apply for a favorable determination letter regarding
the New Plan's qualification under Section 401(a) of the Code and shall
take all actions necessary in order to obtain such letter, including
making all necessary or appropriate changes to the terms of the New
Plan. Seller shall thereafter cause the trust fund under the Old Plan
to transfer to the trust fund under the New Plan, for the exclusive
benefit of Transferred Participants, assets having a value equal to the
aggregate value of the accounts of all of the Transferred Participants,
as of the most recent date on which the interests of the Transferred
Participants shall have been revalued. In any event, any such transfer
shall be carried out in such manner as to permit compliance with the
provisions of Section 414(1) of the Code. During the period prior to
the transfer referred to herein, the trust fund under the Old Plan may
pay to, or in respect of, participants in the Old Plan who are employed
by EDB Subsidiary any benefits to which such persons may then be
entitled based on service prior to the Closing Date, provided that any
employee who is in the employ of EDB Subsidiary on or after the Closing
Date shall not be deemed to have terminated his service for purposes of
the Old Plan.
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(ii) As of the Closing Date, Buyer or its Affiliate shall
cause the participants in the Profit-Sharing Retirement Plan of Varian
Canada, Inc. (the "Old Ontario Plan") who accept the offer of
employment pursuant to Section 12.1 (the "Transferred Ontario
Participants") to be covered by a registered defined contribution
pension plan (the "New Ontario Plan") which is substantially similar to
the Old Ontario Plan (but with no obligation on the part of Buyer or
its Affiliate to provide the same contribution level). At Closing, or
as soon thereafter as is reasonably practicable, Buyer shall notify
Seller of the name of such New Ontario Plan and the identity of the
trustee of such plan and at all times shall provide Seller with such
additional information as Seller or Varian Canada may reasonably
require to carry out the terms of this subsection 12.2(b)(ii). Promptly
after Closing, Buyer or its Affiliate shall apply for registration of
the New Ontario Plan under the Income Tax Act (Canada) and the Pension
Benefits Act (Ontario) and shall take all actions necessary in order to
obtain such registration, including making all necessary or appropriate
changes to the terms of the New Ontario Plan. Seller shall, or shall
cause Varian Canada to, thereafter prepare and submit applications and
all other required materials to Revenue Canada, Taxation and the
Pension Commission of Ontario to permit the trustee of the Old Ontario
Plan to transfer to the trustee of the New Ontario Plan, for the
exclusive benefit of the Transferred Ontario Participants, assets
having a value equal to the aggregate value of the member accounts of
all of the Transferred Ontario Participants, as of the most recent date
on which the interests of the Transferred Ontario Participants shall
have been revalued. In any event, any such transfer shall be carried
out in such manner as to comply with the provisions of the Income Tax
(Canada), the Pension Benefits Act (Ontario) and policies of Revenue
Canada, Taxation and the Pension Commission of Ontario. During the
period prior to the transfer of assets referred to herein, Buyer and
Seller (including Varian Canada) agree that the trustee under the Old
Ontario Plan may pay to, or in respect of, Transferred Ontario
Participants benefits to which such persons may then be entitled based
on service prior to the Closing Date, provided that any such
participant who is in the employ of Buyer or its Affiliate on or after
the Closing Date shall not be deemed to have terminated his service for
purposes of the Old Ontario Plan. Buyer and its Affiliate acknowledge
that: (1) part of the assets of the Old Ontario Plan are held under a
trust agreement with Confederation Life Insurance Company ("Confed
Life"), (2) Confed Life is in the process of being wound up and
liquidated and (3) such assets held by Confed Life cannot be
transferred until all necessary approvals have been obtained under the
winding up proceedings.
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(c) Seller shall also make a cash payment to each Employee who
was covered immediately prior to the Closing Date under Seller's Cash
Profit-Sharing Plan. Such payment shall be made when required by the terms of
such plan and shall be determined as if such Employee had remained an employee
of Seller through September 29, 1995, based on compensation paid or accrued by
Seller through the Closing Date. Neither Buyer nor any of its Affiliates shall
be required to establish a cash profit-sharing plan for the benefit of
Employees, and Seller shall indemnify Buyer and its Affiliates against any and
all Liabilities arising from or relating to Seller's Cash Profit-Sharing Plan,
including any claim by Employees pertaining to an election by Buyer and its
Affiliates not to establish a comparable cash profit-sharing plan.
12.3 CERTAIN PGTP EMPLOYEES. Notwithstanding any other
provision of this Agreement, Seller shall reimburse Buyer for severance payments
made to any Employee employed immediately before the Closing at the Business'
Salt Lake City facility (a "PGTP Employee") who accept employment with Buyer as
of the Closing Date but whose employment with Buyer is subsequently terminated
by Buyer due to a job elimination caused by Buyer's relocation of its Salt Lake
City manufacturing operation; provided, however, that (a) Seller shall not be
obligated to reimburse Buyer for severance payments to the extent such payments
exceed the amount which Seller would have been obligated to pay to the PGTP
Employee for the period up to and including the Closing Date under Seller's
written severance policy in effect on the Closing Date; and (b) Buyer shall give
Seller at least ten days' written notice prior to terminating any PGTP Employee
on the basis of Buyer's relocation of its Salt Lake City manufacturing operation
so as to allow Seller to make an offer of employment to such PGTP Employee,
which offer may require the PGTP Employee to waive his or her right to receive
any severance payment from Buyer, in which case Seller shall not be obligated to
reimburse Buyer for any severance payment actually made to such PGTP Employee.
12.4 COBRA. With respect to Employees, Seller will continue to
provide for "continuation coverage" to or for the benefit of each "covered
employee" and each "qualified beneficiary" entitled thereto by applicable law
(as such terms are defined in Code Section 4980B) and shall otherwise comply in
all respects with the requirements (including notice requirements) of Code
Section 4980B as to each such covered employee and each such qualified
beneficiary with respect to whom a "qualifying event" (as defined in Code
Section 4980B) has occurred (or will occur) through the Closing Date, including
any such qualifying event that may occur as of the Closing or as a result of the
consummation of the transactions contemplated by this Agreement. Buyer shall,
within 30 days after Seller's written request to furnish Seller with copies of
Buyer's or its Affiliates' health plan and the summary plan description for
Buyer's or its Affiliates' health plan, furnish such copies to Seller.
12.5 NO THIRD-PARTY BENEFICIARIES. No provision of this
Agreement shall create any third party beneficiary or other right
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in any Employee (including any beneficiary or dependent thereof) in respect of
continued employment with Buyer or its Affiliates or in respect of any benefits
that may be provided, directly or indirectly, under any benefit plan or program
maintained by Buyer or its Affiliates.
12.6 CESSATION OF PARTICIPATION UNDER SELLER'S PLANS. Subject
to Seller's satisfaction of the requirements of this Article XII, the Employees
shall cease as of the Closing Date to participate in, or accrue benefits under,
the plans and agreements set forth in Disclosure Schedule 5.10(a). Buyer or its
Affiliates shall grant prior service credit under its employee benefit plans,
programs and policies to each Employee hired by Buyer based on the service date
used by Seller in determining his or her service credit under Seller's employee
benefit plans, programs and policies.
12.7 TERMINATION OF CONFIDENTIALITY AND RELATED AGREEMENTS.
Seller agrees that any provisions of any trade secret, confidentiality,
non-compete or comparable agreements entered into prior to the Closing between
Seller or its Affiliates, on the one hand, and any person who becomes an
employee of Buyer, its Affiliates or EDB Subsidiary in connection with the
transactions contemplated hereby, on the other hand, shall be deemed terminated
and of no further force or effect as of the Closing to the extent, and only to
the extent, such provision relates to information of the Business.
ARTICLE XIII
TERMINATION
13.1 TERMINATION. This Agreement may be terminated at any time
prior to the Closing:
(a) by the mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller, if the Closing shall not have
occurred by August 15, 1995; provided, however, that the right to terminate this
Agreement pursuant to this subsection 13.1(b) shall not be available to any
party or parties whose failure to fulfill any obligation under this Agreement
shall have been the cause of, or shall have resulted in, the failure of the
Closing to occur prior to such date; or
(c) by Buyer, upon the breach in any material respect of any of
the representations and warranties of Seller contained herein or the failure by
Seller to perform and comply in any material respect with any of the agreements
and obligations required by this Agreement to be performed or complied with by
Seller, provided that such breach or failure does not have a Material Adverse
Effect and otherwise is not cured within 30 days of Seller's receipt of a
written notice from Buyer that such a breach or failure has occurred; or
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(d) by Seller, upon the breach in any material respect of any
of the representations and warranties of Buyer contained herein or the failure
by Buyer to perform and comply in any material respect with any of the
agreements and obligations required by this Agreement to be performed or
complied with by Buyer, provided that such breach or failure is not cured within
30 days of Buyer's receipt of a written notice from Seller that such a breach or
failure has occurred.
13.2 WRITTEN NOTICE. In order to terminate this Agreement
pursuant to Section 13.1, the party so acting shall give written notice of such
termination to the other party, specifying the grounds thereof.
13.3 EFFECT OF TERMINATION. In the event of the termination of
this Agreement in accordance with Section 13.1, this Agreement (other than
Sections 7.7 and 14.1, which shall survive the termination hereof) shall become
void and have no effect, with no liability on the part of any party or its
Affiliates, directors, officers, employees, shareholders or agents in respect
thereof; provided, however, that nothing herein shall relieve any party hereto
from liability for any breach of this Agreement.
13.4 WAIVER. At any time prior to the Closing, Buyer and Seller
may by mutual written agreement (a) extend the time for the performance of any
of the obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein.
ARTICLE XIV
GENERAL PROVISIONS
14.1 EXPENSES, TAXES, ETC. Except as otherwise provided in
Section 11.9, each party will pay all fees and expenses incurred by it in
connection with this Agreement, the Ancillary Agreements and the transactions
contemplated hereby and thereby; provided, however, that all documentary, stamp
and excise taxes and all transfer, filing, recordation and similar taxes and
fees (including all real estate transfer taxes and conveyance and recording
fees), if any, incurred in connection with this Agreement and the transactions
contemplated hereby will be borne by Seller.
14.2 NOTICES. All notices and other communications given or
made pursuant hereto shall be in writing and shall be deemed to have been duly
given or made as of the date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), or sent by facsimile transmission, (confirmation received) to the
parties at the following addresses and facsimile transmission numbers (or at
such other address or number for a party as shall be specified by like notice),
except that notices after the giving of which there is a
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designated period within which to perform an act and notices of changes of
address or number shall be effective only upon receipt:
(a) if to Seller:
Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: Chief Financial Officer
Telecopy No.: (415) 424-5754
Telephone No.: (415) 424-5320
with a copy to:
Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: General Counsel
Telecopy No.: (415) 858-2018
Telephone No.: (415) 424-5352
(b) if to Buyer:
Communications & Power Industries
Holding Corporation
c/o Green Equity Investors II, L.P.
333 South Grand Avenue
Los Angeles, CA 90071
Attention: Gregory J. Annick
Telecopy No.: (213) 625-2043
Telephone No.: (213) 625-0005
with a copy to:
Irell & Manella
333 South Hope Street, Suite 3300
Los Angeles, CA 90071
Attention: Edmund M. Kaufman
Telecopy No.: (213) 229-0515
Telephone No.: (213) 620-1555
14.3 DISCLOSURE SCHEDULE. The Disclosure Schedule shall be
divided into sections corresponding to the sections and subsections of this
Agreement. Disclosure of any fact or item in any section of the Disclosure
Schedule shall, should the existence of the fact or item or its contents be
relevant to any other section of the Disclosure Schedule, be deemed to be
disclosed with respect to that other section or subsection of the Disclosure
Schedule whether or not any explicit cross-reference appears therein. Disclosure
of any matter in the Disclosure Schedule shall not be deemed to imply that such
matter is or is not material. Disclosure of any matter in the Disclosure
Schedule shall not constitute an admission or raise any inference that such
matter constitutes a violation of law or an admission of liability or facts
supporting liability.
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14.4 INTERPRETATION. When a reference is made in this Agreement
to Sections, subsections, Schedules or Exhibits, such reference shall be to a
Section, subsection, Schedule or Exhibit to this Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used herein
shall be deemed in each case to be followed by the words "without limitation."
The word "herein" and similar references mean, except where a specific Section
or Article reference is expressly indicated, the entire Agreement rather than
any specific Section or Article. The table of contents and the headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. Any references to
the "best knowledge" or "knowledge" of a Person shall mean the actual knowledge
of the Persons listed on Schedule 14.4. Except as otherwise expressly provided
herein, all monetary amounts referenced in this Agreement shall mean U.S.
dollars. In the event of any inconsistency or conflict as to the rights and
obligations of the parties under the indemnification provisions of this
Agreement and any Real Estate Documents with respect to environmental matters,
the terms of this Agreement shall control.
14.5 SEVERABILITY. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the greatest extent
possible.
14.6 ASSIGNMENT. This Agreement may not be assigned by
operation of law or otherwise, except that Buyer (including its Affiliates) may
assign its rights and benefits hereunder and under the Ancillary Agreements
(provided that Buyer or its Affiliates, as applicable, shall remain responsible
for its obligations hereunder) (a) to any Person acquiring all or substantially
all of the assets and properties of the Business, as such Business is then
conducted by Buyer, (b) to any Person acquiring a distinct line or division of
such Business, with respect to the rights and benefits of Buyer hereunder that
pertain thereto, and (c) to any Person that provides to Buyer the financing
referred to in Section 8.12 (including any refinancing, replacement,
substitution, modification or other amendment of such financing at any time and
from time to time).
14.7 NO THIRD-PARTY BENEFICIARIES. This Agreement is for the
sole benefit of the parties hereto, Green Equity Investors II, L.P. and their
permitted assigns and nothing herein expressed or implied shall give or be
construed to give to any Person, other than the parties hereto, Green Equity
Investors II, L.P. and such assigns, any legal or equitable rights hereunder.
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14.8 AMENDMENT. This Agreement may not be amended or modified
except by an instrument in writing signed by Seller and Buyer.
14.9 NO OTHER REMEDIES. (a) Except in the event of fraud or as
otherwise provided in Section 10.5(i), any and all remedies herein expressly
conferred upon a party hereby are deemed exclusive of any other remedy conferred
hereby or by law or equity on such party. In particular, except in the event of
fraud or as otherwise provided in Section 10.5(i), or as otherwise determined by
arbitration as provided in Section 14.13, the remedies provided by Article X for
Losses shall be exclusive of any other rights or remedies available to a party
against the other party, either at law or in equity, in relation to any breach,
default or nonperformance of any representation, warranty, covenant, agreement
or undertaking made or entered into by such other party pursuant to this
Agreement (including any Ancillary Agreement), any agreement executed pursuant
to this Agreement or the transactions contemplated hereby; provided that nothing
contained in this Agreement (including any Ancillary Agreement) shall prejudice
the right of a party to seek provisional remedies under the Real Estate
Documents in accordance with California Code of Civil Procedure Section 1281.8
in conjunction with any arbitration as provided in Section 14.13.
(b) Except in the event of fraud, no Action for termination or
rescission, or claiming repudiation, of this Agreement or any agreement or
undertaking made or entered into pursuant to this Agreement (including any
Ancillary Agreement) may be brought or maintained by either party against the
other following the Closing Date no matter how severe, grave or fundamental any
such breach, default or nonperformance may be by one party. Accordingly, the
parties hereby expressly waive and forego any and all rights they may possess to
bring any such Action, except in the event of fraud.
14.10 FURTHER ASSURANCES. Each of Buyer and Seller agrees to
(a) cooperate fully with the other party, and to cause its subsidiaries and
Affiliates to cooperate fully, (b) execute and cause such subsidiaries and
Affiliates to execute such further instruments, documents and agreements, and
(c) give such further written assurances as may be reasonably requested by Buyer
or Seller, as the case may be, to evidence and reflect the transactions
described herein and contemplated hereby and to carry into effect the intents
and purposes of this Agreement. Buyer shall cause EDB Subsidiary (from and after
the Closing), and Buyer's other Affiliates to perform all obligations specified
herein to be performed by EDB Subsidiary and such Affiliates. Subject to and
without limiting Seller's rights under Section 2.9, and except to the extent
prohibited by any law, rule, regulation, Governmental Order or Governmental
Authority, if at any time and from time to time after the Closing (without
limitation as to time or otherwise) Buyer reasonably determines that all of
Seller's or its Affiliate's rights, title and interests in and to an Asset has
failed to be fully contributed or transferred and conveyed in
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accordance with Sections 2.3 or 2.4 to EDB Subsidiary, Buyer or an Affiliate
thereof, as the case may be, then Seller shall cause such Asset to be
contributed or transferred and conveyed as soon as reasonably practicable after
notice from Buyer to EDB Subsidiary, Buyer or an Affiliate thereof in accordance
with Sections 2.3 or 2.4.
14.11 MUTUAL DRAFTING. This Agreement is the joint product of
Buyer and Seller and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of Buyer and Seller and shall not be
construed for or against any party hereto.
14.12 GOVERNING LAW. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of California (without
giving effect to its choice of law principles).
14.13 DISPUTE RESOLUTION. Any dispute, controversy or claim
between the parties relating to, arising out of or in connection with this
Agreement (or any subsequent agreements or amendments thereto), including as to
its existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, whether arising before or after the
termination of this Agreement, shall be settled only by binding arbitration
pursuant to the Commercial Arbitration Rules, as then amended and in effect, of
the American Arbitration Association (the "Rules"), subject to the following:
(a) The arbitration shall take place in Palo Alto, California.
(b) There shall be three arbitrators, who shall be selected
under the normal procedures prescribed in the Rules, except that one such
arbitrator shall be a certified public accountant and one arbitrator (who shall
chair the arbitration panel) shall be a member of the American Board of Trial
Advocates or the American College of Trial Lawyers.
(c) Subject to legal privileges, each party shall be entitled
to discovery in accordance with the Federal Rules of Civil Procedure.
(d) At the arbitration hearing, each party may make written and
oral presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
(e) The arbitrators' decision shall be in writing, shall be
binding and final and may be entered and enforced in any court of competent
jurisdiction.
(f) The arbitrators shall have the authority to grant
injunctive relief and order specific performance.
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(g) No party shall be eligible to receive, and the arbitrators
shall not have the authority to award, exemplary or punitive damages.
(h) The arbitrators shall have the authority to allocate the
fees and expenses of the arbitrators and the American Arbitration Association as
well as the fees and expenses of the parties based upon the arbitrators'
determination as to the merits of the parties' respective positions in the
arbitration. If the arbitrators fail to make a specific determination as to fees
and expenses, then such fees and expenses of the arbitrators and the American
Arbitration Association shall be paid by the parties in equal amounts and the
parties shall each bear their own fees and expenses.
(i) The arbitrators shall adhere to Section 14.12.
14.14 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate counterparts,
each of which when executed shall be deemed to be an original but all of which
taken together shall constitute one and the same agreement.
14.15 ENTIRE AGREEMENT. This Agreement, together with all
Schedules and Exhibits hereto, and the documents and instruments and other
agreements among the parties delivered pursuant hereto, constitute the entire
agreement and supersede all prior agreements and undertakings, both written and
oral, other than the Confidentiality Agreement, among Seller and Buyer with
respect to the subject matter hereof and are not intended to confer upon any
other Person any rights or remedies hereunder, except as otherwise expressly
provided herein.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
VARIAN ASSOCIATES, INC.,
a Delaware corporation
By /s/ Robert A. Lemos
--------------------------------
Name: Robert A. Lemos
Title: Vice President, Finance
and
Chief Financial Officer
COMMUNICATIONS & POWER INDUSTRIES
HOLDING CORPORATION,
a Delaware corporation
By /s/ John G. Danhakl
--------------------------------
Name: John G. Danhakl
Title: President
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Exhibit Number 99:
VARIAN TO SELL ELECTRON DEVICES BUSINESS TO LEONARD GREEN & PARTNERS
Palo Alto, Calif. -- Varian Associates, Inc., and Leonard Green & Partners,
L.P., (LGP) today announced that they have reached an agreement under which
Varian will sell its Electron Devices business to LGP on behalf of its equity
fund, Green Equity Investors II, L.P., for approximately $200 million in cash,
plus the assumption of certain liabilities.
The companies said the transaction is subject to certain customary
conditions and the arrangement of financing, and added that they anticipate
closing the sale within approximately 90 days.
Varian is a diversified, $1.6 billion electronics manufacturer with core
businesses in health care systems, semiconductor manufacturing equipment, and
analytical instruments, in addition to the operations being sold. LGP is a
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private merchant banking firm based in Los Angeles that specializes in
organizing, structuring, and sponsoring management buyouts of established
companies.
Varian had announced that it would seek a buyer for the Electron Devices
business last fall (10/20/94). With net assets of approximately $120 million and
1994 sales of about $250 million, the operations being sold rank as the smallest
of the company's four major businesses. Varian's other businesses are not
involved in the sale.
The units being sold are located in Palo Alto, San Carlos, and Santa Clara,
California; Beverly, Massachusetts; and Georgetown, Ontario, Canada. They employ
approximately 1,700 persons involved in the production and sale of vacuum tubes,
power supplies, amplifiers, and other products, largely for the communications,
medical, and defense markets.
J. Tracy O'Rourke, Varian's chairman and chief executive, said that the
sale of the Electron Devices units allows the company to exit what is largely a
components business and concentrate on its faster growing equipment operations.
He added that he continues to expect that most of the proceeds from the sale
will be used to repurchase shares of Varian stock.
LGP said it would change the name of the operations being acquired to
Communications & Power Industries. "The acquisition of Communications & Power
Industries is an exciting opportunity for our investors," said Leonard Green.
"It is a profitable, well-run enterprise with a record of innovation and
leadership in its markets. In recent years its management has successfully
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instilled a commitment to quality and customer service, and we are looking
forward to working with the executive team to identify new markets and
opportunities for growth."
On completion of the sale, Al D. Wilunowski, Varian executive vice
president and head of the Electron Devices business, will become Chief Executive
Officer of Communications & Power Industries.
"Our acquisition by Leonard Green & Partners creates an excellent
opportunity for the management and employees of these operations," said
Wilunowski. "As a stand-alone company with a more entrepreneurial environment
and an intense focus on our specific business units, we are in a good position
to build on the tradition of excellence and industry leadership we achieved as
part of Varian. LGP has assured us of their commitment to our strategic plan for
growth and to the resources needed to achieve those goals."
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