<PAGE>
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): AUGUST 11, 1995
VARIAN ASSOCIATES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 1-7598 94-2359345
(STATE OR OTHER JURISDICTION (COMMISSION (I.R.S. EMPLOYER
OF INCORPORATION) FILE NUMBER) IDENTIFICATION NO.)
3050 HANSEN WAY
PALO ALTO, CALIFORNIA 94304-1000
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(415) 493-4000
(REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
<PAGE>
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On June 9, 1995, CPII Acquisition Corp., a Delaware corporation ("Buyer")
(formerly, Communications & Power Industries Holding Corporation), entered
into a Stock Sale Agreement (the "Stock Sale Agreement") with Varian
Associates, Inc., a Delaware corporation ("Registrant"), pursuant to which
Buyer agreed to purchase substantially all of Registrant's Electron Devices
business (the "Business"). The Business, one of Registrant's four core
businesses, develops, manufactures and distributes microwave tubes, power grid
tubes, microwave amplifiers, modulators and various other power supply
equipment. Buyer was formed at the direction of Leonard Green & Partners, L.P.
on behalf of its equity investment fund, Green Equity Investors II, L.P.
In order to facilitate the sale of the Business to Buyer, pursuant to the
Stock Sale Agreement, Registrant formed a new wholly owned subsidiary,
Communications & Power Industries, Inc., a Delaware corporation ("CPI"), on
June 12, 1995. On August 10, 1995, pursuant to the Stock Sale Agreement,
Registrant contributed substantially all of the U.S.-based assets of the
Business to CPI in exchange for all the authorized stock of CPI.
On August 11, 1995 (the "Closing Date"), the sale of the Business was
completed. Buyer acquired on the Closing Date all of the outstanding stock of
CPI from Registrant. Also on the Closing Date, various affiliates of CPI
acquired from affiliates of Registrant substantially all of the assets of the
Business located in foreign jurisdictions. In addition, Registrant and Buyer
entered into amendments to the Stock Sale Agreement (together with the Stock
Sale Agreement, the "Amended Agreement"), copies of which are attached hereto
as Exhibits 2.1 and 2.2 and incorporated herein by reference. Pursuant to the
Amended Agreement, among other things, Communications & Power Industries
Holding Corporation, a Delaware corporation owning all of the outstanding
stock of Buyer ("Holding"), became a party to the Amended Agreement.
In accordance with the Amended Agreement, Buyer and its affiliates paid to
Registrant and its affiliates on the Closing Date $196,200,000 (the "Purchase
Price") in cash in consideration of the sale of the stock of CPI and the
foreign-based assets of the Business. Holding, Buyer and their affiliates also
assumed as of the Closing Date certain specified liabilities of Registrant and
its affiliates related to the Business, including certain liabilities with
respect to product warranties and personal injuries associated with products
of the Business. Except as specifically provided in the Amended Agreement,
Registrant and its affiliates generally retained all liabilities of the
Business arising from the operations, activities and transactions of the
Business up through the Closing Date, including various environmental related
liabilities.
The Amended Agreement provides that the Purchase Price is subject to
adjustment for changes, among other things, in the book value of the Business
since March 31, 1995. Such an adjustment to the Purchase Price will be
determined after completion of a closing balance sheet of the Business as at
the Closing Date which will be audited by Buyer's auditors. Such closing
balance sheet must be delivered by Buyer to Registrant within 60 days of the
Closing Date (or such longer period of time as may be reasonably required). As
with any other dispute among the parties with respect to the Amended
Agreement, any unresolved dispute concerning a possible adjustment to the
Purchase Price will be subject to binding arbitration.
In the Amended Agreement, Registrant made various representations and
warranties as to itself and the Business and has agreed to indemnify Buyer for
any breaches thereof. Claims for breaches of such representations and
warranties must be brought before December 31, 1996. Registrant's maximum
indemnification obligation for such losses is an amount equal to 10% of the
Purchase Price ($19,620,000), which is subject to adjustment as discussed
above.
Except with respect to certain environmental matters, all other
indemnification obligations of Registrant under the Amended Agreement
generally have no time or dollar limitations. Such indemnification provisions
cover, among other matters, breaches of agreements and covenants of Registrant
contained in the Amended Agreement and certain other agreements, various
liabilities retained by Registrant and its affiliates with respect to the
operation of the Business through the Closing Date and liabilities arising
from certain environmental claims and matters.
2
<PAGE>
On the Closing Date, Registrant entered into various agreements with Buyer
pursuant to the Amended Agreement, including (a) a noncompetition agreement
prohibiting Registrant and its affiliates from competing with the Business for
a period of ten years; (b) subleases of certain properties both to and from
Buyer; (c) agreements relating to the purchase and sale of products; (d) an
agreement whereby Registrant will provide certain transitional services to
Buyer; and (e) agreements whereby Registrant granted to Buyer various licenses
relating to certain intellectual property of Registrant which Buyer will use
in the Business. Registrant also guaranteed certain promissory notes executed
by various management investors in favor of Holding.
On August 23, 1995, Registrant commenced an offer (the "Offer") to purchase
from its stockholders up to 3,000,000 shares of its common stock ("Shares").
Registrant will determine a single per Share price (not greater than $58 nor
less than $51 per Share) that it will pay for the Shares validly tendered
pursuant to the Offer and not withdrawn (the "Purchase Price"), taking into
account the number of Shares so tendered and the prices specified by tendering
stockholders. Registrant will select the Purchase Price that will enable it to
purchase 3,000,000 Shares (or such lesser number of Shares as are validly
tendered at prices not greater than $58 nor less than $51 per Share) pursuant
to the Offer. Registrant will purchase all Shares validly tendered at prices
at or below the Purchase Price and not withdrawn on or prior to the expiration
date of the Offer, upon the terms and subject to the conditions of the Offer.
The Purchase Price will be paid in cash, net to the seller, with respect to
all Shares purchased. The Offer will expire on September 20, 1995 unless
extended. Registrant will use the proceeds from the sale of the Business and
cash on hand to purchase Shares in the Offer.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
Not applicable
(b) Pro Forma Financial Information.
The following unaudited pro forma condensed consolidated financial
statements are filed with this report:
<TABLE>
<S> <C>
Pro Forma Condensed Consolidated Balance Sheet as at June 30,
1995.......................................................... Page F-1
Pro Forma Condensed Consolidated Statements of Earnings:
Year Ended September 30, 1994................................. Page F-2
Nine Months Ended June 30, 1995............................... Page F-3
</TABLE>
The Pro Forma Condensed Consolidated Balance Sheet of Registrant as at
June 30, 1995 reflects the financial position of Registrant after giving
effect to the disposition of the assets and assumption of the liabilities
discussed in Item 2 and assumes the disposition took place on June 30, 1995.
The Pro Forma Condensed Consolidated Statements of Earnings for the fiscal
year ended September 30, 1994 and the nine months ended June 30, 1995 assume
that the disposition occurred on October 2, 1993, and are based on the
operations of Registrant for the year ended September 30, 1994 and the nine
months ended June 30, 1995. Such pro forma financial statements also reflect
the purchase of 3,000,000 Shares pursuant to the Offer referred to in Item 2
at a purchase price of $56 per Share (the last reported sale price of the
Shares on the New York Stock Exchange on June 30, 1995).
The unaudited pro forma condensed consolidated financial statements have
been prepared by Registrant based upon assumptions deemed proper by it. The
unaudited pro forma condensed consolidated financial statements presented
herein are shown for illustrative purposes only and are not necessarily
indicative of the future financial position or future results of operations of
Registrant, or of the financial position or results of operations of
Registrant that would have actually occurred had the transaction been in
effect as of the date or for the periods presented. In addition, it should be
noted that Registrant's financial statements will reflect the disposition only
from August 11, 1995, the Closing Date.
The unaudited pro forma condensed consolidated financial statements should
be read in conjunction with the historical financial statements and related
notes of Registrant.
3
<PAGE>
(c) Exhibits.
<TABLE>
<CAPTION>
NO. DESCRIPTION
--- -----------
<C> <S>
2.1 First Amendment to Stock Sale Agreement, dated as of August 11, 1995, by
and among Registrant, Holding and Buyer. (Registrant hereby agrees to
furnish supplementally to the Securities and Exchange Commission upon
request a copy of any omitted schedule, all of which are listed in
Sections 14 to 17 of the First Amendment to Stock Sale Agreement.)
2.2 Second Amendment to Stock Sale Agreement, dated as of August 11, 1995,
by and among Registrant, Holding and Buyer.
</TABLE>
4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
VARIAN ASSOCIATES, INC.
Date: August 23, 1995 By: /s/ Robert A. Lemos
----------------------------------
Robert A. Lemos
Vice President,
Finance
and Chief Financial Officer
5
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
------- -----------
<C> <S>
2.1 First Amendment to Stock Sale Agreement, dated as of August 11,
1995, by and among Registrant, Holding and Buyer. (Registrant
hereby agrees to furnish supplementally to the Securities and
Exchange Commission upon request a copy of any omitted schedule,
all of which are listed in Sections 14 to 17 of the First
Amendment to Stock Sale Agreement.)
2.2 Second Amendment to Stock Sale Agreement, dated as of August 11,
1995, by and among Registrant, Holding and Buyer.
</TABLE>
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET AT JUNE 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
-------------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- --------- -------- ---------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
ASSETS
CURRENT ASSETS
Cash and cash equivalents....... $ 90,120 $ 9,437 $ 37,637(b) $ 118,320
Accounts receivable............. 378,462 40,258 338,204
Inventories..................... 225,932 44,305 181,627
Other current assets............ 75,199 11,998 10,719(c) 73,920
---------- --------- -------- ---------
TOTAL CURRENT ASSETS........... 769,713 105,998 48,356 712,071
Property, Plant, and Equipment... 602,524 185,708 416,816
Accumulated depreciation and
amortization.................... (364,334) (129,113) (235,221)
---------- --------- ---------
Net Property, Plant and
Equipment..................... 238,190 56,595 181,595
Other Assets.................... 61,181 2,289 58,892
---------- --------- -------- ---------
TOTAL ASSETS................... $1,069,084 $ 164,882 $ 48,356 $ 952,558
========== ========= ======== =========
LIABILITIES AND STOCKHOLDERS'
EQUITY
CURRENT LIABILITIES
Notes Payable................... $ 32,968 $ -- $ $ 32,968
Accounts Payable--Trade......... 83,493 6,599 3,286(d) 80,180
Accrued expenses................ 266,175 22,260 48,345(d) 292,260
Product warranty................ 48,349 4,491 43,858
Advance payments from customers. 61,264 3,764 57,500
---------- --------- -------- ---------
TOTAL CURRENT LIABILITIES...... 492,249 37,114 51,631 506,766
Long-Term Debt................... 60,329 -- 60,329
Deferred Taxes................... 20,773 4,961 14,961(d) 30,773
---------- --------- -------- ---------
TOTAL LIABILITIES............... 573,351 42,075 66,592 597,868
TOTAL STOCKHOLDERS' EQUITY....... 495,733 122,807 (18,236) 354,690
---------- --------- -------- ---------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY........... $1,069,084 $ 164,882 $ 48,356 $ 952,558
========== ========= ======== =========
</TABLE>
--------
(a) To eliminate the assets and liabilities included in the balance sheet of
the Company's Electron Devices business ("EDB") as of June 30, 1995.
(b) To reflect the $196.2 million net proceeds from the sale of EDB, the
$168.0 million purchase of 3,000,000 shares of the Company's common stock
pursuant to the Company's tender offer at a purchase price of $56.00 per
share (the last reported sale price of the Company's common stock on the
New York Stock Exchange on June 30, 1995), and the retention of $9.4
million of cash held by EDB.
(c) To reflect deferred tax asset retained by the Company.
(d) To reflect transaction costs, liabilities retained by the Company, and
income tax liabilities related to the transaction.
F-1
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE YEAR ENDED
SEPTEMBER 30, 1994
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
SALES............................... $1,552,477 $246,890 $ $1,305,587
---------- -------- ------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 1,031,956 186,996 844,960
Research and development........... 81,326 7,619 73,707
Marketing.......................... 187,332 19,476 167,856
General and administrative......... 121,873 17,380 3,485(b) 107,978
---------- -------- ------- ----------
Total operating costs and expenses. 1,422,487 231,471 3,485 1,194,501
---------- -------- ------- ----------
OPERATING EARNINGS.................. 129,990 15,419 (3,485) 111,086
Interest expense, net.............. 1,992 1,992
---------- -------- ------- ----------
EARNINGS BEFORE TAXES............... 127,998 15,419 (3,485) 109,094
Taxes on Earnings.................. 48,640 5,859 (1,324)(b) 41,457
---------- -------- ------- ----------
NET EARNINGS........................ $ 79,358 $ 9,560 $(2,161) $ 67,637
========== ======== ======= ==========
Average Shares Outstanding Including
Common Stock Equivalents........... 35,676 (3,000)(c) 32,676
EARNINGS PER SHARE--FULLY DILUTED... $2.22 $2.07
</TABLE>
--------
(a) To eliminate the profit and loss of EDB for the entire period.
(b) To reflect costs that would not have been eliminated due to the sale of
EDB.
(c) To reflect the purchase of shares of the Company's common stock pursuant
to its tender offer as if the transaction had been completed at the
beginning of the period.
F-2
<PAGE>
PRO FORMA FINANCIAL INFORMATION
VARIAN ASSOCIATES, INC. AND SUBSIDIARIES
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF EARNINGS FOR THE NINE MONTHS
ENDED JUNE 30, 1995
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS
----------------
HISTORICAL EDB (A) OTHER PRO FORMA
---------- -------- ------- ----------
<S> <C> <C> <C> <C>
SALES............................... $1,350,403 $192,304 $ $1,158,099
---------- -------- ------- ----------
OPERATING COSTS AND EXPENSES
Cost of sales...................... 903,926 142,959 760,967
Research and development........... 72,470 6,366 66,104
Marketing.......................... 153,950 14,834 139,116
General and administrative......... 87,344 16,500 2,640(b) 73,484
---------- -------- ------- ----------
Total operating costs and expenses. 1,217,690 180,659 2,640 1,039,671
---------- -------- ------- ----------
OPERATING EARNINGS.................. 132,713 11,645 (2,640) 118,428
Interest expense, net.............. 2,258 2,258
---------- -------- ------- ----------
EARNINGS BEFORE TAXES............... 130,455 11,645 (2,640) 116,170
Taxes on Earnings.................. 48,270 4,309 (977)(b) 42,984
---------- -------- ------- ----------
NET EARNINGS........................ $ 82,185 $ 7,336 $(1,663) $ 73,186
========== ======== ======= ==========
Average Shares Outstanding Including
Common Stock Equivalents........... 35,480 (3,000)(c) 32,480
EARNINGS PER SHARE--FULLY DILUTED... $2.32 $2.25
</TABLE>
--------
(a) To eliminate the profit and loss of EDB for the entire period.
(b) To reflect costs that would not have been eliminated due to the sale of
EDB.
(c) To reflect the purchase of shares of the Company's common stock pursuant
to its tender offer as if the transaction had been completed at the
beginning of the period.
F-3
<PAGE>
EXHIBIT 2.1
FIRST AMENDMENT TO STOCK SALE AGREEMENT
FIRST AMENDMENT TO STOCK SALE AGREEMENT (the "Amendment"), dated as of
August 11, 1995, by and among Varian Associates, Inc., a Delaware corporation
("Varian"), Communications & Power Industries Holding Corporation, a Delaware
corporation ("Holding"), and CPII Acquisition Corp., a Delaware corporation
(formerly, Communications & Power Industries Holding Corporation) ("CPI").
RECITALS
A. Varian and CPI are parties to the Stock Sale Agreement, dated as of June
9, 1995 (the "Agreement").
B. Varian and CPI desire to amend the Agreement in order to add Holding as a
party thereto with respect to certain provisions thereof, to reflect a change
in the corporate name of Buyer and otherwise as provided in this Amendment.
In consideration of the premises and the respective representations,
warranties and agreements herein contained, the parties hereto hereby agree as
follows:
SECTION 1. The definition of "Buyer" contained in Article I, Section 1.1 of
the Agreement hereby is amended so as to read in its entirety as follows:
" "Buyer" means CPII Acquisition Corp., a Delaware corporation, and, as
applicable, Affiliates of Buyer formed for the purpose of consummating the
transactions contemplated by this Agreement."
SECTION 2. Article I, Section 1.1 of the Agreement hereby is amended by
adding the following definition thereto:
" "Holding" means Communications & Power Industries Holding Corporation,
a Delaware corporation."
SECTION 3. Article II, subsection 2.8(b) of the Agreement hereby is amended
so as to read in its entirety as follows:
"(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), except
that the Closing Balance Sheet shall reflect the items referred to in
subsection 11.3(d) and shall not reflect the account receivable referred to
in subsection 2.8(f), 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 (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, except that the Closing Balance Sheet shall reflect the
items referred to in subsection 11.3(d) and shall not reflect the account
receivable referred to in subsection 2.8(f). 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."
1
<PAGE>
SECTION 4. Article II of the Agreement hereby is amended by adding thereto a
new subsection 2.8(f) which shall read in its entirety as follows:
"(f) Included in the Assets is an uncollectible account receivable owed
by Jung Juang to Seller, which account receivable has been written down by
Seller in its entirety. Such account receivable shall not be reflected on
the Closing Balance Sheet. Buyer shall pay to Seller 50% of all amounts
Buyer collects with respect to such account receivable promptly after
Buyer's receipt of such amounts."
SECTION 5. Article III, Section 3.1 of the Agreement hereby is amended so as
to read in its entirety as follows:
"3.1 ASSUMPTION OF LIABILITIES. Effective as of the Closing, (1) Holding
(or Buyer's 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
Liabilities set forth in the following clauses (a), (b) and (c) and (2)
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
Liabilities set forth in the following clauses (d), (e) and (f), in any
such case 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, Holding'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
(f) the obligations of Buyer or any of its Affiliates with respect to
Taxes as and to the extent provided in Article XI."
2
<PAGE>
SECTION 6. Article III, subsections 3.2(d) and 3.2(e) of the Agreement
hereby is amended so as to read in their entirety as follows:
"(d) all Liabilities arising from Governmental Claims arising from the
conduct of the Business on or before the Closing Date (other than Holding's
obligation to repair, replace or maintain products or components thereof at
Holding'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 Holding's obligation to repair, replace
or maintain products or components thereof at Holding's sole expense as and
to the extent provided in subsection 3.1(b));"
SECTION 7. Article III, Section 3.3 of the Agreement hereby is amended so as
to read in its entirety as follows:
"3.3 LIABILITIES OF SUBSIDIARIES OF SELLER. Each of Holding and 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 Holding and Buyer from Seller pursuant to Section 3.1. The
foregoing notwithstanding, Holding and Buyer shall cause EDB Subsidiary to
be responsible for its Assumed Liabilities and for the satisfaction and
performance of all other Assumed Liabilities."
SECTION 8. The last sentence of Article IV, Section 4.1 of the Agreement
hereby is deleted and the definition of "Closing Date" contained in Article I,
Section 1.1 of the Agreement hereby is amended so as to read in its entirety
as follows:
" "Closing Date" means 11:59 p.m., Pacific Daylight Time, on August 11,
1995."
SECTION 9. Article IV, subsection 4.3(a) of the Agreement hereby is amended
so as to read in its entirety as follows:
"(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 subsection 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 121000358), and (y) to
Varian Canada (or a subsidiary thereof), the portion of the Purchase Price
allocable to the Varian Canada Assets in accordance with subsection 2.8(a),
by wire transfer of immediately available funds to Varian Canada's account
at Royal Bank of Canada, 83 Main Street, Georgetown, Ontario (Account No.
00003 01642 4001905);"
SECTION 10. Article VII, Section 7.13 of the Agreement hereby is amended so
as to to read in its entirety as follows:
"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, Holding and Green Equity
Investors II, L.P. (a "Subscription Agreement"), prior to the Closing and
as an additional inducement of Holding 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 Holding from such Management Investor for Holding'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 Holding a Guaranty, substantially in the form
described in the Subscription Agreement, with respect to the promissory
note, if any, delivered to Holding by such Management Investor in partial
payment of the purchase price due to Holding from such Management Investor
for Holding's capital stock purchased pursuant to the Subscription
Agreement."
3
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SECTION 11. Article XI, subsection 11.3(d) of the Agreement hereby is
amended so as to read in its entirety as follows:
"(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 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 amount of such Taxes due from one party to the
other pursuant to this subsection 11.3(d) shall be reflected in the Closing
Balance Sheet as either a prepaid item or as an accrued liability, as
applicable. 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
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 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."
SECTION 12. Article XII, subsection 12.2(b)(i) of the Agreement hereby is
amended so as to read in its entirety as follows:
"(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 or
options as to form of distribution). 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 section 12.2(b). Promptly after the Closing, EDB
Subsidiary shall apply for a favorable determination letter from the
Service 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 offer each Transferred Participant the opportunity
to elect (1) to receive a distribution of his or her Old Plan account, (2)
to defer distribution of his or her Old Plan account as provided in the Old
Plan (but only if his or her account exceeds $3,500 in value), and/or (3)
to have all or part of the taxable portion of his or her Old Plan account
transferred in a "direct rollover" (within the meaning of Treas. Reg.
section 1.401(a)(31)-1T) to the New Plan or to an individual retirement
account (within the meaning of Section 408(a) of the Code). To the extent
any Transferred Participant elects a direct rollover to the New Plan, the
New Plan shall accept such rollover on behalf of the Transferred
Participant."
SECTION 13. Article XII of the Agreement hereby is amended by adding thereto
a new subsection 12.2(d) which shall read in its entirety as follows:
"(d) Buyer shall make a cash payment to each Employee hired by Buyer or
any of its Affiliates who was covered immediately prior to the Closing Date
under Seller's Results-Based Variable Rewards System (the "gain sharing
plan") or Seller's "sales incentive plan" (together, the "Applicable
Plans"). Payment under the Applicable Plans shall be (i) for purposes of
eligibility, calculated as if such Employees had remained as employees of
Seller through September 29, 1995, (ii) made at the time they otherwise
would have been made under the terms of the Applicable Plans, and (iii)
made to each such Employee who otherwise is eligible for a payment or
payments under the Applicable Plans. Buyer shall calculate that
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portion of the gross payments required to be made under the Applicable
Plans, including the employer-paid portion of any payroll tax, which are
attributable to Seller ("Seller's Plan Obligations") based on actual
performance from September 30, 1994, up to and including the Closing Date,
relative to actual performance during all of Seller's fiscal year ending on
September 29, 1995. At least six business days prior to the date that
payment under the Applicable Plans is to be made to Employees, Buyer shall
provide Seller with written documentation showing the bases for and Buyer's
calculation of Seller's Plan Obligations. Seller shall pay to Buyer such
amount not later than one day before the date Buyer intends to pay such
amount to Employees. Notwithstanding anything to the contrary in this
Agreement, no amount in respect of Seller's Plan Obligations shall be
reflected as an accrued liability on the Closing Balance Sheet."
SECTION 14. Disclosure Schedule Section 5.12 hereby is amended so as to read
in its entirety as set forth in Exhibit A hereto.
SECTION 15. Schedule 12.1 to the Agreement hereby is amended so as to read
in its entirety as set forth in Exhibit B hereto.
SECTION 16. Schedule 2.3(a)(ii)(1), Schedule 2.3(a)(vii), Schedule
2.3(a)(xi) (other than Attachment 2.3(a)(xi)-c), Schedule 2.6, Schedule 8.3
and Schedule 14.4 to the Agreement hereby are amended so as to read in their
entirety as set forth in Exhibit C hereto.
SECTION 17. The Disclosure Schedule hereby is amended further by deleting
therefrom Sections 5.6, 5.7(b), 5.8(b), 5.9, 5.11(a), (b), (c) and (d),
5.14(a), the attachment 5.4(a)-A to Disclosure Schedule Section 5.4(a), the
attachment 5.14(b)-A to Disclosure Schedule Section 5.14(b), and an attachment
to Disclosure Schedule Section 5.10(a)-A, and adding thereto in lieu thereof
the Disclosure Schedule Sections and attachments to Disclosure Schedule
Sections in the forms attached hereto as Exhibit D.
SECTION 18. This Amendment is hereby made supplemental to and a part of the
Agreement and, except as expressly amended by this Amendment, the Agreement is
in all respects ratified and confirmed and all terms, conditions and
provisions thereof shall remain in full force and effect.
SECTION 19. Capitalized terms contained herein and not otherwise defined
herein shall have the respective meanings assigned to them in the Agreement.
SECTION 20. This Amendment 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).
SECTION 21. Any dispute, controversy or claim between the parties relating
to, arising out of or in connection with this Amendment, including as to its
existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, shall be settled in accordance with the
procedures set forth in Section 14.13 of the Agreement.
SECTION 22. This Amendment 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. The signature page of any
counterpart may be removed therefrom and attached to any other counterpart to
evidence execution thereof by all of the parties hereto without affecting the
validity thereof.
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IN WITNESS WHEREOF, Seller, Buyer and Holding have caused this Amendment 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
-----------------------------------
Robert A. Lemos
Vice President, Finance and
Chief Financial Officer
CPII ACQUISITION CORP.
a Delaware corporation
By /s/ Al D. Wilunowski
-----------------------------------
Al D. Wilunowski
Chief Executive Officer and
President
COMMUNICATIONS & POWER INDUSTRIES
HOLDING CORPORATION,
a Delaware corporation
By /s/ Al D. Wilunowski
-----------------------------------
Al D. Wilunowski
Chief Executive Officer and
President
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EXHIBIT 2.2
SECOND AMENDMENT TO STOCK SALE AGREEMENT
SECOND AMENDMENT TO STOCK SALE AGREEMENT (the "Amendment"), dated as of
August 11, 1995, by and among Varian Associates, Inc., a Delaware corporation
("Varian"), Communications & Power Industries Holding Corporation, a Delaware
corporation ("Holding"), and CPII Acquisition Corp., a Delaware corporation
(formerly Communications & Power Industries Holding Corporation) ("CPI").
RECITALS
A. Varian, Holding and CPI are parties to the Stock Sale Agreement, dated as
of June 9, 1995, as amended by the First Amendment to Stock Sale Agreement
(the "Agreement").
B. Varian, Holding and CPI desire to amend the Agreement in order to
accommodate certain requests for changes made by various lenders to Holding
and CPI and otherwise as provided in this Amendment.
In consideration of the premises and the respective representations,
warranties and agreements herein contained, the parties hereto hereby agree as
follows:
AMENDMENT
SECTION 1. Article X, Section 10.2 of the Agreement hereby is amended so as
to read in its entirety as follows:
"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
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
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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. "Seller Indemnified Environmental
Claims" indemnified under Section 10.2 of the Agreement include, without
limitation and notwithstanding the 10.2 Proviso (which does not apply to
the period prior to Closing), Environmental Claims arising from any of the
matters identified on Disclosure Schedules 5.11(a), (b) and (d) to the
Agreement and any violations of the permits identified on Disclosure
Schedule 5.11(c) to the Agreement, in each case to the extent existing at
the Closing or attributable to the pre-Closing activities of the Seller or
Seller Group for the period prior to Closing."
SECTION 2. Article X of the Agreement hereby is amended to add the following
new subsection, entitled 10.2 Proviso, to be placed at the end, and as part
of, Section 10.2:
"10.2 PROVISO (A). In addition to and without limitation of Section 10.2
and notwithstanding any other provision of this Agreement (other than the
limitations set forth in clauses (i) to (iv) of subsection 10.5(c)), Seller
Indemnified Environmental Claims shall include those Buyer Losses arising
out of Conditions (as defined below) covered by this 10.2 Proviso. Seller's
obligations to perform repairs of Conditions covered by Section 10.2(d)(ii)
to the extent that they continue to exist after Closing, to indemnify Buyer
for Releases occurring after Closing arising from such Conditions and to
indemnify Buyer for Buyer Losses related to either of the foregoing
obligations are set forth in their entirety in this 10.2 Proviso, which
shall govern and supersede any other provision in Section 10.2 or 10.3 to
the contrary.
(1) Seller shall be obligated to repair Conditions (as defined below) as
set forth in this 10.2 Proviso. Seller's obligations with respect to the
repairs of such Conditions shall not depend on there being an Environmental
Claim within the relevant period, but instead those obligations shall arise
with the mere discovery by Buyer of such Condition(s) within the first six
months after Closing. The term "Condition" as used in the 10.2 Proviso
means (a) any physical Condition at the Real Property that either itself
constitutes a violation of law or that cannot be used either in accordance
with law or without causing the Release of Hazardous Materials that would
require that response actions be taken under federal, state or local law,
if properly used in the manner that it was intended to be used and was
being used at or about (but before) Closing, or (b) any other condition
(such as the failure to have a permit). A Condition to which the duties set
forth in this Proviso 10.2 apply is any Condition that (a) is alleged by
Buyer to constitute a violation under 10.2(d)(ii), (b) did in fact
constitute such a violation at or about (but before) Closing, (c) continues
to exist and to constitute such a violation at any time during the six
month period after Closing, and (d) is discovered within six months of
Closing. (Four examples follow: First, a solvent tank that was in use to
store solvents at the time of Closing that has a hole in its bottom clearly
cannot be used in that manner and still be in accordance with law without
first being repaired, and this Condition would be covered by Seller's duty
to repair, even if the hole, per se, was not itself a violation of law.
Second, a tank (again with a hole) that was (legally) not in use to store
solvents at the time of Closing but that is used by Buyer for that purpose
after Closing would not be covered by Seller's duty to repair. Third, a
wastewater treatment
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system that itself is not in violation of law and that has occasional
discharges that violate law is not covered by Seller's duty to repair if
the system (i) can be correctly operated in the manner for which it was
intended to be used without violating law, or (ii) was being used at
Closing without violating law. Fourth, that same system, however, would be
covered by Seller's duty to repair if it could not be operated in
accordance with law if properly operated by Buyer as it was intended to be
used and as it was operated at the Closing (assuming that the manner of
operation at the Closing also violated the law).)
(2) Buyer has the right, upon discovery within the first six months after
Closing of a Condition (but not for any other condition), to put Seller on
notice of that Condition within a reasonable time of such discovery. Seller
shall then either (a) agree to repair the Condition (subject to the
standards described below), or (b) contest that the Condition meets the
definition of Condition in 10.2 Proviso (a)(1)(a) to (1)(d) above, using an
expedited arbitration procedure as set forth in 10.2 Proviso (a)(8), below.
(3) If Seller receives the notice described in 10.2 Proviso (a)(2) above
and fails, within a reasonable period of time (not to exceed sixty days
from receipt) either to agree to repair the Condition (pursuant to 10.2
Proviso (a)(2)(a) above) or contest the Condition (pursuant to 10.2 Proviso
(a)(2)(b) above), Buyer shall have the right (but not the obligation) to
perform the repair on its own and to seek from Seller the costs of such
repair, including interest thereon. If Buyer performs the repair in
accordance with this subsection (b)(3) and seeks its costs from Seller,
Seller shall be entitled to defend against such claim on the grounds that
(a) the Condition does not meet the definition of Condition in 10.2 Proviso
(a)(1)(a) to (d) above, and (b) the repair was not in compliance with the
standard set forth below in 10.2 Proviso (a)(5), and/or (c) any other
grounds recognized at law or in equity not inconsistent with the Stock Sale
Agreement.
(4) In the event that Seller agrees or is ordered by an arbitrator to
repair the Condition, such repair shall be performed within a reasonable
time (taking into consideration all facts and circumstances).
(5) Seller's obligations to perform repairs, and Buyer's obligations to
cooperate with the performance of such repairs, under this 10.2 Proviso
shall be as follows:
(a) Seller's repair shall be sufficient to result in the non-
compliant Condition complying with law; and
(b) Seller shall not be obligated to incur any costs in performing
the repair in excess of those that would be incurred by a reasonable
owner-operator of a facility acting on its own account and using its
own funds.
In the event that 10.2 Proviso (a)(5)(a) and (5)(b) are determined to
conflict, Seller shall be obligated to ensure that 10.2 Proviso (a)(5)(a)
is complied with, unless either (i) Buyer's cooperation, pursuant to
Buyer's duty to cooperate set forth in 10.2 Proviso (a)(6), will eliminate
the need to perform the repair in 10.2 Proviso (a)(5)(a), or (ii) a
governmental agency has indicated or does indicate that it will allow a
particular non-compliant Condition to exist or continue to exist without
the necessity of repairing such Condition.
(6) Buyer shall have the obligation to cooperate with Seller in
performance of the repairs to meet the standard set forth in 10.2 Proviso
(a)(5). This duty of cooperation shall include the duty to make reasonable
modifications to a piece of equipment, a process or an operation, if such
modification would likely bring or help to bring a Condition that fails to
comply with law into compliance. Such modifications shall be at Seller's
expense.
(7) Seller shall indemnify Buyer for (a) any and all Buyer Losses that
result from any Condition defined in this 10.2 Proviso, and (b) any Release
of Hazardous Materials that results from such Condition(s). The repair
obligations shall extend beyond the period extending six months after
Closing up to and including (but not after) the date that such Condition
has been repaired in accordance with the standards set forth in 10.2
Proviso (a)(5) (unless Seller successfully contests its obligation to make
such repairs.)
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(8) In the event a dispute arises under this 10.2 Proviso, the parties
shall resolve such dispute under Section 14.13 of the Stock Sale Agreement,
except that the arbitrator(s) shall have the right, at the reasonable
request of either party, to expedite such arbitration in any reasonable
manner that does not take away from either party's right to a full and fair
hearing of the relevant issues. In such arbitration, Buyer is not required
by 10.2 Proviso (a)(1)(b) above, in order to prove that a Condition "in
fact constitute[s] such a violation as of Closing", to provide evidence
that a governmental agency has determined that such Condition violates or
may violate any law. An arbitrator may, however, consider as evidence the
fact that an agency has reviewed a particular Condition and not made any
finding with respect to the existence of a violation. Such evidence is
probative but not determinative of whether a violation of law in fact
exists.
(B) This 10.2 Proviso and subsection 10.2(d) shall not apply to any Buyer
Losses resulting from (i) 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, (ii) any new
Release of Hazardous Material arising from a Condition described in the 10.2
Proviso (a)(1) after such Condition has been fully and appropriately repaired
by Seller to the reasonable satisfaction of Buyer, or (iii) 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 10.2 Proviso applies to Hazardous Materials after Closing to
the extent, and only to the extent, that it applies to specified Conditions or
Releases occurring during the six months after Closing, but 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. The 10.2 Proviso both (1) does not apply to any Releases at the
Real Property included in the Assets occurring during the period prior to
Closing or for the post-Closing migration of such Releases, which Releases and
migrations are addressed only by Section 10.2(d)(iii), which section is not
modified by the 10.2 Proviso, and (2) does not modify 10.2(d)(i) or (ii) with
respect to any liabilities for the period prior to Closing, which liabilities
are addressed solely by those subsections."
SECTION 3. Article X, Section 10.3 of the Agreement hereby is amended so as
to read in its entirety as follows:
"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 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
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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 all Conditions described in 10.2 Proviso
(a)(1), and to pay fines and penalties for and to indemnify Buyer with
respect to any Buyer Losses resulting or arising from such Conditions, to
the full extent (but only to the extent) required by the 10.2 Proviso."
SECTION 4. Article X, Section 10.4(d) of the Agreement hereby is amended so
as to read in its entirety as follows:
"(E) In any dispute between Buyer and Seller regarding (1) 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 (2)
whether clause (a)(1)(a)(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 and standard of proof in all other matters shall be determined
in accordance with applicable law."
SECTION 5. Article X, Section 10.5(d) of the Agreement hereby is amended so
as to read in its entirety as follows:
"(D) Notwithstanding anything to the contrary contained 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 (i) 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; (ii)
Buyer shall have unlimited rights to discuss and/or initiate discussions
with any Governmental Authority as to its views with respect to such
actions and with respect to any other matters, and to take any position in
opposition to any position taken by Seller; (iii) nothing in this
subsection 10.5(d) shall 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; and (iv) Seller shall keep Buyer reasonably
informed concerning its activities undertaken for cleanup, removal,
treatment or remediation in connection with any Seller Indemnified
Environmental Claim."
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IN WITNESS WHEREOF, Seller, CPI and Holding have caused this Amendment 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
-----------------------------------
Robert A. Lemos
Vice President, Finance and
Chief Financial Officer
CPI ACQUISITION CORP.
a Delaware corporation
By /s/Lynn E. Harvey
-----------------------------------
Lynn E. Harvey
Chief Financial Officer, Treasurer
and Secretary
COMMUNICATIONS & POWER INDUSTRIES
HOLDING CORPORATION,
a Delaware corporation
By /s/Lynn E. Harvey
-----------------------------------
Lynn E. Harvey
Chief Financial Officer, Treasurer
and Secretary
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