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UNITED STATES
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) December 3, 1999
-------------------------------
CERPROBE CORPORATION
(Exact name of Registrant as specified in its Charter)
Delaware 0-11370 86-0312814
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
1150 North Fiesta Boulevard, Gilbert, Arizona 85233-2237
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (480) 333-1500
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On December 3, 1999 (the "Closing Date"), Cerprobe Corporation, a
Delaware corporation (the "Registrant"), completed its purchase (the "Stock
Purchase") of all of the capital stock of OZ Technologies, Inc., a California
corporation ("OZ"), pursuant to that certain Stock Purchase Agreement dated as
of December 3, 1999 (the "Stock Purchase Agreement") by and among the
Registrant, OZ, and the following parties: Nasser Barabi, Iraj Barabi, Ali
Bushehri, and Ahmad Barabi, as individuals, Ali Bushehri, as trustee for the Ali
and Nassrin Bushehri Trust, a trust established under the laws of the state of
California, and Ahmad Barabi, as trustee for the Ahmad and Zakieh Barabi Trust,
a trust established under the laws of the state of California (Nasser Barabi,
Iraj Barabi, the Ali and Nassrin Bushehri Trust and the Ahmad and Zakieh Barabi
Trust are referred to herein as the "Selling Stockholders"). The purchase price
paid by the Registrant under the Stock Purchase Agreement consisted of (i)
$19,000,000 in cash, (ii) 1,500,000 shares of the Registrant's common stock (the
"Registrant Common Stock"), (iii) a note from the Registrant issued to the agent
of the Selling Stockholders in the amount of $2,830,000 (the "Subordinated
Promissory Note"), and (iv) a note from the Registrant issued to the agent of
the Selling Stockholders in the amount of $2,800,000 (the "Promissory Note").
The amount and nature of the purchase price was determined by
arms-length negotiations among the parties.
In connection with the Stock Purchase, Registrant and its domestic
subsidiaries, Cerprobe Interconnect Solutions, Inc., OZ and OZ's domestic
subsidiary, Triple S Engineering, Inc. (the "Borrowers"), entered into a
three-year senior secured credit facility with Bank of America, N.A. (the "Loan
and Security Agreement"). The Loan and Security Agreement includes a revolving
credit facility in the amount of $15,000,000 subject to borrowing base
requirements providing for advances of up to eighty-five (85%) of eligible
accounts receivable. Initial advances on the revolving line of credit were
approximately $1,800,000. Advances on the revolving credit facility bear
interest at prime rate plus 0.50%. The facility also includes an inventory term
loan in the amount of approximately $5,800,000 and a machinery and equipment
term loan in the amount of $2,000,000, both of which bear interest at prime rate
plus 2.00%. The inventory term shall be repaid based upon a 24-month
amortization with a balloon payment of the outstanding principal balance at the
end of 12 months. The machinery and equipment term loan shall be repaid based
upon a 60-month amortization with a balloon payment of the outstanding principal
balance at the end of 36 months. All loans, advances, and other obligations,
liabilities, and indebtedness of Registrant and its domestic subsidiaries shall
be secured by valid, perfected, and enforceable first priority liens upon and
security interest in substantially all of the Borrower's present and future
assets, including all accounts, contract rights, inventory instruments,
documents, fixtures, chattel paper, general intangibles, patents, trademarks,
copyrights, trade names, deposit accounts, vehicles, equipment, and pledge of
stock of all domestic subsidiaries of Cerprobe and OZ and 65% of the stock of
each wholly-owned foreign subsidiary of Cerprobe. The facility is also
guaranteed by all wholly-owned subsidiaries of Cerprobe and OZ.
The Loan and Security Agreement contains a number of covenants that,
among other things, restrict the ability of the Borrowers to dispose of assets,
incur additional indebtedness, incur guaranty obligations, prepay indebtedness
except in accordance with relevant subordination provisions, pay dividends or
make capital distribution (other than distributions in capital stock), create
liens on assets, engage in mergers or consolidations (except that any Borrower
may voluntarily merge into another Borrower), engage in certain transactions
with subsidiaries and affiliates, make any change in accounting policies or
reporting practices except as required or permitted by generally accepted
accounting principles and otherwise restrict corporate activities. In addition,
the Loan and Security Agreement
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requires the Borrowers to comply with certain financial covenants, including the
maintenance of a consolidated Tangible Net Worth (as defined in the Loan and
Security Agreement). Borrowers do not expect that such covenants will materially
impact the ability of Borrowers to operate their respective businesses.
The Loan and Security Agreement contains customary events of default,
including the failure to pay principal when due or any interest or other amount
that becomes due, any representation or warranty being made by Borrowers that is
incorrect in any material respect on or as of the date made, a default in the
performance of any covenant which continues for more than thirty days, default
in certain other indebtedness, certain insolvency events, certain ERISA events,
and certain change of control events.
In connection with the Stock Purchase, the Registrant agreed to prepare
and file a registration statement (the "Registration Statement") on Form S-3
with the Securities and Exchange Commission no later than seven days after the
Closing Date to register the resale of the Registrant Purchaser Shares. The
Selling Stockholders have waived this provision of the Stock Purchase Agreement
and the Registrant expects that it will file the Registration Statement within
ninety days after the Closing Date. Under the Stock Purchase Agreement, the
maximum number of shares of the Registrant Common Stock that the Selling
Stockholders may sell (i) during the 180-day period beginning on the effective
date of the Registration Statement is 554,089 shares and (ii) during each of the
four consecutive 30-day periods that begin immediately following the end of such
180-day period is 100,000 shares. The Stock Purchase Agreement also provides
that, to the extent that the Selling Stockholders sell shares of the Registrant
Common Stock during the 180-day period beginning on the effective date of the
Registration Statement, if the average proceeds per share to the Selling
Stockholders from such sales after customary selling expenses are less than
$7.58 per share, the product of (i) the difference between $7.58 per share and
such average proceeds per share and (ii) the number of shares of the Registrant
Common Stock sold during such 180-day period shall be added to the principal
amount of the Subordinated Promissory Note. The principal amount of the
Subordinated Promissory Note may be reduced by an amount up to $3,000,000 under
the Stock Purchase Agreement in satisfaction of certain of the Selling
Stockholders' indemnification obligations to the Registrant thereunder. The
principal amount of the Subordinated Note also may be reduced under the Stock
Purchase Agreement based on payments made by the Registrant to OZ's
counter-party under two contracts OZ has with that counter-party, with the
principal amount being so reduced as follows: (i) by 50% of all payments (other
than payments for legal fees) made by the Registrant pursuant to or in
settlement of those contracts after the Registrant's total for such payments
exceeds $50,000 but is less than $250,000 and (ii) by 100% of all payments
(other than payments for legal fees) made by the Registrant pursuant to or in
settlement of those contracts after the Registrant's total for such payments
exceeds $250,000. The Subordinated Promissory Note matures on the earlier of the
Registrant's receiving at least $10,000,000 in gross proceeds from an
underwritten public offering of its common stock or December 3, 2002, and
accrues interest at the rate of 10% per annum.
The Promissory Note matures on February 3, 2000 and accrues interest at
the rate of 10% per annum. Under the Stock Purchase Agreement, the Registrant
may satisfy the Promissory Note on February 3, 2000 by paying in cash all
amounts then due under the Promissory Note or by transferring its real property
located at 10365 Sanden Drive, Dallas, Texas (the "Real Property") to the
Selling Stockholders' agent, unencumbered except for minor liens and any
mortgage that is executed by the Registrant in favor of the Selling Stockholders
with respect to the Real Property. In the event that the Registrant satisfies
the Promissory Note by transferring the Real Property to the Selling
Stockholders' agent on February 3, 2000, the Stock Purchase Agreement provides
that the Registrant and the Selling Stockholders' agent shall assign a value
(the "Appraised Value") to the Real Property equal to the appraised value for
the Real Property as determined by a mutually agreed-upon real estate appraiser.
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The Stock Purchase Agreement further provides that (i) to the extent the
Appraised Value is less than $2,800,000 plus interest due under the Promissory
Note, the amount of the difference shall be added to the principal amount of the
Subordinated Promissory Note and (ii) to the extent the Appraised Value is more
than $2,800,000 plus interest due under the Promissory Note, the amount of the
difference may be applied to reduce the principal amount of the Subordinated
Promissory Note if doing so does not cause the Registrant to violate any
covenant in any loan document to which it is a party.
In connection with the Stock Purchase, Nasser Barabi and Iraj Barabi
have entered into employment agreements with OZ, which expire December 6, 2001.
Under these employment agreements, Nasser Barabi will serve as OZ's Director of
Engineering and Research and Development at a salary of $175,000 per year, and
Iraj Barabi will serve as OZ's Director of Operations at a salary of $175,000
per year.
In connection with the Stock Purchase, the Registrant entered into a
consulting agreement with C-MA International, Ltd., the sole equity holder of
which is Ali Bushehri, which expires March 6, 2001. Under this consulting
agreement, C-MA International, Ltd. will perform certain financial and
administrative consulting services for an amount equal to $100 per hour with a
guaranteed 120 hours per month during the term of the agreement.
In connection with the Stock Purchase, each of Nasser Barabi, Iraj
Barabi, Ali Bushehri and Ahmad Barabi entered into a noncompetition agreement
with the Registrant. Each of these agreements contains certain noncompetition
provisions that expire on the third anniversary of the Closing Date.
The acquisition will be accounted for using the purchase method.
Accordingly, the purchase price will be allocated to assets acquired and
liabilities assumed based upon their estimated fair values. The amount of
purchased in-process research and development in connection with the allocation
is still to be determined. The current state of the research and development
products/processes is not yet at a technological feasible or commercially viable
stage. The Registrant does not believe that the research and development
products/processes have any future alternative use because if they are not
finished and brought to ultimate product or process completion, they have no
other value. Therefore, consistent with generally accepted accounting
principles, the Registrant intends to take a one-time charge for the purchased
in-process research and development in the fourth quarter ending December 31,
1999.
OZ manufactures systems solutions for IC package test and is a
leading designer and producer of high performance test sockets and contactors.
OZ also designs and distributes ATE test boards and burn-in interfaces and
systems.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired.
As of the date of filing of this Form 8-K, it is impracticable for
the Registrant to provide the financial statements required by this Item 7(a).
In accordance with Item 7(a)(4) of Form 8-K, such financial statements shall be
filed by amendment to this form 8-K not later than 60 days after the date of
this Form 8-K.
(b) Pro Forma Financial Information
As of the date of filing of this Form 8-K, it is impracticable for
the Registrant to provide the pro forma financial statements required by this
Item 7(b). In accordance with Item 7(b) of Form 8-K,
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such financial statements shall be filed by amendment to this form 8-K not later
than 60 days after the date of this Form 8-K.
(c) Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
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<C> <S>
1 Stock Purchase Agreement
2 Subordinated Promissory Note $2,830,000
3 Promissory Note $2,800,000
4 Employment Agreement-Nasser Barabi
5 Employment Agreement-Iraj Barabi
6 Consulting Agreement-C-MA International, Ltd.
7 Noncompetition Agreement-Nasser Barabi
8 Noncompetition Agreement-Iraj Barabi
9 Noncompetition Agreement-Ali Bushehri
10 Noncompetition Agreement-Ahmad Barabi
11 Loan and Security Agreement with Bank of America, N.A.
</TABLE>
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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
undersigning hereunto duly authorized.
CERPROBE CORPORATION
By: /s/ Randal L. Buness
------------------------------------
Randal L. Buness
Senior Vice President, Chief Financial
Officer, Secretary, and Treasurer
Dated as of December 20, 1999
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Exhibit Index
<TABLE>
<CAPTION>
Number Description
- ------ -----------
<C> <S>
1 Stock Purchase Agreement
2 Subordinated Promissory Note $2,830,000
3 Promissory Note $2,800,000
4 Employment Agreement-Nasser Barabi
5 Employment Agreement-Iraj Barabi
6 Consulting Agreement-C-MA International, Ltd.
7 Noncompetition Agreement-Nasser Barabi
8 Noncompetition Agreement-Iraj Barabi
9 Noncompetition Agreement-Ali Bushehri
10 Noncompetition Agreement-Ahmad Barabi
11 Loan and Security Agreement with Bank of America, N.A.
</TABLE>
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Exhibit 1
STOCK PURCHASE AGREEMENT
among:
CERPROBE CORPORATION,
a Delaware corporation;
OZ TECHNOLOGIES, INC.,
a California corporation;
and
NASSER BARABI, IRAJ BARABI, ALI BUSHEHRI, INDIVIDUALLY AND AS TRUSTEE
FOR THE ALI AND NASSRIN BUSHEHRI TRUST, AND AHMAD BARABI, INDIVIDUALLY
AND AS TRUSTEE FOR THE AHMAD AND ZAKIEH BARABI TRUST
Dated as of December 3, 1999
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TABLE OF CONTENTS
<TABLE>
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PAGE
<S> <C> <C>
Section 1. Sale and Purchase of Shares; Related Transactions ...... 1
1.1 Sale and Purchase of Shares ............................ 1
1.2 Purchase Price ......................................... 1
1.3 Closing ................................................ 2
Section 2. Representations and Warranties of the Company and the
Selling Stockholders ................................... 4
2.1 Due Organization; Subsidiaries, Etc .................... 4
2.2 Certificate of Incorporation and Bylaws; Records ....... 5
2.3 Capitalization, Etc .................................... 5
2.4 Financial Statements ................................... 6
2.5 Absence of Changes ..................................... 6
2.6 Title to Assets ........................................ 8
2.7 Bank Accounts; Receivables ............................. 8
2.8 Equipment; Leasehold ................................... 9
2.9 Proprietary Assets ..................................... 9
2.10 Contracts .............................................. 12
2.11 Liabilities; Fees, Costs and Expenses .................. 14
2.12 Compliance with Legal Requirements ..................... 15
2.13 Governmental Authorizations ............................ 15
2.14 Tax Matters ............................................ 15
2.15 Employee and Labor Matters; Benefit Plans .............. 16
2.16 Environmental Matters .................................. 19
2.17 Insurance .............................................. 19
2.18 Related Party Transactions ............................. 20
2.19 Legal Proceedings; Orders .............................. 20
2.20 Authority; Binding Nature of Agreement ................. 21
2.21 Non-Contravention; Consents ............................ 21
2.22 Customers .............................................. 22
2.23 Product Development .................................... 23
2.24 Company Projections .................................... 23
2.25 Full Disclosure ........................................ 23
</TABLE>
i.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
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2.26 Sale of Products; Performance of Services ................ 23
2.27 Certain Business Practices ............................... 24
2.28 Selling Stockholders and Trusts .......................... 24
Section 3. Representations and Warranties of Purchaser .............. 26
3.1 Acquisition of Shares .................................... 26
3.2 Organization, Standing and Power ......................... 26
3.3 Authority; Binding Nature of Agreement ................... 26
3.4 Non-Contravention; Consents .............................. 26
3.5 Valid Issuance ........................................... 27
3.6 SEC Filings; Financial Statements ........................ 27
3.7 Hart-Scott-Rodino Compliance ............................. 27
Section 4. Pre-Closing Covenants .................................... 27
4.1 Access and Investigation ................................. 27
4.2 Operation of the Business of the Acquired Corporations ... 27
4.3 Notification; Updates to Disclosure Schedule ............. 29
4.4 No Negotiation ........................................... 30
4.5 Payment of Indebtedness by Related Parties ............... 31
4.6 Confidentiality .......................................... 31
Section 5. Additional Covenants of the Parties ...................... 32
5.1 Filings and Consents ..................................... 32
5.2 Best Efforts ............................................. 32
5.3 Termination of Agreements ................................ 32
5.4 Treatment of Company's Employee Benefit Plans ............ 32
5.5 Best Efforts to Release Guarantees; Indemnification
Agreement ................................................ 33
5.6 Registration Requirements ................................... 33
5.7 Registration Statement Indemnification ...................... 35
5.8 Transfer of Aggregate Purchaser Shares After Registration ... 37
5.9 Additional Selling Stockholder Information Covenants ........ 37
5.10 Termination of Registration Rights .......................... 38
5.11 Certain Provisions Relating to the Real Property Note ....... 38
5.12 Mortgage of the Real Property ............................... 38
</TABLE>
ii.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
5.13 Certain Provisions Relating to the Software Agreements .................. 39
SECTION 6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE ................. 39
6.1 Accuracy of Representations ............................................. 39
6.2 Performance of Covenants ................................................ 40
6.3 Consents ................................................................ 40
6.4 No Adverse Change ....................................................... 40
6.5 Additional Documents .................................................... 40
6.6 No Legal Proceedings .................................................... 41
6.7 No Claim Regarding Stock Ownership or Sale Proceeds ..................... 41
6.8 No Prohibition .......................................................... 41
SECTION 7. CONDITIONS PRECEDENT TO SELLING STOCKHOLDERS' AND
TRUSTS' OBLIGATIONS TO CLOSE ............................................ 42
7.1 Accuracy of Representations ............................................. 42
7.2 Performance of Covenants ................................................ 42
7.3 Purchaser's Performance ................................................. 42
7.4 No Injunction ........................................................... 42
7.5 Release of Guarantees ................................................... 42
7.6 Additional Documents .................................................... 42
SECTION 8. TERMINATION ............................................................. 43
8.1 Termination Events ...................................................... 43
8.2 Termination Procedures .................................................. 44
8.3 Effect of Termination ................................................... 44
8.4 Exclusivity of Termination Rights ....................................... 44
8.5 Audit Fees and Expenses ................................................. 44
SECTION 9. INDEMNIFICATION, ETC. ................................................... 45
9.1 Survival of Representations, Etc. ....................................... 45
9.2 Indemnification by Selling Stockholders ................................. 45
9.3 Threshold ............................................................... 47
9.4 Right of Offset of Indemnification Claims; Aggregate Liability
of Selling Stockholders ................................................. 47
9.5 No Contribution ......................................................... 48
9.6 Defense of Third Party Claims ........................................... 48
</TABLE>
iii.
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TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
9.7 Exercise of Remedies by Indemnitees Other Than Purchaser ................ 49
9.8 Insurance Proceeds ...................................................... 49
9.9 Exclusive Remedy ........................................................ 49
9.10 Note to be Held as Security ............................................. 50
9.11 Administration of Note By the Agent ..................................... 50
SECTION 10. MISCELLANEOUS PROVISIONS ................................................ 52
10.1 Joint and Several Liability ............................................. 52
10.2 Selling Stockholders' Agent ............................................. 53
10.3 Further Assurances ...................................................... 54
10.4 Fees and Expenses ....................................................... 54
10.5 Attorneys' Fees ......................................................... 55
10.6 Notices ................................................................. 55
10.7 Publicity ............................................................... 57
10.8 Time of the Essence ..................................................... 57
10.9 Headings ................................................................ 57
10.10 Counterparts ............................................................ 57
10.11 Governing Law; Venue .................................................... 57
10.12 Successors and Assigns .................................................. 58
10.13 Remedies Cumulative; Specific Performance ............................... 59
10.14 Waiver .................................................................. 59
10.15 Amendments .............................................................. 60
10.16 Severability ............................................................ 60
10.17 Parties in Interest ..................................................... 60
10.18 Entire Agreement ........................................................ 60
10.19 Construction ............................................................ 60
</TABLE>
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TABLE OF CONTENTS
EXHIBITS
<TABLE>
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PAGE
<S> <C> <C>
Exhibit A: Certain Definitions
Exhibit B: Form of Employment Agreement
Exhibit C: Form of General Release
Exhibit D: Form of Spousal Consent
Exhibit E: Form of Non Competition Agreement
Exhibit F: Form of Substitute Form W-8
Exhibit G: Form of Legal Opinion of Ferrari, Olsen, Ottoboni & Bebb, LLP
Exhibit H: Form of Note
Exhibit I: Form of Registration Statement Questionnaire
Exhibit J: Intentionally Omitted
Exhibit K: Form of Amended Company Lease
Exhibit L: Form of Notice of Non Real Property Holding Corporation Status
Exhibit M: Form of Consulting Agreement
Exhibit N: Section 5.6(b) Illustration
Exhibit O: Form of Real Property Note
</TABLE>
V.
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is entered into as of December 3, 1999, by
and among CERPROBE CORPORATION, a Delaware corporation (the "Purchaser"), OZ
TECHNOLOGIES, INC., a California corporation (the "Company"), and the following
parties: NASSER BARABI, IRAJ BARABI, ALI BUSHEHRI, AHMAD BARABI (each, a
"Selling Stockholder," and, collectively, the "Selling Stockholders"; Nasser
Barabi and Iraj Barabi are referred to together in this Agreement as the
"Non-Trust Selling Stockholders," and Ali Bushehri and Ahmad Barabi are referred
to together in this Agreement as the "Trust Selling Stockholders"), ALI
BUSHEHRI, as trustee (the "Bushehri Trustee") for the ALI AND NASSRIN BUSHEHRI
TRUST, a trust established under the laws of the State of California (the
"Bushehri Trust"), and AHMAD BARABI, as trustee (the "Barabi Trustee"; each of
the Bushehri Trustee and the Barabi Trustee are referred to in this Agreement as
a "Trustee" and together as the "Trustees") for the AHMAD AND ZAKIEH BARABI
TRUST, a trust established under the laws of the State of California (the
"Barabi Trust"; each of the Bushehri Trust and the Barabi Trust are referred to
in this Agreement as a "Trust" and together as the "Trusts"). Certain
capitalized terms used in this Agreement are defined on Exhibit A.
RECITALS
A. The Non-Trust Selling Stockholders and the Trusts hold 100,000 shares
(the "Shares") of the common stock of the Company, no par value per share (the
"Company Common Stock"), which constitute all of the outstanding capital stock
of the Company. There are no outstanding stock options, warrants or other rights
or commitments that could require the Company to issue any additional shares of
its capital stock.
B. The Non-Trust Selling Stockholders and the Trusts wish to sell the
Shares to the Purchaser on the terms set forth in this Agreement.
AGREEMENT
The Purchaser, the Company, the Selling Stockholders and the Trustees
acting on behalf of their respective Trusts, intending to be legally bound,
agree as follows:
SECTION 1. SALE AND PURCHASE OF SHARES; RELATED TRANSACTIONS
1.1 SALE AND PURCHASE OF SHARES. At the Closing, the Non-Trust Selling
Stockholders and the Trustees on behalf of their respective Trusts shall sell,
assign, transfer and deliver the Shares to the Purchaser, and the Purchaser
shall purchase the Shares from the Non-Trust Selling Stockholders and the
Trusts, on the terms and subject to the conditions set forth in this Agreement.
1.2 PURCHASE PRICE. The purchase price payable by the Purchaser for all of
the Shares (the "Aggregate Share Purchase Price") shall consist of the
following:
1.
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(a) cash in the amount of $19,000,000, less the total amount of all
loan and interest and other loan-related payments, fees, costs and expenses set
forth in Part 1.2(a), Part 2.11(b) and Part 2.11(c) of the Disclosure Schedule
(but not including the Aggregate Accounting Fees to the extent that the
Aggregate Accounting Fees exceed $40,000) (the "Cash Amount");
(b) 1,500,000 shares (the "Aggregate Purchaser Shares") of common
stock of the Purchaser, $0.05 par value per share (the "Purchaser Common
Stock");
(c) a note (the "Note") from the Purchaser to the Agent in the form
of Exhibit H having an initial principal amount equal to the Initial Note
Amount; and
(d) a note (the "Real Property Note") from the Purchaser to the
Agent in the form of Exhibit O having an initial principal amount equal to
$2,800,000.
The Aggregate Share Purchase Price shall be paid (in the case of the Cash
Amount) and delivered (in the case of the Aggregate Purchaser Shares, the Note
and the Real Property Note) by the Purchaser to either the Agent or the Selling
Stockholders and the Trustees on behalf of the Trusts at the Closing. In
addition, on behalf of the Selling Stockholders, the Purchaser shall pay the
fees, costs and expenses set forth in Part 2.11(b) and Part 2.11(c) of the
Disclosure Schedule at the Closing. If the Agent receives the Cash Amount at the
Closing, the Agent shall distribute the Cash Amount to the Non-Trust Selling
Stockholders and the Trusts pro rata in proportion to their ownership percentage
(the "Applicable Share Ownership Percentage") in the Shares as determined from
Section 2.28(f) herein. The Aggregate Purchaser Shares to be delivered by the
Purchaser at the Closing shall be registered in the names of the Non-Trust
Selling Stockholders and the Trusts pro rata in proportion to their Applicable
Share Ownership Percentage; provided, however that the Purchaser shall only
deliver stock certificates representing whole shares of Purchaser Common Stock
at the Closing, and, in lieu of any fractional shares to which any Non-Trust
Selling Stockholder or Trust would otherwise be entitled, the Purchaser shall
pay to such Non-Trust Selling Stockholder or Trust an amount equal to the dollar
amount (rounded to the nearest whole cent) determined by multiplying the Average
Purchaser Common Stock Closing Price by the fraction of a share of Purchaser
Common Stock that would otherwise be deliverable to such Non-Trust Selling
Stockholder or Trust. The Agent shall distribute the proceeds of the Note and
the Real Property Note to the Non-Trust Selling Stockholders and the Trusts pro
rata in proportion to their Applicable Share Ownership Percentage.
1.3 CLOSING.
(a) The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Cooley Godward LLP,
Five Palo Alto Square, Palo Alto, California 94306 at 10:00 a.m. (California
time) on December 3, 1999 (or at such other place or time as the Purchaser and
the Agent may jointly designate). For purposes of this Agreement: "Scheduled
Closing Time" shall mean the time and date as of which the Closing is required
to take place pursuant to this Section 1.3(a); and "Closing Date" shall mean the
time and date as of which the Closing actually takes place.
2.
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(b) At the Closing:
(i) the Non-Trust Selling Stockholders and the Trustees on
behalf of their respective Trusts shall deliver to the Purchaser the stock
certificates representing the Shares, duly endorsed (or accompanied by duly
executed stock powers), and the Purchaser shall pay (in the case of the Cash
Amount) and deliver (in the case of the Aggregate Purchaser Shares, the Note and
the Real Property Note) the Aggregate Share Purchase Price to the Agent as
contemplated by Section 1.2;
(ii) the Purchaser and each of the Non-Trust Selling
Stockholders shall execute and deliver an Employment Agreement in the form of
Exhibit B;
(iii) the Selling Stockholders shall execute and deliver to
the Purchaser and the Company a General Release in the form of Exhibit C;
(iv) each Selling Stockholder (or the Agent on behalf of the
Selling Stockholders) shall execute and deliver to the Purchaser a Selling
Stockholder Compliance Certificate;
(v) the Chief Executive Officer and the Chief Financial
Officer of the Company (prior to their resignations as contemplated by clause
(x) below) shall execute and deliver to the Purchaser a Company Compliance
Certificate;
(vi) the Selling Stockholders shall deliver duly executed
spousal consents in the form of Exhibit D (the "Spousal Consents") from their
respective spouses;
(vii) the Selling Stockholders shall deliver releases
satisfactory to the Purchaser of all guarantees by any Acquired Corporation of
any indebtedness of any Related Party;
(viii) the Selling Stockholders shall each execute and deliver
to the Purchaser and the Company a Non Competition Agreement in the form of
Exhibit F;
(ix) each of the Non-Trust Selling Stockholders shall execute
and deliver a Substitute Form W-8 in the form of Exhibit G;
(x) the Existing Directors and Officers shall resign from
their positions and deliver letters of resignation to the Purchaser;
(xi) the Company and The B IV Group shall execute the Amended
Company Lease in the form of Exhibit K;
(xii) the Chief Executive Officer or the Chief Financial
Officer of the Company (prior to their resignations as contemplated by clause
(x) above) shall execute and deliver to the Purchaser a Notice of Non Real
Property Holding Corporation Status in the form of Exhibit L;
(xiii) intentionally omitted;
3.
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(xiv) the Company and the Selling Stockholders shall deliver
evidence satisfactory to the Purchaser of the payment in full and discharge of
all indebtedness and other liabilities of all Related Parties to the Acquired
Corporations, which evidence shall include checks payable to the Company from
applicable Related Parties that are dated the Closing Date; and
(xv) the Purchaser and Ali Bushehri shall execute and deliver
a Consulting Agreement in the form of Exhibit M.
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SELLING
STOCKHOLDERS. The Company and each of the Selling Stockholders jointly and
severally represent and warrant, to and for the benefit of the Indemnitees, as
follows:
2.1 DUE ORGANIZATION; SUBSIDIARIES, ETC.
(a) The Company has no Subsidiaries, except for the Entities
identified as Subsidiaries in Part 2.1 of the Disclosure Schedule; and neither
the Company nor any of the other Entities identified in Part 2.1 of the
Disclosure Schedule owns any capital stock of, or any equity interest of any
nature in, any other Entity, other than the Entities identified in Part 2.1 of
the Disclosure Schedule. (The Company and each of its Subsidiaries are referred
to collectively in this Agreement as the "Acquired Corporations.") None of the
Acquired Corporations has agreed or is obligated to make any future investment
in or capital contribution to any other Entity. None of the Acquired
Corporations has guaranteed or become responsible or liable for any obligation
of any of the Entities in which it owns or has owned any equity interest. Each
of the Acquired Corporations is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has all necessary power and authority: (i) to conduct its business in the manner
in which its business is currently being conducted; (ii) to own and use its
assets in the manner in which its assets are currently owned and used; and (iii)
to perform its obligations under all Acquired Corporation Contracts.
(b) Except as set forth in Part 2.1 of the Disclosure Schedule, none
of the Acquired Corporations has conducted any business under or otherwise used,
for any purpose or in any jurisdiction, any fictitious name, assumed name, trade
name or other name, other than the names "Oz Technologies, Inc.," "Oz Tek,"
"Triple S Engineering" and "TSE."
(c) Each Acquired Corporation is not and has not been required to be
qualified, authorized, registered or licensed to do business as a foreign
corporation in any jurisdiction other than the jurisdictions identified in Part
2.1 of the Disclosure Schedule, except where the failure to be so qualified,
authorized, registered or licensed has not had and will not have a Material
Adverse Effect on the Acquired Corporations. Each Acquired Corporation is in
good standing as a foreign corporation in each of the jurisdictions identified
with respect to it in Part 2.1 of the Disclosure Schedule.
(d) Part 2.1 of the Disclosure Schedule accurately sets forth,
without giving effect to the resignations contemplated by Section 6.5(d) of this
Agreement, (i) the names of the members of each Acquired Corporation's board of
directors, (ii) the names of the members of
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each committee of each Acquired Corporation's board of directors, and (iii) the
names and titles of each Acquired Corporation's officers.
(e) Except as set forth in Part 2.1 of the Disclosure Schedule, no
assets were transferred from Ketzo Corporation to any of its equity holders or
any other party in connection with its dissolution and the distribution of its
equity interests prior to the Closing or in the six months prior to such
dissolution and distribution.
2.2 CERTIFICATE OF INCORPORATION AND BYLAWS; RECORDS. The Company has
delivered to the Purchaser accurate and complete copies of: (i) the certificate
of incorporation or charter and bylaws of each of the Acquired Corporations,
including all amendments thereto; (ii) the stock records of each of the Acquired
Corporations; and (iii) the minutes and other records of the meetings and other
proceedings (including any actions taken by written consent or otherwise without
a meeting) of the stockholders of any of the Acquired Corporations, the board of
directors of any of the Acquired Corporations and all committees of the board of
directors of any of the Acquired Corporations. There have been no formal
meetings or other proceedings of the stockholders of any of the Acquired
Corporations, the board of directors of any of the Acquired Corporations or any
committee of the board of directors of any of the Acquired Corporations that are
not fully reflected in such minutes or other records. There has not been any
violation of any of the provisions of any Acquired Corporation's certificate of
incorporation or charter or bylaws, and no Acquired Corporation has taken any
action that is inconsistent in any material respect with any resolution adopted
by its stockholders, its board of directors or any committee of its board of
directors. The books of account, stock records, minute books and other records
of each of the Acquired Corporations are accurate, up-to-date and complete in
all material respects, and have been maintained in accordance with prudent
business practices.
2.3 CAPITALIZATION, ETC.
(a) The authorized capital stock of the Company consists of
1,000,000 shares of Company Common Stock, of which 100,000 shares have been
issued and are outstanding as of the date of this Agreement. All of the
outstanding shares of Company Common Stock have been duly authorized and validly
issued, and are fully paid and non-assessable. All outstanding shares of Company
Common Stock have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
(b) There is no: (i) outstanding subscription, option, call, warrant
or right (whether or not currently exercisable) to acquire any shares of capital
stock or other securities of the Company; (ii) outstanding security, instrument
or obligation that is or may become convertible into or exchangeable for any
shares of capital stock or other securities of the Company; (iii) Contract under
which the Company is or may become obligated to sell or otherwise issue any
shares of its capital stock or any other securities of the Company; or (iv) to
the knowledge of the Company and each of the Selling Stockholders, except as set
forth in Part 2.3 of the Disclosure Schedule, condition or circumstance that may
give rise to or provide a basis for the assertion of a claim by any Person to
the effect that such Person is entitled to acquire or receive any shares of
capital stock or other securities of the Company.
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(c) Except as set forth in Part 2.3 of the Disclosure Schedule, no
Acquired Corporation has ever repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities of itself or any other Acquired
Corporation. Any securities so reacquired by the Acquired Corporations were
reacquired in compliance with (i) the applicable provisions of the California
Corporations Code and all other applicable Legal Requirements, and (ii) all
requirements set forth in applicable Contracts.
2.4 FINANCIAL STATEMENTS.
(a) The Company has delivered to the Purchaser the following
financial statements and notes (collectively, the "Company Financial
Statements"):
(i) The audited consolidated balance sheet of the Company and
its Subsidiaries as of December 31, 1998, and the related audited consolidated
statement of income and retained earnings and statement of cash flows of the
Company and its Subsidiaries for the year then ended, together with the notes
thereto and the unqualified report and opinion of Frank, Rimerman & Co. LLP
relating thereto; and
(ii) the unaudited Interim Balance Sheet, and the related
unaudited consolidated statement of income and retained earnings and statement
of cash flows of the Company and its Subsidiaries for the nine months then
ended, together with the notes thereto.
(b) Except as set forth in Part 2.4 of the Disclosure Schedule, the
Company Financial Statements are accurate and complete in all material respects
and present fairly the financial position of the Company and its Subsidiaries as
of the respective dates thereof and the results of operations and cash flows of
the Company and its Subsidiaries for the periods covered thereby. Except as set
forth in Part 2.4 of the Disclosure Schedule, the Company Financial Statements
have been prepared in accordance with GAAP applied on a consistent basis
throughout the periods covered.
2.5 ABSENCE OF CHANGES. Except as set forth in Part 2.5 of the Disclosure
Schedule, since September 30, 1999:
(a) there has not been any material adverse change in the business,
condition, assets, liabilities, operations, financial performance or prospects
of the Acquired Corporations taken as a whole, and, to the knowledge of the
Company and each of the Selling Stockholders, no event has occurred that will,
or could reasonably be expected to, have a Material Adverse Effect on the
Acquired Corporations;
(b) there has not been any material loss, damage or destruction to,
or any material interruption in the use of, any of the assets of any of the
Acquired Corporations (whether or not covered by insurance);
(c) none of the Acquired Corporations has declared, accrued, set
aside or paid any dividend or made any other distribution in respect of any
shares of capital stock, or has repurchased, redeemed or otherwise reacquired
any shares of capital stock or other securities;
6.
<PAGE> 13
(d) none of the Acquired Corporations has sold, issued or authorized
the issuance of (i) any capital stock or other securities, (ii) any option or
right to acquire any capital stock or any other securities, or (iii) any
instrument convertible into or exchangeable for any capital stock or other
securities;
(e) there has been no amendment to the certificate of incorporation
or charter or bylaws of any of the Acquired Corporations, and none of the
Acquired Corporations has effected or been a party to any Acquisition
Transaction, recapitalization, reclassification of shares, stock split, reverse
stock split or similar transaction;
(f) none of the Acquired Corporations has formed any Subsidiary or
acquired any equity interest or other interest in any other Entity;
(g) none of the Acquired Corporations has made any expenditure to
acquire or improve any capital asset;
(h) none of the Acquired Corporations has (i) entered into or
permitted any of the assets owned or used by it to become bound by any Contract
that is or would constitute a Material Contract (as defined in Section 2.10(a)),
or (ii) amended or prematurely terminated, or waived any material right or
remedy under, any such Contract;
(i) none of the Acquired Corporations has (i) acquired, leased or
licensed any right or other asset from any other Person, (ii) sold or otherwise
disposed of, or leased or licensed, any right or other asset to any other
Person, or (iii) waived or relinquished any right, except for immaterial rights
or other immaterial assets acquired, leased, licensed or disposed of in the
ordinary course of business and consistent with past practices;
(j) none of the Acquired Corporations has written off as
uncollectible, or established any extraordinary reserve with respect to, any
account receivable or other indebtedness;
(k) none of the Acquired Corporations has made any pledge of any of
its assets or otherwise permitted any of its assets to become subject to any
Encumbrance, except for pledges of immaterial assets made in the ordinary course
of business and consistent with past practices;
(l) none of the Acquired Corporations has (i) lent money to any
Person (other than pursuant to routine travel advances made to employees in the
ordinary course of business), or (ii) incurred or guaranteed any indebtedness
for borrowed money;
(m) none of the Acquired Corporations has (i) established or adopted
any Employee Benefit Plan, (ii) paid any bonus or made any profit-sharing or
similar payment to, or increased the amount of the wages, salary, commissions,
fringe benefits or other compensation or remuneration payable to, any of its
directors, officers or employees, (iii) except as contemplated by Section 6.5(c)
and Section 6.5(q) of this Agreement, entered into, amended or modified any
contract or agreement (either oral or written) with any of its directors,
officers or employees or (iv) hired any new employee;
7.
<PAGE> 14
(n) none of the Acquired Corporations has changed any of its methods
of accounting or accounting practices in any respect;
(o) none of the Acquired Corporations has made any Tax election;
(p) none of the Acquired Corporations has commenced or settled any
Legal Proceeding;
(q) none of the Acquired Corporations has entered into any material
transaction or taken any other material action outside the ordinary course of
business or inconsistent with its past practices;
(r) none of the Acquired Corporations has entered into any material
transaction or taken any other material action that has had, or would reasonably
be expected to have, a Material Adverse Effect on the Acquired Corporations; and
(s) none of the Acquired Corporations has agreed or committed to
take any of the actions referred to in clauses "(c)" through "(r)" above.
2.6 TITLE TO ASSETS.
(a) The Acquired Corporations own, and have good, valid and
marketable title to, all assets purported to be owned by them, including: (i)
all assets reflected on the Interim Balance Sheet; (ii) all assets referred to
in Parts 2.7 and 2.9 of the Disclosure Schedule and all of the rights of the
Acquired Corporations under the Material Contracts; and (iii) all other assets
reflected in the books and records of the Acquired Corporations as being owned
by the Acquired Corporations. Except as set forth in Part 2.6 of the Disclosure
Schedule, all of said assets are owned by the Acquired Corporations free and
clear of any liens or other Encumbrances, except for (i) any lien for current
taxes not yet due and payable, and (ii) minor liens that have arisen in the
ordinary course of business and that do not (in any case or in the aggregate)
materially detract from the value of the assets subject thereto or materially
impair the operations of any of the Acquired Corporations.
(b) Part 2.6 of the Disclosure Schedule identifies all assets that
are material to the business of any of the Acquired Corporations and that are
being leased or licensed to any of the Acquired Corporations.
2.7 BANK ACCOUNTS; RECEIVABLES.
(a) Part 2.7(a) of the Disclosure Schedule provides accurate
information with respect to each account maintained by or for the benefit of any
Acquired Corporation at any bank or other financial institution including the
name of the bank or financial institution, the account number and the balance as
of the date hereof.
(b) Part 2.7(b) of the Disclosure Schedule provides an accurate and
complete breakdown and aging of all accounts receivable, notes receivable and
other receivables of the Company and its Subsidiaries as of September 30, 1999.
Except as set forth in Part 2.7(b) of the Disclosure Schedule, all existing
accounts receivable of the Acquired Corporations (including
8.
<PAGE> 15
those accounts receivable reflected on the Interim Balance Sheet that have not
yet been collected and those accounts receivable that have arisen since
September 30, 1999 and have not yet been collected) (i) represent valid
obligations of customers of the Acquired Corporations arising from bona fide
transactions entered into in the ordinary course of business, and (ii) are
current. To the knowledge of the Company and each of the Selling Stockholders,
none of the existing accounts receivable are subject to any counterclaim or
right of set off.
2.8 EQUIPMENT; LEASEHOLD.
(a) All material items of equipment and other tangible assets owned
by or leased to the Acquired Corporations are adequate for the uses to which
they are being put, are in good condition and repair (ordinary wear and tear
excepted) and are adequate for the conduct of the business of the Acquired
Corporations in the manner in which such business is currently being conducted.
(b) None of the Acquired Corporations owns any real property or any
interest in real property, except for the leaseholds created under the real
property leases identified in Part 2.10 of the Disclosure Schedule.
2.9 PROPRIETARY ASSETS.
(a) Part 2.9(a)(i) of the Disclosure Schedule sets forth, with
respect to each Proprietary Asset owned by the Acquired Corporations and
registered with any Governmental Body or for which an application has been filed
with any Governmental Body, (i) a brief description of such Proprietary Asset,
and (ii) the names of the jurisdictions covered by the applicable registration
or application. Part 2.9(a)(ii) of the Disclosure Schedule identifies and
provides a brief description of all other Proprietary Assets owned by the
Acquired Corporations that are material to the business of any of the Acquired
Corporations and all other Proprietary Assets owned by the Acquired Corporations
that the Company or any of the Selling Stockholders reasonably believes are
patentable and for which a patent application on behalf of the Company has not
been filed. Part 2.9(a)(iii) of the Disclosure Schedule identifies and provides
a brief description of, and identifies any ongoing royalty or payment
obligations in excess of $10,000 with respect to, each Proprietary Asset that is
licensed or otherwise made available to any of the Acquired Corporations by any
Person and is material to the business of any of the Acquired Corporations
(except for any Proprietary Asset that is licensed to any of the Acquired
Corporations under any third party software license generally available to the
public), and identifies the Contract under which such Proprietary Asset is being
licensed or otherwise made available to such Acquired Corporation. The Acquired
Corporations have good, valid and marketable title to all of the Acquired
Corporation Proprietary Assets identified in Parts 2.9(a)(i) and 2.9(a)(ii) of
the Disclosure Schedule, free and clear of all Encumbrances, except for (i) any
lien for current taxes not yet due and payable, and (ii) minor liens that have
arisen in the ordinary course of business and that do not (individually or in
the aggregate) materially detract from the value of the assets subject thereto
or materially impair the operations of any of the Acquired Corporations. The
Acquired Corporations have a valid right to use, license and otherwise exploit
all Proprietary Assets identified in Part 2.9(a)(iii) of the Disclosure
Schedule. Except as set forth in Part 2.9(a)(iv) of the Disclosure Schedule,
none of the Acquired Corporations has developed jointly with any other Person
any Acquired Corporation Proprietary Asset that is material to the
9.
<PAGE> 16
business of any of the Acquired Corporations with respect to which such other
Person has any rights. Except as set forth in Part 2.9(a)(v) of the Disclosure
Schedule, there is no Acquired Corporation Contract (with the exception of end
user license agreements in the form previously delivered by the Company to the
Purchaser) pursuant to which any Person has any right (whether or not currently
exercisable) to use, license or otherwise exploit any Acquired Corporation
Proprietary Asset.
(b) The Acquired Corporations have taken reasonable measures and
precautions to protect and maintain the confidentiality, secrecy and value of
all material Acquired Corporation Proprietary Assets (except Acquired
Corporation Proprietary Assets whose value would be unimpaired by disclosure).
Part 2.9(b) of the Disclosure Schedule lists all current and former employees of
the Acquired Corporations and all current and former consultants and independent
contractors to the Acquired Corporations who are or were involved in, or who
have contributed to, the creation or development of any material Acquired
Corporation Proprietary Asset. No current or former employee, officer, director,
stockholder, consultant or independent contractor has any right, claim or
interest in or with respect to any Acquired Corporation Proprietary Asset.
(c) To the knowledge of the Company and each of the Selling
Stockholders: (i) all patents, trademarks, service marks and copyrights held by
any of the Acquired Corporations are valid, enforceable and subsisting; (ii)
none of the Acquired Corporation Proprietary Assets and no Proprietary Asset
that is currently being developed by any of the Acquired Corporations (either by
itself or with any other Person) infringes, misappropriates or conflicts with
any Proprietary Asset owned or used by any other Person; (iii) none of the
products that are or have been designed, created, developed, assembled,
manufactured or sold by any of the Acquired Corporations is infringing,
misappropriating or making any unlawful or unauthorized use of any Proprietary
Asset owned or used by any other Person, and none of such products has at any
time infringed, misappropriated or made any unlawful or unauthorized use of, and
none of the Acquired Corporations has received any notice or other communication
(in writing or otherwise) of any actual, alleged, possible or potential
infringement, misappropriation or unlawful or unauthorized use of, any
Proprietary Asset owned or used by any other Person; and (iv) no other Person is
infringing, misappropriating or making any unlawful or unauthorized use of, and
no Proprietary Asset owned or used by any other Person infringes or conflicts
with, any material Acquired Corporation Proprietary Asset.
(d) The Acquired Corporation Proprietary Assets constitute all the
Proprietary Assets necessary to enable the Acquired Corporations to conduct
their business in the manner in which such business has been and is being
conducted. None of the Acquired Corporations has (i) licensed any of the
material Acquired Corporation Proprietary Assets to any Person on an exclusive
basis, or (ii) entered into any covenant not to compete or Contract limiting its
ability to exploit fully any material Acquired Corporation Proprietary Asset or
to transact business in any market or geographical area or with any Person.
(e) Except as set forth in Part 2.9(e)(i) of the Disclosure
Schedule, none of the Acquired Corporations has disclosed or delivered to any
Person, or permitted the disclosure or delivery to any escrow agent or other
Person, of any Acquired Corporation Source Code. No event has occurred, and no
circumstance or condition exists, that (with or without notice or lapse
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<PAGE> 17
of time) will, or could reasonably be expected to, result in the disclosure or
delivery to any Person of any Acquired Corporation Source Code. Part 2.10(a)(ii)
of the Disclosure Schedule identifies each Contract pursuant to which any
Acquired Corporation has deposited or is required to deposit with an escrow
holder or any other Person any Acquired Corporation Source Code, and further
describes whether the execution of this Agreement or the consummation of any of
the transactions contemplated hereby could reasonably be expected to result in
the release or disclosure of any Acquired Corporation Source Code.
(f) To the knowledge of the Company and each of the Selling
Stockholders, except as set forth in Part 2.9(f)(i) of the Disclosure Schedule,
each computer, computer program and other item of software (whether installed on
a computer or on any other piece of equipment, including firmware) that is
owned, licensed or used by any of the Acquired Corporations for its internal
business operations is Year 2000 Compliant. Except as set forth in Part
2.9(f)(ii) of the Disclosure Schedule, each computer program and other item of
software that has been designed, developed, sold, licensed or otherwise made
available to any Person by any of the Acquired Corporations is Year 2000
Compliant. Except as set forth in Part 2.9(f)(iii) of the Disclosure Schedule,
each of the Acquired Corporations has conducted sufficient Year 2000 compliance
testing for each computer, computer program and item of software referred to in
the preceding two sentences to be able to determine whether such computer,
computer program and item of software is Year 2000 Compliant, and has obtained
warranties or other written assurances from each of its suppliers to the effect
that the products and services provided by such suppliers to the Acquired
Corporation is Year 2000 Compliant. As used in this Section 2.9, "Year 2000
Compliant" means, with respect to a computer, computer program or other item of
software (i) the functions, calculations, and other computing processes of the
computer, program or software (collectively, "Processes") perform in a
consistent and correct manner without interruption regardless of the date on
which the Processes are actually performed and regardless of the date input to
the applicable computer system, whether before, on, or after January 1, 2000;
(ii) the computer, program or software accepts, calculates, compares, sorts,
extracts, sequences, and otherwise processes date inputs and date values, and
returns and displays date values, in a consistent and correct manner regardless
of the dates used whether before, on, or after January 1, 2000; (iii) the
computer, program or software accepts and responds to year input, if any, in a
manner that resolves any ambiguities as to century in a defined, predetermined,
and appropriate manner; (iv) the computer, program or software stores and
displays date information in ways that are unambiguous as to the determination
of the century; and (v) leap years will be determined by the following standard
(A) if dividing the year by 4 yields an integer, it is a leap year, except for
years ending in 00, but (B) a year ending in 00 is a leap year if dividing it by
400 yields an integer.
(g) Except with respect to demonstration or trial copies, no
product, system, program or software module designed, developed, sold, licensed
or otherwise made available by any of the Acquired Corporations to any Person
contains any "back door," "time bomb," "Trojan horse," "worm," "drop dead
device," "virus" or other software routines or hardware components designed to
permit unauthorized access or to disable or erase software, hardware or data
without the consent of the user.
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2.10 CONTRACTS.
(a) Part 2.10 of the Disclosure Schedule identifies:
(i) each Acquired Corporation Contract relating to the
employment of, or the performance of services by, any employee, consultant or
independent contractor;
(ii) each Acquired Corporation Contract relating to the
acquisition, transfer, use, development, sharing or license of any technology or
any Proprietary Asset;
(iii) each Acquired Corporation Contract imposing any
restriction on the right or ability of any Acquired Corporation (A) to compete
with any other Person, (B) to acquire any product or other asset or any services
from any other Person, to sell any product or other asset to or perform any
services for any other Person or to transact business or deal in any other
manner with any other Person, or (C) develop or distribute any technology;
(iv) each Acquired Corporation Contract creating or involving
any agency relationship, distribution arrangement or franchise relationship;
(v) each Acquired Corporation Contract relating to the
acquisition, issuance or transfer of any securities;
(vi) each Acquired Corporation Contract relating to the
creation of any Encumbrance with respect to any asset of any Acquired
Corporation;
(vii) each Acquired Corporation Contract involving or
incorporating any guaranty, any pledge, any performance or completion bond, any
indemnity or any surety arrangement;
(viii) each Acquired Corporation Contract creating or relating
to any partnership or joint venture or any sharing of revenues, profits, losses,
costs or liabilities;
(ix) each Acquired Corporation Contract relating to the
purchase or sale of any product or other asset or the creation of any
indebtedness by or to, or the performance of any services by or for, any Related
Party (as defined in Section 2.18);
(x) each Acquired Corporation Contract constituting or
relating to a Government Contract or Government Bid;
(xi) any other Acquired Corporation Contract that was entered
into outside the ordinary course of business or was inconsistent with past
practices;
(xii) any other Acquired Corporation Contract that has a term
of more than 60 days and that may not be terminated by the applicable Acquired
Corporation (without penalty) within 60 days after the delivery of a termination
notice by such Acquired Corporation;
(xiii) any other Acquired Corporation Contract that
contemplates or involves (A) the payment or delivery of cash or other
consideration in an amount or having a
12.
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value in excess of $50,000 in the aggregate, or (B) the performance of services
having a value in excess of $50,000 in the aggregate;
(xiv) each Acquired Corporation Contract constituting a
commitment of any Person to purchase products (including products in
development) of any Acquired Corporation; and
(xv) each Acquired Corporation Contract contemplating or
creating indebtedness on the part of any Acquired Corporation.
(Acquired Corporation Contracts in the respective categories described in
clauses "(i)" through "(xv)" above are referred to in this Agreement as
"Material Contracts.")
(b) The Company has delivered to the Purchaser accurate and complete
copies of all written Material Contracts, including all amendments thereto. Part
2.10 of the Disclosure Schedule provides an accurate description of the terms of
each Acquired Corporation Contract that is not in written form. Each Contract
identified in Part 2.10 of the Disclosure Schedule is valid and in full force
and effect, and, to the knowledge of the Company and each of the Selling
Stockholders, is enforceable by the applicable Acquired Corporation in
accordance with its terms.
(c) Except as set forth in Part 2.10 of the Disclosure Schedule:
(i) none of the Acquired Corporations has violated or
breached, or committed any default under, any Acquired Corporation Contract,
and, to the knowledge of the Company and each of the Selling Stockholders, no
other Person has violated or breached, or committed any default under, any
Acquired Corporation Contract;
(ii) to the knowledge of the Company and each of the Selling
Stockholders, no event has occurred, and no circumstance or condition exists,
that (with or without notice or lapse of time) will, or could reasonably be
expected to, (A) result in a violation or breach of any of the provisions of any
Acquired Corporation Contract, (B) give any Person the right to declare a
default or exercise any remedy under any Acquired Corporation Contract, (C) give
any Person the right to accelerate the maturity or performance of any Acquired
Corporation Contract, or (D) give any Person the right to cancel, terminate or
modify any Acquired Corporation Contract;
(iii) since their inception, none of the Acquired Corporations
has received any notice or other communication regarding any actual or possible
violation or breach of, or default under, any Acquired Corporation Contract; and
(iv) none of the Acquired Corporations has waived any of its
material rights under any Material Contract.
(d) No Person is renegotiating, or has a right pursuant to the terms
of any Acquired Corporation Contract to renegotiate, any amount paid or payable
to any Acquired Corporation under any Material Contract or any other material
term or provision of any Material Contract.
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(e) The Material Contracts collectively constitute all of the
Contracts necessary to enable each of the Acquired Corporations to conduct its
business in the manner in which its business is currently being conducted.
(f) Part 2.10 of the Disclosure Schedule identifies and provides a
brief description of each proposed Contract as to which any bid, offer, award,
written proposal, term sheet or similar document has been submitted or received
by any Acquired Corporation since January 1, 1999.
(g) Part 2.10 of the Disclosure Schedule provides an accurate
description and breakdown of the backlog of the Acquired Corporations under
Acquired Corporation Contracts.
2.11 LIABILITIES; FEES, COSTS AND EXPENSES.
(a) None of the Acquired Corporations has accrued, contingent or
other liabilities of any nature, either matured or unmatured (whether or not
required to be reflected in financial statements in accordance with GAAP, and
whether due or to become due), except for: (i) liabilities identified as such in
the "liabilities" column of the Interim Balance Sheet; (ii) accounts payable or
accrued salaries that have been incurred by the Acquired Corporations since
September 30, 1999 in the ordinary course of business and consistent with past
practices; (iii) liabilities under the Material Contracts, to the extent the
nature and magnitude of such liabilities can be specifically ascertained by
reference to the text of such Contracts; and (iv) the liabilities identified in
Part 2.11(a) of the Disclosure Schedule.
(b) Part 2.11(b) of the Disclosure Schedule sets forth the total
amount of all legal fees and expenses payable to Ferrari, Olsen, Ottoboni & Bebb
and all investment banking and other fees and expenses payable to Broadview
Associates LLC that have been incurred by or that will in the future be incurred
by or for the benefit of the Company in connection with (i) the negotiation,
preparation and review of any term sheet or similar document relating to any of
the transactions contemplated by this Agreement, (ii) the investigation and
review conducted by the Purchaser and its Representatives with respect to the
business of the Acquired Corporations (and the furnishing of information to the
Purchaser and its Representatives in connection with such investigation and
review), (iii) the negotiation, preparation and review of this Agreement
(including the Disclosure Schedule), the other agreements referred to in this
Agreement and all certificates, opinions and other instruments and documents
delivered or to be delivered in connection with the transactions contemplated by
this Agreement, (iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the transactions
contemplated by this Agreement, and the obtaining of any Consent required to be
obtained in connection with any of such transactions, or (v) the consummation
and performance of the transactions contemplated by this Agreement.
(c) Part 2.11(c) of the Disclosure Schedule sets forth the total
amount of all accounting fees and expenses (the "Aggregate Accounting Fees")
payable to Frank, Rimerman & Co. LLP, Duane Roemmich, KPMG LLP or any other
accountant that have been incurred by or that will in the future be incurred by
or for the benefit of the Company in connection with KPMG LLP's (i) audit of the
consolidated balance sheet of the Company and its Subsidiaries as of September
30, 1999 (the "Interim Balance Sheet"), and the related consolidated statement
of
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income and retained earnings and statement of cash flows of the Company and its
Subsidiaries for the nine months then ended, together with the notes thereto,
and (ii) issuance of its unqualified report and opinion, if any, relating to
such financial statements.
2.12 COMPLIANCE WITH LEGAL REQUIREMENTS. Each of the Acquired Corporations
is, and has at all times since its inception been, in compliance with all
applicable Legal Requirements, except where the failure to comply with such
Legal Requirements has not had and will not have a Material Adverse Effect on
the Acquired Corporations. Except as set forth in Part 2.12 of the Disclosure
Schedule, none of the Acquired Corporations has received any notice or other
communication from any Governmental Body regarding any actual or possible
violation of, or failure to comply with, any Legal Requirement, since its
inception.
2.13 GOVERNMENTAL AUTHORIZATIONS. Part 2.13 of the Disclosure Schedule
identifies each material Governmental Authorization held by any Acquired
Corporation, and the Company has delivered to the Purchaser accurate and
complete copies of all Governmental Authorizations identified in Part 2.13 of
the Disclosure Schedule. The Governmental Authorizations identified in Part 2.13
of the Disclosure Schedule are valid and in full force and effect, and
collectively constitute all Governmental Authorizations necessary to enable each
of the Acquired Corporations to conduct its business in the manner in which its
business is currently being conducted. Each Acquired Corporation is, and at all
times since its inception has been, in substantial compliance with the terms and
requirements of the applicable Governmental Authorizations identified in Part
2.13 of the Disclosure Schedule. Since the date of their inception, none of the
Acquired Corporations has received any notice or other communication from any
Governmental Body regarding (a) any actual or possible violation of or failure
to comply with any term or requirement of any Governmental Authorization, or (b)
any actual or possible revocation, withdrawal, suspension, cancellation,
termination or modification of any Governmental Authorization.
2.14 TAX MATTERS.
(a) All Tax Returns required to be filed by or on behalf of the
Acquired Corporations with any Governmental Body with respect to any taxable
period ending on or before the Closing Date (the "Acquired Corporation Returns")
(i) have been or will be filed on or before the applicable due date (including
any extensions of such due date), and (ii) except as set forth in Part 2.14 of
the Disclosure Schedule, have been, or will be when filed, accurately and
completely prepared in all material respects in compliance with all applicable
Legal Requirements. All amounts shown on the Acquired Corporation Returns to be
due on or before the Closing Date have been or will be paid on or before the
Closing Date. The Company has delivered to the Purchaser accurate and complete
copies of all Acquired Corporation Returns filed since December 31, 1993 which
have been requested by the Purchaser.
(b) The Company Financial Statements fully accrue all actual and
contingent liabilities for Taxes with respect to all periods through the dates
thereof in accordance with GAAP. Each Acquired Corporation will establish, in
the ordinary course of business and consistent with its past practices, reserves
adequate for the payment of all Taxes for the period from September 30, 1999
through the Closing Date, and will disclose the dollar amount of such reserves
to the Purchaser on or prior to the Closing Date.
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(c) Except as set forth in Part 2.14 of the Disclosure Schedule, no
Acquired Corporation Return relating to income Taxes has ever been examined or
audited by any Governmental Body. Except as set forth in Part 2.14 of the
Disclosure Schedule, there have been no other examinations or audits of any
Acquired Corporation Return. The Company has delivered to the Purchaser accurate
and complete copies of all audit reports and similar documents (to which the
Company has access) relating to the Acquired Corporation Returns. Except as set
forth in Part 2.14 of the Disclosure Schedule, no extension or waiver of the
limitation period applicable to any of the Acquired Corporation Returns has been
granted (by any Acquired Corporation or any other Person), and no such extension
or waiver has been requested from any Acquired Corporation.
(d) Except as set forth in Part 2.14 of the Disclosure Schedule, no
claim or Legal Proceeding is pending or has been threatened against or with
respect to any Acquired Corporation in respect of any Tax. There are no
unsatisfied liabilities for Taxes (including liabilities for interest, additions
to tax and penalties thereon and related expenses) with respect to any notice of
deficiency or similar document received by any Acquired Corporation with respect
to any Tax (other than liabilities for Taxes asserted under any such notice of
deficiency or similar document which are being contested in good faith by the
applicable Acquired Corporations and with respect to which adequate reserves for
payment have been established). There are no liens for Taxes upon any of the
assets of any of the Acquired Corporations except liens for current Taxes not
yet due and payable. None of the Acquired Corporations has entered into or
become bound by any agreement or consent pursuant to Section 341(f) of the Code.
None of the Acquired Corporations has been, and none of the Acquired
Corporations will be, required to include any adjustment in taxable income for
any tax period (or portion thereof) pursuant to Section 481 or 263A of the Code
or any comparable provision under state or foreign Tax laws as a result of
transactions or events occurring, or accounting methods employed, prior to the
Closing.
(e) There is no agreement, plan, arrangement or other Contract
covering any employee or independent contractor or former employee or
independent contractor of any of the Acquired Corporations that, considered
individually or considered collectively with any other such Contracts, will, or
could reasonably be expected to, give rise directly or indirectly to the payment
of any amount that would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the Acquired Corporations is, or has ever been, a party
to or bound by any tax indemnity agreement, tax sharing agreement, tax
allocation agreement or similar Contract.
2.15 EMPLOYEE AND LABOR MATTERS; BENEFIT PLANS.
(a) Part 2.15(a) of the Disclosure Schedule identifies each salary,
bonus, deferred compensation, incentive compensation, stock purchase, stock
option, severance pay, termination pay, hospitalization, medical, life or other
insurance, supplemental unemployment benefits, profit-sharing, pension or
retirement plan, program or agreement (collectively, the "Plans") sponsored,
maintained, contributed to or required to be contributed to by any of the
Acquired Corporations for the benefit of any employee of any of the Acquired
Corporations ("Employee"), except for Plans which would not require any of the
Acquired Corporations to make payments or provide benefits having a value in
excess of $10,000 in the aggregate. The
16.
<PAGE> 23
Acquired Corporations have received and are in possession of executed Form I-9s
for each former and current Employee.
(b) Except as set forth in Part 2.15(a) of the Disclosure Schedule,
none of the Acquired Corporations maintains, sponsors or contributes to, and, to
the knowledge of the Company and each of the Selling Stockholders, has not at
any time in the past maintained, sponsored or contributed to, any employee
pension benefit plan (as defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), whether or not excluded from
coverage under specific Titles or Merger Subtitles of ERISA) for the benefit of
Employees or former Employees (a "Pension Plan").
(c) The Acquired Corporations maintain, sponsor or contribute only
to those employee welfare benefit plans (as defined in Section 3(1) of ERISA,
whether or not excluded from coverage under specific Titles or Merger Subtitles
of ERISA) for the benefit of Employees or former Employees which are described
in Part 2.15(c) of the Disclosure Schedule (the "Welfare Plans"), none of which
is a multiemployer plan (within the meaning of Section 3(37) of ERISA).
(d) With respect to each Plan, the Company has delivered to the
Purchaser:
(i) an accurate and complete copy of such Plan (including all
amendments thereto);
(ii) an accurate and complete copy of the annual report, if
required under ERISA, with respect to such Plan for the last two years;
(iii) an accurate and complete copy of the most recent summary
plan description, together with each Summary of Material Modifications, if
required under ERISA, with respect to such Plan, and all material employee
communications relating to such Plan;
(iv) if such Plan is funded through a trust or any third party
funding vehicle, an accurate and complete copy of the trust or other funding
agreement (including all amendments thereto) and accurate and complete copies
the most recent financial statements thereof;
(v) accurate and complete copies of all Contracts relating to
such Plan, including service provider agreements, insurance contracts, minimum
premium contracts, stop-loss agreements, investment management agreements,
subscription and participation agreements and record keeping agreements; and
(vi) an accurate and complete copy of the most recent
determination letter received from the Internal Revenue Service with respect to
such Plan (if such Plan is intended to be qualified under Section 401(a) of the
Code).
(e) None of the Acquired Corporations is required to be, and, to the
knowledge of the Company and each of the Selling Stockholders, has never been
required to be, treated as a single employer with any other Person under Section
4001(b)(1) of ERISA or Section 414(b), (c), (m) or (o) of the Code. None of the
Acquired Corporations has ever been a
17.
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member of an "affiliated service group" within the meaning of Section 414(m) of
the Code. To the knowledge of the Company and each of the Selling Stockholders,
none of the Acquired Corporations has ever made a complete or partial withdrawal
from a multiemployer plan, as such term is defined in Section 3(37) of ERISA,
resulting in "withdrawal liability," as such term is defined in Section 4201 of
ERISA (without regard to subsequent reduction or waiver of such liability under
either Section 4207 or 4208 of ERISA).
(f) None of the Acquired Corporations has any plan or commitment to
create any additional Welfare Plan or any Pension Plan, or to modify or change
any existing Welfare Plan or Pension Plan (other than to comply with applicable
law) in a manner that would affect any Employee.
(g) Except as set forth in Part 2.15(g) of the Disclosure Schedule,
no Welfare Plan provides death, medical or health benefits (whether or not
insured) with respect to any current or former Employee after any such
Employee's termination of service (other than (i) benefit coverage mandated by
applicable law, including coverage provided pursuant to Section 4980B of the
Code, (ii) deferred compensation benefits accrued as liabilities on the Interim
Balance Sheet, and (iii) benefits the full cost of which are borne by current or
former Employees (or the Employees' beneficiaries)).
(h) With respect to each of the Welfare Plans constituting a group
health plan within the meaning of Section 4980B(g)(2) of the Code, the
provisions of Section 4980B of the Code ("COBRA") have been complied with in all
material respects.
(i) Each of the Plans has been operated and administered in all
material respects in accordance with applicable Legal Requirements, including
but not limited to ERISA and the Code.
(j) Each of the Plans intended to be qualified under Section 401(a)
of the Code has received a favorable determination from the Internal Revenue
Service, and neither the Company nor any of the Selling Stockholders is aware of
any reason why any such determination letter should be revoked.
(k) Except as set forth in Part 2.15(k) of the Disclosure Schedule,
neither the execution, delivery or performance of this Agreement, nor the
consummation of the transactions contemplated by this Agreement, will result in
any payment (including any bonus, golden parachute or severance payment) to any
current or former Employee or director of any of the Acquired Corporations
(whether or not under any Plan), or materially increase the benefits payable
under any Plan, or result in any acceleration of the time of payment or vesting
of any such benefits.
(l) Part 2.15(l) of the Disclosure Schedule contains a list of all
salaried employees of each of the Acquired Corporations as of the date of this
Agreement, and correctly reflects, in all material respects, their salaries, any
other compensation payable to them (including compensation payable pursuant to
bonus, deferred compensation or commission arrangements), their dates of
employment and their positions. None of the Acquired Corporations is a party to
any collective bargaining contract or other Contract with a labor union
18.
<PAGE> 25
involving any of its Employees. All of the employees of the Acquired
Corporations are "at will" employees.
(m) Part 2.15(m) of the Disclosure Schedule identifies each Employee
who is not fully available to perform work because of disability or other leave
and sets forth the basis of such leave and the anticipated date of return to
full service.
(n) Each of the Acquired Corporations is in compliance in all
material respects with all applicable Legal Requirements and Contracts relating
to employment, employment practices, wages, bonuses and terms and conditions of
employment, including employee compensation matters.
(o) Except as set forth in Part 2.15(o) of the Disclosure Schedule,
each of the Acquired Corporations has good labor relations, and neither the
Company nor any of the Selling Stockholders has any reason to believe that (i)
the consummation of the transactions contemplated by this Agreement will have a
material adverse effect on the labor relations of any of the Acquired
Corporations, or (ii) any of the employees of any of the Acquired Corporations
intends to terminate his or her employment with such Acquired Corporation.
2.16 ENVIRONMENTAL MATTERS. Each of the Acquired Corporations is in
compliance in all material respects with all applicable Environmental Laws,
which compliance includes the possession by each of the Acquired Corporations of
all permits and other Governmental Authorizations required under applicable
Environmental Laws, and compliance with the terms and conditions thereof. None
of the Acquired Corporations has received any notice or other communication (in
writing or otherwise), whether from a Governmental Body, citizens group,
employee or otherwise, that alleges that any of the Acquired Corporations is not
in compliance with any Environmental Law, and, to the knowledge of the Company
and each of the Selling Stockholders, there are no circumstances that may
prevent or interfere with any Acquired Corporation's compliance with any
Environmental Law in the future. To the knowledge of the Company and each of the
Selling Stockholders, no current or prior owner of any property leased or
controlled by any of the Acquired Corporations has received any notice or other
communication (in writing or otherwise), whether from a Government Body,
citizens group, employee or otherwise, that alleges that such current or prior
owner or any of the Acquired Corporations is not in compliance with any
Environmental Law. All Governmental Authorizations currently held by any of the
Acquired Corporations pursuant to Environmental Laws are identified in Part 2.16
of the Disclosure Schedule. (For purposes of this Section 2.16: (i)
"Environmental Law" means any federal, state, local or foreign Legal Requirement
relating to pollution or protection of human health or the environment
(including ambient air, surface water, ground water, land surface or subsurface
strata), including any law or regulation relating to emissions, discharges,
releases or threatened releases of Hazardous Materials, or otherwise relating to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials.)
2.17 INSURANCE. Part 2.17 of the Disclosure Schedule identifies all
insurance policies maintained by, at the expense of or for the benefit of any of
the Acquired Corporations and identifies any material claims made thereunder,
and the Company has delivered to the Purchaser accurate and complete copies of
the insurance policies identified on Part 2.17 of the Disclosure
19.
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Schedule. Each of the insurance policies identified in Part 2.17 of the
Disclosure Schedule is in full force and effect. None of the Acquired
Corporations, since their inception, has received any notice or other
communication regarding any actual or possible (a) cancellation or invalidation
of any insurance policy, (b) refusal of any coverage or rejection of any claim
under any insurance policy, or (c) material adjustment in the amount of the
premiums payable with respect to any insurance policy.
2.18 RELATED PARTY TRANSACTIONS. Except as set forth in Part 2.18 of the
Disclosure Schedule: (a) no Related Party has, and no Related Party has had at
any time since the inception of the Acquired Corporations, any direct or
indirect interest in any material asset used in or otherwise relating to the
business of any Acquired Corporation; (b) no Related Party is, or has been at
any time since the inception of the Acquired Corporations, indebted to any
Acquired Corporation; (c) since the inception of the Acquired Corporations, no
Related Party has entered into, or has had any direct or indirect financial
interest in, any Material Contract, transaction or business dealing involving
any Acquired Corporation; (d) no Related Party is competing, or has at any time
since the inception of the Acquired Corporations, competed, directly or
indirectly, with any Acquired Corporation; and (e) no Related Party has any
claim or right against any Acquired Corporation (other than rights to receive
compensation for services performed as an employee of such Acquired
Corporation).
2.19 LEGAL PROCEEDINGS; ORDERS.
(a) Except as set forth in Part 2.19 of the Disclosure Schedule,
there is no pending Legal Proceeding, and to the knowledge of the Company and
each of the Selling Stockholders, no Person has threatened to commence any Legal
Proceeding: (i) that involves any of the Acquired Corporations or any of the
assets owned or used by any of the Acquired Corporations or any Person whose
liability any of the Acquired Corporations has or may have retained or assumed,
either contractually or by operation of law; or (ii) that challenges, or that
may have the effect of preventing, delaying, making illegal or otherwise
interfering with, any of the transactions contemplated by this Agreement. To the
knowledge of the Company and each of the Selling Stockholders, except as set
forth in Part 2.19 of the Disclosure Schedule, no event has occurred, and no
claim, dispute or other condition or circumstance exists, that will, or that
could reasonably be expected to, give rise to or serve as a basis for the
commencement of any such Legal Proceeding.
(b) Except as set forth in Part 2.19 of the Disclosure Schedule, no
Legal Proceeding has been commenced by or has been pending against any of the
Acquired Corporations since January 1, 1995.
(c) There is no order, writ, injunction, judgment or decree to which
any of the Acquired Corporations, or any of the assets owned or used by any of
the Acquired Corporations, is subject, and none of the Selling Stockholders is
subject to any order, writ, injunction, judgment or decree that relates to the
business of any of the Acquired Corporations or to any assets owned or used by
any of the Acquired Corporations. To the knowledge of the Company and each of
the Selling Stockholders, no officer or other employee of any of the Acquired
Corporations is subject to any order, writ, injunction, judgment or decree that
prohibits such
20.
<PAGE> 27
officer or other employee from engaging in or continuing any conduct, activity
or practice relating to the business of any of the Acquired Corporations.
2.20 AUTHORITY; BINDING NATURE OF AGREEMENT.
(a) The Company has the absolute and unrestricted right, power and
authority to enter into and to perform its obligations under this Agreement; and
the execution, delivery and performance by the Company of this Agreement have
been duly authorized by all necessary action on the part of the Company and its
board of directors and this Agreement and the transactions contemplated hereby
have been unanimously approved by the board of directors of the Company. This
Agreement constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
(b) Each Selling Stockholder has the absolute and unrestricted
right, power and capacity to enter into and to perform such Selling
Stockholder's obligations under this Agreement and the other agreements referred
to in this Agreement to which such Selling Stockholder is or may become a party.
This Agreement constitutes the legal, valid and binding obligation of each of
the Selling Stockholders, enforceable against each of the Selling Stockholders
in accordance with its terms. Upon the execution of each of the other agreements
referred to in this Agreement at the Closing, each of such other agreements will
constitute the legal, valid and binding obligation of each Selling Stockholder
who is a party thereto, and will be enforceable against such Selling Stockholder
in accordance with its terms.
(c) The respective spouses of the Selling Stockholders have the
absolute and unrestricted right, power and capacity to execute and deliver and
to perform their obligations under the Spousal Consents being executed by them.
Said Spousal Consents constitute their legal, valid and binding obligations,
enforceable against them in accordance with their terms.
(d) Each Trustee has the unrestricted right, power, authority and
capacity to act for and bind its respective Trust with respect to all matters
relating to this Agreement and the transactions contemplated by this Agreement.
This Agreement and all other agreements referred to in this Agreement to which
either of the Trusts is a party constitute the legal, valid and binding
obligations of each Trust that is a party thereto, enforceable against such
Trust in accordance with its terms.
(e) The Agent has the unrestricted right, power, authority and
capacity to act for and bind each of the Selling Stockholders with respect to
all matters relating to this Agreement, the other agreements referred to in this
Agreement and the transactions contemplated by this Agreement.
2.21 NON-CONTRAVENTION; CONSENTS. Except as set forth in Part 2.21 of the
Disclosure Schedule, neither (i) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, nor (ii)
the consummation of any of the transactions contemplated by this Agreement, will
directly or indirectly (with or without notice or lapse of time):
21.
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(a) contravene, conflict with or result in a violation of (i) any of
the provisions of the certificate of incorporation or charter or bylaws of any
of the Acquired Corporations, (ii) any resolution adopted by the stockholders,
the board of directors or any committee of the board of directors of any of the
Acquired Corporations or (iii) the constitutive documents of either Trust;
(b) contravene, conflict with or result in a violation of, or give
any Governmental Body or other Person the right to challenge any of the
transactions contemplated by this Agreement or to exercise any remedy or obtain
any relief under, any Legal Requirement or any order, writ, injunction, judgment
or decree to which any of the Acquired Corporations, any of the Selling
Stockholders, either of the Trusts or any of the assets owned or used by any of
the Acquired Corporations, is subject;
(c) contravene, conflict with or result in a violation of any of the
terms or requirements of, or give any Governmental Body the right to revoke,
withdraw, suspend, cancel, terminate or modify, any Governmental Authorization
that is held by any of the Acquired Corporations or that otherwise relates to
the business of any of the Acquired Corporations or to any of the assets owned
or used by any of the Acquired Corporations;
(d) contravene, conflict with or result in a violation or breach of,
or result in a default under, any provision of any Acquired Corporation Contract
that is or would constitute a Material Contract, or give any Person the right to
(i) declare a default or exercise any remedy under any such Acquired Corporation
Contract, (ii) accelerate the maturity or performance of any such Acquired
Corporation Contract, or (iii) cancel, terminate or modify any such Acquired
Corporation Contract;
(e) contravene, conflict with or result in a violation or breach of
or a default under any provision of, or give any Person the right to declare a
default under, any Contract to which any of the Selling Stockholders or either
of the Trusts is a party or by which any of the Selling Stockholders or either
of the Trusts is bound; or
(f) result in the imposition or creation of any lien or other
Encumbrance upon or with respect to any asset owned or used by any of the
Acquired Corporations (except for minor liens that will not, in any case or in
the aggregate, materially detract from the value of the assets subject thereto
or materially impair the operations of any of the Acquired Corporations).
Except as set forth in Part 2.21 of the Disclosure Schedule, none of the
Acquired Corporations or any of the Selling Stockholders or either of the
Trustees acting on behalf of their respective Trusts is or will be required to
make any filing with or give any notice to, or to obtain any Consent from, any
Person in connection with (i) the execution, delivery or performance of this
Agreement or any of the other agreements referred to in this Agreement, or (ii)
the consummation of any of the transactions contemplated by this Agreement.
2.22 CUSTOMERS. Part 2.22 of the Disclosure Schedule identifies each
Person that has committed (whether oral or written and whether pursuant to an
agreement or purchase order or otherwise) to purchase existing products or
products being developed by any of the Acquired Corporations, and sets forth for
each such Person the quantities or amounts of such products that
22.
<PAGE> 29
such Person has committed to purchase (the "Purchase Commitments") and whether
such commitment is oral or written. The Company has provided to the Purchaser
true and complete copies of all documents evidencing such Purchase Commitments.
All such Purchase Commitments are in full force and effect, have not been
withdrawn, amended, modified or terminated and are enforceable by the applicable
Acquired Corporation against the other party to such Purchase Commitments. No
fact, condition or circumstance exists that would give any party the right to
withdraw, amend, modify or terminate any Purchase Commitment and no Person has
given any notice to any Acquired Corporation, and neither the Company nor any
Selling Stockholder has any reason to believe, that any Person intends to
withdraw, amend, modify or terminate any Purchase Commitment.
2.23 PRODUCT DEVELOPMENT. Part 2.23 of the Disclosure Schedule sets forth
for each product being developed by or on behalf of any Acquired Corporation a
true and correct product development status, including the dates on which the
development of each such product will be completed. No fact, condition or
circumstance exists that would materially impair or delay the development of any
such products.
2.24 COMPANY PROJECTIONS. Part 2.24 of the Disclosure Schedule sets forth
consolidated financial projections of the Company and its Subsidiaries for the
periods through December 31, 2001 (the "Company Financial Projections") and all
assumptions used by the Company's management or any other Person in preparing
such Company Financial Projections (the "Assumptions"). The Company reasonably
believes that the Assumptions constitute all of the assumptions necessary in
order to accurately prepare the Company Financial Projections. The Company
Financial Projections have been prepared in good faith and the Company
reasonably believes that the Company Financial Projections are materially
accurate. Except as explicitly set forth in the Assumptions, the Company has no
reason to believe that the Company Financial Projections will not be achieved or
that the Assumptions will prove to be inaccurate or incomplete.
2.25 FULL DISCLOSURE. To the knowledge of each of the Selling Stockholders
(it being understood by the parties hereto that the Company is also making the
representation and warranty set forth in this Section 2.25 and is making such
representation and warranty without a qualification as to its knowledge), this
Agreement (including the Disclosure Schedule) does not (i) contain any
representation, warranty or information that is false or misleading with respect
to any material fact, or (ii) omit to state any material fact or necessary in
order to make the representations, warranties and information contained and to
be contained herein and therein (in the light of the circumstances under which
such representations, warranties and information were or will be made or
provided) not false or misleading.
2.26 SALE OF PRODUCTS; PERFORMANCE OF SERVICES.
(a) Except as set forth in Part 2.26 of the Disclosure Schedule,
each product, system, program, Proprietary Asset or other asset designed,
developed, manufactured, assembled, sold, installed, repaired, licensed or
otherwise made available by any of the Acquired Corporations to any Person:
23.
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(i) conformed and complied in all material respects with the
terms and requirements of any applicable warranty or other Contract and with all
applicable Legal Requirements; and
(ii) was free of any bug, virus, design defect or other defect
or deficiency at the time it was sold or otherwise made available, other than
any immaterial bug or similar defect that would not adversely affect in any
material respect such product, system, program, Proprietary Asset or other asset
(or the operation or performance thereof).
Part 2.26 of the Disclosure Schedule contains an accurate and complete copy of
the most recent "bug list" with respect to each product, system, program or
software module of each of the Acquired Corporations.
(b) All installation services, programming services, repair
services, maintenance services, support services, training services, upgrade
services and other services that have been performed by the Acquired
Corporations were performed properly and in full conformity with the terms and
requirements of all applicable warranties and other Contracts and with all
applicable Legal Requirements.
(c) Except as set forth in Part 2.26 of the Disclosure Schedule,
since January 1, 1996, no customer or other Person has asserted or threatened to
assert any claim against any of the Acquired Corporations (i) under or based
upon any warranty provided by or on behalf of any of the Acquired Corporations,
or (ii) under or based upon any other warranty relating to any product, system,
program, Proprietary Asset or other asset designed, developed, manufactured,
assembled, sold, installed, repaired, licensed or otherwise made available by
any of the Acquired Corporations or any services performed by any of the
Acquired Corporations.
2.27 CERTAIN BUSINESS PRACTICES. None of the Acquired Corporations nor (to
the knowledge of the Company and each of the Selling Stockholders) any director,
officer, agent or employee of any of the Acquired Corporations has (i) used any
funds for unlawful contributions, gifts, entertainment or other unlawful
expenses relating to political activity, (ii) made any unlawful payment to
foreign or domestic government officials or employees or to foreign or domestic
political parties or campaigns or violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended, or (iii) made any other unlawful payment.
2.28 SELLING STOCKHOLDERS AND TRUSTS.
(a) Each Selling Stockholder has the capacity and financial
capability to comply with and perform all of such Selling Stockholder's
covenants and obligations under this Agreement and each other agreement referred
to in this Agreement to which such Selling Stockholder is or may become a party.
(b) No Selling Stockholder:
(i) has, at any time, (A) made a general assignment for the
benefit of creditors, (B) filed, or had filed against such Selling Stockholder,
any bankruptcy petition or similar filing, (C) suffered the attachment or other
judicial seizure of all or a substantial portion of such Selling Stockholder's
assets, (D) admitted in writing such Selling Stockholder's inability
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to pay such Selling Stockholder's debts as they become due, (E) been convicted
of, or pleaded guilty to, any felony, or (F) taken or been the subject of any
action that may have an adverse effect on such Selling Stockholder's ability to
comply with or perform any of such Selling Stockholder's covenants or
obligations under this Agreement or any other agreement referred to in this
Agreement to which such Selling Stockholder is or may become a party; or
(ii) is subject to any order, writ, injunction, judgment or
decree that may have an adverse effect on such Selling Stockholder's ability to
comply with or perform any of such Selling Stockholder's covenants or
obligations under this Agreement or any other agreement referred to in this
Agreement to which such Selling Stockholder is or may become a party.
(c) Neither of the Trustees has taken on behalf of its respective
Trust, and neither of the Trustees nor either of the Trusts has been the subject
of, any action that may have an adverse effect on (i) either Trust's ability to
comply with or perform its covenants or obligations under this Agreement or any
other agreement referred to in this Agreement to which either Trust is or may
become a party or (ii) either Trustee's ability to act for and bind its
respective Trust with respect to any matter relating to this Agreement or any
other agreement referred to in this Agreement to which its respective Trust is
or may become a party.
(d) Neither of the Trustees nor either of the Trusts is subject to
any order, writ, injunction, judgment or decree that may have an adverse effect
on (i) either Trust's ability to comply with or perform its covenants or
obligations under this Agreement or any other agreement referred to in this
Agreement to which either Trust is or may become a party or (ii) either
Trustee's ability to act for and bind its respective Trust with respect to any
matter relating to this Agreement or any other agreement referred to in this
Agreement to which its respective Trust is or may become a party.
(e) There is no Legal Proceeding pending, and no Person has
threatened to commence any Legal Proceeding, that may have an adverse effect on
the ability of (i) any Selling Stockholder to comply with or perform any of such
Selling Stockholder's covenants or obligations under this Agreement or any other
agreement referred to in this Agreement to which such Selling Stockholder is or
may become a party, (ii) either Trust to comply with or perform its covenants or
obligations under this Agreement or any other agreement referred to in this
Agreement to which either Trust is or may become a party or (iii) either Trustee
to act for and bind its respective Trust with respect to any matter relating to
this Agreement or any other agreement referred to in this Agreement to which its
respective Trust is or may become a party. No event has occurred, and no claim,
dispute or other condition or circumstance exists, that might directly or
indirectly give rise to or serve as a basis for the commencement of any such
Legal Proceeding.
(f) The Non-Trust Selling Stockholders and the Trusts have, and the
Purchaser will acquire at the Closing, good and valid title to the Shares free
and clear of any Encumbrances. Of the Shares: (i) Nasser Barabi owns,
beneficially and of record, 35,000 Shares; (ii) Iraj Barabi owns, beneficially
and of record, 25,000 Shares; (iii) the Bushehri Trust owns, beneficially and of
record, 20,000 Shares; and (iv) the Barabi Trust owns, beneficially and of
record, 20,000 Shares. The Non-Trust Selling Stockholders and the Trustees on
behalf of the
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Trusts have delivered to the Purchaser accurate and complete copies of the stock
certificates evidencing the Shares.
(g) Each of the Trust Selling Stockholders is a United States
citizen, and each of the Non-Trust Selling Stockholders has properly completed,
executed and delivered to the Purchaser a Substitute Form W-8 in the Form of
Exhibit F. The purchase of the Shares by the Purchaser from the Non-Trust
Selling Stockholders and the Trusts as contemplated herein will not subject the
Purchaser to any withholding or other Tax.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF PURCHASER
The Purchaser represents and warrants, to and for the benefit of the
Selling Stockholders, as follows:
3.1 ACQUISITION OF SHARES. The Purchaser is not acquiring the Shares with
the current intention of making a public distribution thereof.
3.2 ORGANIZATION, STANDING AND POWER. The Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has all necessary power and authority: (i) to conduct its business
in the manner in which its business is currently being conducted; (ii) to own
and use its assets in the manner in which its assets are currently owned and
used; and (iii) to perform its obligations under all Contracts by which it is
bound.
3.3 AUTHORITY; BINDING NATURE OF AGREEMENT. The Purchaser has the absolute
and unrestricted right, power and authority to perform its obligations under
this Agreement; and the execution, delivery and performance (including the
issuance and delivery in accordance with this Agreement of the Aggregate
Purchaser Shares, the Note and the Real Property Note) by the Purchaser of this
Agreement has been duly authorized by all necessary action on the part of the
Purchaser and its board of directors. Each of this Agreement, the Note and the
Real Property Note constitutes the legal, valid and binding obligation of the
Purchaser, enforceable against it in accordance with its terms, subject to (i)
laws of general application relating to bankruptcy, insolvency and the relief of
debtors, and (ii) rules of law governing specific performance, injunctive relief
and other equitable remedies.
3.4 NON-CONTRAVENTION; CONSENTS. Neither the execution and delivery of
this Agreement by the Purchaser nor the consummation by the Purchaser of the
transactions contemplated by this Agreement will (i) conflict with or result in
any breach of any provision of the certificate of incorporation or bylaws of the
Purchaser, (ii) result in a default by the Purchaser under any Contract to which
the Purchaser is a party, except for any default which has not had and will not
have a Material Adverse Effect on the Purchaser, or (iii) result in a violation
by the Purchaser of any order, writ, injunction, judgment or decree to which the
Purchaser is subject, except for any violation which has not had and will not
have a Material Adverse Effect on the Purchaser. The Purchaser is not and will
not be required to make any filing with or give any notice to, or to obtain any
Consent from, any Person in connection with the execution, delivery or
performance of this Agreement or the consummation of the transactions
contemplated by this Agreement.
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3.5 VALID ISSUANCE. The shares of Purchaser Common Stock to be issued
pursuant to Section 1.2 will be, when issued in accordance with the provisions
of this Agreement, validly issued, fully paid and nonassessable.
3.6 SEC FILINGS; FINANCIAL STATEMENTS.
(a) The Purchaser has delivered to the Company accurate and complete
copies (excluding copies of exhibits) of each report, registration statement (on
a form other than Form S-8) and definitive proxy statement filed by the
Purchaser with the SEC between January 1, 1999 and the date of this Agreement
(the "Purchaser SEC Documents"). As of the time it was filed with the SEC (or,
if amended or superseded by a filing prior to the date of this Agreement, then
on the date of such filing): (i) each of the Purchaser SEC Documents complied in
all material respects with the applicable requirements of the Securities Act or
the Exchange Act (as the case may be); and (ii) none of the Purchaser SEC
Documents contained any untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(b) The financial statements contained in the Purchaser SEC
Documents: (i) complied as to form in all material respects with the published
rules and regulations of the SEC applicable thereto; (ii) were prepared in
accordance with GAAP applied on a consistent basis throughout the periods
covered, except as may be indicated in the notes to such financial statements
and (in the case of unaudited statements) as permitted by Form 10-Q of the SEC,
and except that unaudited financial statements may not contain footnotes and are
subject to year-end audit adjustments; and (iii) fairly present the financial
position of the Purchaser and its subsidiaries as of the respective dates
thereof and the results of operations of the Purchaser for the periods covered
thereby.
3.7 HART-SCOTT-RODINO COMPLIANCE. No approval under the Hart-Scott-Rodino
Anti-Trust Act of 1976 is necessary for the purchase of the Shares by the
Purchaser from the Non-Trust Selling Stockholders and the Trusts as contemplated
herein.
SECTION 4. PRE-CLOSING COVENANTS
4.1 ACCESS AND INVESTIGATION. During the period from the date of this
Agreement to the Closing Date (the "Pre-Closing Period"), the Company shall, and
shall cause the respective Representatives of the Acquired Corporations to: (i)
provide the Purchaser and the Purchaser's Representatives with reasonable access
to the Acquired Corporations' Representatives, personnel and assets and to all
existing books, records, Tax Returns, work papers and other documents and
information relating to the Acquired Corporations; and (ii) provide the
Purchaser and the Purchaser's Representatives with copies of such existing
books, records, Tax Returns, work papers and other documents and information
relating to the Acquired Corporations, and with such additional financial,
operating and other data and information regarding the Acquired Corporations, as
the Purchaser may reasonably request.
4.2 OPERATION OF THE BUSINESS OF THE ACQUIRED CORPORATIONS. The Company
and the Selling Stockholders shall ensure that, during the Pre-Closing Period:
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(a) none of the Selling Stockholders and neither of the Trustees on
behalf of their respective Trusts directly or indirectly sells or otherwise
transfers, or offers, agrees or commits (in writing or otherwise) to sell or
otherwise transfer, any of the Shares or any interest in or right relating to
any of the Shares;
(b) none of the Selling Stockholders and neither of the Trustees on
behalf of their respective Trusts permits, or offers, agrees or commits (in
writing or otherwise) to permit, any of the Shares to become subject, directly
or indirectly, to any Encumbrance;
(c) each of the Acquired Corporations shall conduct its business and
operations in the ordinary course and in substantially the same manner as such
business and operations have been conducted prior to the date of this Agreement;
(d) each of the Acquired Corporations preserves intact its current
business organization, keeps available the services of its current officers and
employees and maintains its relations and good will with all suppliers,
customers, landlords, creditors, employees and other Persons having business
relationships with such Acquired Corporation;
(e) each applicable Acquired Corporation shall keep in full force
and effect all insurance policies identified with respect to it in Part 2.17 of
the Disclosure Schedule;
(f) the officers of each of the Acquired Corporations report
regularly (but in no event less frequently than weekly) to the Purchaser
concerning the status of the applicable Acquired Corporation's business;
(g) none of the Acquired Corporations shall declare, accrue, set
aside or pay any dividend or make any other distribution in respect of any
shares of capital stock, or shall repurchase, redeem or otherwise reacquire any
shares of capital stock or other securities;
(h) none of the Acquired Corporations shall sell, issue or authorize
the issuance of (i) any capital stock or other securities, (ii) any option or
right to acquire any capital stock or other securities, or (iii) any instrument
convertible into or exchangeable for any capital stock or other securities;
(i) none of the Acquired Corporations shall amend or permit the
adoption of any amendment to its certificate of incorporation or charter or
bylaws, or effect or become a party to any Acquisition Transaction,
recapitalization, reclassification of shares, stock split, reverse stock split
or similar transaction;
(j) none of the Acquired Corporations shall form any Subsidiary or
acquire any equity interest or other interest in any other Entity;
(k) none of the Acquired Corporations shall make any expenditure to
acquire or improve any capital asset;
(l) none of the Acquired Corporations shall (i) enter into, or
permit any of the assets owned or used by it to become bound by, any Contract
that is or would constitute a
28.
<PAGE> 35
Material Contract, or (ii) amend or prematurely terminate, or waive any material
right or remedy under, any such Contract;
(m) none of the Acquired Corporations shall (i) acquire, lease or
license any right or other asset from any other Person, (ii) sell or otherwise
dispose of, or lease or license, any right or other asset to any other Person,
or (iii) waive or relinquish any right, except for assets acquired, leased,
licensed or disposed of by any Acquired Corporation pursuant to Contracts that
are not Material Contracts;
(n) none of the Acquired Corporations shall (i) lend money to any
Person (except that the Acquired Corporations may make routine travel advances
to employees in the ordinary course of business), or (ii) incur or guarantee any
indebtedness for borrowed money;
(o) none of the Acquired Corporations shall (i) establish, adopt or
amend any Employee Benefit Plan, (ii) pay any bonus or make any profit-sharing
payment, cash incentive payment or similar payment to, or increase the amount of
the wages, salary, commissions, fringe benefits or other compensation or
remuneration payable to, any of its directors, officers or employees, (iii)
except as contemplated by Section 6.5(c) and Section 6.5(q) of this Agreement,
enter into, amend or modify any contract or agreement (either oral or written)
with any of its directors, officers or employees, or (iv) hire any new employee
whose aggregate annual compensation exceeds $60,000;
(p) none of the Acquired Corporations shall change any of its
methods of accounting or accounting practices in any material respect;
(q) none of the Acquired Corporations shall make any Tax election;
(r) none of the Acquired Corporations shall commence or settle any
material Legal Proceeding; and
(s) none of the Acquired Corporations shall agree or commit to take
any of the actions described in clauses "(g)" through "(r)" above.
Notwithstanding the foregoing, any of the Acquired Corporations may take any
action described in clauses "(g)" through "(r)" above if the Purchaser gives its
prior written consent to the taking of such action by the applicable Acquired
Corporation, which consent will not be unreasonably withheld (it being
understood that the Purchaser's withholding of consent to any action will not be
deemed unreasonable if the Purchaser determines in good faith that the taking of
such action would not be in the best interests of the Purchaser or would not be
in the best interests of any of the Acquired Corporations).
4.3 NOTIFICATION; UPDATES TO DISCLOSURE SCHEDULE.
(a) During the Pre-Closing Period, the Company shall promptly notify
the Purchaser in writing of:
(i) the discovery by the Company or any of the Selling
Stockholders of any event, condition, fact or circumstance that occurred or
existed on or prior to the date of
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this Agreement and that caused or constitutes an inaccuracy in or breach of any
representation or warranty made by the Company or any of the Selling
Stockholders in this Agreement;
(ii) any event, condition, fact or circumstance that occurs,
arises or exists after the date of this Agreement and that would cause or
constitute an inaccuracy in or breach of any representation or warranty made by
the Company or any of the Selling Stockholders in this Agreement if (A) such
representation or warranty had been made as of the time of the occurrence,
existence or discovery of such event, condition, fact or circumstance, or (B)
such event, condition, fact or circumstance had occurred, arisen or existed on
or prior to the date of this Agreement;
(iii) any breach of any covenant or obligation of the Company
or any of the Selling Stockholders;
(iv) any event, condition, fact or circumstance that would
make the timely satisfaction of any condition set forth in Section 6 or Section
7 impossible or unlikely; and
(v) any event, condition, fact or circumstance that may have
an adverse effect on either Trust's ability to comply with or perform its
obligations under this Agreement or either Trustee's ability to act for and bind
its respective Trust with respect to any matter relating to this Agreement.
(b) If any event, condition, fact or circumstance that is required
to be disclosed pursuant to Section 4.3(a) requires any change in the Disclosure
Schedule, or if any such event, condition, fact or circumstance would require
such a change assuming the Disclosure Schedule were dated as of the date of the
occurrence, existence or discovery of such event, condition, fact or
circumstance, then the Company and the Selling Stockholders shall promptly
deliver to the Purchaser an update to the Disclosure Schedule specifying such
change. No such update shall be deemed to supplement or amend the Disclosure
Schedule for the purpose of (i) determining the accuracy of any of the
representations and warranties made by the Company or any of the Selling
Stockholders in this Agreement, or (ii) determining whether any condition set
forth in Section 6 has been satisfied.
4.4 NO NEGOTIATION. The Company and the Selling Stockholders shall ensure
that, during the Pre-Closing Period, the Company and the Selling Stockholders
shall not, directly or indirectly:
(a) solicit or encourage the initiation of any inquiry, proposal or
offer from any Person (other than the Purchaser) relating to a possible
Acquisition Transaction;
(b) participate in any discussions or negotiations or enter into any
agreement with, or provide any non-public information to, any Person (other than
the Purchaser) relating to or in connection with a possible Acquisition
Transaction; or
(c) consider, entertain or accept any proposal or offer from any
Person (other than the Purchaser) relating to a possible Acquisition
Transaction.
30.
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The Company and the Selling Stockholders shall promptly notify Parent in writing
of any inquiry, proposal or offer relating to a possible Acquisition Transaction
that is received by the Company or any Selling Stockholder during the
Pre-Closing Period.
4.5 PAYMENT OF INDEBTEDNESS BY RELATED PARTIES. The Company and the
Selling Stockholders shall cause all indebtedness and other liabilities of each
Related Party to the Acquired Corporations to be discharged and paid in full
prior to or on the Closing Date.
4.6 CONFIDENTIALITY.
(a) The Company and the Selling Stockholders shall ensure that,
during the Pre-Closing Period:
(i) each of the Acquired Corporations and their respective
Representatives and the Trustees on behalf of the Trusts keep strictly
confidential the existence and terms of this Agreement;
(ii) none of the Acquired Corporations or any of their
respective Representatives or either of the Trustees on behalf of the Trusts
issue or disseminate any press release or other publicity or otherwise makes any
disclosure of any nature (to any of the Acquired Corporations' suppliers,
customers, landlords, creditors or employees or to any other Person) regarding
any of the transactions contemplated by this Agreement, except to the extent
that (i) any Acquired Corporation or Trustee on behalf of its Trust is required
by law to make any such disclosure regarding such transactions or (ii) any
Acquired Corporation or Trustee on behalf of its Trust is required to obtain the
Consent of such Person in connection with the transactions contemplated by this
Agreement; and
(iii) if any Acquired Corporation or Trustee on behalf of its
Trust is required by law to make any disclosure regarding the transactions
contemplated by this Agreement or is required to obtain such Consent, the
Company advises the Purchaser, at least five business days before making such
disclosure or seeking such Consent, of the nature and content of the intended
disclosure or Consent.
(b) The Purchaser shall ensure that, during the Pre-Closing Period:
(i) the Purchaser and its Representatives keep strictly
confidential the existence and terms of this Agreement;
(ii) neither the Purchaser nor any of its Representatives
issues or disseminates any press release or other publicity or otherwise makes
any disclosure of any nature (to any of the Purchaser's suppliers, customers,
landlords, creditors or employees or to any other Person) regarding any of the
transactions contemplated by this Agreement, except to the extent that (i) the
Purchaser is required by law to make such disclosure regarding such transactions
or (ii) the Purchaser is required to obtain the Consent of such Person in
connection with the transactions contemplated by this Agreement; and
(iii) if the Purchaser is required by law to make any
disclosure regarding the transactions contemplated by this Agreement or is
required to obtain such Consent,
31.
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the Purchaser advises the Company, at least five business days before making
such disclosure or seeking such Consent, of the nature and content of the
intended disclosure or Consent; provided, however, that any time that the
Purchaser determines in good faith, based on the advice of counsel, that it is
required by law to make such disclosure or seek such Consent, and that it cannot
comply with the law if it must afford the Company at least five business days
between the date the Company is advised of such disclosure or Consent and the
date the Purchaser makes such disclosure or seeks such Consent, the Purchaser
may make such disclosure or seek such Consent without advising the Company or
without affording it such five business days, as applicable.
SECTION 5. ADDITIONAL COVENANTS OF THE PARTIES
5.1 FILINGS AND CONSENTS. Subject to Section 5.6(a), as promptly as
practicable after the execution of this Agreement, each party to this Agreement
(i) shall make all filings (if any) and give all notices (if any) required to be
made and given by such party in connection with the transactions contemplated by
this Agreement, and (ii) shall use all commercially reasonable efforts to obtain
all Consents (if any) required to be obtained (pursuant to any applicable Legal
Requirement or Contract, or otherwise) by such party in connection with the
transactions contemplated by this Agreement. The Company and the Selling
Stockholders shall (upon request) promptly deliver to the Purchaser a copy of
each such filing made, each such notice given and each such Consent obtained by
any of the Acquired Corporations, any Selling Stockholder or either Trustee
acting on behalf of its respective Trust during the Pre-Closing Period.
5.2 BEST EFFORTS. During the Pre-Closing Period, (i) the Company and the
Selling Stockholders shall use their best efforts to cause the conditions set
forth in Section 6 to be satisfied on a timely basis, and (ii) the Purchaser
shall use its best efforts to cause the conditions set forth in Section 7 to be
satisfied on a timely basis.
5.3 TERMINATION OF AGREEMENTS. Prior to the Closing, the Company and the
Selling Stockholders shall cause the parties to the Stockholders Agreement to
enter into an agreement, reasonably satisfactory in form and content to the
Purchaser (and conditioned and effective upon the Closing), terminating all of
such parties' rights under the Stockholders Agreement.
5.4 TREATMENT OF COMPANY'S EMPLOYEE BENEFIT PLANS.
(a) Prior to the Closing, the Company shall terminate the Oz
Technologies, Inc. 401(k) Profit Sharing Plan (the "401(k) Plan") to provide
that (i) no employee of any of the Acquired Corporations shall be able to make
elective deferrals to the 401(k) Plan as of the date the 401(k) Plan is
terminated and (ii) no employer contributions shall be made to the 401(k) Plan
with respect to any period after the date the 401(k) Plan is terminated.
(b) Effective on the first day of the month immediately following
the Closing, the Purchaser shall provide eligibility for all Employees to
participate in any medical plan provided by the Purchaser to its other employees
(i) without imposition of any pre-existing condition limitations and at the same
contribution rate paid by the Employees for medical coverage under the Company's
medical benefit plan covering the Employee prior to the first of
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the month immediately following the Closing and (ii) with grandfathering of any
payments by the Employees prior to the Closing Date toward the satisfaction of
any deductible amounts under the Purchaser's medical plans.
(c) The Purchaser shall grandfather all prior service by the
Employees with the Company for purposes of participation in (i) Purchaser's
benefit plans and programs regularly maintained for its employees and (ii)
Purchaser's vacation policy or program regularly maintained and provided for its
employees.
(d) The Purchaser shall grandfather all prior service of the
Employees with the Company prior to the Closing for purposes of eligibility to
participate and vesting of benefits under the Purchaser's Section 401(k) Plan.
5.5 BEST EFFORTS TO RELEASE GUARANTEES; INDEMNIFICATION AGREEMENT. Each of
the Purchaser, the Company and each of the Selling Stockholders will use its
best efforts to obtain, prior to or at the Closing, the release of the Selling
Stockholders from all guarantees made by them that are set forth in Part
2.10(a)(vii) of the Disclosure Schedule. In the event that all of the guarantees
made by the Selling Stockholders and set forth in Part 2.10(a)(vii) of the
Disclosure Schedule have not been or are not released prior to or at the
Closing, the Company hereby agrees to indemnify the Selling Stockholders,
pursuant to a separate indemnification agreement to be entered into among the
Company and the Selling Stockholders on terms satisfactory to all parties, for
payments made by the Selling Stockholders after the Closing pursuant to the
guarantees set forth in Part 2.10(a)(vii) of the Disclosure Schedule.
5.6 REGISTRATION REQUIREMENTS.
(a) The Purchaser shall prepare and file, not later than seven days
after the Closing Date, a registration statement on Form S-3 or another
available form (the "Registration Statement") with the SEC under the Securities
Act to register the resale of the Aggregate Purchaser Shares by the Non-Trust
Selling Stockholders and the Trustees on behalf of the Trusts, and thereafter
shall use its best efforts to secure effectiveness of the Registration Statement
within ninety days after the Closing Date.
(b) The Selling Stockholders and the Trustees on behalf of the
Trusts hereby agree that, during the Initial Selling Period, the maximum
aggregate number of shares of Purchaser Common Stock that may be sold by or on
behalf of the Selling Stockholders and the Trusts shall be the Calculated
Purchaser Shares. The Selling Stockholders and the Trustees on behalf of the
Trusts also hereby agree that, during each of the four consecutive 30-day
periods (each, a "Subsequent Period") that begin immediately following the end
of the Initial Selling Period, the maximum aggregate number of shares of
Purchaser Common Stock that may be sold by or on behalf of the Selling
Stockholders and the Trusts shall be 100,000 shares per Subsequent Period. The
Selling Stockholders and the Trustees on behalf of the Trusts further agree that
the Agent shall notify the Purchaser in writing within seventy-five days after
the Closing Date of the total number of Aggregate Purchaser Shares (the "Initial
Selling Period Shares") that the Selling Stockholders and the Trusts want to
sell during the Initial Selling Period, which amount shall be subject to the
first sentence of this paragraph. The Purchaser hereby agrees to arrange the
sale of the Initial Selling Period Shares during the Initial Selling
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Period, subject to the receipt from the Selling Stockholders or the Trustees on
behalf of the Trusts (or the Agent on behalf of any of them) of stock
certificates representing the Initial Selling Period Shares, if any such stock
certificates are required by the Purchaser. The parties hereto hereby agree that
sales of Purchaser Common Stock by or on behalf of the Selling Stockholders or
the Trustees on behalf of the Trusts during the Initial Selling Period shall be
limited to sales of the Initial Selling Period Shares and shall only be made
pursuant to arrangements made by the Purchaser in accordance with the
immediately preceding sentence. The parties hereto hereby also agree that, to
the extent a Total Initial Selling Period Share Shortfall exists at the end of
the Initial Selling Period, the Purchaser shall instruct the Agent in writing to
endorse an addition to the principal amount of the Note in the amount of such
Shortfall within five days following (i) written notice to the Purchaser from
the Agent specifying in reasonable detail the calculation of such Shortfall and
(ii) the Purchaser's delivery to the Agent of a written notice confirming such
calculation. The Purchaser may include any written instruction to the Agent
pursuant to the immediately preceding sentence in its written confirmation of
the Agent's calculation of the Total Initial Selling Period Share Shortfall. The
Agent hereby agrees to make such endorsement as promptly as practicable
following receipt of such written instruction from the Purchaser which includes
the amount of any Total Initial Selling Period Share Shortfall. The Agent hereby
agrees to furnish the Purchaser with copies of such existing records, books and
other documents and information relating to the Purchaser's confirmation of the
Agent's calculation of the Total Initial Selling Period Share Shortfall as the
Purchaser may reasonably request. Exhibit N is included herein for illustrative
purposes only and shall not be deemed to supersede, amend or modify this
Agreement in any respect whatsoever.
(c) The Purchaser shall pay all Registration Expenses in connection
with any registration, qualification or compliance hereunder, and each Selling
Stockholder and Trustee on behalf of its Trust shall pay all of its respective
Selling Expenses and other expenses that are not Registration Expenses relating
to the Aggregate Purchaser Shares resold by such Selling Stockholder or Trustee,
as the case may be.
(d) In the case of any registration effected by the Purchaser
pursuant to these registration provisions, the Purchaser will use its reasonable
best efforts to: (i) keep such registration effective until the earlier of (A)
such date as all of the Aggregate Purchaser Shares have been resold or (B) the
date on which each Non-Trust Selling Stockholder and each Trustee on behalf of
its Trust is entitled to sell all of its Aggregate Purchaser Shares pursuant to
Rule 144 promulgated under the Securities Act; (ii) prepare and file with the
SEC such amendments and supplements to the Registration Statement and the
prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of the Aggregate Purchaser Shares covered by the Registration
Statement; (iii) cause the Aggregate Purchaser Shares to be listed on each
securities exchange and quoted on each quotation service on which similar
securities issued by the Purchaser are then listed or quoted; (iv) provide a
transfer agent and registrar for the Aggregate Purchaser Shares; (v) comply with
all applicable rules and regulations of the SEC governing such registration; and
(vi) file the documents required of the Purchaser by, and otherwise use its
reasonable best efforts to maintain requisite blue sky clearance in, (X) all
jurisdictions in which any of the Aggregate Purchaser Shares are originally sold
and (Y) all other states specified in writing by any Non-Trust Selling
Stockholder or Trustee on behalf of its Trust; provided, however, that as to
clause
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(Y), the Purchaser shall not be required to qualify to do business or consent to
service of process in any state in which it is now so qualified or has not so
consented.
(e) The Purchaser shall furnish to each Non-Trust Selling
Stockholder and Trustee on behalf of its Trust upon request a reasonable number
of copies of a supplement to or an amendment of the prospectus used in
connection with the Registration Statement as may be necessary in order to
facilitate the public sale or other disposition of all or any of the Aggregate
Purchaser Shares held by such Non-Trust Selling Stockholder or Trustee on behalf
of its Trust.
(f) With a view to making available to the Non-Trust Selling
Stockholders and the Trustees on behalf of their Trusts, the benefit of Rule 144
and Form S-3 and any other rule or regulation of the SEC that may at any time
permit a Non-Trust Selling Stockholder or either Trustee on behalf of its Trust
to sell any of the Aggregate Purchaser Shares to the public without
registration, the Purchaser covenants and agrees to use its reasonable best
efforts to: (i) make and keep public information available, as those terms are
understood and defined in Rule 144, until the earlier of (A) the date on which
each Non-Trust Selling Stockholder and Trustee on behalf of its Trust is
entitled to sell all of its Aggregate Purchaser Shares pursuant to Rule 144
promulgated under the Securities Act or (B) such date as all of the Aggregate
Purchaser Shares shall have been resold; (ii) file with the SEC in a timely
manner all reports and other documents required of the Purchaser under the
Exchange Act; and furnish to any Non-Trust Selling Stockholder or Trustee on
behalf of its Trust upon request, as long as such Non-Trust Selling Stockholder
or Trustee owns any Aggregate Purchaser Shares, (A) a written statement by the
Purchaser that it has complied with the reporting requirements of the Exchange
Act, (B) a copy of the most recent annual or quarterly report of the Purchaser,
and (C) such other information as may be reasonably requested in order to avail
any Non-Trust Selling Stockholder or Trustee on behalf of its Trust of any rule
or regulation of the SEC that permits the selling of any Aggregate Purchaser
Shares without registration or pursuant to a registration statement on Form S-3.
(g) The Purchaser may suspend the use of the Registration Statement
and refuse to permit the Selling Stockholders and the Trustees on behalf of
their Trusts to resell the Aggregate Purchaser Shares pursuant to the
Registration Statement for a period not to exceed 20 days in any twelve month
period; provided, however, that in order to exercise this right, the Purchaser
must notify the Selling Stockholders and the Trustees to the effect that such
action is necessary because there then exists material, non-public information
relating to the Purchaser, which, in the reasonable opinion of the board of
directors of the Purchaser would not be appropriate for disclosure during that
time. In such an event, the Purchaser shall use its best efforts to amend the
Registration Statement as necessary and to take all other actions necessary to
allow such sales and shall notify the Selling Stockholders and the Trustees
promptly after it has determined that such sales have become permissible.
5.7 REGISTRATION STATEMENT INDEMNIFICATION.
(a) The Purchaser agrees to indemnify and hold harmless each
Non-Trust Selling Stockholder and each Trustee on behalf of its Trust from and
against any losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) to which such Non-Trust Selling Stockholder or Trustee may
become subject (under the Securities Act or otherwise)
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insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon, any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement on the effective date thereof or the omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading in light of the circumstances under which
they were made, or arise out of any failure by the Purchaser to fulfill any
undertaking included in the Registration Statement, and the Purchaser will
reimburse such Non-Trust Selling Stockholder or Trustee for any reasonable legal
or other expenses incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, however, that the Purchaser
shall not be liable in any such case to the extent that such loss, claim, damage
or liability arises out of, or is based upon (i) an untrue statement made in the
Registration Statement in reliance upon and in conformity with written
information furnished to the Purchaser by or on behalf of such Non-Trust Selling
Stockholder or Trustee (or the Trust Selling Stockholder applicable to such
Trustee) specifically for use in preparation of the Registration Statement, (ii)
the failure of such Non-Trust Selling Stockholder or Trustee to comply with the
covenants and agreements contained in Section 5.8 hereof, or (iii) any statement
or omission in any prospectus that is corrected in any subsequent prospectus
that was delivered to such Non-Trust Selling Stockholder or Trustee (or the
Trust Selling Stockholder applicable to such Trustee) prior to the pertinent
sale or sales by such Non-Trust Selling Stockholder or Trustee.
(b) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless the Purchaser from and against any losses, claims,
damages or liabilities (or actions or proceedings in respect thereof) to which
the Purchaser may become subject (under the Securities Act or otherwise) insofar
as such losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) arise out of, or are based upon an untrue statement made in the
Registration Statement in reliance upon and in conformity with written
information furnished by such Selling Stockholder or, with respect to either
Trust Selling Stockholder, the Trustee on behalf of its Trust in the
Registration Statement Questionnaire (the form of which is attached hereto as
Exhibit I) for use in preparation of the Registration Statement; provided,
however, that no Selling Stockholder shall be liable in any such case for any
untrue statement included in any prospectus which statement has been corrected,
in writing, by such Selling Stockholder or, with respect to either Trust Selling
Stockholder, the Trustee on behalf of its Trust and delivered to the Purchaser
before the sale from which such loss occurred, and each Selling Stockholder,
severally and not jointly, will reimburse the Purchaser for any legal or other
expenses reasonably incurred in investigating, defending or preparing to defend
any such action, proceeding or claim; provided, further, however, that in no
event shall any indemnity under this Section 5.7(b) exceed the portion of the
Aggregate Share Purchase Price received by the applicable Selling Stockholder,
or, with respect to either Trust Selling Stockholder, the Trustee on behalf of
its Trust, from the sale of the Shares.
(c) Promptly after receipt by any indemnified person of a notice of
a claim to the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 5.7, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action, and subject to the provisions hereinafter
stated, in case any such action shall be brought against an indemnified person
and the indemnifying person shall have been notified thereof, the indemnifying
person shall be entitled to participate therein, and, to the extent that it
shall wish, to
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assume the defense thereof, with counsel reasonably satisfactory to the
indemnified person. After notice from the indemnifying person to such
indemnified person of the indemnifying person's election to assume the defense
thereof, such indemnifying person shall not be liable to such indemnified person
for any legal expense subsequently incurred by such indemnified person in
connection with the defense thereof; provided, however, that if there exists or
shall exist a conflict of interest that would make it inappropriate, in the
opinion of counsel to the indemnified person, for the same counsel to represent
both the indemnified person and such indemnifying person or any affiliate or
associate thereof, the indemnified person shall be entitled to retain its own
counsel at the expense of such indemnifying person; provided further, however,
that no indemnifying person shall be responsible for the fees and expenses of
more than one separate counsel for all indemnified parties.
(d) The obligations of the Selling Stockholders under this Section
5.7 shall be in addition to any liability which each respective Selling
Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls the Purchaser within the
meaning of the Securities Act.
5.8 TRANSFER OF AGGREGATE PURCHASER SHARES AFTER REGISTRATION. Each
Selling Stockholder and each Trustee on behalf of its Trust hereby covenants
with the Purchaser not to make any sale of the Aggregate Purchaser Shares except
either (a) in accordance with the Registration Statement, in which case each
Selling Stockholder and each Trustee on behalf of its Trust covenants to comply
with the requirements of delivering a current prospectus, (b) in accordance with
Rule 144, in which case each Selling Stockholder and each Trustee on behalf of
its Trust covenants to comply with Rule 144, or (c) subject to such conditions
as the Purchaser shall reasonably impose, in accordance with another exemption
from the registration requirements of the Securities Act. Each Selling
Stockholder and each Trustee on behalf of its Trust also covenants that it will
not make any sale of any Aggregate Purchaser Shares pursuant to the Registration
Statement during any period in which the Purchaser has suspended use of the
Registration Statement pursuant to Section 5.6(g) of this Agreement. Each
Selling Stockholder and each Trustee on behalf of its Trust further acknowledges
and agrees that the Aggregate Purchaser Shares are not transferable on the books
of the Purchaser unless the stock certificate submitted to the Purchaser's
transfer agent evidencing such Aggregate Purchaser Shares is accompanied by such
additional certification, documentation or information as the Purchaser shall
reasonably require in order to effect such sale in accordance with the
Registration Statement, Rule 144 or such other exemption from the registration
requirements of the Securities Act.
5.9 ADDITIONAL SELLING STOCKHOLDER INFORMATION COVENANTS. Each Selling
Stockholder covenants that it will promptly notify the Purchaser of any changes
in the information set forth in the Registration Statement regarding such
Selling Stockholder, its Trust (in the case of Trust Selling Stockholders) or
such Selling Stockholder's or its Trust's "Plan of Distribution," including,
without limitation, the information contained in any Registration Statement
Questionnaire (the form of which is attached hereto as Exhibit I) relating to
such Selling Stockholder and, in the case of the Trust Selling Stockholders, its
Trust. Each Selling Stockholder shall provide the Purchaser in writing with such
change or additional information necessary so that the information set forth in
the Registration Statement regarding such Selling Stockholder or (in the case of
the Trust Selling Stockholders) its Trust will be true and correct as
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of the effective date of the Registration Statement and until the Purchaser is
no longer required to keep the Registration Statement effective pursuant to
Section 5.6(d) of this Agreement.
5.10 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 5 shall expire and be of no further force and effect if all
Aggregate Purchaser Shares held by each Non-Trust Selling Stockholder and
Trustee on behalf of its Trust may be sold under Rule 144 promulgated under the
Securities Act.
5.11 CERTAIN PROVISIONS RELATING TO THE REAL PROPERTY NOTE. The parties
hereto hereby agree that the Real Property Note shall be due and payable on
February 3, 2000 (the "Real Property Note Payment Date") and may be satisfied on
the Real Property Note Payment Date by either (a) the payment in cash by the
Purchaser to the Agent of all amounts then owing under the Real Property Note or
(b) the transfer of the Real Property to the Agent by the Purchaser,
unencumbered except to the extent of the mortgage described in Section 5.12
below and minor liens that do not (in any case or in the aggregate) materially
detract from the value of the Real Property. In the event that the Real Property
Note is satisfied on the Real Property Note Payment Date by the transfer of the
Real Property to the Agent by the Purchaser, the Purchaser and the Agent shall
assign a value to the Real Property on the Real Property Note Payment Date equal
to the appraised value (the "Appraised Value") for the Real Property as
determined by a real estate appraiser who has been mutually agreed upon between
the Purchaser and the Agent. To the extent that the Appraised Value is less than
$2,800,000 plus interest due under the Real Property Note to the Real Property
Note Payment Date (the "Real Property Shortfall"), the Purchaser shall instruct
the Agent in writing to endorse an addition to the principal amount of the Note
in the amount of the Real Property Shortfall, and the Agent shall make such
endorsement as promptly as practicable following receipt of such written
instruction from the Purchaser which includes the amount of any Real Property
Shortfall. To the extent that the Appraised Value is more than $2,800,000 plus
interest due under the Real Property Note to the Real Property Note Payment Date
(the "Real Property Surplus"), the Purchaser may apply the Real Property Surplus
to reduce the principal amount of the Note, provided doing so does not cause the
Purchaser to violate any covenant in any loan document to which the Purchaser is
a party. In the event that the Purchaser chooses to apply any Real Property
Surplus to reduce the principal amount of the Note, the Purchaser shall instruct
the Agent in writing to endorse a subtraction to the principal amount of the
Note in the amount of the Real Property Surplus, and the Agent shall make such
endorsement as promptly as practicable following receipt of such written
instruction from the Purchaser which includes the amount of the Real Property
Surplus. The parties hereto hereby agree that the Real Property Note shall be
cancelled on the Real Property Note Payment Date upon its satisfaction in either
manner provided in clause (a) or (b) of the first sentence of this paragraph.
5.12 MORTGAGE OF THE REAL PROPERTY. The parties hereto hereby agree to
execute a mortgage relating to the Real Property prior to the Real Property Note
Payment Date that shall be for the benefit of the Agent on behalf of the Selling
Stockholders and the Trusts. The parties hereto hereby also agree that the
mortgage to be executed shall contain reasonable and customary provisions for
transactions of this type and be in a form to be mutually agreed upon among the
parties.
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5.13 CERTAIN PROVISIONS RELATING TO THE SOFTWARE AGREEMENTS. The Purchaser
hereby agrees that, in the event (a) the Company pursues obtaining a release
from, or otherwise settling amounts outstanding under, the Software Agreements
or (b) J.D. Edwards initiates any manner of legal proceeding to enforce the
provisions of the Software Agreements against the Company (any such pursuit of a
release or settlement or initiated legal proceeding being herein referred to as
a "Software Proceeding"), the Purchaser shall pay or cause to be paid all
attorneys' fees, costs and disbursements incurred by the Company in connection
with any Software Proceeding. The Purchaser also hereby agrees that the
Purchaser may only settle, adjust or compromise any Software Proceeding in a
manner that results in monetary liability of the Company to J.D. Edwards with
the consent of the Agent (any such consented-to settlement, adjustment or
compromise, a "Software Settlement"); provided, however, that the Agent shall
not unreasonably withhold such consent. The parties hereto hereby agree that, to
the extent the Company makes any payments to J.D. Edwards (the "J.D. Edwards
Payments") pursuant to any Software Settlement or the Software Agreements, the
Purchaser shall cause cancelled checks or other customary commercial evidence of
such payments (the "Payment Evidence") to be delivered to the Agent. The parties
hereto hereby also agree that, with respect to the first $50,000 of any J.D.
Edwards Payments made by the Company for which Payment Evidence is delivered to
the Agent, the amount of such J.D. Edwards Payments shall be applied to reduce
the dollar amount of the Indemnity Basket on a dollar-for-dollar basis. The
parties hereto hereby further agree that, with respect to the next $200,000 of
any J.D. Edwards Payments made by the Company for which Payment Evidence is
delivered to the Agent, the Purchaser shall instruct the Agent in writing to
endorse a subtraction to the principal amount of the Note in the amount of
one-half of the amount of such J.D. Edwards Payments, and the Agent shall make
such endorsement as promptly as practicable following receipt of such written
instruction from the Purchaser which includes such amount. The remaining
one-half of the amount of such J.D. Edwards Payments shall be borne by the
Company and not applied to reduce the Indemnity Basket. The parties hereto
hereby also agree that, with respect to any J.D. Edwards Payments for which
Payment Evidence is delivered to the Agent that are in addition to the $250,000
in J.D. Edwards Payments referenced in the two immediately preceding sentences,
the Purchaser shall instruct the Agent in writing to endorse a subtraction to
the principal amount of the Note in the amount of such J.D. Edwards Payments,
and the Agent shall make such endorsement as promptly as practicable following
receipt of such written instruction from the Purchaser which includes such
amount.
SECTION 6. CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE The
Purchaser's obligations to purchase the Shares and to take the other actions
required to be taken by the Purchaser at the Closing are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
6.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Company and the Selling Stockholders in this Agreement
and in each of the other agreements and instruments delivered to the Purchaser
in connection with the transactions contemplated by this Agreement shall have
been accurate in all material respects as of the date of this Agreement (without
giving effect to any "Material Adverse Effect" or other materiality
qualifications, or any similar qualifications, contained or incorporated
directly or indirectly in such representations and warranties), and shall be
accurate in all material respects as of the Scheduled Closing Time as if made at
the Scheduled Closing Time (without giving effect to any
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update to the Disclosure Schedule, and without giving effect to any "Material
Adverse Effect" or other materiality qualifications, or any similar
qualifications, contained or incorporated directly or indirectly in such
representations and warranties).
6.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Company, the Selling Stockholders and the Trustees acting on behalf of the
Trusts are required to comply with or to perform at or prior to the Closing
shall have been complied with and performed in all material respects.
6.3 CONSENTS. All Consents required to be obtained in connection with the
transactions contemplated by this Agreement (including the Consents identified
in Part 2.21 of the Disclosure Schedule) shall have been obtained and shall be
in full force and effect.
6.4 NO ADVERSE CHANGE. There shall have been no material adverse change in
the business, condition, assets, liabilities, operations, financial performance,
net income or prospects of the Acquired Corporations taken as a whole since the
date of this Agreement.
6.5 ADDITIONAL DOCUMENTS. The Purchaser shall have received the following
agreements and documents, each of which shall be in full force and effect:
(a) a legal opinion from Ferrari, Olsen, Ottoboni & Bebb, LLP,
counsel for the Company and the Selling Stockholders, dated the Closing Date, in
the form of Exhibit G;
(b) the Amended Company Lease in the form of Exhibit K, executed by
the Company and The B IV Group;
(c) Employment Agreements in the form of Exhibit B, executed by the
Non-Trust Selling Stockholders;
(d) written resignations of all Existing Directors and Officers,
effective as of the Closing;
(e) satisfactory releases of all guarantees by any of the Acquired
Corporations of any indebtedness of any Related Party;
(f) a certificate signed on behalf of the Company by the Chief
Executive Officer and the Chief Financial Officer of the Company (prior to their
resignations pursuant to clause (d) above) representing and warranting that the
conditions applicable to the Company set forth in Sections 6.1 and 6.2 have been
duly satisfied (the "Company Compliance Certificate");
(g) a certificate signed by each Selling Stockholder representing
and warranting that the conditions applicable to such Selling Stockholder set
forth in Sections 6.1 and 6.2 (including, with respect to the Trust Selling
Stockholders, the conditions set forth in Sections 6.1 and 6.2 relating to their
respective Trusts and the Trustees who are acting on behalf of such Trusts) have
been duly satisfied (the "Selling Stockholder Compliance Certificates");
(h) Spousal Consents in the form of Exhibit D delivered by each of
the Selling Stockholders and duly executed by their respective spouses;
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(i) General Releases in the form of Exhibit C executed and delivered
by the Selling Stockholders;
(j) Non Competition Agreements in the form of Exhibit E, executed
and delivered by the Selling Stockholders;
(k) Substitute Form W-8s in the form of Exhibit F, properly
completed, executed and delivered by each of the Non-Trust Selling Stockholders;
(l) intentionally omitted;
(m) a Registration Statement Questionnaire in the form of Exhibit I,
properly completed, executed and delivered by each of the Selling Stockholders
and each Trustee on behalf of its Trust;
(n) a Notice of Non Real Property Holding Corporation Status in the
form of Exhibit L, executed and delivered by the Chief Executive Officer or
Chief Financial Officer of the Company (prior to their resignations pursuant to
clause (d) above);
(o) intentionally omitted;
(p) satisfactory evidence of the payment in full and discharge of
all indebtedness and other liabilities of all Related Parties to the Acquired
Corporations, which evidence shall include checks payable to the Company from
applicable Related Parties that are dated the Closing Date; and
(q) a Consulting Agreement in the form of Exhibit M, executed by Ali
Bushehri.
6.6 NO LEGAL PROCEEDINGS. Since the date of this Agreement, there shall
not have been commenced or threatened against the Purchaser, or against any
Person affiliated with the Purchaser, any Legal Proceeding (i) involving any
challenge to, or seeking damages or other relief in connection with, any of the
transactions contemplated by this Agreement, (ii) that may have the effect of
preventing, delaying, making illegal or otherwise interfering with any of the
transactions contemplated by this Agreement, (iii) seeking to prohibit or limit
in any material respect the Purchaser's ability to vote, receive dividends with
respect to or otherwise exercise ownership rights with respect to the capital
stock of any of the Acquired Corporations (including the Shares) or (iv) which
would materially and adversely affect the right of any of the Acquired
Corporations to own the assets or operate the business of the Acquired
Corporations.
6.7 NO CLAIM REGARDING STOCK OWNERSHIP OR SALE PROCEEDS. No Person shall
have made or threatened any claim asserting that such Person (i) may be the
holder or the beneficial owner of, or may have the right to acquire or to obtain
beneficial ownership of, any capital stock or other securities of the Acquired
Corporations (including the Shares), or (ii) may be entitled to all or any
portion of the Aggregate Share Purchase Price.
6.8 NO PROHIBITION. Neither the consummation nor the performance of any of
the transactions contemplated by this Agreement will, directly or indirectly
(with or without notice
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or lapse of time), contravene or conflict with or result in a violation of, or
cause the Purchaser or any Person affiliated with the Purchaser to suffer any
adverse consequence under, (i) any applicable Legal Requirement or order, writ,
injunction, judgment or decree, or (ii) any Legal Requirement or order, writ,
injunction, judgment or decree that has been proposed by or before any
Governmental Body.
SECTION 7. CONDITIONS PRECEDENT TO SELLING STOCKHOLDERS' AND TRUSTS' OBLIGATIONS
TO CLOSE.
The obligation of the Non-Trust Selling Stockholders and the Trustees on
behalf of their respective Trusts to sell the Shares and to take the other
actions required to be taken by them at the Closing are subject to the
satisfaction, at or prior to the Closing, of each of the following conditions:
7.1 ACCURACY OF REPRESENTATIONS. Each of the representations and
warranties made by the Purchaser in this Agreement shall have been accurate in
all material respects as of the date of this Agreement (without giving effect to
any materiality qualifications or similar qualifications contained or
incorporated directly or indirectly in such representations and warranties), and
shall be accurate in all material respects as of the Scheduled Closing Time as
if made at the Scheduled Closing Time (without giving effect to any materiality
qualifications or similar qualifications contained or incorporated directly or
indirectly in such representations and warranties).
7.2 PERFORMANCE OF COVENANTS. All of the covenants and obligations that
the Purchaser is required to comply with or to perform at or prior to the
Closing shall have been complied with and performed in all material respects.
7.3 PURCHASER'S PERFORMANCE. The Purchaser shall have paid (in the case of
the Cash Amount) and delivered (in the case of the Aggregate Purchaser Shares,
the Note and the Real Property Note) the Aggregate Share Purchase Price to
either the Agent or the Selling Stockholders and the Trustees on behalf of the
Trusts as contemplated by Section 1.2.
7.4 NO INJUNCTION. There shall not be in effect any injunction that shall
have been entered by a court of competent jurisdiction since the date of this
Agreement and that prohibits the sale of the Shares by the Non-Trust Selling
Stockholders and the Trustees on behalf of their respective Trusts to the
Purchaser.
7.5 RELEASE OF GUARANTEES. The Selling Stockholders either shall have (a)
been released from all guarantees made by them that are set forth on Part
2.10(a)(vii) of the Disclosure Schedule or (b) entered into an indemnification
agreement with the Company whereby the Company indemnifies the Selling
Stockholders for any payments made by them after the Closing pursuant to the
guarantees set forth in Part 2.10(a)(vii) of the Disclosure Schedule.
7.6 ADDITIONAL DOCUMENTS. The Agent shall have received the Amended
Company Lease in the form of Exhibit K, executed by the Company and The B IV
Group.
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SECTION 8. TERMINATION
8.1 TERMINATION EVENTS. This Agreement may be terminated prior to the
Closing:
(a) by the Purchaser if the Purchaser reasonably determines that the
timely satisfaction of any condition set forth in Section 6 has become
impossible (other than as a result of any failure on the part of the Purchaser
to comply with or perform any covenant or obligation of the Purchaser set forth
in this Agreement);
(b) by the Agent if the Agent reasonably determines that the timely
satisfaction of any condition set forth in Section 7 has become impossible
(other than as a result of any failure on the part of the Company, any of the
Selling Stockholders or either of the Trusts or the Trustees acting on their
behalf to comply with or perform any covenant or obligation set forth in this
Agreement or in any other agreement or instrument delivered to the Purchaser);
(c) by the Purchaser at or after the Scheduled Closing Time if any
condition set forth in Section 6 has not been satisfied by the Scheduled Closing
Time;
(d) by the Agent at or after the Scheduled Closing Time if any
condition set forth in Section 7 has not been satisfied by the Scheduled Closing
Time;
(e) by the Purchaser if any of the Company's or any of the Selling
Stockholders' representations and warranties contained in this Agreement shall
have been materially inaccurate as of the date of this Agreement or shall have
become materially inaccurate as of any subsequent date (as if made on such
subsequent date), or if any of the Company's or any of the Selling Stockholders'
covenants contained in this Agreement shall have been breached in any material
respect; provided, however, that the Purchaser may not terminate this Agreement
under this Section 8.1(e) on account of an inaccuracy in the Company's or the
Selling Stockholders' representations and warranties that is curable by the
Company or the Selling Stockholders or on account of a breach of a covenant by
the Company or the Selling Stockholders that is curable by the Company or the
Selling Stockholders unless the Company or the Selling Stockholders fail to cure
such inaccuracy or breach within five days after receiving written notice from
the Purchaser of such inaccuracy or breach;
(f) by the Agent if any of the Purchaser's representations and
warranties contained in this Agreement shall have been materially inaccurate as
of the date of this Agreement or shall have become materially inaccurate as of
any subsequent date (as if made on such subsequent date), or if any of the
Purchaser's covenants contained in this Agreement shall have been breached in
any material respect; provided, however, that the Agent may not terminate this
Agreement under this Section 8.1(f) on account of an inaccuracy in the
Purchaser's representations and warranties that is curable by the Purchaser or
on account of a breach of a covenant by the Purchaser that is curable by the
Purchaser unless the Purchaser fails to cure such inaccuracy or breach within
five days after receiving written notice from the Agent of such inaccuracy or
breach;
(g) by the Purchaser if the Closing has not taken place on or before
December 3, 1999 (other than as a result of any failure on the part of the
Purchaser to comply with or perform any covenant or obligation of the Purchaser
set forth in this Agreement);
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(h) by the Agent if the Closing has not taken place on or before
December 3, 1999 (other than as a result of the failure on the part of the
Company, any of the Selling Stockholders or either of the Trusts or the Trustees
acting on their behalf to comply with or perform any covenant or obligation set
forth in this Agreement or in any other agreement or instrument delivered to the
Purchaser); or
(i) by the mutual consent of the Purchaser and the Agent.
8.2 TERMINATION PROCEDURES. If the Purchaser wishes to terminate this
Agreement pursuant to Section 8.1(a), Section 8.1(c), Section 8.1(e) or Section
8.1(g), the Purchaser shall deliver to the Agent a written notice stating that
the Purchaser, subject to Section 8.1(e), is terminating this Agreement and
setting forth a brief description of the basis on which the Purchaser is
terminating this Agreement. If the Agent wishes to terminate this Agreement
pursuant to Section 8.1(b), Section 8.1(d), Section 8.1(f) or Section 8.1(h),
the Agent shall deliver to the Purchaser a written notice stating that the
Agent, subject to Section 8.1(f), is terminating this Agreement and setting
forth a brief description of the basis on which the Agent is terminating this
Agreement.
8.3 EFFECT OF TERMINATION. If this Agreement is terminated pursuant to
Section 8.1, all further obligations of the parties under this Agreement shall
terminate; provided, however, that:
(a) the parties shall, in all events, remain bound by and continue
to be subject to the provisions set forth in Section 10; and
(b) the parties shall, in all events, remain bound by and continue
to be subject to Section 4.6.
8.4 EXCLUSIVITY OF TERMINATION RIGHTS. The termination rights provided in
Section 8.1 shall be the exclusive remedy under this Agreement in the event that
this Agreement is terminated by any party hereto pursuant to the provisions of
this Section 8.
8.5 AUDIT FEES AND EXPENSES. If this Agreement is terminated by the Agent
pursuant to Section 8.1(f), the Purchaser shall pay all accounting fees and
expenses payable to KPMG LLP in connection with its audit (the "Audit") of the
Interim Balance Sheet and the related consolidated statement of income and
retained earnings and statement of cash flows of the Company and its
Subsidiaries for the nine months ended September 30, 1999, together with the
notes thereto; provided, however, that, if the Purchaser is required to pay any
accounting fees or expenses of KPMG LLP pursuant to this Section 8.5, any report
and opinion of KPMG LLP relating to the Audit shall be the property of and be
held in the possession of the Purchaser, and any other party to this Agreement
which has any copies of such report or opinion in its possession shall not make
any use of and shall destroy all such copies immediately after termination of
this Agreement pursuant to Section 8.1(f).
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SECTION 9. INDEMNIFICATION, ETC.
9.1 SURVIVAL OF REPRESENTATIONS, ETC.
(a) The representations and warranties made by the Company and the
Selling Stockholders (including, subject to the immediately succeeding proviso,
the representations and warranties set forth in Section 2 and the
representations set forth in the Company Compliance Certificate and the Selling
Stockholder Compliance Certificates) shall survive the Closing and shall expire
on the first anniversary of the Closing Date; provided, however, that the
Specified Representations shall expire on the Applicable Specified
Representations Expiration Date; and provided further, however, that if, at any
time prior to the first anniversary of the Closing Date (with respect to the
representations and warranties made by the Company and the Selling Stockholders
other than the Specified Representations) or the Applicable Specified
Representations Expiration Date (with respect to the Specified Representations),
any Indemnitee (acting in good faith) delivers to the Agent a written notice
alleging the existence of an inaccuracy in or a breach of any of such
representations and warranties (and setting forth in reasonable detail the basis
for such Indemnitee's belief that such an inaccuracy or breach may exist) and
asserting a claim for recovery under Section 9.2 based on such alleged
inaccuracy or breach, then the claim asserted in such notice shall survive the
first anniversary of the Closing or the Applicable Specified Representations
Expiration Date, as applicable, until such time as such claim is fully and
finally resolved. All representations and warranties made by the Purchaser shall
terminate and expire as of the Closing Date, and any liability of the Purchaser
with respect to such representations and warranties shall thereupon cease.
(b) The representations, warranties, covenants and obligations of
the Company, the Selling Stockholders, the Trusts and the Trustees acting on
their behalf, and the rights and remedies that may be exercised by the
Indemnitees, shall not be limited or otherwise affected by or as a result of any
information furnished to, or any investigation made by or knowledge of, any of
the Indemnitees or any of their Representatives.
(c) For purposes of this Agreement, each statement or other item of
information set forth in the Disclosure Schedule or in any update to the
Disclosure Schedule shall be deemed to be a representation and warranty made by
the Company and the Selling Stockholders in this Agreement.
9.2 INDEMNIFICATION BY SELLING STOCKHOLDERS.
(a) The Selling Stockholders, jointly and severally, shall hold
harmless and indemnify each of the Indemnitees from and against, and shall
compensate and reimburse each of the Indemnitees for, any Damages which are
directly or indirectly suffered or incurred by any of the Indemnitees or to
which any of the Indemnitees may otherwise become subject at any time
(regardless of whether or not such Damages relate to any third-party claim) and
which arise directly or indirectly from or as a direct or indirect result of, or
are directly or indirectly connected with:
(i) any inaccuracy in or breach of any representation or
warranty of the Company or any of the Selling Stockholders set forth in this
Agreement (without giving
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effect to any "Material Adverse Effect" or other materiality qualification or
any similar qualification contained or incorporated directly or indirectly in
such representation or warranty, and without giving effect to any update to the
Disclosure Schedule delivered by the Company or any Selling Stockholder to the
Purchaser prior to the Closing) or in the Company Compliance Certificate or any
Selling Stockholder Compliance Certificate;
(ii) any inaccuracy in or breach of any representation or
warranty made by the Company or any of the Selling Stockholders in this
Agreement (without giving effect to any "Material Adverse Effect" or other
materiality qualification or any similar qualification contained or incorporated
directly or indirectly in such representation or warranty, and without giving
effect to any update to the Disclosure Schedule delivered by the Company or any
Selling Stockholder to the Purchaser prior to the Closing) or in the Company
Compliance Certificate or any Selling Stockholder Compliance Certificate, in
each case as if such representation or warranty were made on and as of the
Closing Date;
(iii) any breach of any covenant or obligation of the Company,
any of the Selling Stockholders or either of the Trusts or the Trustees acting
on their behalf;
(iv) any obligation or liability to which any of the Acquired
Corporations or any of the Indemnitees may become subject and that arises
directly or indirectly from or relates directly or indirectly to (A) any product
manufactured or sold, or any service performed, by or on behalf of any of the
Acquired Corporations on or at any time prior to the Closing Date, (B) the
presence of any Hazardous Material at any site owned, leased, occupied or
controlled by any of the Acquired Corporations on or at any time prior to the
Closing Date, or (C) the generation, manufacture, production, transportation,
importation, use, treatment, refinement, processing, handling, storage,
discharge, release or disposal of any Hazardous Material (whether lawfully or
unlawfully) by or on behalf of any of the Acquired Corporations on or at any
time prior to the Closing Date;
(v) any matter identified or referred to in Part 2.12 or Part
2.19 of the Disclosure Schedule; or
(vi) any Legal Proceeding relating directly or indirectly to
any inaccuracy or breach, alleged inaccuracy or breach, obligation, liability or
other matter of the type referred to in clause "(i)," "(ii)," "(iii)," "(iv),"
or "(v)" above (including any Legal Proceeding commenced by any Indemnitee for
the purpose of enforcing any of its rights under this Section 9).
(b) The Selling Stockholders acknowledge and agree that, if there is
any inaccuracy or breach of any representation, warranty or other provision
relating to any of the Acquired Corporations or the business, condition, assets,
liabilities, operations, financial performance, net income or prospects of the
Acquired Corporations, or if any of the Acquired Corporations becomes subject to
any obligation or liability of the type referred to in clause "(iv)" of Section
9.2(a), then the Purchaser itself shall be deemed, by virtue of its ownership of
common stock of the Company, to have incurred Damages as a result of such
inaccuracy, breach, obligation or liability. Nothing contained in this Section
9.2(b) shall have the effect of (i) limiting the circumstances under which the
Purchaser may otherwise be deemed to have
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incurred Damages for purposes of this Agreement, (ii) limiting the other types
of Damages that the Purchaser may be deemed to have incurred (whether in
connection with any such inaccuracy, breach, obligation or liability or
otherwise), or (iii) limiting the rights of the Company or any of the
Indemnitees under this Section 9.2.
9.3 THRESHOLD. The Selling Stockholders shall not be required to make any
indemnification payment pursuant to Section 9.2 for any inaccuracy or breach of
any of their representations, warranties, covenants or obligations set forth in
this Agreement or in the Company Compliance Certificate or any Selling
Stockholder Compliance Certificate until such time as the total amount of all
Damages (including the Damages arising from such inaccuracy or breach and all
other Damages arising from any other inaccuracies or breaches of any such
representations, warranties, covenants or obligations) that have been directly
or indirectly suffered or incurred by any one or more of the Indemnitees, or to
which any one or more of the Indemnitees has or have otherwise become subject,
exceeds $100,000 (the "Indemnity Basket") in the aggregate. The parties hereto
hereby agree that the amount of the Indemnity Basket may be reduced from time to
time in accordance with the provisions of Section 5.13 of this Agreement. At
such time as the total amount of such Damages exceeds $100,000 (or the then
current amount of the Indemnity Basket following any reduction to the Indemnity
Basket pursuant to Section 5.13 of this Agreement) in the aggregate, the
Indemnitees shall be entitled to be indemnified against the portion of such
Damages exceeding $100,000 (or such then current amount of the Indemnity
Basket).
9.4 RIGHT OF OFFSET OF INDEMNIFICATION CLAIMS; AGGREGATE LIABILITY OF
SELLING STOCKHOLDERS. Subject to Section 9.3, in the event any Indemnitee shall
assert any claim prior to the first anniversary of the Closing Date that such
Indemnitee has suffered or incurred any Damages for which such Indemnitee is
entitled to indemnification under this Section 9, such Indemnitee's sole
recourse with respect to the Damages relating to such claim (other than for
claims asserted prior to the first anniversary of the Closing Date that are
related to fraud, tortious misrepresentation or willful or reckless misconduct)
shall be to offset any such Damages against the principal amount of the Note in
accordance with the procedures set forth in Section 9.11. Any payment of
insurance proceeds received by any Indemnitee prior to the first anniversary of
the Closing Date for Damages that were previously offset against the principal
amount of the Note shall result in an increase in the principal amount of the
Note as provided for in Section 9.11. With respect to any claim asserted by any
Indemnitee on or following the first anniversary of the Closing Date for Damages
that such Indemnitee has suffered or incurred and is entitled to be indemnified,
compensated or reimbursed for under this Section 9 (other than claims asserted
on or following the first anniversary of the Closing Date that are related to
fraud, tortious misrepresentation or willful or reckless misconduct), the
aggregate liability of the Selling Stockholders to such Indemnitee under this
Section 9 shall not exceed the amount by which $3,000,000 exceeds the sum of (i)
amounts for Damages for which insurance proceeds were not received by the
applicable Indemnitee prior to the first anniversary of the Closing Date and
that were previously offset against the principal amount of the Note in
accordance with the procedures set forth in Section 9.11 and (ii) amounts for
Damages for which insurance proceeds were not paid to the Agent pursuant to
Section 9.8 and that relate to claims asserted by any Indemnitee on or following
the first anniversary of the Closing Date that such Indemnitee was previously
indemnified, compensated or reimbursed for by any Selling Stockholder under this
Section 9.
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9.5 NO CONTRIBUTION. Each Selling Stockholder waives, and acknowledges and
agrees that such Selling Stockholder shall not have and shall not exercise or
assert or attempt to exercise or assert, any right of contribution or right of
indemnity or any other right or remedy against any of the Acquired Corporations
in connection with any indemnification obligation or any other liability to
which such Selling Stockholder may become subject under this Agreement or any
agreement referred to in this Agreement or otherwise in connection with any of
the transactions contemplated by this Agreement.
9.6 DEFENSE OF THIRD PARTY CLAIMS. In the event of the assertion or
commencement by any Person of any claim or Legal Proceeding (whether against any
of the Acquired Corporations, against any Indemnitee or against any other
Person) with respect to which any of the Selling Stockholders may become
obligated to indemnify, hold harmless, compensate or reimburse any Indemnitee
pursuant to this Section 9, the Purchaser shall have the right, at its election,
to designate the Agent to assume the defense of such claim or Legal Proceeding
at the sole expense of the Selling Stockholders. If the Purchaser so elects to
designate the Agent to assume the defense of any such claim or Legal Proceeding:
(a) the Agent shall proceed to defend such claim or Legal Proceeding
in a diligent manner with counsel satisfactory to the Purchaser;
(b) the Purchaser shall make available to the Agent any
non-privileged documents and materials in the possession of the Purchaser that
may be necessary to the defense of such claim or Legal Proceeding;
(c) the Agent shall keep the Purchaser informed of all material
developments and events relating to such claim or Legal Proceeding;
(d) the Purchaser shall have the right to participate in the defense
of such claim or Legal Proceeding;
(e) the Agent shall not settle, adjust or compromise such claim or
Legal Proceeding without the prior written consent of the Purchaser; and
(f) the Purchaser may at any time (notwithstanding the prior
designation of the Agent to assume the defense of such claim or Legal
Proceeding) assume the defense of such claim or Legal Proceeding.
If the Purchaser does not elect to designate the Agent to assume the defense of
any such claim or Legal Proceeding (or if, after initially designating the Agent
to assume such defense, the Purchaser elects to assume such defense), the
Purchaser may proceed with the defense of such claim or Legal Proceeding on its
own. If the Purchaser so proceeds with the defense of any such claim or Legal
Proceeding on its own:
(i) the Purchaser shall notify the Agent in writing that it is
doing so and keep the Agent informed of all material developments and events
relating to such claim or Legal Proceeding;
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(ii) all expenses relating to the defense of such claim or
Legal Proceeding (whether or not incurred by the Purchaser) shall be satisfied
by offsetting the principal amount of the Note in accordance with the procedures
set forth in Section 9.11 or, otherwise, subject to Section 9.4, shall be borne
and paid exclusively by the Selling Stockholders;
(iii) the Selling Stockholders shall make available to the
Purchaser any documents and materials in the possession or control of any of the
Selling Stockholders that may be necessary to the defense of such claim or Legal
Proceeding;
(iv) if such claim or Legal Proceeding is a Minor Claim or
Legal Proceeding, the Purchaser shall have the right to settle, adjust or
compromise such claim or Legal Proceeding without the consent of the Agent; and
(v) if such claim or Legal Proceeding is not a Minor Claim or
Legal Proceeding, the Purchaser may only settle, adjust or compromise such claim
or Legal Proceeding with the consent of the Agent; provided, however, that the
Agent shall not unreasonably withhold such consent.
9.7 EXERCISE OF REMEDIES BY INDEMNITEES OTHER THAN PURCHASER. No
Indemnitee (other than the Purchaser or any successor thereto or assign thereof)
shall be permitted to assert any indemnification claim or exercise any other
remedy under this Agreement unless the Purchaser (or any successor thereto or
assign thereof) shall have consented to the assertion of such indemnification
claim or the exercise of such other remedy.
9.8 INSURANCE PROCEEDS. In the event that any Indemnitee receives any
insurance proceeds that compensate it, in whole or in part, for any Damages
suffered or incurred by such Indemnitee, the amount of such insurance proceeds,
net of Taxes, shall be deducted from the amount that such Indemnitee is
otherwise entitled to under this Section 9 with respect to such Damages, or, if
such Indemnitee has been previously indemnified, compensated or reimbursed for
such Damages under this Section 9, such Indemnitee shall promptly notify the
Agent of the amount of such insurance proceeds, net of Taxes (if the insurance
proceeds are received by such Indemnitee prior to the first anniversary of the
Closing Date), or otherwise pay the Agent, on behalf of the Selling
Stockholders, the amount of such insurance proceeds, net of Taxes, up to the
amount that such Indemnitee has been previously indemnified, compensated or
reimbursed for under this Section 9 with respect to such Damages. The Purchaser
agrees that it shall seek recovery for Damages under any applicable insurance
policies.
9.9 EXCLUSIVE REMEDY. The remedies provided by this Section 9 shall
constitute the exclusive remedies available to the Indemnitees with respect to
inaccuracies in or breaches of representations and warranties of the Company or
any of the Selling Stockholders set forth in this Agreement or in the Company
Compliance Certificate or any Selling Stockholder Compliance Certificate
(whether those inaccuracies or breaches existed on the date made or as of the
Closing Date), other than claims for inaccuracies or breaches related to fraud,
tortious misrepresentation or willful or reckless misconduct.
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9.10 NOTE TO BE HELD AS SECURITY. The Note shall be held by the Agent as
security for the Selling Stockholders' indemnification obligations under this
Section 9 until the date that is one year after the Closing Date (the
"Termination Date"). In addition, to the extent that, on the Termination Date,
(i) any Claimed Amount (as defined in Section 9.11(b) below) exists for which
(A) the Agent has not delivered a Response Notice (as defined in Section 9.11(b)
below) and (B) with respect to which the Agent's 20-day period to do so pursuant
to Section 9.11(b) has not expired or (ii) any Contested Amount (as defined in
Section 9.11(e) below) exists (all such Claimed Amounts and Contested Amounts
referred to in the immediately preceding clauses (i) and (ii) being hereinafter
referred to in aggregate as the "Termination Date Amount"), the Note shall
continue to be held by the Agent as security for the Selling Stockholders'
indemnification obligations under this Section 9. The Agent shall continue to
hold the Note as security pursuant to the immediately preceding sentence until
the date (the "Subsequent Termination Date") on which all such Claimed Amounts
and/or Contested Amounts referred to therein shall have been resolved in
accordance with the provisions of Section 9.11. The Note and the Real Property
Note shall be held by the Agent in trust and shall not be subject to (i) any
sale, assignment, transfer or other disposition or (ii) any lien, attachment,
pledge, hypothecation or other judicial process of any creditor of any party
hereto.
9.11 ADMINISTRATION OF NOTE BY THE AGENT. The Agent shall administer the
Note as follows:
(a) If any Indemnitee has incurred or suffered Damages for which it
is or may be entitled to indemnification under this Section 9 and such
Indemnitee is cognizant of such Damages prior to the Termination Date, such
Indemnitee may, but is not obligated hereunder to, on or prior to the
Termination Date, give written notice of such claim (a "Claim Notice") to the
Agent. In the event that any Indemnitee gives a Claim Notice to the Agent on or
prior to the Termination Date pursuant to the immediately preceding sentence,
such Indemnitee's sole recourse for the Damages asserted in such Claim Notice
(other than Damages related to fraud, tortious misrepresentation or willful or
reckless misconduct) shall be to offset such Damages against the principal
amount of the Note pursuant to the provisions of this Section 9.11.
(b) Each Claim Notice given to the Agent pursuant to Section 9.11(a)
above shall state the amount of Claimed Damages (the "Claimed Amount") and the
basis for such claim. Within 20 days after delivery of a Claim Notice, the Agent
shall provide to the Purchaser a written response (the "Response Notice") in
which the Agent shall: (i) agree that the full Claimed Amount may be offset
against the principal amount of the Note, (ii) agree that part, but not all, of
the Claimed Amount (the "Agreed Amount") may be offset against the principal
amount of the Note, or (iii) contest the use of any of the Claimed Amount to
offset the principal amount of the Note. The Agent may contest the use of any of
the Claimed Amount to offset the principal amount of the Note only based upon a
good faith belief that all or such portion of the Claimed Amount does not
constitute Damages for which the Indemnitee is entitled to indemnification under
this Section 9. If no Response Notice is delivered by the Agent within such
20-day period, the Agent shall be deemed to have agreed that an amount equal to
all of the Claimed Amount may be offset against the principal amount of the
Note.
(c) If the Agent in the Response Notice agrees (or, pursuant to the
last sentence of the immediately preceding paragraph, is deemed to have agreed)
that the Claimed
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Amount may be offset against the principal amount of the Note, the Purchaser
shall instruct the Agent in writing to endorse a subtraction on Schedule A to
the Note to effect a reduction in its principal amount by the amount of the
Claimed Amount, and the Agent shall, as promptly as practicable following the
receipt of such written instruction, make such endorsement.
(d) If the Agent in the Response Notice agrees that part, but not
all, of the Claimed Amount may be offset against the principal amount of the
Note the Purchaser shall instruct the Agent in writing to endorse a subtraction
on Schedule A to the Note to effect a reduction in its principal amount by the
amount of the Agreed Amount, and the Agent shall, as promptly as practicable
following the receipt of such written instruction, make such endorsement.
(e) If the Agent in the Response Notice contests the use of all or
part of the Claimed Amount to offset the principal amount of the Note (the
"Contested Amount"), and the Contested Amount is $250,000 or more (a
"Non-Arbitration Contested Amount") the Agent shall only endorse a subtraction
on Schedule A to the Note upon (i) delivery of a settlement agreement executed
by the Purchaser and the Agent that sets forth instructions to the Agent as to
any endorsement to Schedule A of the Note that shall be made with respect to the
Non-Arbitration Contested Amount or (ii) delivery of a copy of a court order to
the Agent that sets forth instructions as to any endorsement to Schedule A of
the Note that shall be made with respect to the Non-Arbitration Contested
Amount. The Agent shall thereupon endorse a subtraction on Schedule A of the
Note if required by such settlement agreement or instructions.
If the Contested Amount is less than $250,000 (an "Arbitration Contested
Amount"), the matter shall be settled by binding arbitration in California. All
claims shall be settled by one arbitrator in accordance with the Commercial
Arbitration Rules then in effect of the American Arbitration Association (the
"AAA Rules"). The Agent and the Purchaser shall agree on one arbitrator within
fifteen days of delivery of the Response Notice contesting the Claimed Amount;
provided, however, that failing such agreement within fifteen days of delivery
of such Response Notice, the arbitrator shall be appointed in accordance with
the AAA Rules. There shall be limited discovery prior to the arbitration
hearing, subject to the discretion of the arbitrator, as follows: (i) exchange
of witness lists and copies of documentary evidence and documents related to or
arising out of the issues to arbitrated, (ii) depositions of all party
witnesses, and (iii) such other depositions as may be allowed by the arbitrator
upon a showing of good cause. Depositions shall be conducted in accordance with
the California Code of Civil Procedure. Each of (i) the Purchaser and (ii) the
Selling Stockholders shall bear one-half of the fees and expenses of the
arbitrator. The arbitrator shall decide the matter to be arbitrated pursuant
hereto within sixty days after his or her appointment. The arbitrator's decision
shall relate solely to whether the Purchaser is entitled to offset the
Arbitration Contested Amount (or a portion thereof) against the principal amount
of the Note pursuant to the terms of this Agreement. If the arbitrator decides
that the Purchaser is entitled to offset at least a majority of the Arbitration
Contested Amount against the principal amount of the Note, the Selling
Stockholders shall pay the Purchaser's costs and expenses (including counsel
fees) relating to such arbitration. If the arbitrator decides that the Purchaser
is not entitled to offset at least a majority of the Arbitration Contested
Amount against the principal amount of the Note, the Purchaser shall pay the
Agent's costs and expenses (including counsel fees) relating to such
arbitration. The final decision of the arbitrator shall be furnished to the
Agent and the Purchaser in writing, shall set forth instructions, if applicable,
as
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to any endorsement to Schedule A of the Note that shall be made with respect to
the Arbitration Contested Amount, shall constitute a conclusive determination of
the issue in question, binding upon the Agent, the Purchaser, the Selling
Stockholders and the Trusts, and shall not be contested by any of them. Upon
receipt of the written decision of the arbitrator, the Agent shall thereupon
endorse a subtraction on Schedule A of the Note if required by such decision.
The arbitrator's decision may be used in a court of law only for the purpose of
seeking its enforcement.
Once the portion of a Claimed Amount that is a Contested Amount has become the
subject of a settlement agreement, court order or arbitrator's written decision
pursuant to the preceding two paragraphs and the Agent has endorsed all
subtractions on Schedule A of the Note required by such settlement agreement,
court order or written decision, such Contested Amount shall no longer be deemed
a "Contested Amount" for purposes of this Agreement.
(f) If the Agent receives written instructions from any Indemnitee
pursuant to Section 9.8 (i) stating the amount of any insurance proceeds, net of
Taxes, received by such Indemnitee prior to the first anniversary of the Closing
Date that relate to Damages which such Indemnitee was previously indemnified,
compensated or reimbursed for under this Section 9 and (ii) instructing the
Agent to endorse an addition on Schedule A to the Note in the amount of such
insurance proceeds, the Agent shall, as promptly as practicable following
receipt of such instructions, make such endorsement.
(g) If the Agent receives written instructions from the Purchaser
pursuant to Section 9.6(i) prior to the Termination Date or the Subsequent
Termination Date, as applicable, (i) stating the amount of expenses relating to
the defense of a claim or Legal Proceeding referenced therein that the Purchaser
has elected to proceed with on its own and (ii) instructing the Agent to endorse
a subtraction on Schedule A to the Note in the amount of such expenses, the
Agent shall, as promptly as practicable following receipt of such instructions,
make such endorsement.
(h) The parties hereto hereby agree that no amounts shall be due
under the Note until the Agent shall have endorsed all subtractions and
additions on Schedule A to the Note that are required by the preceding
provisions of this Section 9.11 (and, with respect to any Termination Date
Amount, shall have made all such endorsements and/or received settlement
agreements, court orders or arbitrator's written decisions instructing it to not
do so for the entire Termination Date Amount).
SECTION 10. MISCELLANEOUS PROVISIONS
10.1 JOINT AND SEVERAL LIABILITY. Subject to Section 5.7(b) and Section
9.5:
(a) the Selling Stockholders jointly and severally agree that they
shall be jointly and severally liable with the Company for the due and timely
compliance with and performance of each of the covenants and obligations of the
Company set forth in this Agreement;
(b) each Selling Stockholder agrees that such Selling Stockholder
shall be jointly and severally liable with each of the other Selling
Stockholders for the due and timely
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compliance with and performance of each of the covenants and obligations of such
other Selling Stockholders and the Trusts and the Trustees acting on their
behalf set forth in this Agreement; and
(c) the Company agrees that, prior to the Closing, the Company shall
be jointly and severally liable with each Selling Stockholder for the due and
timely compliance with and performance of each of the covenants and obligations
of such Selling Stockholder set forth in this Agreement.
10.2 SELLING STOCKHOLDERS' AGENT.
(a) The Selling Stockholders and the Trustees on behalf of the
Trusts hereby irrevocably nominate, constitute and appoint Ali Bushehri as the
agent and true and lawful attorney-in-fact of the Selling Stockholders and the
Trusts (the "Agent"), with full power of substitution, to act in the name, place
and stead of the Selling Stockholders and the Trusts for purposes of executing
any documents and taking any actions that the Agent may, in his sole discretion,
determine to be necessary, desirable or appropriate in connection with this
Agreement or any agreement referred to in this Agreement or any of the
transactions contemplated by this Agreement. Ali Bushehri hereby accepts his
appointment as Agent.
(b) The Selling Stockholders and the Trusts hereby grant to the
Agent full authority to execute, deliver, acknowledge, certify and file on
behalf of the Selling Stockholders (in the name of any or all of the Selling
Stockholders or otherwise) and the Trusts (in the name of either or both of the
Trusts or otherwise) any and all documents that the Agent may, in his sole
discretion, determine to be necessary, desirable or appropriate, in such forms
and containing such provisions as the Agent may, in his sole discretion,
determine to be appropriate (including the General Release referred to in
Section 1.3(b)(iii), any Selling Stockholder Compliance Certificate and any
amendment to or waiver of rights under this Agreement or any agreement referred
to in this Agreement). Notwithstanding anything to the contrary contained in
this Agreement or any agreement referred to in this Agreement:
(i) the Purchaser shall be entitled to deal exclusively with
the Agent on all matters relating to this Agreement or any agreement referred to
in this Agreement and the transactions contemplated by this Agreement that
involve the Selling Stockholders or the Trusts (including all matters relating
to any notice to, or any Consent to be given or action to be taken by, any
Selling Stockholder or either Trust); and
(ii) each Indemnitee shall be entitled to rely conclusively
(without further evidence of any kind whatsoever) on any document executed or
purported to be executed on behalf of any Selling Stockholder or either Trust by
the Agent, and on any other action taken or purported to be taken on behalf of
any Selling Stockholder or either Trust by the Agent, as fully binding upon such
Selling Stockholder or Trust, as the case may be.
(c) The Selling Stockholders and the Trustees on behalf of the
Trusts recognize and intend that the power of attorney granted in Section
10.2(a):
(i) is coupled with an interest and is irrevocable;
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(ii) may be delegated by the Agent; and
(iii) shall survive the death or incapacity of each of the
Selling Stockholders and the termination of each of the Trusts.
(d) The Agent shall be entitled to treat as genuine, and as the
document it purports to be, any letter, facsimile, telex or other document that
is believed by him to be genuine and to have been telexed, telegraphed, faxed or
cabled by a Selling Stockholder or a Trustee on behalf of a Trust or to have
been signed and presented by a Selling Stockholder or a Trustee on behalf of a
Trust.
(e) If the Agent shall die, become disabled or otherwise be unable
to fulfill his responsibilities hereunder, the Selling Stockholders and the
Trustees on behalf of the Trusts shall, within ten days after such death or
disability, appoint a successor to the Agent and immediately thereafter notify
the Purchaser of the identity of such successor. Any such successor shall
succeed the Agent as Agent hereunder. If for any reason there is no Agent at any
time, all references herein to the Agent shall be deemed to refer to the Selling
Stockholders and the Trustees on behalf of the Trusts.
(f) All expenses incurred by the Agent in connection with the
performance of his duties as Agent shall be borne and paid by the Selling
Stockholders.
10.3 FURTHER ASSURANCES. Each party hereto shall execute and/or cause to
be delivered to each other party hereto such instruments and other documents,
and shall take such other actions, as such other party may reasonably request
(prior to, at or after the Closing) for the purpose of carrying out or
evidencing any of the transactions contemplated by this Agreement.
10.4 FEES AND EXPENSES.
(a) Without limiting the generality of anything contained in Section
10.4(b), and subject to Section 1.2, the Selling Stockholders shall bear and pay
all fees, costs and expenses (including all legal fees and expenses payable to
Ferrari, Olsen, Ottoboni & Bebb, LLP, all of the Aggregate Accounting Fees to
the extent that the Aggregate Accounting Fees do not exceed $40,000, and all
investment banking and other fees and expenses payable to Broadview Associates
LLC, but not including any Registration Expenses) that have been incurred or
that are in the future incurred by, on behalf of or for the benefit of the
Company, any of the Selling Stockholders or either of the Trusts or the Trustees
on their behalf in connection with:
(i) the negotiation, preparation and review of any term sheet
or similar document relating to any of the transactions contemplated by this
Agreement;
(ii) the investigation and review conducted by the Purchaser
and its Representatives with respect to the business of the Acquired
Corporations (and the furnishing of information to the Purchaser and its
Representatives in connection with such investigation and review);
(iii) the negotiation, preparation and review of this
Agreement (including the Disclosure Schedule), the other agreements referred to
in this Agreement and all
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certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the transactions contemplated by this Agreement;
(iv) the preparation and submission of any filing or notice
required to be made or given in connection with any of the transactions
contemplated by this Agreement, and the obtaining of any Consent required to be
obtained in connection with any of such transactions; and
(v) the consummation and performance of the transactions
contemplated by this Agreement.
Subject to Section 1.2 and the immediately succeeding sentence, neither the
Purchaser nor any of the Acquired Corporations shall bear or pay, and the
Selling Stockholders shall not permit the Purchaser or any of the Acquired
Corporations to bear or pay, any such fees, costs or expenses. The Purchaser
shall pay all the Aggregate Accounting Fees to the extent that the Aggregate
Accounting Fees exceed $40,000.
(b) Subject to the provisions of Section 9 (including the
indemnification and other obligations of the Selling Stockholders thereunder),
the Purchaser shall bear and pay all fees, costs and expenses (including all
legal fees and expenses payable to Cooley Godward LLP and all investment banking
and other fees and expenses payable to Banc of America Securities LLC, but not
including any Selling Expenses) that have been incurred or that are in the
future incurred by or on behalf of the Purchaser in connection with:
(i) the negotiation, preparation and review of any term sheet
or similar document relating to any of the transactions contemplated by this
Agreement;
(ii) the investigation and review conducted by the Purchaser
and its Representatives with respect to the business of the Acquired
Corporations;
(iii) the negotiation, preparation and review of this
Agreement, the other agreements referred to in this Agreement and all
certificates, opinions and other instruments and documents delivered or to be
delivered in connection with the transactions contemplated by this Agreement;
and
(iv) the consummation and performance of the transactions
contemplated by this Agreement.
10.5 ATTORNEYS' FEES. Subject to the second paragraph of Section 9.11(e)
of this Agreement, if any legal action or other legal proceeding relating to
this Agreement or any agreement referred to in this Agreement or the enforcement
of any provision of this Agreement or any agreement referred to in this
Agreement is brought against any party hereto, the prevailing party shall be
entitled to recover reasonable attorneys' fees, costs and disbursements (in
addition to any other relief to which the prevailing party may be entitled).
10.6 NOTICES. Any notice or other communication required or permitted to
be delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express
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delivery service or by facsimile) to the address or facsimile number set forth
beneath the name of such party below (or to such other address or facsimile
number as such party shall have specified in a written notice given to the other
parties hereto):
if to the Company:
Oz Technologies, Inc.
3387 Investment Boulevard
Hayward, CA 94545
Attention: President
Facsimile: (725) 828-8050
if to Nasser Barabi:
4067 Happy Valley Rd.
Lafayette, CA 94549
if to Ahmad Barabi or Iraj Barabi:
4 Margaret Lane
Danville, CA 94526
if to Ali Bushehri:
468 El Rio Rd.
Danville, CA 94526
with a copy to:
Ferrari, Olsen, Ottoboni & Bebb, LLP
333 West Santa Clara Street, Suite 700
San Jose, CA 95113-1787
Attention: Peter D. Feinberg, Esq.
Facsimile: (408) 280-0151
if to the Purchaser:
Cerprobe Corporation
1150 North Fiesta Boulevard
Gilbert, AZ 85233
Attention: Randal L. Buness
Facsimile: (480) 333-1799
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with a copy to:
Cooley Godward LLP
4365 Executive Drive, Suite 1100
San Diego, CA 92121
Attention: Lance W. Bridges, Esq.
Facsimile: (858) 453-3555
10.7 PUBLICITY. Without limiting the generality of anything contained in
Section 4.6, on and at all times after the Closing Date:
(a) no press release or other publicity concerning any of the
transactions contemplated by this Agreement shall be issued or otherwise
disseminated by or on behalf of any of the Selling Stockholders or either of the
Trustees on behalf of their respective Trusts, and the Selling Stockholders and
the Trustees shall continue to keep the existence and terms of this Agreement
and the other agreements referred to in this Agreement strictly confidential;
and
(b) each Selling Stockholder shall keep strictly confidential, and
shall not use or disclose to any other Person, any non-public document or other
information in such Selling Stockholder's possession that relates directly or
indirectly to the business of any of the Acquired Corporations, the Purchaser or
any affiliate of the Purchaser.
10.8 TIME OF THE ESSENCE. Time is of the essence of this Agreement.
10.9 HEADINGS. The headings contained in this Agreement are for
convenience of reference only, shall not be deemed to be a part of this
Agreement and shall not be referred to in connection with the construction or
interpretation of this Agreement.
10.10 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall constitute an original and all of which, when
taken together, shall constitute one agreement.
10.11 GOVERNING LAW; VENUE.
(a) This Agreement shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California (the
"Agreed-to State") (without giving effect to principles of conflicts of laws).
(b) Any legal action or other legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement may be brought
or otherwise commenced in any state or federal court located in the County of
San Diego, California. Each party to this Agreement:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of San Diego,
California (and each appellate court located in the State of California) in
connection with any such legal proceeding;
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(ii) agrees that each state and federal court located in the
County of San Diego, California, shall be deemed to be a convenient forum; and
(iii) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal court
located in the County of San Diego, California, any claim that such party is not
subject personally to the jurisdiction of such court, that such legal proceeding
has been brought in an inconvenient forum, that the venue of such proceeding is
improper or that this Agreement or the subject matter of this Agreement may not
be enforced in or by such court.
(c) Each Selling Stockholder agrees that, if any Legal Proceeding is
commenced against any Indemnitee by any Person in or before any court or other
tribunal anywhere in the world, then such Indemnitee may proceed against such
Selling Stockholder in such court or other tribunal with respect to any
indemnification claim or other claim arising directly or indirectly from or
relating directly or indirectly to such Legal Proceeding or any of the matters
alleged therein or any of the circumstances giving rise thereto.
(d) Nothing contained in Section 10.11(b) or 10.11(c) shall be
deemed to limit or otherwise affect the right of any Indemnitee to commence any
legal proceeding or otherwise proceed against the Company or any of the Selling
Stockholders in any other forum or jurisdiction; provided, however, that the
Indemnitees may not commence any legal proceeding against the Company or any
Selling Stockholder in any State other than the Agreed-to State if the Company
or such Selling Stockholder is domiciled, at the time of commencement of the
applicable legal proceeding, in the Agreed-to State, unless the Indemnitees are
seeking to enforce an existing judgment.
(e) The Selling Stockholders irrevocably constitute and appoint the
Agent as their agent to receive service of process in connection with any legal
proceeding relating to this Agreement or the enforcement of any provision of
this Agreement.
(f) The Purchaser and the Selling Stockholders irrevocably waive the
right to a jury trial in connection with any legal proceeding relating to this
Agreement or the enforcement of any provision of this Agreement.
10.12 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon: the
Company and its successors and assigns (if any); the Selling Stockholders and
their respective personal representatives, executors, administrators, estates,
heirs, successors and assigns (if any); the Trusts and the Trustees on their
behalf and each of their respective successors and assigns (if any); and the
Purchaser and its successors and assigns (if any). This Agreement shall inure to
the benefit of: the Company; the Selling Stockholders; the Trusts and the
Trustees on their behalf; the Purchaser; the other Indemnitees (subject to
Section 9.7); and the respective successors and assigns (if any) of the
foregoing. The Purchaser may freely assign any or all of its rights under this
Agreement (including its indemnification rights under Section 9), in whole or in
part, to any other Person without obtaining the consent or approval of any other
party hereto or of any other Person.
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10.13 REMEDIES CUMULATIVE; SPECIFIC PERFORMANCE.
(a) The rights and remedies of the parties hereto shall be
cumulative (and not alternative). Each Selling Stockholder and each Trustee on
behalf of its respective Trust agrees that:
(i) in the event of any breach or threatened breach by such
Selling Stockholder or such Trustee acting on behalf of its Trust of any
covenant, obligation or other provision set forth in this Agreement, the
Purchaser shall be entitled (in addition to any other remedy that may be
available to it) to (A) a decree or order of specific performance or mandamus to
enforce the observance and performance of such covenant, obligation or other
provision, and (B) an injunction restraining such breach or threatened breach;
and
(ii) neither the Purchaser nor any other Indemnitee shall be
required to provide any bond or other security in connection with any such
decree, order or injunction or in connection with any related action or Legal
Proceeding.
(b) The Purchaser agrees that:
(i) in the event of any breach or threatened breach by the
Purchaser prior to the Closing of any covenant, obligation or other provision
set forth in this Agreement, the Selling Stockholders and the Trustees acting on
behalf of their respective Trusts shall be entitled (in addition to any other
remedy that may be available to them) to (A) a decree or order of specific
performance or mandamus to enforce the observance and performance of such
covenant, obligation or other provision, and (B) an injunction restraining such
breach or threatened breach; and
(ii) none of the Selling Stockholders or either of the
Trustees acting on behalf of their respective Trusts shall be required to
provide any bond or other security in connection with any such decree, order or
injunction or in connection with any related action or Legal Proceeding.
10.14 WAIVER.
(a) No failure on the part of any Person to exercise any power,
right, privilege or remedy under this Agreement, and no delay on the part of any
Person in exercising any power, right, privilege or remedy under this Agreement,
shall operate as a waiver of such power, right, privilege or remedy; and no
single or partial exercise of any such power, right, privilege or remedy shall
preclude any other or further exercise thereof or of any other power, right,
privilege or remedy.
(b) No Person shall be deemed to have waived any claim arising out
of this Agreement, or any power, right, privilege or remedy under this
Agreement, unless the waiver of such claim, power, right, privilege or remedy is
expressly set forth in a written instrument duly executed and delivered on
behalf of such Person; and any such waiver shall not be applicable or have any
effect except in the specific instance in which it is given.
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10.15 AMENDMENTS. This Agreement may not be amended, modified, altered or
supplemented other than by means of a written instrument duly executed and
delivered on behalf of the Purchaser, the Company, the Agent and the Trustees on
behalf of the Trusts.
10.16 SEVERABILITY. In the event that any provision of this Agreement, or
the application of any such provision to any Person or set of circumstances,
shall be determined to be invalid, unlawful, void or unenforceable to any
extent, the remainder of this Agreement, and the application of such provision
to Persons or circumstances other than those as to which it is determined to be
invalid, unlawful, void or unenforceable, shall not be impaired or otherwise
affected and shall continue to be valid and enforceable to the fullest extent
permitted by law.
10.17 PARTIES IN INTEREST. Except for the provisions of Section 5.7(b) and
Section 9 hereof, none of the provisions of this Agreement is intended to
provide any rights or remedies to any Person other than the parties hereto and
their respective successors and assigns (if any).
10.18 ENTIRE AGREEMENT. This Agreement and the other agreements referred
to in this Agreement set forth the entire understanding of the parties relating
to the subject matter thereof and supersede all prior agreements and
understandings among or between any of the parties relating to the subject
matter thereof.
10.19 CONSTRUCTION.
(a) For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
(b) The parties hereto agree that any rule of construction to the
effect that ambiguities are to be resolved against the drafting party shall not
be applied in the construction or interpretation of this Agreement.
(c) As used in this Agreement, the words "include" and "including,"
and variations thereof, shall not be deemed to be terms of limitation, but
rather shall be deemed to be followed by the words "without limitation."
(d) Except as otherwise indicated, all references in this Agreement
to "Sections" and "Exhibits" are intended to refer to Sections of this Agreement
and Exhibits to this Agreement.
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The parties hereto have caused this Agreement to be executed and delivered
as of December 3, 1999.
CERPROBE CORPORATION,
a Delaware corporation.
By:_______________________________________
Title: ___________________________________
OZ TECHNOLOGIES, INC.,
a California corporation.
By:_______________________________________
Title: ___________________________________
By:_______________________________________
Nasser Barabi
By:_______________________________________
Iraj Barabi
By:_______________________________________
Ali Bushehri
By:_______________________________________
Ahmad Barabi
By:_______________________________________
Ali Bushehri, as Trustee for the
Bushehri Trust
By:_______________________________________
Ahmad Barabi, as Trustee for the
Barabi Trust
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EXHIBIT A
CERTAIN DEFINITIONS
For purposes of the Agreement (including this Exhibit A):
AAA RULES. "AAA Rules" shall have the meaning specified in Section
9.11(e) of the Agreement.
ACQUIRED CORPORATION CONTRACT. "Acquired Corporation Contract" shall
mean any Contract:
(a) to which any of the Acquired Corporations is a party;
(b) by which any of the Acquired Corporations or any of the assets
of any of the Acquired Corporations is or may become bound or under which any of
the Acquired Corporations has, or may become subject to, any obligation; or
(c) under which any of the Acquired Corporations has or may acquire
any right or interest.
ACQUIRED CORPORATION PROPRIETARY ASSET. "Acquired Corporation
Proprietary Asset" shall mean any Proprietary Asset owned by or licensed to
any of the Acquired Corporations or otherwise used by the Acquired
Corporations.
ACQUIRED CORPORATION RETURNS. "Acquired Corporation Returns" shall
have the meaning specified in Section 2.14(a) of the Agreement.
ACQUIRED CORPORATION SOURCE CODE. "Acquired Corporation Source Code" shall
mean any source code, or any portion, aspect or segment of any source code,
relating to any Proprietary Asset owned by or licensed to any of the Acquired
Corporations or otherwise used by any of the Acquired Corporations.
ACQUIRED CORPORATIONS. "Acquired Corporations" shall have the meaning
specified in Section 2.1(a) of the Agreement.
ACQUISITION TRANSACTION. "Acquisition Transaction" shall mean any
transaction involving:
(a) the sale or other disposition of all or any portion of the
business or assets of any of the Acquired Corporations (other than in the
ordinary course of business);
(b) the issuance, sale or other disposition of (i) any capital stock
of any of the Acquired Corporations, (ii) any option, call, warrant or right
(whether or not immediately exercisable) to acquire any capital stock of any of
the Acquired Corporations, or (iii) any security, instrument or obligation that
is or may become convertible into or exchangeable for any capital stock of any
of the Acquired Corporations; or
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(c) any merger, consolidation, business combination, share exchange,
reorganization or similar transaction involving of any of the Acquired
Corporations.
AGENT. "Agent" shall have the meaning specified in Section 10.2 of the
Agreement.
AGGREGATE ACCOUNTING FEES. "Aggregate Accounting Fees" shall have the
meaning specified in Section 2.11(c) of the Agreement.
AGGREGATE PURCHASER SHARES. "Aggregate Purchaser Shares" shall have
the meaning specified in Section 1.2(b) of the Agreement.
AGGREGATE PURCHASER SHARES VALUE. The "Aggregate Purchaser Shares
Value" shall be equal to $11,370,000.
AGGREGATE SHARE PURCHASE PRICE. "Aggregate Share Purchase Price" shall
have the meaning specified in Section 1.2 of the Agreement.
AGREED AMOUNT. "Agreed Amount" shall have the meaning specified in
Section 9.11(b) of the Agreement.
AGREED-TO STATE. "Agreed-to State" shall have the meaning specified in
Section 10.11(a) of the Agreement.
AGREEMENT. "Agreement" shall mean the Stock Purchase Agreement to
which this Exhibit A is attached (including the Disclosure Schedule), as it
may be amended from time to time.
APPLICABLE SHARE OWNERSHIP PERCENTAGE. "Applicable Share Ownership
Percentage" shall have the meaning specified in Section 1.2 of the Agreement.
APPLICABLE SPECIFIED REPRESENTATIONS EXPIRATION DATE. "Applicable
Specified Representations Expiration Date" shall mean (i) with respect to the
Environmental Representations, the Environmental Representations Expiration
Date, (ii) with respect to the Proprietary Asset Representations, the
Proprietary Asset Representations Expiration Date and (iii) with respect to the
Tax Representations, the Tax Representations Expiration Date.
APPRAISED VALUE. "Appraised Value" shall have the meaning specified in
Section 5.11 of the Agreement.
ARBITRATION CONTESTED AMOUNT. "Arbitration Contested Amount" shall
have the meaning specified in Section 9.11(e) of the Agreement.
ASSUMPTIONS. "Assumptions" shall have the meaning specified in Section
2.24 of the Agreement.
AUDIT. "Audit" shall have the meaning specified in Section 8.5 of the
Agreement.
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AVERAGE INITIAL SELLING PERIOD SHARE PROCEEDS. "Average Initial Selling
Period Share Proceeds" shall mean the dollar amount equal to the quotient
obtained by dividing the Initial Selling Period Share Proceeds by the Initial
Selling Period Shares.
AVERAGE INITIAL SELLING PERIOD SHARE SHORTFALL. "Average Initial
Selling Period Share Shortfall" shall mean the dollar amount equal to the
difference (if any such difference exists and is greater than 0) between the
Average Purchaser Common Stock Closing Price and the Average Initial Selling
Period Share Proceeds.
AVERAGE PURCHASER COMMON STOCK CLOSING PRICE. "Average Purchaser Common
Stock Closing Price" shall mean the average closing sales price of one share of
Purchaser Common Stock as quoted on The Nasdaq National Market for the period of
twenty-five trading days that ends on the third day preceding the date of this
Agreement (including, for any particular date during such twenty-five day
trading period when a closing sales price for the Purchaser Common Stock is
unavailable, the mean between the highest bid and lowest asked prices as quoted
on The Nasdaq National Market as a substitute for such closing sales price).
BARABI TRUST. "Barabi Trust" shall have the meaning specified in the
introductory paragraph of the Agreement.
BARABI TRUSTEE. "Barabi Trustee" shall have the meaning specified in
the introductory paragraph of the Agreement.
BUSHEHRI TRUST. "Bushehri Trust" shall have the meaning specified in
the introductory paragraph of the Agreement.
BUSHEHRI TRUSTEE. "Bushehri Trustee" shall have the meaning specified
in the introductory paragraph of the Agreement.
CALCULATED PURCHASER SHARES. "Calculated Purchaser Shares" shall mean the
number of shares of Purchaser Common Stock equal to the quotient obtained by
dividing $4,200,000 by the Average Purchaser Common Stock Closing Price, rounded
down to the nearest whole share.
CASH AMOUNT. "Cash Amount" shall have the meaning specified in Section
1.2(a) of the Agreement.
CERCLA. "CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Act.
CLAIM NOTICE. "Claim Notice" shall have the meaning specified in
Section 9.11(a) of the Agreement.
CLAIMED AMOUNT. "Claimed Amount" shall have the meaning specified in
Section 9.11(b) of the Agreement.
CLOSING. "Closing" shall have the meaning specified in Section 1.3(a)
of the Agreement.
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CLOSING DATE. "Closing Date" shall have the meaning specified in Section
1.3(a) of the Agreement.
COBRA. "COBRA" shall have the meaning specified in Section 2.15(h) of
the Agreement.
CODE. "Code" shall mean the Internal Revenue Code of 1986, as amended.
COMPANY. "Company" shall mean Oz Technologies, Inc., a California
corporation.
COMPANY COMMON STOCK. "Company Common Stock" shall have the meaning
specified in Recital "A" to the Agreement.
COMPANY COMPLIANCE CERTIFICATE. "Company Compliance Certificate" shall
have the meaning specified in Section 6.5(f) of the Agreement.
COMPANY FINANCIAL PROJECTIONS. "Company Financial Projections" shall
have the meaning specified in Section 2.24 of the Agreement.
COMPANY FINANCIAL STATEMENTS. "Company Financial Statements" shall
have the meaning specified in Section 2.4(a) of the Agreement.
CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental
Authorization).
CONTESTED AMOUNT. "Contested Amount" shall have the meaning specified
in Section 9.11(e) of the Agreement.
CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
DAMAGES. "Damages" shall include any loss, damage, injury, decline in
value, lost opportunity, liability, claim, demand, settlement, judgment, award,
fine, penalty, Tax, fee (including any legal fee, expert fee, accounting fee or
advisory fee), charge, cost (including any cost of investigation) or expense of
any nature.
DISCLOSURE SCHEDULE. "Disclosure Schedule" shall mean the schedule
(dated as of the date of the Agreement) delivered to the Purchaser on behalf
of the Company and the Selling Stockholders, a copy of which is attached to
the Agreement and incorporated in the Agreement by reference.
EMPLOYEE. "Employee" shall have the meaning specified in Section
2.15(a) of the Agreement.
EMPLOYEE BENEFIT PLAN. "Employee Benefit Plan" shall have the meaning
specified in Section 3(3) of ERISA.
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ENCUMBRANCE. "Encumbrance" shall mean any lien, pledge, hypothecation,
charge, mortgage, security interest, encumbrance, equity, trust, equitable
interest, claim, preference, right of possession, lease, tenancy, license,
encroachment, covenant, infringement, interference, order, writ, injunction,
judgment, decree, proxy, option, right of first refusal, preemptive right,
community property interest, legend, defect, impediment, exception, reservation,
limitation, impairment, imperfection of title, condition or restriction of any
nature (including any restriction on the voting of any security, any restriction
on the transfer of any security or other asset, any restriction on the receipt
of any income derived from any asset, any restriction on the use of any asset
and any restriction on the possession, exercise or transfer of any other
attribute of ownership of any asset).
ENTITY. "Entity" shall mean any corporation (including any non-profit
corporation), general partnership, limited partnership, limited liability
partnership, joint venture, estate, trust, cooperative, foundation, society,
political party, union, company (including any limited liability company or
joint stock company), firm or other enterprise, association, organization or
entity.
ENVIRONMENTAL LAW. "Environmental Law" shall have the meaning specified in
Section 2.16 of the Agreement.
ENVIRONMENTAL REPRESENTATIONS. "Environmental Representations" shall
mean the representations and warranties made by the Company and the Selling
Stockholders in Section 2.16 of the Agreement.
ENVIRONMENTAL REPRESENTATIONS EXPIRATION DATE. "Environmental
Representations Expiration Date" shall mean the third anniversary of the
Closing Date.
ERISA. "ERISA" shall have the meaning specified in Section 2.15(b) of
the Agreement.
EXCHANGE ACT. "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
EXISTING DIRECTORS AND OFFICERS. "Existing Directors and Officers" shall
mean the directors that compose the boards of directors of the Acquired
Corporations, and the officers of the Acquired Corporations, in each case
immediately prior to the Closing.
401(k) PLAN. "401(k) Plan" shall have the meaning specified in Section
5.4 of the Agreement.
GAAP. "GAAP" shall mean generally accepted accounting principles,
applied on a basis consistent with the basis on which the Company Financial
Statements were prepared.
GOVERNMENT BID. "Government Bid" shall mean any quotation, bid or
proposal submitted to any Governmental Body or any proposed prime contractor
or higher-tier subcontractor of any Governmental Body.
GOVERNMENT CONTRACT. "Government Contract" shall mean any prime contract,
subcontract, letter contract, purchase order or delivery order executed or
submitted to or on behalf of any Governmental Body or any prime contractor or
higher-tier subcontractor, or under
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which any Governmental Body or any such prime contractor or subcontractor
otherwise has or may acquire any right or interest.
GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any:
(a) permit, license, certificate, franchise, concession, approval,
consent, ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
that is, has been or may in the future be issued, granted, given or otherwise
made available by or under the authority of any Governmental Body or pursuant to
any Legal Requirement; or
(b) right under any Contract with any Governmental Body.
GOVERNMENTAL BODY. "Governmental Body" shall mean any:
(a) nation, principality, state, commonwealth, province, territory,
county, municipality, district or other jurisdiction of any nature;
(b) federal, state, local, municipal, foreign or other government;
(c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal);
(d) multi-national organization or body; or
(e) individual, Entity or body exercising, or entitled to exercise,
any executive, legislative, judicial, administrative, regulatory, police,
military or taxing authority or power of any nature.
HAZARDOUS MATERIAL. "Hazardous Material" shall include:
(a) any petroleum, waste oil, crude oil, asbestos, urea formaldehyde
or polychlorinated biphenyl;
(b) any waste, gas or other substance or material that is explosive
or radioactive;
(c) any "hazardous substance," "pollutant," "contaminant,"
"hazardous waste," "regulated substance," "hazardous chemical" or "toxic
chemical" as designated, listed or defined (whether expressly or by reference)
in any statute, regulation or other Legal Requirement (including CERCLA, any
other so-called "superfund" or "superlien" law, the Resource Conservation
Recovery Act, the Federal Water Pollution Control Act, the Toxic Substances
Control Act, the Emergency Planning and Community Right-to-Know Act and the
respective regulations promulgated thereunder);
A-6.
<PAGE> 74
(d) any other substance or material (regardless of physical form) or
form of energy that is subject to any Legal Requirement which regulates or
establishes standards of conduct in connection with, or which otherwise relates
to, the protection of human health, plant life, animal life, natural resources,
property or the enjoyment of life or property from the presence in the
environment of any solid, liquid, gas, odor, noise or form of energy; and
(e) any compound, mixture, solution, product or other substance or
material that contains any substance or material referred to in clause "(a)",
"(b)", "(c)" or "(d)" above.
INDEMNITEES. "Indemnitees" shall mean the following Persons:
(a) the Purchaser;
(b) the Purchaser's current and future affiliates (including the
Acquired Corporations and all persons who control the Purchaser within the
meaning of the Securities Act);
(c) the respective Representatives of the Persons referred to in
clauses "(a)" and "(b)" above; and
(d) the respective successors and assigns of the Persons referred to
in clauses "(a)", "(b)" and "(c)" above;
provided, however, that (i) none of the Acquired Corporations shall be entitled
to exercise any rights as an Indemnitee prior to the Closing, and (ii) the
Selling Stockholders shall not be deemed to be "Indemnitees."
INDEMNITY BASKET. "Indemnity Basket" shall have the meaning specified
in Section 9.3 of the Agreement.
INITIAL NOTE AMOUNT. The "Initial Note Amount" shall be equal to
$3,200,000 plus the dollar amount equal to the difference (positive or negative)
between $11,000,000 and the Aggregate Purchaser Shares Value.
INITIAL SELLING PERIOD. "Initial Selling Period" shall mean the period
beginning on the date that the Registration Statement becomes effective and
ending on the date that is 179 days thereafter.
INITIAL SELLING PERIOD SELLING EXPENSES. "Initial Selling Period Selling
Expenses" shall mean all reasonable and customary selling commissions,
underwriting fees and stock transfer taxes paid to third parties with respect to
the sales of the Initial Selling Period Shares during the Initial Selling
Period.
INITIAL SELLING PERIOD SHARE PROCEEDS. "Initial Selling Period Share
Proceeds" shall mean the aggregate proceeds (net of all Initial Selling Period
Selling Expenses) received by any Selling Stockholder or either Trust from sales
of the Initial Selling Period Shares during the Initial Selling Period.
A-7.
<PAGE> 75
INITIAL SELLING PERIOD SHARES. "Initial Selling Period Shares" shall
have the meaning specified in Section 5.6(b) of the Agreement.
INTERIM BALANCE SHEET. "Interim Balance Sheet" shall have the meaning
specified in Section 2.11(c) of the Agreement.
J. D. EDWARDS PAYMENTS. "J. D. Edwards Payments" shall have the meaning
specified in Section 5.13 of the Agreement.
LEGAL PROCEEDING. "Legal Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation that is, has been or may in the future be commenced, brought,
conducted or heard by or before, or that otherwise has involved or may involve,
any Governmental Body or any arbitrator or arbitration panel.
LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal, state,
local, municipal, foreign or other law, statute, legislation, constitution,
principle of common law, resolution, ordinance, code, edict, decree,
proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation that is, has been or may in the future be issued, enacted,
adopted, passed, approved, promulgated, made, implemented or otherwise put into
effect by or under the authority of any Governmental Body.
MATERIAL ADVERSE EFFECT.
(a) An event, violation, inaccuracy, circumstance or other matter
will be deemed to have a "Material Adverse Effect" on the Acquired Corporations
if such event, violation, inaccuracy, circumstance or other matter (considered
together with all other matters that would constitute exceptions to the
representations and warranties of the Company and the Selling Stockholders set
forth in the Agreement, the Company Compliance Certificate or any Selling
Stockholder Compliance Certificate but for the presence of "Material Adverse
Effect" or other materiality qualifications, or any similar qualifications, in
such representations and warranties) has had or could have a material adverse
effect on the business, condition, prospects, assets, liabilities, operations,
financial performance or capitalization of the Acquired Corporations taken as a
whole;
(b) An event, violation, inaccuracy, circumstance or other matter
will be deemed to have a "Material Adverse Effect" on the Purchaser if such
event, violation, inaccuracy, circumstance or other matter (considered together
with all other matters that would constitute exceptions to the representations
and warranties of the Purchaser set forth in the Agreement but for the presence
of "Material Adverse Effect" or other materiality qualifications, or any similar
qualifications, in such representations and warranties) has had or could have a
material adverse effect on the business, condition, prospects, assets,
liabilities, operations, financial performance or capitalization of the
Purchaser.
A-8.
<PAGE> 76
MATERIAL CONTRACTS. "Material Contracts" shall have the meaning
specified in Section 2.10(a) of the Agreement.
MINOR CLAIM OR LEGAL PROCEEDING. A "Minor Claim or Legal Proceeding" is a
claim or Legal Proceeding that the Purchaser settles, adjusts or compromises and
that, together with all settlements, adjustments or compromises entered into by
the Purchaser without the consent of the Agent, results in aggregate liability
to the Selling Stockholders under Section 9 of the Agreement of $100,000 or
less.
NON-ARBITRATION CONTESTED AMOUNT. "Non-Arbitration Contested Amount"
shall have the meaning specified in Section 9.11(e) of the Agreement.
NON-TRUST SELLING STOCKHOLDERS. "Non-Trust Selling Stockholders" shall
have the meaning specified in the introductory paragraph of the Agreement.
NOTE. "Note" shall have the meaning specified in Section 1.2(c) of the
Agreement.
PAYMENT EVIDENCE. "Payment Evidence" shall have the meaning specified
in Section 5.13 of the Agreement.
PENSION PLAN. "Pension Plan" shall have the meaning specified in
Section 2.15(b) of the Agreement.
PERSON. "Person" shall mean any individual, Entity or Governmental Body.
PLANS. "Plans" shall have the meaning specified in Section 2.15(a) of
the Agreement.
PRE-CLOSING PERIOD. "Pre-Closing Period" shall have the meaning specified
in Section 4.1 of the Agreement.
PROCESSES. "Processes" shall have the meaning specified in Section 2.9(f)
of the Agreement.
PROPRIETARY ASSET. "Proprietary Asset" shall mean any: (i) patent, patent
application, trademark (whether registered or unregistered), trademark
application, trade name, fictitious business name, service mark (whether
registered or unregistered), service mark application, copyright (whether
registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, algorithm, invention, design,
blueprint, engineering drawing, proprietary product, technology, proprietary
right or other intellectual property right or intangible asset; or (ii) right to
use or exploit any of the foregoing.
PROPRIETARY ASSET REPRESENTATIONS. "Proprietary Asset Representations"
shall mean the representations and warranties made by the Company and the
Selling Stockholders in Section 2.9 of the Agreement.
PROPRIETARY ASSET REPRESENTATIONS EXPIRATION DATE. "Proprietary Asset
Representations Expiration Date" shall mean the fifth anniversary of the
Closing Date.
A-9.
<PAGE> 77
PURCHASE COMMITMENTS. "Purchase Commitments" shall have the meaning
specified in Section 2.22 of the Agreement.
PURCHASER. "Purchaser" shall mean Cerprobe Corporation, a Delaware
corporation.
PURCHASER COMMON STOCK. "Purchaser Common Stock" shall have the
meaning specified in Section 1.2(b) of the Agreement.
PURCHASER SEC DOCUMENTS. "Purchaser SEC Documents" shall have the
meaning specified in Section 3.6(a) of the Agreement.
REAL PROPERTY. "Real Property" shall mean the Purchaser's real
property located at 10365 Sanden Drive, Dallas, Texas 75238.
REAL PROPERTY NOTE. "Real Property Note" shall have the meaning
specified in Section 1.2(d) of the Agreement.
REAL PROPERTY NOTE PAYMENT DATE. "Real Property Note Payment Date"
shall have the meaning specified in Section 5.11 of the Agreement.
REAL PROPERTY SHORTFALL. "Real Property Shortfall" shall have the
meaning specified in Section 5.11 of the Agreement.
REAL PROPERTY SURPLUS. "Real Property Surplus" shall have the meaning
specified in Section 5.11 of the Agreement.
REAL PROPERTY VALUE. The "Real Property Value" shall be equal to
$2,800,000.
REGISTRATION EXPENSES. "Registration Expenses" shall mean all expenses,
except for Selling Expenses, incurred by the Purchaser in complying with the
registration provisions of this Agreement, including, without limitation, all
registration, qualification and filing fees, printing expenses, fees and
disbursements of counsel and accountants for the Purchaser, blue sky fees and
expenses and the expense of any special audits incidents to or required by any
such registration.
REGISTRATION STATEMENT. "Registration Statement" shall have the
meaning specified in Section 5.6(a) of the Agreement.
RELATED PARTY. Each of the following shall be deemed to be a "Related
Party":
(a) each of the Selling Stockholders;
(b) each individual who is, or who has at any time been, an officer
or director of any of the Acquired Corporations;
(c) each member of the family of each of the individuals referred to
in clauses "(a)" and "(b)" above; and
A-10.
<PAGE> 78
(c) any Entity (other than the Acquired Corporations) in which any
one of the individuals referred to in clauses "(a)", "(b)" and "(c)" above holds
(or in which more than one of such individuals collectively hold), beneficially
or otherwise, a material voting, proprietary or equity interest.
REPRESENTATIVES. "Representatives" shall mean officers, directors,
employees, agents, attorneys, accountants, advisors and representatives. The
Selling Stockholders and all other Related Parties shall be deemed to be
"Representatives" of the Company.
RESPONSE NOTICE. "Response Notice" shall have the meaning specified in
Section 9.11(b) of the Agreement.
RULE 144. "Rule 144" shall mean Rule 144 under the Securities Act.
SCHEDULED CLOSING TIME. "Scheduled Closing Time" shall have the
meaning specified in Section 1.3(a) of the Agreement.
SEC. "SEC" shall mean the Securities and Exchange Commission.
SECURITIES ACT. "Securities Act" shall mean the Securities Act of 1933, as
amended.
SELLING EXPENSES. "Selling Expenses" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Aggregate Purchaser
Shares and all fees and disbursements of counsel for any Selling Stockholder or
either Trustee on behalf of its Trust.
SELLING STOCKHOLDER COMPLIANCE CERTIFICATE. "Selling Stockholder
Compliance Certificate" shall have the meaning specified in Section 6.5(g) of
the Agreement.
SELLING STOCKHOLDER and SELLING STOCKHOLDERS. "Selling Stockholder"
and "Selling Stockholders" shall have the meanings specified in the
introductory paragraph of the Agreement.
SHARES. "Shares" shall have the meaning specified in Recital "A" to
the Agreement.
SOFTWARE AGREEMENTS. "Software Agreements" shall mean (a) the Software
License Agreement dated July 31, 1999 between the Company and J.D. Edwards
and (b) the Maintenance Agreement dated July 31, 1999 between the Company and
J.D. Edwards.
SOFTWARE PROCEEDING. "Software Proceeding" shall have the meaning
specified in Section 5.13 of the Agreement.
SOFTWARE SETTLEMENT. "Software Settlement" shall have the meaning
specified in Section 5.13 of the Agreement.
SPECIFIED REPRESENTATIONS. "Specified Representations" shall mean the
Environmental Representations, the Proprietary Asset Representations and the
Tax Representations.
SPOUSAL CONSENTS. "Spousal Consents" shall have the meaning specified
in Section 1.3(b)(vi) of the Agreement.
A-11.
<PAGE> 79
STOCKHOLDERS AGREEMENT. "Stockholders Agreement" shall mean the
Stockholders Agreement dated December 1, 1991 among the Company, the Selling
Stockholders and Nassrin Barabi-Bushehri.
SUBSEQUENT PERIOD. "Subsequent Period" shall have the meaning specified in
Section 5.6(b) of the Agreement.
SUBSEQUENT TERMINATION DATE. "Subsequent Termination Date" shall have the
meaning specified in Section 9.10 of the Agreement.
SUBSIDIARY. An entity shall be deemed to be a "Subsidiary" of another
Person if such Person directly or indirectly owns, beneficially or of record,
(i) an amount of voting securities or other interests in such Entity that is
sufficient to enable such Person to elect at least a majority of the members of
such Entity's board of directors or other governing body, or (ii) at least 50%
of the outstanding equity or financial interests of such Entity.
TAX. "Tax" shall mean any tax (including any income tax, franchise tax,
capital gains tax, estimated tax, gross receipts tax, value-added tax, surtax,
excise tax, ad valorem tax, transfer tax, stamp tax, sales tax, use tax,
property tax, business tax, occupation tax, inventory tax, occupancy tax,
withholding tax or payroll tax), levy, assessment, tariff, impost, imposition,
toll, duty (including any customs duty), deficiency or fee, and any related
charge or amount (including any fine, penalty or interest), that is, has been or
may in the future be (i) imposed, assessed or collected by or under the
authority of any Governmental Body, or (ii) payable pursuant to any tax-sharing
agreement or similar Contract.
TAX REPRESENTATIONS. "Tax Representations" shall mean the representation
and warranties made by the Company and the Selling Stockholders in Section 2.14
of the Agreement.
TAX REPRESENTATIONS EXPIRATION DATE. Tax Representations Expiration Date
shall mean the date on which the statute of limitations for examination or audit
of all of the Acquired Corporation Returns by all Governmental Bodies has
expired.
TAX RETURN. "Tax Return" shall mean any return (including any information
return), report, statement, declaration, estimate, schedule, notice,
notification, form, election, certificate or other document or information that
is, has been or may in the future be filed with or submitted to, or required to
be filed with or submitted to, any Governmental Body in connection with the
determination, assessment, collection or payment of any Tax or in connection
with the administration, implementation or enforcement of or compliance with any
Legal Requirement relating to any Tax.
TERMINATION DATE. "Termination Date" shall have the meaning specified in
Section 9.10 of the Agreement.
TERMINATION DATE AMOUNT. "Termination Date Amount" shall have the meaning
specified in Section 9.10 of the Agreement.
A-12.
<PAGE> 80
TOTAL INITIAL SELLING PERIOD SHARE SHORTFALL. "Total Initial Selling
Period Share Shortfall" shall mean the dollar amount equal to the product
obtained by multiplying the Initial Selling Period Shares by the Average Initial
Selling Period Share Shortfall; provided, however, that if the Initial Selling
Period Share Proceeds are greater than or equal to $4,000,000, no Total Initial
Selling Period Share Shortfall shall be deemed to exist at the end of the
Initial Selling Period.
TRUSTEE and TRUSTEES. "Trustee" and "Trustees" shall have the meanings
specified in the introductory paragraph of the Agreement.
TRUST and TRUSTS. "Trust" and "Trusts" shall have the meanings
specified in the introductory paragraph of the Agreement.
TRUST SELLING STOCKHOLDERS. "Trust Selling Stockholders" shall have
the meaning specified in the introductory paragraph of the Agreement.
WELFARE PLANS. "Welfare Plans" shall have the meaning specified in
Section 2.15(c) of the Agreement.
YEAR 2000 COMPLIANT. "Year 2000 Compliant" shall have the meaning
specified in Section 2.9(f) of the Agreement.
A-13.
<PAGE> 1
Exhibit 2
THIS PROMISSORY NOTE MAY NOT BE (I) SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF OR (II) SUBJECTED TO ANY LIEN, ATTACHMENT, PLEDGE, HYPOTHECATION OR
ANY JUDICIAL PROCESS OF ANY CREDITOR OF THE HOLDER OF THIS NOTE OR ANY PARTY TO
THE STOCK PURCHASE AGREEMENT (AS DEFINED BELOW) EXCEPT PURSUANT TO A VALID
WAIVER OF THE APPLICABLE PROVISIONS OF SECTION 9.10 OF SUCH AGREEMENT.
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE PAYOR (AS DEFINED
BELOW), THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
THIS PROMISSORY NOTE IS SUBJECT TO A SUBORDINATION AGREEMENT, DATED AS OF
DECEMBER 3, 1999 AMONG BANK OF AMERICA, N.A., AS SENIOR LENDER AND THE PAYOR.
THIS PROMISSORY NOTE IS SUBORDINATED IN RIGHT AND TIME OF PAYMENT TO THE PRIOR
INDEFEASIBLE PAYMENT IN FULL IN CASH OF ALL SENIOR DEBT (AS DEFINED THEREIN),
AND ALL LIENS AND SECURITY INTERESTS SECURING THIS PROMISSORY NOTE ARE
SUBORDINATED TO LIENS AND SECURITY INTERESTS SECURING SUCH SENIOR DEBT, IN
ACCORDANCE WITH THE TERMS OF SUCH SUBORDINATION AGREEMENT AND EACH HOLDER OF
THIS PROMISSORY NOTE, BY ITS ACCEPTANCE HEREOF, IRREVOCABLY AGREES TO BE BOUND
BY THE TERMS AND PROVISIONS OF SUCH SUBORDINATION AGREEMENT.
SUBORDINATED PROMISSORY NOTE
December 3, 1999
FOR VALUE RECEIVED, CERPROBE CORPORATION, a Delaware corporation
(together with its successors and assigns, the "PAYOR"), promises to pay to ALI
BUSHEHRI (the "AGENT") or any successor appointed pursuant to Section 10.2(e) of
the Stock Purchase Agreement (as defined below) (the "HOLDER") the principal
amount of $2,830,000 (as may be adjusted from time to time as set forth herein)
on the earlier of (i) December 3, 2002 or (ii) the third business day following
the Payor's receipt of gross proceeds equal to or in excess of $10,000,000 from
a public offering of shares of its common stock pursuant to an effective
registration statement under the Securities Act of 1933, as amended, and "firm
commitment" underwriting arrangements (such earlier date, the "MATURITY DATE"),
along with interest on the outstanding principal amount at the rate of 10% per
annum. The principal amount payable by the Payor to the Holder on the Maturity
Date and the interest thereon then due are together referred to herein as the
"MATURITY AMOUNT." The Maturity Amount constitutes a portion of the Aggregate
Share Purchase Price (capitalized terms used and not defined herein shall have
the meanings assigned to them in the Stock Purchase Agreement (the "STOCK
PURCHASE AGREEMENT") dated as of
1.
<PAGE> 2
December 3, 1999 by and among the Payor, Oz Technologies, Inc., a California
corporation, Nasser Barabi, Iraj Barabi, Ali Bushehri, individually and as
trustee for the Ali and Nassrin Bushehri Trust, and Ahmad Barabi, individually
and as trustee for the Ahmad and Zakieh Barabi Trust) payable to the Holder on
behalf of the Non-Trust Selling Stockholders and the Trusts under the Stock
Purchase Agreement. The principal amount payable by the Payor to the Holder on
the Maturity Date pursuant to the first sentence of this paragraph is subject to
adjustment as provided in this paragraph and paragraph 1 below, and shall equal
the principal amount (the "MATURITY DATE PRINCIPAL AMOUNT") on Schedule A hereto
that (i) has been endorsed by the Holder and for which an Anniversary
Instruction, a 5.6(b) Instruction, a 5.11 Instruction, a 5.13 Instruction or a
9.11 Instruction (each as defined herein) is attached hereto and (ii)
corresponds to the Maturity Date or the date closest to the Maturity Date, as
applicable (or, if no endorsements have been made by the Holder, the amount
corresponding to December 3, 1999). The interest due on this note (this "NOTE")
on the Maturity Date shall commence on the date hereof and be calculated on the
basis of a 365-day or a 366-day year, as applicable, by reference to the
outstanding principal amount under this Note as determined on a daily basis from
Schedule A hereof (except that any portion of the original outstanding principal
amount under this Note that has been subtracted on Schedule A hereto based on a
9.11 Instruction that has been endorsed by the Agent shall be deemed, for
purposes of calculating interest under this Note, to have never been
outstanding). No portion of the Maturity Amount shall be payable by the Payor to
the Holder until the Maturity Date. The Payor may, at its option, on each of
December 3, 2000 and December 3, 2001, pay to the Holder all or any portion of
the principal and interest then outstanding under this Note to the extent that
doing so does not cause the Payor to violate any covenant in any loan, security
or subordination document to which the Payor is then a party. To the extent that
any such payment is made and constitutes a principal payment, the Payor shall
deliver a written instruction (an "Anniversary Instruction") to the Holder
instructing it to endorse a subtraction on Schedule A hereto in the amount
provided in such Anniversary Instruction, and the Holder shall endorse such
subtraction in such amount as promptly as practicable (an in no event later than
the Maturity Date) after its receipt of such Anniversary Instruction. The Holder
shall attach to this Note each Anniversary Instruction pursuant to which it
makes any endorsement to Schedule A of this Note, and no endorsement to Schedule
A of this Note made pursuant to an Anniversary Instruction shall be effective
unless a corresponding Anniversary Instruction is attached to this Note. To the
extent that all or any portion of the Maturity Date Principal Amount is not paid
by the Payor to the Holder on the Maturity Date (the portion of the Maturity
Date Principal Amount that is not paid on the Maturity Date being herein
referred to as the "UNPAID MATURITY DATE PRINCIPAL AMOUNT"), the Unpaid Maturity
Date Principal Amount shall accrue interest at the rate of 10% per annum
commencing on the Maturity Date until the date on which the Unpaid Maturity Date
Principal Amount (and all interest thereon pursuant to this sentence) has been
paid in full to the Holder, with such interest being calculated based on a
365-day or a 366-day year, as applicable, and by reference to the Unpaid
Maturity Date Principal Amount as determined on a daily basis.
1. This Note shall be held by the Holder until the Termination Date or
the Subsequent Termination Date, as applicable, as collateral to secure the
rights of the Indemnitees under the Stock Purchase Agreement. In the event that,
prior to or on the Maturity Date, the Payor instructs the Holder in writing
pursuant to Section 5.6(b) of the Stock Purchase Agreement
2.
<PAGE> 3
to endorse an addition on Schedule A hereto in the amount of the Total Initial
Selling Period Share Shortfall (a "5.6(b) INSTRUCTION"), the Holder shall
endorse such addition on Schedule A hereto as promptly as practicable (and in no
event later than the Maturity Date) after receipt of such 5.6(b) Instruction.
The Holder shall attach to this Note each 5.6(b) Instruction pursuant to which
it makes any endorsement to Schedule A of this Note, and no endorsement to
Schedule A of this Note made pursuant to a 5.6(b) Instruction shall be effective
unless the corresponding 5.6(b) Instruction is attached to this Note. In the
event that, prior to or on the Maturity Date, the Payor instructs the Holder in
writing pursuant to Section 5.11 of the Stock Purchase Agreement to endorse an
addition or subtraction on Schedule A hereto in the amount of the Real Property
Shortfall or Real Property Surplus, as applicable (a "5.11 INSTRUCTION"), the
Holder shall endorse such addition or subtraction on Schedule A hereto as
promptly as practicable (and in no event later than the Maturity Date) after
receipt of such 5.11 Instruction. The Holder shall attach to this Note each 5.11
Instruction pursuant to which it makes any endorsement to Schedule A of this
Note, and no endorsement to Schedule A of this Note made pursuant to a 5.11
Instruction shall be effective unless the corresponding 5.11 Instruction is
attached to this Note. In the event that, prior to or on the Maturity Date, the
Payor instructs the Holder in writing pursuant to Section 5.13 of the Stock
Purchase Agreement (a "5.13 INSTRUCTION") to endorse a subtraction on Schedule A
hereto in the amount of the J.D. Edwards Payment stated in such instruction, the
Holder shall endorse such subtraction on Schedule A hereto as promptly as
practicable (and in no event later than the Maturity Date) after receipt of such
5.13 Instruction. The Holder shall attach to this Note each 5.13 Instruction
pursuant to which it makes any endorsement to Schedule A of this Note, and no
endorsement to Schedule A of this Note made pursuant to a 5.13 Instruction shall
be effective unless a corresponding 5.13 Instruction is attached to this Note.
In the event that, prior to or on the Maturity Date, the Holder receives,
pursuant to the provisions of Section 9.11 ("SECTION 9.11") of the Stock
Purchase Agreement, either (i) a written instruction or notice from the Payor,
(ii) a settlement agreement executed by the Payor and the Holder, (iii) a copy
of a court order or (iv) an arbitrator's written decision (any such instruction,
notice, settlement agreement, court order or written decision delivered to the
Holder pursuant to Section 9.11 being herein referred to as a "9.11
INSTRUCTION") instructing it to endorse a subtraction or addition on Schedule A
hereto in the amount provided in such 9.11 Instruction, the Holder shall endorse
such subtraction or addition in such amount as promptly as practicable (and in
no event later than the Maturity Date) after its receipt of such 9.11
Instruction. The Holder shall attach to this Note each 9.11 Instruction pursuant
to which it makes any endorsement to Schedule A of this Note, and no endorsement
to Schedule A of this Note made pursuant to a 9.11 Instruction shall be
effective unless the corresponding 9.11 Instruction is attached to this Note. No
amounts shall be due under this Note (and no Unpaid Maturity Date Principal
Amount shall be deemed to exist with respect to this Note) on the Maturity Date
or thereafter until the Holder shall have endorsed all the subtractions and
additions on Schedule A hereto required by the immediately preceding paragraph
and this paragraph 1 and shall have attached all the Anniversary Instructions,
5.6(b) Instructions, 5.11 Instructions, 5.13 Instructions and 9.11 Instructions
corresponding to such endorsements. If the Holder has not endorsed all the
subtractions and additions on Schedule A hereto required by the immediately
preceding paragraph and this paragraph 1 on the Maturity Date specified in the
introductory paragraph, the Maturity Date shall become, for all purposes of this
Note, the date on which the Holder has endorsed all such subtractions and
additions.
3.
<PAGE> 4
2. All amounts then owing under this Note shall become due and payable
immediately in the event of a sale of all of substantially all of the Payor's
assets or capital stock to an unaffiliated third party or a general assignment
by the Payor for the benefit of its creditors. Any date on which any of the
preceding events occurs shall be deemed, for all purposes of this Note, the
Maturity Date. Notwithstanding the immediately preceding sentence, if the Holder
has not endorsed all the subtractions and additions on Schedule A hereto
required by the second preceding paragraph and paragraph 1 on any date on which
any of the preceding events occurs, the Maturity Date with respect to such event
shall become, for all purposes of this Note, the date on which the Holder has
endorsed all such subtractions and additions.
2a. If (i) the Payor is permitted under CRPB Investors, L.L.C.'s
constitutive documents, (ii) its doing so would not cause the Payor to violate
any covenant in any loan, security or subordination document to which the Payor
is then a party (it being understood that the Payor shall not enter into any
such document containing any such covenant after the date hereof), and (iii) the
pledge of the Payor's membership interest (the "MEMBERSHIP INTEREST") in CRPB
Investors, L.L.C. existing on the date hereof is released prior to the Maturity
Date, the Payor shall use its best efforts to pledge the Membership Interest as
security for amounts outstanding under this Note.
3. All payments of interest and principal shall be in lawful money of
the United States of America and shall be made to the Holder. All payments shall
be applied first to accrued interest, and thereafter to principal.
4. In the event of any default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.
5. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
6. The terms of this Note shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
4.
<PAGE> 5
7. Any term of this Note may be amended or waived with the written consent of
Payor and the Holder.
CERPROBE CORPORATION
By:
---------------------------------
5.
<PAGE> 6
SCHEDULE A
PRINCIPAL AMOUNT OF THE PROMISSORY NOTE
The following subtractions and additions of portions of the principal
amount of this Promissory Note have been made:
<TABLE>
<CAPTION>
PRINCIPAL AMOUNT
FOLLOWING SUCH
PRINCIPAL AMOUNT SUBTRACTION OR
DATE MADE SUBTRACTED OR ADDED ADDITION NOTATION MADE ON BEHALF OF THE HOLDER
- ------------------------- ------------------- --------------- -------------------------------------
<S> <C> <C> <C>
December 3, 1999 ----- $2,830,000 -----
</TABLE>
NO ENDORSEMENT BY THE HOLDER OF THIS SCHEDULE A SHALL BE EFFECTIVE UNLESS THE
CORRESPONDING ANNIVERSARY INSTRUCTION, 5.6(b) INSTRUCTION, 5.11 INSTRUCTION,
5.13 INSTRUCTION OR 9.11 INSTRUCTION (EACH AS DEFINED IN THIS NOTE) IS ATTACHED
HERETO.
<PAGE> 1
Exhibit 3
THIS PROMISSORY NOTE MAY NOT BE (I) SOLD, ASSIGNED, TRANSFERRED OR OTHERWISE
DISPOSED OF OR (II) SUBJECTED TO ANY LIEN, ATTACHMENT, PLEDGE, HYPOTHECATION OR
ANY JUDICIAL PROCESS OF ANY CREDITOR OF THE HOLDER OF THIS NOTE OR ANY PARTY TO
THE STOCK PURCHASE AGREEMENT (AS DEFINED BELOW) EXCEPT PURSUANT TO A VALID
WAIVER OF THE APPLICABLE PROVISIONS OF SECTION 9.10 OF SUCH AGREEMENT.
THIS PROMISSORY NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED. NO SALE OR DISPOSITION MAY BE EFFECTED EXCEPT IN COMPLIANCE WITH
RULE 144 UNDER SAID ACT OR AN EFFECTIVE REGISTRATION STATEMENT RELATED THERETO
OR AN OPINION OF COUNSEL FOR THE HOLDER, SATISFACTORY TO THE PAYOR (AS DEFINED
BELOW), THAT SUCH REGISTRATION IS NOT REQUIRED UNDER SAID ACT OR RECEIPT OF A
NO-ACTION LETTER FROM THE SECURITIES AND EXCHANGE COMMISSION.
PROMISSORY NOTE
December 3, 1999
FOR VALUE RECEIVED, CERPROBE CORPORATION, a Delaware corporation
(together with its successors and assigns, the "PAYOR"), promises either (i) to
pay to ALI BUSHEHRI (the "AGENT") or any successor appointed pursuant to Section
10.2(e) of the Stock Purchase Agreement (as defined below) (the "HOLDER") the
principal amount of $2,800,000 on February 3, 2000 (the "MATURITY DATE"), along
with interest on the outstanding principal amount at the rate of 10% per annum,
or (ii) to transfer to the Holder on the Maturity Date the Real Property
(capitalized terms used and not defined herein shall have the meanings assigned
to them in the Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT") dated
as of December 3, 1999 by and among the Payor, Oz Technologies, Inc., a
California corporation, Nasser Barabi, Iraj Barabi, Ali Bushehri, individually
and as trustee for the Ali and Nassrin Bushehri Trust, and Ahmad Barabi,
individually and as trustee for the Ahmad and Zakieh Barabi Trust), unencumbered
except to the extent of any mortgage for the benefit of the Selling Stockholders
and the Trusts and minor liens that do not (in any case or in the aggregate)
materially detract from the value of the Real Property on the Maturity Date.
This Note (this "NOTE") constitutes a portion of the Aggregate Share Purchase
Price payable to the Holder on behalf of the Non-Trust Selling Stockholders and
the Trusts under the Stock Purchase Agreement. The interest due on this Note on
the Maturity Date shall commence on the date hereof and be calculated on the
basis of a 365-day year by reference to the outstanding principal amount under
this Note as determined on a daily basis. No amounts shall be payable by the
Payor to the Holder under this Note until the Maturity Date. To the extent that
the Payor does not make the payment or transfer required by clause (a) or (b) of
the first sentence to this paragraph on the Maturity Date, the portion of the
outstanding principal amount under this Note that remains unpaid or unsatisfied
on the Maturity Date shall accrue interest at the rate of 10% per annum
commencing on the Maturity Date until the date on which such amount (and all
interest thereon pursuant to this sentence) has been paid in full to the Holder,
with such interest being calculated based on a 365-day or a 366-day year, as
applicable, and by reference to the unpaid outstanding principal amount under
this Note as
<PAGE> 2
determined on a daily basis. This Note shall be deemed fully satisfied and
cancelled and of no further effect whatsoever on the Maturity Date upon its
payment in full pursuant to clause (a) of the first sentence to this paragraph
or the transfer of the Real Property pursuant to clause (b) of the first
sentence to this paragraph.
1. All amounts then owing under this Note shall become due and payable
immediately in the event of a sale of all of substantially all of the Payor's
assets or capital stock to an unaffiliated third party or a general assignment
by the Payor for the benefit of its creditors. Any date on which any of the
preceding events occurs shall be deemed, for all purposes of this Note, the
Maturity Date.
2. All payments of interest and principal shall be in lawful money of
the United States of America and shall be made to the Holder. All payments shall
be applied first to accrued interest, and thereafter to principal.
3. In the event of any default hereunder, Payor shall pay all
reasonable attorneys' fees and court costs incurred by Holder in enforcing and
collecting this Note.
4. Payor hereby waives demand, notice, presentment, protest and notice
of dishonor.
5. The terms of this Note shall be construed in accordance with, and
governed in all respects by, the internal laws of the State of California
(without giving effect to principles of conflicts of laws).
<PAGE> 3
6. Any term of this Note may be amended or waived with the written
consent of Payor and the Holder.
CERPROBE CORPORATION
By:
<PAGE> 1
Exhibit 4
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made this 3rd day of
December, 1999, by and between Nasser Barabi ("Employee") and Oz Technologies,
Inc., a California corporation ("Company"), effective December 6, 1999
("Effective Date").
Company wishes to retain the services of Employee pursuant to this
Employment Agreement, the terms and provisions of which are set forth below.
1. POSITION AND DUTIES.
During the Term (as defined in Section 5) Employee will be employed
by Company as its Director of Engineering and Research and Development and will
perform those duties as from time to time determined by the Board of Directors
of Company ("Board") or Company's CEO in accordance with the policies,
practices, and bylaws of Company.
Employee will serve Company faithfully, loyally, honestly, and to
the best of Employee's ability. Employee will devote Employee's best efforts and
substantially all of the Employee's business time to the performance of
Employee's duties for, and in the business and affairs of, Company.
The Board reserves the right, in its sole discretion, to change or
modify Employee's position, title, and duties during the Term of this Agreement.
2. BASE SALARY.
During the Term of this Agreement, Employee's base salary will be
$175,000, payable in accordance with Company's customary payroll practice.
Employee's base salary will be reviewed annually by the Board in accordance with
Company's compensation review policies and practices, all as determined by
Company in its discretion.
<PAGE> 2
3. INCENTIVE COMPENSATION.
Employee is eligible to participate in any performance-based
incentive compensation program that the Board establishes for Employee, as well
as any performance-based incentive compensation program established from time to
time for other employees of Company in the same or similar job classification.
4. BENEFIT PLANS.
Employee will be entitled to be eligible to participate in all
employee benefit plans, including, but not limited to, retirement plans, life
insurance plans, and health and dental plans available to other Company
employees, subject to restrictions (including waiting periods) specified in the
applicable Plan.
Employee is entitled to four weeks of paid vacation per calendar
year, with such vacation to be scheduled and taken in accordance with Company's
standard vacation policies.
5. TERM AND TERMINATION.
The "Term" of this Agreement shall begin on the Effective Date and
will expire by its terms on December 6, 2001, unless sooner terminated in
accordance with this Agreement. [NASSER AND IRAJ - 2 YEARS; ALL OTHERS - 1
YEAR].
6. TERMINATION BY COMPANY.
(a) Termination For Cause. Company may terminate this Agreement and
Employee's employment for Cause at any time upon written notice. For purposes of
this Agreement, "Cause" is limited to discharge resulting from a determination
by Company that Employee: (i) is convicted of a felony involving dishonesty,
fraud, theft, or embezzlement; (ii)
<PAGE> 3
repeatedly fails or refuses to follow reasonable policies or directives
established by Company after written notice from Company, and a reasonable
opportunity by Employee to cure the failures or refusals; (iii) willfully and
persistently fails to attend to the material duties or obligations imposed upon
Employee under this Agreement after written notice from Company and a reasonable
opportunity by Employee to cure the failure; (iv) performs an act or fails to
act, which, if Employee were prosecuted and convicted, would constitute a felony
involving $1,000 or more of money or property of Company; or (v) intentionally
misrepresents or conceals a material fact for purposes of securing employment
with Company or this Agreement.
If this Agreement and Employee's employment are terminated by
Company for Cause, Employee will receive no Severance Benefits.
(b) Termination Without Cause. Company also may terminate this
Agreement and Employee's employment at any time or elect to not renew this
Agreement at the end of any Term without Cause by giving at least 30 days prior
written notice to Employee. In the event Company elects to not renew this
Agreement at the end of any Term, without Cause, Employee is not entitled to
receive Severance Benefits pursuant to Section 9.
7. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement and his employment with
Company at any time by giving 90 days written notice to Company. If Employee
terminates this Agreement and Employee's employment, Employee is not entitled to
receive Severance Benefits.
8. DEATH OR DISABILITY.
This Agreement will terminate automatically on Employee's death. Any
salary or other amounts due to Employee for services rendered prior to
Employee's death will be
<PAGE> 4
paid to Employee's surviving spouse, or if Employee does not leave a surviving
spouse, to Employee's estate. No other benefits will be paid to Employee's
estate or heirs under this Agreement, but amounts may be payable pursuant to any
life insurance or other benefit plans maintained in whole or in part by Company
for the benefit of Employee, his estate, or heirs.
Employee is considered "Disabled" or to be suffering from a
"Disability" for purposes of this Section 8 if, in the reasonable, good faith
judgment of a licensed physician selected by the Board, Employee is unable to
perform the essential functions of Employee position required under this
Agreement for a period of 90 consecutive business days, with or without
reasonable accommodations, because of a physical or mental impairment. Any
dispute relating to the existence of a Disability will be resolved by the
opinion of the licensed physician selected by the Board, provided, however, that
if Employee does not accept the opinion of the licensed physician selected by
Company, the dispute will be resolved by the opinion of a licensed physician
selected by Employee; provided further, however, that if Company does not accept
the opinion of the licensed physician selected by Employee, the dispute will be
finally resolved by the opinion of a licensed physician selected by the
physicians selected by Company and Employee.
9. SEVERANCE BENEFITS.
If this Agreement and Employee's employment with Company are
terminated without Cause pursuant to Section 6(b), Employee will receive the
"Severance Benefits" as provided by this Section. The Severance Benefits will
equal the number of whole months of Employee's base salary remaining from the
date of termination of employment to the expiration of the Term of this
Agreement (as defined in Section 5) and will be payable over that number of
months in accordance with Company's payroll practices. The Employee's right to
<PAGE> 5
elect to continue coverage under the Company's group health plans pursuant to
Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as
amended, will commence following his termination of employment with Company.
Employee has no duty to mitigate damages in order to receive the
benefits provided by this Section.
No Severance Benefits will be paid in the event of Employee's death
or disability while actively employed by Company.
10. CONFIDENTIALLY AND NON-DISCLOSURE.
During the course of Employee's employment, Employee will become
exposed to a substantial amount of confidential and proprietary information,
including, but not limited to financial information, annual reports, audited and
unaudited financial reports, strategic plans, business plans, marketing
strategies, new business strategies, personnel and compensation information, and
other such reports, documents, or information. If Employee's employment with
Company is terminated by either party for any, reason, Employee will return to
Company and Employee will not take, any copies of such documents, computer
print-outs, computer tapes, floppy disks, CD ROMS, etc., in any form, format, or
manner whatsoever, nor will Employee disclose this information in whole or in
part to any person or entity, in any manner either directly or indirectly.
Excluded from this Agreement is information that is already disclosed to third
parties and is in the public domain or that Company consents to be disclosed in
writing. The provisions of this Section 10 will survive the termination of this
Agreement.
11. EMPLOYEE COVENANTS.
<PAGE> 6
(a) Interests to be Protected. The parties acknowledge that during
the Term, Employee will perform essential functions for Company, its employees
and shareholders, and for customers of Company. Therefore, Employee will be
given an opportunity to meet, work with, and develop close working relationships
with Company's clients on a first-hand basis and will gain valuable insight as
to the clients' operations, personnel, and need for services. In addition,
Employee will have access to, and be required to work with, a considerable
amount of Company's confidential and proprietary information, including but not
limited to information concerning Company's methods of operation, financial
information, strategic planning, operational budgets and strategies, payroll
data, management systems programs, computer systems, marketing plans and
strategies, merger and acquisition strategies, and customer lists.
The parties acknowledge that this covenant has an extended duration;
however, they agree that this covenant is reasonable and that it is necessary to
protect Company, its shareholders and employees.
For these and other reasons, and the fact that there are many other
employment opportunities available to Employee if Employee should terminate, the
parties are in full and complete agreement that the following covenants are fair
and reasonable and are freely, voluntarily, and knowingly entered into. Further,
each party has been given the opportunity to consult with independent legal
counsel before entering into this Agreement.
(b) Devotion to Employment. Employee will devote substantially all
of Employee's business time and best efforts to the performance of Employee's
duties on behalf of Company. During the term of employment, Employee will not at
any time or place or to any extent whatsoever, either directly or indirectly,
without the express written consent of Company,
<PAGE> 7
engage in any outside employment, or in any activity competitive with or adverse
to Company's business, practice or affairs, whether alone or as partner,
officer, director, employee, shareholder of any corporation, or as a trustee,
fiduciary, consultant, or other representative. This is not intended to prohibit
Employee from engaging in nonprofessional activities such as personal
investments or conducting to a reasonable extent private business affairs which
may include other boards of directors' activity, as long as they do not conflict
with Company. Participation to a reasonable extent in civic, social, or
community activities is encouraged.
(c) Notification and Disclosure. Employee will promptly and fully
disclose to Company in writing, whether or not requested by Company, any and all
ideas, improvements, discoveries, inventions, trademarks, proprietary
information, know-how, processes, or other developments or improvements
(collectively, the "Inventions"), whether or not Employee believes them to be
patentable, that relate to the business of Company now or hereafter engaged in,
that Employee conceives or first actually reduces to a plan, practice, or
device, either individually or jointly with others, during the term of
Employee's employment with Company, or within the period ending six moths after
the termination thereof, and that relate to the business of Company now or
hereafter engaged in, resulting from or arising out of Employee's use of
Company's equipment, supplies, facilities, or trade secret information that
result from any work performed by employee in his capacity as an employee of
Company, whether conceived or developed during Company's business hours or
otherwise. Employee will keep current, accurate, and complete records of all
Inventions, which records will belong to Company and at all times be kept and
stored on Company's premises.
<PAGE> 8
(d) Ownership and Patenting of Inventions. The Inventions will be
the sole and exclusive property of Company. During the term of Employee's
employment by Company and at any time thereafter, Employee, at any time upon the
requests of Company, will execute and deliver an assignment or assignments of
any and all applications, plans, devices, and other uses relating to the
Inventions that Company deems necessary or convenient to apply for, obtain, or
maintain patents of the United States, and any other foreign countries, for the
Inventions and to assign and convey to Company or its nominee the sole and
exclusive right, title, and interest in and to the Inventions. Employee will
provide any and all aid and assistance deemed necessary by Company to protect
Company's interest in the Inventions with respect to any disputes arising out of
any unauthorized use or infringement of the Inventions or any patents issued in
relation thereto.
(e) Judicial Amendment. If the scope of any provision of this
Section 11 is found by a court of competent jurisdiction to be too broad to
permit enforcement to its full extent, the provision will be enforced to the
maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, it will not affect the validity of the
remaining provisions of this Agreement.
(f) Injunctive Relief Damages and Forfeiture. Due to the nature of
Employee's position with Company, and with full realization that a violation of
this Agreement will cause immediate and irreparable injury and damage, which is
not readily measurable, and to
<PAGE> 9
protect Company's interests, Employee understands and agrees that in addition to
instituting legal proceedings to recover damages resulting from a breach of this
Agreement, Company may seek to enforce this Agreement with an action for
injunctive relief to cease or prevent any actual or threatened violation of this
Agreement on the part of Employee.
(g) Survival. The provisions of this Section 11, will survive the
termination of this Agreement.
12. AMENDMENTS.
This Agreement constitutes the entire agreement between the parties
as to the subject matter hereof. Accordingly, there are no side agreements or
verbal agreements other than those that are stated in this document. Any
amendment, modification, or change in this Agreement must be done so in writing
and signed by both parties.
13. SEVERABILITY.
If a court or arbitrator declares that any provision of this
Agreement is invalid or unenforceable, it will not affect or invalidate any of
the remaining provisions. Further, the court has the authority to re-write that
portion of the Agreement it deems unenforceable, to make it enforceable.
14. GOVERNING LAW.
The law of the State of California will govern the interpretation
and application of all of the provisions of this Agreement.
15. INDEMNITY.
(a) General. Company will, to the fullest extent authorized by
applicable law, indemnify and hold harmless Employee in any threatened, pending
or completed
<PAGE> 10
action, suit or proceeding, whether civil, criminal, administrative, or
investigative against expenses, liabilities, and losses (including attorneys'
fees, judgments, fines, excise taxes, or penalties and amounts paid in
settlement) reasonably incurred or suffered by Employee.
(b) Expenses. This right to indemnification includes the right to be
paid by Company the expenses (including attorneys' fees) incurred in defending
any such proceeding in advance of its final disposition; provided, however,
that, if applicable law requires, an advancement of expenses incurred by
Employee will be made only if Employee agrees to repay all amounts so advanced
if it is ultimately determined by final judicial decision from which there is no
further right to appeal that Employee is not entitled to be indemnified for such
expenses. The rights to indemnification and to the advancement of expenses are
contract rights and such rights will continue as to Employee after his
termination of employment and will inure to the benefit of the Indemnitee's
heirs, executors and administrators.
(c) Claims for Indemnification or Expenses. If a claim under either
(a) or (b) above is not paid in full by Company within 60 days after Company
receives a written claim, except in the case of a claim for an advancement of
expenses, in which case the applicable period is 20 days, Employee may at any
time thereafter bring suit against Company to recover the unpaid amount of the
claim. If successful in whole or in part in any such suit, Employee is entitled
to be paid the expense of prosecuting or defending such suit. In any suit
brought by the Employee to enforce a right to indemnification or to an
advancement of expenses hereunder, or brought by Company to recover an
advancement of expenses, the burden of proving that Employee is not entitled to
be indemnified, or to such advancement of expenses, is on Company.
16. DISPUTE RESOLUTION.
<PAGE> 11
(a) Mediation. Any and all disputes arising under, pertaining to or
touching upon this Agreement (excepting the confidentiality and non-disclosure
provisions of Section 10 hereof, and the provisions of Section 11 hereof), or
the statutory rights or obligations of either party hereto, will, if not settled
by negotiation, be subject to non-binding mediation before an independent
mediator selected by the parties pursuant to Section 16(d) below. Any demand for
mediation must be made in writing party to the dispute, by certified mail,
return receipt requested, at the business address, or at the last known
residence address, of Employee. The demand must set forth with reasonable
specificity the basis of the dispute and the relief sought. The mediation
hearing will occur at a time and place convenient to the parties in Maricopa
County, Arizona, within 30 days of the date of selection or appointment of the
mediator and will be governed by the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association ("AAA").
(b) Arbitration. If the dispute is not settled through mediation,
the parties will proceed to binding arbitration before a single independent
arbitrator selected pursuant to Section 16(d). The mediator shall not serve as
arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL EMPLOYMENT DISCRIMINATION
TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY, OR ALLEGED EMPLOYMENT TORT
COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY INCLUDING CLAIMS OF
VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR PUBLIC POLICY, SHALL
BE RESOLVED PURSUANT TO THIS POLICY AND THERE SHALL BE NO RECOURSE TO COURT,
WITH OR WITHOUT A JURY TRIAL. The arbitration hearing will occur at a time and
<PAGE> 12
place convenient to the parties in Alameda County, California, within 30 days of
selection or appointment of the arbitrator. If Company has adopted a policy that
applies to arbitrations with Employees, the arbitration will be conducted in
accordance with the policy to the extent that the policy is consistent with this
Agreement and the Federal Arbitration Act, 9 U.S.C. Sections 1-16. If no
policy has been adopted, the arbitration will be governed by the National Rules
for the Resolution of Employment Disputes of the AAA. The arbitrator will issue
written findings of fact and conclusions of law, and an award, within 15 days of
the date of the hearing unless the parties otherwise agree.
(c) Damages. In cases of breach of contract or policy, damages will
be limited to contract damages. In cases of intentional discrimination claims
prohibited by statute, the arbitrator may direct payment consistent with 42
U.S.C. Section 1981(a) and the Civil Rights Act of 1991. In cases of employment
tort, the arbitrator may award punitive damages if proved by clear and
convincing evidence. Any award of punitive damages will not exceed two times any
compensatory award and in any event, will not exceed $250,000. The arbitrator
may award fees to the prevailing party and assess costs of the arbitration to
the non-prevailing party. Issues of procedure, arbitrability, or confirmation of
award will be governed by the Federal Arbitration Act, 9 U.S.C. Sections
1-16, except that court review of the arbitrator's award will be that of an
appellate court reviewing a decision of a trial judge sitting without a jury.
(d) Selection of Mediators or Arbitrators. The parties will select
the mediator or arbitrator form a panel list made available by the AAA. If the
parties are unable to agree to a mediator or arbitrator within 10 days of
receipt of a demand for mediation or
<PAGE> 13
arbitration, the mediator or arbitrator will be chosen by alternatively striking
from a list of five mediators or arbitrators obtained by Company from AAA.
Employee will have the first strike.
<PAGE> 14
IN WITNESS WHEREOF, Company and Employee have executed this
Agreement effective on the date set forth above.
OZ TECHNOLOGIES, INC.
By:
----------------------------------
Name:
----------------------------------
Its:
----------------------------------
"EMPLOYEE"
---------------------------------------
Nasser Barabi
<PAGE> 1
Exhibit 5
EMPLOYMENT AGREEMENT
This Employment Agreement ("Agreement") is made this 3rd day
of December, 1999, by and between Iraj Barabi ("Employee") and Oz Technologies,
Inc., a California corporation ("Company"), effective December 6, 1999
("Effective Date").
Company wishes to retain the services of Employee pursuant to
this Employment Agreement, the terms and provisions of which are set forth
below.
1. POSITION AND DUTIES.
During the Term (as defined in Section 5) Employee
will be employed by Company as its Director of Operations and will perform those
duties as from time to time determined by the Board of Directors of Company
("Board") or Company's CEO in accordance with the policies, practices, and
bylaws of Company.
Employee will serve Company faithfully, loyally,
honestly, and to the best of Employee's ability. Employee will devote Employee's
best efforts and substantially all of the Employee's business time to the
performance of Employee's duties for, and in the business and affairs of,
Company.
The Board reserves the right, in its sole discretion,
to change or modify Employee's position, title, and duties during the Term of
this Agreement.
2. BASE SALARY.
During the Term of this Agreement, Employee's base
salary will be $175,000, payable in accordance with Company's customary payroll
practice. Employee's base salary will be reviewed annually by the Board in
accordance with Company's compensation review policies and practices, all as
determined by Company in its discretion.
<PAGE> 2
3. INCENTIVE COMPENSATION.
Employee is eligible to participate in any
performance-based incentive compensation program that the Board establishes for
Employee, as well as any performance-based incentive compensation program
established from time to time for other employees of Company in the same or
similar job classification.
4. BENEFIT PLANS.
Employee will be entitled to be eligible to
participate in all employee benefit plans, including, but not limited to,
retirement plans, life insurance plans, and health and dental plans available to
other Company employees, subject to restrictions (including waiting periods)
specified in the applicable Plan.
Employee is entitled to four weeks of paid vacation
per calendar year, with such vacation to be scheduled and taken in accordance
with Company's standard vacation policies.
5. TERM AND TERMINATION.
The "Term" of this Agreement shall begin on the
Effective Date and will expire by its terms on December 6, 2001, unless sooner
terminated in accordance with this Agreement. [NASSER AND IRAJ - 2 YEARS; ALL
OTHERS - 1 YEAR].
6. TERMINATION BY COMPANY.
(a) Termination For Cause. Company may terminate this
Agreement and Employee's employment for Cause at any time upon written notice.
For purposes of this Agreement, "Cause" is limited to discharge resulting from a
determination by Company that Employee: (i) is convicted of a felony involving
dishonesty, fraud, theft, or embezzlement; (ii)
<PAGE> 3
repeatedly fails or refuses to follow reasonable policies or directives
established by Company after written notice from Company, and a reasonable
opportunity by Employee to cure the failures or refusals; (iii) willfully and
persistently fails to attend to the material duties or obligations imposed upon
Employee under this Agreement after written notice from Company and a reasonable
opportunity by Employee to cure the failure; (iv) performs an act or fails to
act, which, if Employee were prosecuted and convicted, would constitute a felony
involving $1,000 or more of money or property of Company; or (v) intentionally
misrepresents or conceals a material fact for purposes of securing employment
with Company or this Agreement.
If this Agreement and Employee's employment are
terminated by Company for Cause, Employee will receive no Severance Benefits.
(b) Termination Without Cause. Company also may
terminate this Agreement and Employee's employment at any time or elect to not
renew this Agreement at the end of any Term without Cause by giving at least 30
days prior written notice to Employee. In the event Company elects to not renew
this Agreement at the end of any Term, without Cause, Employee is not entitled
to receive Severance Benefits pursuant to Section 9.
7. TERMINATION BY EMPLOYEE.
Employee may terminate this Agreement and his
employment with Company at any time by giving 90 days written notice to Company.
If Employee terminates this Agreement and Employee's employment, Employee is not
entitled to receive Severance Benefits.
8. DEATH OR DISABILITY.
This Agreement will terminate automatically on
Employee's death. Any salary or other amounts due to Employee for services
rendered prior to Employee's death will be
<PAGE> 4
paid to Employee's surviving spouse, or if Employee does not leave a surviving
spouse, to Employee's estate. No other benefits will be paid to Employee's
estate or heirs under this Agreement, but amounts may be payable pursuant to any
life insurance or other benefit plans maintained in whole or in part by Company
for the benefit of Employee, his estate, or heirs.
Employee is considered "Disabled" or to be suffering
from a "Disability" for purposes of this Section 8 if, in the reasonable, good
faith judgment of a licensed physician selected by the Board, Employee is unable
to perform the essential functions of Employee position required under this
Agreement for a period of 90 consecutive business days, with or without
reasonable accommodations, because of a physical or mental impairment. Any
dispute relating to the existence of a Disability will be resolved by the
opinion of the licensed physician selected by the Board, provided, however, that
if Employee does not accept the opinion of the licensed physician selected by
Company, the dispute will be resolved by the opinion of a licensed physician
selected by Employee; provided further, however, that if Company does not accept
the opinion of the licensed physician selected by Employee, the dispute will be
finally resolved by the opinion of a licensed physician selected by the
physicians selected by Company and Employee.
9. SEVERANCE BENEFITS.
If this Agreement and Employee's employment with
Company are terminated without Cause pursuant to Section 6(b), Employee will
receive the "Severance Benefits" as provided by this Section. The Severance
Benefits will equal the number of whole months of Employee's base salary
remaining from the date of termination of employment to the expiration of the
Term of this Agreement (as defined in Section 5) and will be payable over that
number of months in accordance with Company's payroll practices. The Employee's
right to
<PAGE> 5
elect to continue coverage under the Company's group health plans pursuant to
Section 601 et seq. of the Employee Retirement Income Security Act of 1974, as
amended, will commence following his termination of employment with Company.
Employee has no duty to mitigate damages in order to
receive the benefits provided by this Section.
No Severance Benefits will be paid in the event of
Employee's death or disability while actively employed by Company.
10. CONFIDENTIALLY AND NON-DISCLOSURE.
During the course of Employee's employment, Employee
will become exposed to a substantial amount of confidential and proprietary
information, including, but not limited to financial information, annual
reports, audited and unaudited financial reports, strategic plans, business
plans, marketing strategies, new business strategies, personnel and compensation
information, and other such reports, documents, or information. If Employee's
employment with Company is terminated by either party for any, reason, Employee
will return to Company and Employee will not take, any copies of such documents,
computer print-outs, computer tapes, floppy disks, CD ROMS, etc., in any form,
format, or manner whatsoever, nor will Employee disclose this information in
whole or in part to any person or entity, in any manner either directly or
indirectly. Excluded from this Agreement is information that is already
disclosed to third parties and is in the public domain or that Company consents
to be disclosed in writing. The provisions of this Section 10 will survive the
termination of this Agreement.
11. EMPLOYEE COVENANTS.
<PAGE> 6
(a) Interests to be Protected. The parties
acknowledge that during the Term, Employee will perform essential functions for
Company, its employees and shareholders, and for customers of Company.
Therefore, Employee will be given an opportunity to meet, work with, and develop
close working relationships with Company's clients on a first-hand basis and
will gain valuable insight as to the clients' operations, personnel, and need
for services. In addition, Employee will have access to, and be required to work
with, a considerable amount of Company's confidential and proprietary
information, including but not limited to information concerning Company's
methods of operation, financial information, strategic planning, operational
budgets and strategies, payroll data, management systems programs, computer
systems, marketing plans and strategies, merger and acquisition strategies, and
customer lists.
The parties acknowledge that this covenant has an
extended duration; however, they agree that this covenant is reasonable and that
it is necessary to protect Company, its shareholders and employees.
For these and other reasons, and the fact that there
are many other employment opportunities available to Employee if Employee should
terminate, the parties are in full and complete agreement that the following
covenants are fair and reasonable and are freely, voluntarily, and knowingly
entered into. Further, each party has been given the opportunity to consult with
independent legal counsel before entering into this Agreement.
(b) Devotion to Employment. Employee will devote
substantially all of Employee's business time and best efforts to the
performance of Employee's duties on behalf of Company. During the term of
employment, Employee will not at any time or place or to any extent whatsoever,
either directly or indirectly, without the express written consent of Company,
<PAGE> 7
engage in any outside employment, or in any activity competitive with or adverse
to Company's business, practice or affairs, whether alone or as partner,
officer, director, employee, shareholder of any corporation, or as a trustee,
fiduciary, consultant, or other representative. This is not intended to prohibit
Employee from engaging in nonprofessional activities such as personal
investments or conducting to a reasonable extent private business affairs which
may include other boards of directors' activity, as long as they do not conflict
with Company. Participation to a reasonable extent in civic, social, or
community activities is encouraged.
(c) Notification and Disclosure. Employee will
promptly and fully disclose to Company in writing, whether or not requested by
Company, any and all ideas, improvements, discoveries, inventions, trademarks,
proprietary information, know-how, processes, or other developments or
improvements (collectively, the "Inventions"), whether or not Employee believes
them to be patentable, that relate to the business of Company now or hereafter
engaged in, that Employee conceives or first actually reduces to a plan,
practice, or device, either individually or jointly with others, during the term
of Employee's employment with Company, or within the period ending six moths
after the termination thereof, and that relate to the business of Company now or
hereafter engaged in, resulting from or arising out of Employee's use of
Company's equipment, supplies, facilities, or trade secret information that
result from any work performed by employee in his capacity as an employee of
Company, whether conceived or developed during Company's business hours or
otherwise. Employee will keep current, accurate, and complete records of all
Inventions, which records will belong to Company and at all times be kept and
stored on Company's premises.
<PAGE> 8
(d) Ownership and Patenting of Inventions. The
Inventions will be the sole and exclusive property of Company. During the term
of Employee's employment by Company and at any time thereafter, Employee, at any
time upon the requests of Company, will execute and deliver an assignment or
assignments of any and all applications, plans, devices, and other uses relating
to the Inventions that Company deems necessary or convenient to apply for,
obtain, or maintain patents of the United States, and any other foreign
countries, for the Inventions and to assign and convey to Company or its nominee
the sole and exclusive right, title, and interest in and to the Inventions.
Employee will provide any and all aid and assistance deemed necessary by Company
to protect Company's interest in the Inventions with respect to any disputes
arising out of any unauthorized use or infringement of the Inventions or any
patents issued in relation thereto.
(e) Judicial Amendment. If the scope of any provision
of this Section 11 is found by a court of competent jurisdiction to be too broad
to permit enforcement to its full extent, the provision will be enforced to the
maximum extent permitted by law. The parties agree that the scope of any
provision of this Agreement may be modified by a judge in any proceeding to
enforce this Agreement, so that such provision can be enforced to the maximum
extent permitted by law. If any provision of this Agreement is found to be
invalid or unenforceable for any reason, it will not affect the validity of the
remaining provisions of this Agreement.
(f) Injunctive Relief Damages and Forfeiture. Due to
the nature of Employee's position with Company, and with full realization that a
violation of this Agreement will cause immediate and irreparable injury and
damage, which is not readily measurable, and to
<PAGE> 9
protect Company's interests, Employee understands and agrees that in addition to
instituting legal proceedings to recover damages resulting from a breach of this
Agreement, Company may seek to enforce this Agreement with an action for
injunctive relief to cease or prevent any actual or threatened violation of this
Agreement on the part of Employee.
(g) Survival. The provisions of this Section 11, will
survive the termination of this Agreement.
12. AMENDMENTS.
This Agreement constitutes the entire agreement
between the parties as to the subject matter hereof. Accordingly, there are no
side agreements or verbal agreements other than those that are stated in this
document. Any amendment, modification, or change in this Agreement must be done
so in writing and signed by both parties.
13. SEVERABILITY.
If a court or arbitrator declares that any provision
of this Agreement is invalid or unenforceable, it will not affect or invalidate
any of the remaining provisions. Further, the court has the authority to
re-write that portion of the Agreement it deems unenforceable, to make it
enforceable.
14. GOVERNING LAW.
The law of the State of California will govern the
interpretation and application of all of the provisions of this Agreement.
15. INDEMNITY.
(a) General. Company will, to the fullest extent
authorized by applicable law, indemnify and hold harmless Employee in any
threatened, pending or completed
<PAGE> 10
action, suit or proceeding, whether civil, criminal, administrative, or
investigative against expenses, liabilities, and losses (including attorneys'
fees, judgments, fines, excise taxes, or penalties and amounts paid in
settlement) reasonably incurred or suffered by Employee.
(b) Expenses. This right to indemnification includes
the right to be paid by Company the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if applicable law requires, an advancement of expenses
incurred by Employee will be made only if Employee agrees to repay all amounts
so advanced if it is ultimately determined by final judicial decision from which
there is no further right to appeal that Employee is not entitled to be
indemnified for such expenses. The rights to indemnification and to the
advancement of expenses are contract rights and such rights will continue as to
Employee after his termination of employment and will inure to the benefit of
the Indemnitee's heirs, executors and administrators.
(c) Claims for Indemnification or Expenses. If a
claim under either (a) or (b) above is not paid in full by Company within 60
days after Company receives a written claim, except in the case of a claim for
an advancement of expenses, in which case the applicable period is 20 days,
Employee may at any time thereafter bring suit against Company to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
Employee is entitled to be paid the expense of prosecuting or defending such
suit. In any suit brought by the Employee to enforce a right to indemnification
or to an advancement of expenses hereunder, or brought by Company to recover an
advancement of expenses, the burden of proving that Employee is not entitled to
be indemnified, or to such advancement of expenses, is on Company.
16. DISPUTE RESOLUTION.
<PAGE> 11
(a) Mediation. Any and all disputes arising under,
pertaining to or touching upon this Agreement (excepting the confidentiality and
non-disclosure provisions of Section 10 hereof, and the provisions of Section 11
hereof), or the statutory rights or obligations of either party hereto, will, if
not settled by negotiation, be subject to non-binding mediation before an
independent mediator selected by the parties pursuant to Section 16(d) below.
Any demand for mediation must be made in writing party to the dispute, by
certified mail, return receipt requested, at the business address, or at the
last known residence address, of Employee. The demand must set forth with
reasonable specificity the basis of the dispute and the relief sought. The
mediation hearing will occur at a time and place convenient to the parties in
Maricopa County, Arizona, within 30 days of the date of selection or appointment
of the mediator and will be governed by the National Rules for the Resolution of
Employment Disputes of the American Arbitration Association ("AAA").
(b) Arbitration. If the dispute is not settled
through mediation, the parties will proceed to binding arbitration before a
single independent arbitrator selected pursuant to Section 16(d). The mediator
shall not serve as arbitrator. ALL DISPUTES INVOLVING ALLEGED UNLAWFUL
EMPLOYMENT DISCRIMINATION TERMINATION BY ALLEGED BREACH OF CONTRACT OR POLICY,
OR ALLEGED EMPLOYMENT TORT COMMITTED BY COMPANY OR A REPRESENTATIVE OF COMPANY
INCLUDING CLAIMS OF VIOLATIONS OF FEDERAL OR STATE DISCRIMINATION STATUTES OR
PUBLIC POLICY, SHALL BE RESOLVED PURSUANT TO THIS POLICY AND THERE SHALL BE NO
RECOURSE TO COURT, WITH OR WITHOUT A JURY TRIAL. The arbitration hearing will
occur at a time and
<PAGE> 12
place convenient to the parties in Alameda County, California, within 30 days of
selection or appointment of the arbitrator. If Company has adopted a policy that
applies to arbitrations with Employees, the arbitration will be conducted in
accordance with the policy to the extent that the policy is consistent with this
Agreement and the Federal Arbitration Act, 9 U.S.C. Sections 1-16. If no
policy has been adopted, the arbitration will be governed by the National Rules
for the Resolution of Employment Disputes of the AAA. The arbitrator will issue
written findings of fact and conclusions of law, and an award, within 15 days of
the date of the hearing unless the parties otherwise agree.
(c) Damages. In cases of breach of contract or
policy, damages will be limited to contract damages. In cases of intentional
discrimination claims prohibited by statute, the arbitrator may direct payment
consistent with 42 U.S.C. Section 1981(a) and the Civil Rights Act of 1991. In
cases of employment tort, the arbitrator may award punitive damages if proved by
clear and convincing evidence. Any award of punitive damages will not exceed two
times any compensatory award and in any event, will not exceed $250,000. The
arbitrator may award fees to the prevailing party and assess costs of the
arbitration to the non-prevailing party. Issues of procedure, arbitrability, or
confirmation of award will be governed by the Federal Arbitration Act, 9 U.S.C.
Sections 1-16, except that court review of the arbitrator's award will be
that of an appellate court reviewing a decision of a trial judge sitting without
a jury.
(d) Selection of Mediators or Arbitrators. The
parties will select the mediator or arbitrator form a panel list made available
by the AAA. If the parties are unable to agree to a mediator or arbitrator
within 10 days of receipt of a demand for mediation or
<PAGE> 13
arbitration, the mediator or arbitrator will be chosen by alternatively striking
from a list of five mediators or arbitrators obtained by Company from AAA.
Employee will have the first strike.
<PAGE> 14
IN WITNESS WHEREOF, Company and Employee have executed this
Agreement effective on the date set forth above.
OZ TECHNOLOGIES, INC.
By: ___________________________________
Name:__________________________________
Its: __________________________________
"EMPLOYEE"
_______________________________________
Iraj Barabi
<PAGE> 1
Exhibit 6
CONSULTING AGREEMENT
THIS CONSULTING AGREEMENT (the "Agreement") is made this 3rd day of
December, 1999, by and between C-MA International, Ltd. ("Consultant") and Oz
Technologies, Inc. ("Company").
In consideration of the mutual promises set forth herein, the
sufficiency of which is hereby acknowledged by each of the parties hereto, the
parties hereby agree as follows:
1. CONSULTING SERVICES. Consultant hereby agrees to provide and perform
for the benefit of Company certain financial and administrative consulting
services (the "Services"), or those requested by Company and approved by the
Consultant and Company hires and engages Consultant to provide Services.
2. CONSIDERATION FOR SERVICES. As consideration for each Services,
Company shall pay Consultant an amount equal to $100 per hour multiplied by the
number of hours worked by Consultant in the performance of such Services
provided, however, that Consultant will be guaranteed at least 120 hours per
month during the term of this Agreement. Company will be under no obligation to
pay or reimburse Consultant for any additional services or for any costs or
expenses incurred in connection with the Services, except upon Company's prior
written approval.
3. COMPLETION OF TASKS; TERM OF AGREEMENT. The term of this Agreement
shall commence on December 6, 1999, and shall end on March 6, 2001. However,
Company has the right to terminate this Agreement for "Cause." For purposes of
this Agreement, Cause shall mean Consultant is discharged resulting from a
determination by Company that Consultant: (i) is convicted of a felony involving
dishonesty, fraud, theft, or
<PAGE> 2
embezzlement; (ii) repeatedly fails or refuses to follow reasonable policies or
directives established by Company after written notice from Company, and a
reasonable opportunity by Consultant to cure the failures or refusals; (iii)
willfully and persistently fails to attend to the material duties or obligations
imposed upon Consultant under this Agreement after written notice from Company
and a reasonable opportunity by Consultant to cure the failure; (iv) performs an
act or fails to act, which, if Consultant were prosecuted and convicted, would
constitute a felony involving $1,000 or more of money or property of Company; or
(v) intentionally misrepresents or conceals a material fact for purposes of
securing services with Company or this Agreement.
4. BILLING FOR SERVICES. Consultant will submit invoices to Company
each month for the actual number of hours worked during the previous month, and
for any costs or expenses previously authorized by Company. The invoice should
include a breakdown of each of the Services provided to Company, the per hour
dollar rate charged for each of such Services, the number of hours worked during
such time period for each of such Services, an itemization of all such costs and
expenses, and any other information that Company may request provided, however,
that Consultant will be guaranteed at last 100 hours per month during the term
of this Agreement. Company shall make payment for all such charges incurred in
accordance with the terms of this Agreement and properly reflected in such
invoice to the Consultant within ten (10) business days after the receipt of
each invoice.
5. CHANGE OF CONTROL PAYMENT. In the event of a "Change of Control,"
Consultant shall receive a payment from Company equal to the number of months
remaining on the Agreement multiplied by $12,000. Consultant shall also receive
a pro rata payment for any partial month. The Company shall pay such payment in
a lump sum to
-2-
<PAGE> 3
Consultant within ten (10) days of the date of the Change of Control event. For
purposes of this Agreement, Change of Control shall mean and include the
following transactions or situations:
(a) A sale, transfer, or other disposition by Cerprobe
Corporation ("Cerprobe") through a single transaction or a series of
transactions of securities of Cerprobe representing 30% or more of the combined
voting power of Cerprobe's then outstanding securities to any "Unrelated Person"
or "Unrelated Persons" acting in concert with one another. For purposes of this
Section, the term "Person" shall mean and include any individual, partnership,
joint venture, association, trust, corporation, or other entity (including a
"group" as referred to in Section 13(d)(3) of the Securities Exchange Act of
1934 (the "Act")). For purposes of this Section, the term "Unrelated Person"
shall mean and include any Person other than the Company, or an Consultant
benefit Plan of the Company.
(b) A sale, transfer, or other disposition through a single
transaction or a series of transactions of all or substantially all of the
assets of Cerprobe to an Unrelated Person or Unrelated Persons acting in concert
with one another.
(c) A change in the ownership of Cerprobe through a single
transaction or a series of transactions such that any Unrelated Person or
Unrelated Persons acting in concert with one another become the "Beneficial
Owner," directly or indirectly, of securities of Cerprobe representing at least
30% of the combined voting power of Cerprobe's then outstanding securities. For
purposes of this Section, the term "Beneficial Owner" shall have the same
meaning as given to that term in Rule 13d-3 promulgated under the Act, provided
that any pledgee of voting securities shall not be deemed to be the Beneficial
Owner thereof prior to its acquisition of voting rights with respect to such
securities.
-3-
<PAGE> 4
(d) Any consolidation or merger of Cerprobe with or into an
Unrelated Person, unless immediately after the consolidation or merger the
holders of the common stock of Cerprobe immediately prior to the consolidation
or merger are the Beneficial Owners of securities of the surviving corporation
representing at least 50% of the combined voting power of the surviving
corporation's then outstanding securities.
(e) During any period of two (2) years, individuals who, at
the beginning of such period, constituted the Board of Directors of Cerprobe
cease, for any reason, to constitute at least a majority thereof, unless the
election or nomination for election of each new director was approved by the
vote of at least two-thirds (2/3) of the directors then still in office who were
directors at the beginning of such period.
(f) A change in control of Cerprobe of a nature that would be
required to be reported in response to Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Act, or any successor regulation of similar import,
regardless of whether Cerprobe is subject to such reporting requirement.
Notwithstanding any provision herein to the contrary, the filing of a
proceeding for the reorganization of Cerprobe under Chapter 11 of the Federal
Bankruptcy Code or any successor or other statute of similar import shall not be
deemed to be a Change of Control for purpose of this Agreement.
6. INDEPENDENT CONTRACTOR STATUS. The relationship of Consultant to
Company is that of an independent contractor, and nothing herein shall be
construed or deemed as creating any other relationship. Without limiting the
foregoing, the relationship between the parties hereto shall not be deemed to be
that of an employer-employee,
-4-
<PAGE> 5
joint venture, or partnership. As an independent contractor, Consultant shall
have the sole responsibility for paying taxes, workers compensation, employee
benefits (if any), and all similar obligations, and shall be charged with
performing the Services and completing the Tasks in the way that Consultant
deems the most feasible or desirable in order to accomplish the Tasks in the
most efficient manner possible.
7. CONFIDENTIAL INFORMATION AND WORK FOR HIRE. Consultant and Company
hereby acknowledge and agree that in connection with the performance of the
Services set forth herein, Consultant shall be provided with or shall otherwise
be exposed to or receive certain confidential and/or proprietary information of
Company or of third parties and may develop certain products, services, methods,
know-how, procedures, formulae, processes, specifications, and information of a
similar nature that relate to the Services rendered hereunder. Consultant
therefore agrees not to disclose such information at any time unless authorized
by Company or required by law.
8. AUDIT AND RECORDS. Consultant shall keep accurate records and books
of account showing all charges, disbursements, and expenses made or incurred by
Consultant in the performance of the Services. Company shall have the right,
upon reasonable notice, to audit at any time up to one year after payment of its
final invoice, the direct costs, expenses, and disbursements made with respect
to the performance of the Services.
9. TITLE TO MATERIALS AND EQUIPMENT. All materials and equipment
furnished by Company and all materials and equipment the cost of which shall be
reimbursed to Consultant by Company hereunder are to be and remain the sole
property of Company and are to be returned to Company within thirty (30) days of
the expiration or earlier
-5-
<PAGE> 6
termination of this Agreement, or within ten (10) days after written demand by
Company, whichever first occurs.
10. NOTIFICATION AND DISCLOSURE. Consultant will promptly and fully
disclose to Company in writing, whether or not requested by Company, any and all
ideas, improvements, discoveries, inventions, trademarks, proprietary
information, know-how, processes, or other developments or improvements
(collectively, the "Inventions"), whether or not Consultant believes them to be
patentable, that relate to the business of Company now or hereafter engaged in,
that Consultant conceives or first actually reduces to a plan, practice, or
device, either individually or jointly with others, during the term of
Consultant's employment with Company, or within the period ending six moths
after the termination thereof, and that relate to the business of Company now or
hereafter engaged in, resulting from or arising out of Consultant's use of
Company's equipment, supplies, facilities, or trade secret information that
result from any work performed by Consultant in his or her capacity as service
provider for Company, whether conceived or developed during Company's business
hours or otherwise. Consultant will keep current, accurate, and complete records
of all Inventions, which records will belong to Company and at all times be kept
and stored on Company's premises.
11. OWNERSHIP AND PATENTING OF INVENTIONS. The Inventions will be the
sole and exclusive property of Company. During the term that Consultant is
providing services to Company and at any time thereafter, Consultant, at any
time upon the requests of Company, will execute and deliver an assignment or
assignments of any and all applications, plans, devices, and other uses relating
to the Inventions that Company deems necessary or convenient to apply for,
obtain, or maintain patents of the United States, and any other foreign
countries, for the Inventions and to assign and convey to Company or its nominee
-6-
<PAGE> 7
the sole and exclusive right, title, and interest in and to the Inventions.
Consultant will provide any and all aid and assistance deemed necessary by
Company to protect Company's interest in the Inventions with respect to any
disputes arising out of any unauthorized use or infringement of the Inventions
or any patents issued in relation thereto.
12. ASSIGNABILITY. This Agreement shall be binding upon and inure to
the benefit of the parties, their legal representatives, successors, and
assigns. This Agreement may not be assigned, transferred, conveyed, or
encumbered, whether voluntarily or by operation of law, by Consultant without
the prior written consent of Company (which may be granted or withheld in
Company's sole and absolute judgment).
13. AMENDMENTS, ETC. No modification, amendment, or waiver of any
provision of this Agreement shall be effective unless the same shall be in
writing and signed by each of the parties hereto. Any waiver of any provision of
this Agreement shall be effective only in the specific instance and for the
specific purpose for which given.
14. NO WAIVER; REMEDIES. No failure on the part of Company to exercise,
and no delay in exercising, any right, power, or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right hereunder preclude any other or further exercise thereof or the exercise
of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
15. GOVERNING LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the state of California.
-7-
<PAGE> 8
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first set forth above.
"OZ TECHNOLOGIES, INC."
By: _______________________
Its: _______________________
"C-MA INTERNATIONAL"
________________________________
<PAGE> 1
Exhibit 7
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
December 3, 1999 by NASSER BARABI (the "Stockholder") in favor of, and for the
benefit of, OZ TECHNOLOGIES, INC., a California corporation (the "Company"),
CERPROBE CORPORATION, a Delaware corporation (the "Purchaser"), and the other
"Indemnitees" (as hereinafter defined). Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 19.
RECITALS
A. As a direct or indirect stockholder and employee of the Company, the
Stockholder has obtained extensive and valuable knowledge and confidential
information concerning the businesses of the Company and its subsidiaries. (The
Company and its subsidiaries are referred to collectively herein as the
"Acquired Companies.")
B. Pursuant to a Stock Purchase Agreement dated as of December 3, 1999
among the Purchaser, the Company, the Stockholder, the other stockholders of the
Company, and certain trustees for certain trusts in which certain of the
stockholders of the Company hold their shares of the Company's common stock (the
"Purchase Agreement"), the Company's direct and indirect stockholders are
selling all of the outstanding stock of the Company to the Purchaser
contemporaneously with the execution and delivery of this Noncompetition
Agreement. As a result of the Purchaser's acquisition of all of the outstanding
stock of the Company, the Acquired Companies are becoming subsidiaries of the
Purchaser.
C. In connection with the acquisition by the Purchaser of all of the
outstanding stock of the Company pursuant to the Purchase Agreement (and as a
condition to the consummation of such acquisition), and to enable the Purchaser
to secure more fully the benefits of such acquisition, the Purchaser has
required that the Stockholder enter into this Noncompetition Agreement, and the
Stockholder is entering into this Noncompetition Agreement in order to induce
the Purchaser to consummate the acquisition contemplated by the Purchase
Agreement.
AGREEMENT
In order to induce the Purchaser to consummate the transactions contemplated by
the Purchase Agreement, and for other good and valuable consideration, the
Stockholder agrees as follows:
1. RESTRICTION ON COMPETITION. The Stockholder agrees that, during the
Noncompetition Period, the Stockholder shall not, and shall not permit any of
his Affiliates to:
(a) engage directly or indirectly in Competition in any
Restricted Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, proprietor, Affiliate, partner, promoter,
employee, agent, representative, designer, consultant, advisor,
manager, licensor, sublicensor, licensee or sublicensee of, for or to,
or otherwise be or become associated with or acquire or hold (of
record, beneficially or otherwise) any direct or indirect interest in,
any Person that engages directly or indirectly in Competition in any
Restricted Territory;
<PAGE> 2
provided, however, that the Stockholder may, without violating this Section 1,
(i) perform his obligations under any employee agreement executed by the
Purchaser and the Stockholder substantially contemporaneously with the execution
and delivery of this Agreement (an "Employment Agreement") and (ii) own, as a
passive investment, shares of capital stock of a publicly-held corporation that
engages in Competition if (i) such shares are actively traded on an established
national securities market in the United States, (ii) the number of shares of
such corporation's capital stock that are owned beneficially (directly or
indirectly) by the Stockholder and the number of shares of such corporation's
capital stock that are owned beneficially (directly or indirectly) by the
Stockholder's Affiliates collectively represent less than one percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither the Stockholder nor any Affiliate of the Stockholder is otherwise
associated directly or indirectly with such corporation or with any Affiliate of
such corporation.
2. NO HIRING OR SOLICITATION OF EMPLOYEES; NO SOLICITATION OF CUSTOMERS
OR SUPPLIERS. The Stockholder agrees that, while the Stockholder is employed in
any capacity by, or serves as an independent contractor or consultant to, the
Purchaser or any of the Acquired Companies, and for a period of one year
following the termination of such employment or independent service, the
Stockholder shall not, and shall not permit any of his Affiliates (other than,
in each case, in connection with performing his obligations under any Employment
Agreement), to hire any Specified Employee (including as an independent
contractor). The Stockholder also agrees that, during the Noncompetition Period,
the Stockholder shall not, and shall not permit any of his Affiliates (other
than, in each case, in connection with performing his obligations under any
Employment Agreement), to: (a) directly or indirectly, personally or through
others, encourage, induce, attempt to induce, solicit or attempt to solicit (on
the Stockholder's own behalf or on behalf of any other Person) any Specified
Employee or any other employee to leave his or her employment with the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries, or (b) directly or indirectly, personally or through others,
solicit or attempt to solicit (on the Stockholder's own behalf or on behalf of
any other Person) a Specified Customer or Supplier if such solicitation or
attempt to solicit is for or related to any Competing Product or Competing
Service. (For purposes of this Section 2, "Specified Employee" shall mean any
individual who (i) is or was an employee of any of the Acquired Companies on the
date of this Noncompetition Agreement or during the 12 month period ending on
the date of this Noncompetition Agreement, and (ii) remains or becomes an
employee of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries on the date of this Noncompetition Agreement or
at any time during the Noncompetition Period, and "Specified Customer or
Supplier" shall mean any customer or supplier of any of the Acquired Companies
who is or was such a customer or supplier on the date of this Noncompetition
Agreement or during the 12 month period ending on the date of this
Noncompetition Agreement and any customer or supplier of the Purchaser, any of
the Acquired Companies or the Purchaser's other subsidiaries who is or becomes
such a customer or supplier following the date of this Noncompetition Agreement
and prior to the expiration of the Noncompetition Period.) In the event that the
Stockholder violates any of his obligations under this Section 2, the
Noncompetition Period shall be extended with respect to such obligations by the
period of time equal to that period beginning when the activities constituting
such violation commenced and ending when the activities constituting such
violation terminated. The provisions of Section 1 and Section 2 of this
Agreement shall terminate if the Purchaser does not cause all amounts payable on
any maturity date provided for in the Note (as defined in the Purchase
Agreement) to
2.
<PAGE> 3
be paid to the Agent (as defined in the Purchase Agreement) or his
successor within thirty days of such maturity date.
3. CONFIDENTIALITY. The Stockholder agrees that he shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period): (a) reveal, report, publish,
disclose or transfer any Confidential Information to any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries), except in the performance of his obligations under any Employment
Agreement, (b) use any Confidential Information for any purpose, except in the
performance of his obligations under any Employment Agreement, or (c) use any
Confidential Information for the benefit of any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries).
4. REPRESENTATIONS AND WARRANTIES. The Stockholder represents and
warrants, to and for the benefit of the Indemnitees, that: (a) he has full power
and capacity to execute and deliver, and to perform all of his obligations
under, this Noncompetition Agreement; and (b) neither the execution and delivery
of this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which the Stockholder or any of his Affiliates is or
may be bound, or (ii) any law, rule or regulation. The Stockholder's
representations and warranties shall survive the expiration of the
Noncompetition Period for an unlimited period of time.
5. SPECIFIC PERFORMANCE. The Stockholder agrees that, in the event of
any breach or threatened breach by the Stockholder of any covenant or obligation
contained in this Noncompetition Agreement, each of the Purchaser, the Company
and the other Indemnitees shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek and obtain (a)
a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. The Stockholder further agrees that no
Indemnitee shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5, and the Stockholder irrevocably waives any right he may
have to require any Indemnitee to obtain, furnish or post any such bond or
similar instrument.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, the Stockholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises directly or indirectly out of or by
virtue of, or relates directly or indirectly to, (a) any inaccuracy in or breach
of any representation or warranty contained in this Noncompetition Agreement, or
(b) any failure on the part of the Stockholder to observe, perform or abide by,
or any other breach of, any restriction, covenant, obligation or other provision
contained in this Noncompetition Agreement.
3.
<PAGE> 4
7. NON-EXCLUSIVITY. The rights and remedies of the Purchaser, the
Company and the other Indemnitees under this Noncompetition Agreement are not
exclusive of or limited by any other rights or remedies which they may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of the Purchaser, the Company and the other
Indemnitees under this Noncompetition Agreement, and the obligations and
liabilities of the Stockholder under this Noncompetition Agreement, are in
addition to their respective rights, remedies, obligations and liabilities under
the law of unfair competition, under laws relating to misappropriation of trade
secrets, under other laws and common law requirements and under all applicable
rules and regulations. Nothing in this Noncompetition Agreement shall limit any
of the Stockholder's obligations, or the rights or remedies of the Purchaser,
the Company or any of the other Indemnitees, under the Purchase Agreement or any
Employment Agreement, and (subject to the last sentence of Section 2) nothing in
the Purchase Agreement or any Employment Agreement shall limit any of the
Stockholder's obligations, or any of the rights or remedies of the Purchaser,
the Company, or any of the other Indemnitees, under this Noncompetition
Agreement. Subject to the last sentence of Section 2, no breach on the part of
the Purchaser, the Company or any other party of any covenant or obligation
contained in the Purchase Agreement, any Employment Agreement or any other
agreement shall limit or otherwise affect any right or remedy of the Purchaser,
the Company or any of the other Indeminitees under this Noncompetition
Agreement.
8. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW; VENUE.
(a) This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4.
<PAGE> 5
(B) Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of San Diego, California (the "Agreed-to
State"). The Stockholder:
(i) expressly and irrevocably consents and submits to the
jurisdiction of each state and federal court located in the County of
San Diego, California (and each appellate court located in the State of
California), in connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice or
document by U.S. mail addressed to him at the address set forth on the
signature page of this Noncompetition Agreement shall constitute
effective service of such process, summons, notice or document for
purposes of any such legal proceeding;
(iii) agrees that each state and federal court located in the
County of San Diego, California, shall be deemed to be a convenient
forum; and
(iv) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or
federal court located in the County of San Diego, California, any claim
that the Stockholder is not subject personally to the jurisdiction of
such court, that such legal proceeding has been brought in an
inconvenient forum, that the venue of such proceeding is improper or
that this Noncompetition Agreement or the subject matter of this
Noncompetition Agreement may not be enforced in or by such court.
Nothing contained in this Section 9 shall be deemed to limit or otherwise affect
the right of any Indemnitee to commence any legal proceeding or otherwise
proceed against the Stockholder in any other forum or jurisdiction; provided,
however, that the Indemnitees may not commence any legal proceeding against the
Stockholder in any State other than the Agreed-to State if the Stockholder is
domiciled, at the time of commencement of the applicable legal proceeding, in
the Agreed-to State, unless the Indemnitees are seeking to enforce any existing
judgment.
(c) THE STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY
TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION
AGREEMENT OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
10. WAIVER. No failure on the part of the Purchaser, the Company or any
other Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of the Purchaser, the Company
or any other Indemnitee in exercising any power, right, privilege or remedy
under this Noncompetition Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise thereof
or of any other power, right, privilege or remedy. No Indemnitee shall be deemed
to have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver
5.
<PAGE> 6
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Indemnitee; and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
11. SUCCESSORS AND ASSIGNS. Each of the Purchaser, the Company and the
other Indemnitees may freely assign any or all of its rights under this
Noncompetition Agreement, at any time, in whole or in part, to any Person
without obtaining the consent or approval of the Stockholder or of any other
Person. This Noncompetition Agreement shall be binding upon the Stockholder and
his heirs, executors, estate, personal representatives, successors and assigns,
and shall inure to the benefit of the Purchaser, the Company and the other
Indemnitees.
12. FURTHER ASSURANCES. The Stockholder shall (at the Stockholder's
sole expense) execute and/or cause to be delivered to each Indemnitee such
instruments and other documents, and shall (at the Stockholder's sole expense)
take such other actions, as such Indemnitee may reasonably request at any time
(whether during or after the Noncompetition Period) for the purpose of carrying
out or evidencing any of the provisions of this Noncompetition Agreement.
13. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against the Stockholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
14. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
15. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
16. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein,
the obligations of the Stockholder under this Noncompetition Agreement
(including his obligations under Sections 3, 6 and 12) shall survive the
expiration of the Noncompetition Period. The expiration of the Noncompetition
Period shall not operate to relieve the Stockholder of any obligation or
liability arising from any prior breach by the Stockholder of any provision of
this Noncompetition Agreement.
6.
<PAGE> 7
17. OBLIGATIONS ABSOLUTE. Subject to the last sentence of Section 2,
the Stockholder's obligations under this Noncompetition Agreement are absolute
and shall not be terminated or otherwise limited by virtue of any breach (on the
part of the Purchaser, the Company, any other Indemnitee or any other Person) of
any provision of the Purchase Agreement or any other agreement, or by virtue of
any failure to perform or other breach of any obligation of the Purchaser, the
Company, any other Indemnitee or any other Person.
18. AMENDMENT. This Noncompetition Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of the Stockholder, the Purchaser (or any
successor to the Purchaser) and the Company (or any successor to the Company).
19. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person,
any other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
specified Person.
(b) "Competing Product" means any: (i) probe card, automatic
test equipment interface assembly, automatic test equipment test board, socket,
receptacle, adapter or similar product used in the semiconductor manufacturing
industry; (ii) product, equipment, device or system that has been designed,
developed, manufactured, assembled, promoted, sold, supplied, distributed,
resold, installed, supported, maintained, repaired, refurbished, licensed,
sublicensed, financed, leased or subleased by or on behalf of any of the
Acquired Companies (or any predecessor of any of the Acquired Companies) at any
time on or prior to this date of this Noncompetition Agreement; (iii) product,
equipment, device or system that is designed, developed, manufactured,
assembled, promoted, sold, supplied, distributed, resold, installed, supported,
maintained, repaired, refurbished, licensed, sublicensed, financed, leased or
subleased by or on behalf of the Purchaser, any of the Acquired Companies or any
of the Purchaser's other subsidiaries at any time during the Noncompetition
Period; or (iv) product, equipment, device or system that is substantially the
same as, incorporates, is a material component or part of, is based upon, is
functionally similar to or competes in any material respect with any product,
equipment, device or system of the type referred to in clause "(i)", clause
"(ii)" or clause "(iii)" of this sentence.
(c) "Competing Service" means any: (i) service that has been
provided, performed or offered by or on behalf of any of the Acquired Companies
(or any predecessor of any of the Acquired Companies) at any time on or prior to
the date of this Noncompetition Agreement; (ii) service that is provided,
performed or offered by the Purchaser, any of the Acquired Companies or any of
the Purchaser's other subsidiaries at any time during the Noncompetition Period;
(iii) service that facilitates, supports or otherwise relates to the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (iv)
service that is substantially the same as, is based upon or competes in any
material respect with any service referred to in clause "(i)", clause "(ii)" or
clause "(iii)" of this sentence.
7.
<PAGE> 8
(d) A Person shall be deemed to be engaged in "Competition"
if: (a) such Person or any of such Person's subsidiaries or other Affiliates
(other than the Purchaser, the Acquired Companies or any of the Purchaser's
other subsidiaries) is engaged directly or indirectly in the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (b)
such Person or any of such Person's subsidiaries or other Affiliates (other than
the Purchaser, the Acquired Companies or any of the Purchaser's other
subsidiaries) is engaged directly or indirectly in providing, performing or
offering any Competing Service.
(e) "Confidential Information" means any non-public
information (whether or not in written form and whether or not expressly
designated as confidential) relating directly or indirectly to the Purchaser,
any of the Acquired Companies or any of the Purchaser's other subsidiaries or
relating directly or indirectly to the business, operations, financial affairs,
performance, prospects, assets, technology, processes, products, contracts,
customers, licensees, sublicensees, suppliers, personnel, consultants or plans
of the Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries (including any such information consisting of or otherwise relating
to trade secrets, know-how, technology, inventions, prototypes, designs,
drawings, sketches, processes, methods, license or sublicense arrangements,
formulae, proposals, research and development activities, customer lists or
preferences, pricing lists, referral sources, marketing or sales techniques or
plans, operations manuals, service manuals, financial information, projections,
lists of consultants, lists of suppliers or lists of distributors); provided,
however, that "Confidential Information" shall not be deemed to include
information of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries that (a) was already publicly known and in the
public domain prior to the time of its initial disclosure to the Stockholder or
(ii) is required to be disclosed by law. The Stockholder shall advise the
Purchaser, in writing at 1150 North Fiesta Boulevard, Gilbert, AZ 85233
(Attention: Randal L. Buness), of any subpoena or similar legal inquiry to
disclose any Confidential Information so that the Purchaser may seek appropriate
legal relief.
(f) "Indemnitees" shall include: (i) the Purchaser, (ii) the
Company, (iii) each Person who is or becomes an Affiliate of the Purchaser or
the Company, and (iv) the successors and assigns of each of the Persons referred
to in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(g) "Noncompetition Period" shall mean the period commencing
on the date of this Noncompetition Agreement and ending on the third anniversary
of the date of this Noncompetition Agreement.
(h) "Person" means any: (i) individual, (ii) corporation,
general partnership, limited partnership, limited liability partnership, trust,
company (including any limited liability company or joint stock company) or
other organization or entity, or (iii) governmental body or authority.
(i) "Restricted Territory" means each county or similar
political subdivision of each State of the United States of America (including
each of the counties in the State of Arizona), each State, territory or
possession of the United States of America, and all other countries in which the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
8.
<PAGE> 9
subsidiaries conducts business as of the date of this Noncompetition Agreement
or during the Noncompetition Period.
9.
<PAGE> 10
IN WITNESS WHEREOF, the Stockholder has duly executed and delivered
this Noncompetition Agreement as of the date first above written.
NASSER BARABI
Address:
Telephone No.: ( )
Facsimile:( )
10.
<PAGE> 1
Exhibit 8
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
December 3, 1999 by IRAJ BARABI (the "Stockholder") in favor of, and for the
benefit of, OZ TECHNOLOGIES, INC., a California corporation (the "Company"),
CERPROBE CORPORATION, a Delaware corporation (the "Purchaser"), and the other
"Indemnitees" (as hereinafter defined). Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 19.
RECITALS
A. As a direct or indirect stockholder and employee of the Company, the
Stockholder has obtained extensive and valuable knowledge and confidential
information concerning the businesses of the Company and its subsidiaries. (The
Company and its subsidiaries are referred to collectively herein as the
"Acquired Companies.")
B. Pursuant to a Stock Purchase Agreement dated as of December 3, 1999
among the Purchaser, the Company, the Stockholder, the other stockholders of the
Company, and certain trustees for certain trusts in which certain of the
stockholders of the Company hold their shares of the Company's common stock (the
"Purchase Agreement"), the Company's direct and indirect stockholders are
selling all of the outstanding stock of the Company to the Purchaser
contemporaneously with the execution and delivery of this Noncompetition
Agreement. As a result of the Purchaser's acquisition of all of the outstanding
stock of the Company, the Acquired Companies are becoming subsidiaries of the
Purchaser.
C. In connection with the acquisition by the Purchaser of all of the
outstanding stock of the Company pursuant to the Purchase Agreement (and as a
condition to the consummation of such acquisition), and to enable the Purchaser
to secure more fully the benefits of such acquisition, the Purchaser has
required that the Stockholder enter into this Noncompetition Agreement, and the
Stockholder is entering into this Noncompetition Agreement in order to induce
the Purchaser to consummate the acquisition contemplated by the Purchase
Agreement.
AGREEMENT
In order to induce the Purchaser to consummate the transactions contemplated by
the Purchase Agreement, and for other good and valuable consideration, the
Stockholder agrees as follows:
1. RESTRICTION ON COMPETITION. The Stockholder agrees that, during the
Noncompetition Period, the Stockholder shall not, and shall not permit any of
his Affiliates to:
(a) engage directly or indirectly in Competition in any Restricted
Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, proprietor, Affiliate, partner, promoter,
employee, agent, representative, designer, consultant, advisor, manager,
licensor, sublicensor, licensee or sublicensee of, for or to, or otherwise
be or become associated with or acquire or hold (of record, beneficially or
otherwise) any direct or indirect interest in, any Person that engages
directly or indirectly in Competition in any Restricted Territory;
<PAGE> 2
provided, however, that the Stockholder may, without violating this Section 1,
(i) perform his obligations under any employee agreement executed by the
Purchaser and the Stockholder substantially contemporaneously with the execution
and delivery of this Agreement (an "Employment Agreement") and (ii) own, as a
passive investment, shares of capital stock of a publicly-held corporation that
engages in Competition if (i) such shares are actively traded on an established
national securities market in the United States, (ii) the number of shares of
such corporation's capital stock that are owned beneficially (directly or
indirectly) by the Stockholder and the number of shares of such corporation's
capital stock that are owned beneficially (directly or indirectly) by the
Stockholder's Affiliates collectively represent less than one percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither the Stockholder nor any Affiliate of the Stockholder is otherwise
associated directly or indirectly with such corporation or with any Affiliate of
such corporation.
2. NO HIRING OR SOLICITATION OF EMPLOYEES; NO SOLICITATION OF CUSTOMERS OR
SUPPLIERS. The Stockholder agrees that, while the Stockholder is employed in any
capacity by, or serves as an independent contractor or consultant to, the
Purchaser or any of the Acquired Companies, and for a period of one year
following the termination of such employment or independent service, the
Stockholder shall not, and shall not permit any of his Affiliates (other than,
in each case, in connection with performing his obligations under any Employment
Agreement), to hire any Specified Employee (including as an independent
contractor). The Stockholder also agrees that, during the Noncompetition Period,
the Stockholder shall not, and shall not permit any of his Affiliates (other
than, in each case, in connection with performing his obligations under any
Employment Agreement), to: (a) directly or indirectly, personally or through
others, encourage, induce, attempt to induce, solicit or attempt to solicit (on
the Stockholder's own behalf or on behalf of any other Person) any Specified
Employee or any other employee to leave his or her employment with the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries, or (b) directly or indirectly, personally or through others,
solicit or attempt to solicit (on the Stockholder's own behalf or on behalf of
any other Person) a Specified Customer or Supplier if such solicitation or
attempt to solicit is for or related to any Competing Product or Competing
Service. (For purposes of this Section 2, "Specified Employee" shall mean any
individual who (i) is or was an employee of any of the Acquired Companies on the
date of this Noncompetition Agreement or during the 12 month period ending on
the date of this Noncompetition Agreement, and (ii) remains or becomes an
employee of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries on the date of this Noncompetition Agreement or
at any time during the Noncompetition Period, and "Specified Customer or
Supplier" shall mean any customer or supplier of any of the Acquired Companies
who is or was such a customer or supplier on the date of this Noncompetition
Agreement or during the 12 month period ending on the date of this
Noncompetition Agreement and any customer or supplier of the Purchaser, any of
the Acquired Companies or the Purchaser's other subsidiaries who is or becomes
such a customer or supplier following the date of this Noncompetition Agreement
and prior to the expiration of the Noncompetition Period.) In the event that the
Stockholder violates any of his obligations under this Section 2, the
Noncompetition Period shall be extended with respect to such obligations by the
period of time equal to that period beginning when the activities constituting
such violation commenced and ending when the activities constituting such
violation terminated. The provisions of Section 1 and Section 2 of this
Agreement shall terminate if the Purchaser does not cause all amounts payable on
any maturity date provided for in the Note (as defined in the Purchase
Agreement) to
2.
<PAGE> 3
be paid to the Agent (as defined in the Purchase Agreement) or his successor
within thirty days of such maturity date.
3. CONFIDENTIALITY. The Stockholder agrees that he shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period): (a) reveal, report, publish,
disclose or transfer any Confidential Information to any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries), except in the performance of his obligations under any Employment
Agreement, (b) use any Confidential Information for any purpose, except in the
performance of his obligations under any Employment Agreement, or (c) use any
Confidential Information for the benefit of any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries).
4. REPRESENTATIONS AND WARRANTIES. The Stockholder represents and warrants,
to and for the benefit of the Indemnitees, that: (a) he has full power and
capacity to execute and deliver, and to perform all of his obligations under,
this Noncompetition Agreement; and (b) neither the execution and delivery of
this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which the Stockholder or any of his Affiliates is or
may be bound, or (ii) any law, rule or regulation. The Stockholder's
representations and warranties shall survive the expiration of the
Noncompetition Period for an unlimited period of time.
5. SPECIFIC PERFORMANCE. The Stockholder agrees that, in the event of any
breach or threatened breach by the Stockholder of any covenant or obligation
contained in this Noncompetition Agreement, each of the Purchaser, the Company
and the other Indemnitees shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek and obtain (a)
a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. The Stockholder further agrees that no
Indemnitee shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5, and the Stockholder irrevocably waives any right he may
have to require any Indemnitee to obtain, furnish or post any such bond or
similar instrument.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, the Stockholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises directly or indirectly out of or by
virtue of, or relates directly or indirectly to, (a) any inaccuracy in or breach
of any representation or warranty contained in this Noncompetition Agreement, or
(b) any failure on the part of the Stockholder to observe, perform or abide by,
or any other breach of, any restriction, covenant, obligation or other provision
contained in this Noncompetition Agreement.
3.
<PAGE> 4
7. NON-EXCLUSIVITY. The rights and remedies of the Purchaser, the Company
and the other Indemnitees under this Noncompetition Agreement are not exclusive
of or limited by any other rights or remedies which they may have, whether at
law, in equity, by contract or otherwise, all of which shall be cumulative (and
not alternative). Without limiting the generality of the foregoing, the rights
and remedies of the Purchaser, the Company and the other Indemnitees under this
Noncompetition Agreement, and the obligations and liabilities of the Stockholder
under this Noncompetition Agreement, are in addition to their respective rights,
remedies, obligations and liabilities under the law of unfair competition, under
laws relating to misappropriation of trade secrets, under other laws and common
law requirements and under all applicable rules and regulations. Nothing in this
Noncompetition Agreement shall limit any of the Stockholder's obligations, or
the rights or remedies of the Purchaser, the Company or any of the other
Indemnitees, under the Purchase Agreement or any Employment Agreement, and
(subject to the last sentence of Section 2) nothing in the Purchase Agreement or
any Employment Agreement shall limit any of the Stockholder's obligations, or
any of the rights or remedies of the Purchaser, the Company, or any of the other
Indemnitees, under this Noncompetition Agreement. Subject to the last sentence
of Section 2, no breach on the part of the Purchaser, the Company or any other
party of any covenant or obligation contained in the Purchase Agreement, any
Employment Agreement or any other agreement shall limit or otherwise affect any
right or remedy of the Purchaser, the Company or any of the other Indemnitees
under this Noncompetition Agreement.
8. SEVERABILITY. If any provision of this Noncompetition Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW; VENUE.
(a) This Noncompetition Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
4.
<PAGE> 5
(b) Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of San Diego, California (the "Agreed-to
State"). The Stockholder:
(i) expressly and irrevocably consents and submits to the jurisdiction
of each state and federal court located in the County of San Diego,
California (and each appellate court located in the State of California),
in connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice or document
by U.S. mail addressed to him at the address set forth on the signature
page of this Noncompetition Agreement shall constitute effective service of
such process, summons, notice or document for purposes of any such legal
proceeding;
(iii) agrees that each state and federal court located in the County
of San Diego, California, shall be deemed to be a convenient forum; and
(iv) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of San Diego, California, any claim that the
Stockholder is not subject personally to the jurisdiction of such court,
that such legal proceeding has been brought in an inconvenient forum, that
the venue of such proceeding is improper or that this Noncompetition
Agreement or the subject matter of this Noncompetition Agreement may not be
enforced in or by such court.
Nothing contained in this Section 9 shall be deemed to limit or otherwise affect
the right of any Indemnitee to commence any legal proceeding or otherwise
proceed against the Stockholder in any other forum or jurisdiction; provided,
however, that the Indemnitees may not commence any legal proceeding against the
Stockholder in any State other than the Agreed-to State if the Stockholder is
domiciled, at the time of commencement of the applicable legal proceeding, in
the Agreed-to State, unless the Indemnitees are seeking to enforce any existing
judgment.
(c) THE STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION AGREEMENT
OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
10. WAIVER. No failure on the part of the Purchaser, the Company or any
other Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of the Purchaser, the Company
or any other Indemnitee in exercising any power, right, privilege or remedy
under this Noncompetition Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise thereof
or of any other power, right, privilege or remedy. No Indemnitee shall be deemed
to have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver
5.
<PAGE> 6
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Indemnitee; and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
11. SUCCESSORS AND ASSIGNS. Each of the Purchaser, the Company and the
other Indemnitees may freely assign any or all of its rights under this
Noncompetition Agreement, at any time, in whole or in part, to any Person
without obtaining the consent or approval of the Stockholder or of any other
Person. This Noncompetition Agreement shall be binding upon the Stockholder and
his heirs, executors, estate, personal representatives, successors and assigns,
and shall inure to the benefit of the Purchaser, the Company and the other
Indemnitees.
12. FURTHER ASSURANCES. The Stockholder shall (at the Stockholder's sole
expense) execute and/or cause to be delivered to each Indemnitee such
instruments and other documents, and shall (at the Stockholder's sole expense)
take such other actions, as such Indemnitee may reasonably request at any time
(whether during or after the Noncompetition Period) for the purpose of carrying
out or evidencing any of the provisions of this Noncompetition Agreement.
13. ATTORNEYS' FEES. If any legal action or other legal proceeding relating
to this Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement is brought against the Stockholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
14. CAPTIONS. The captions contained in this Noncompetition Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
15. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
16. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein, the
obligations of the Stockholder under this Noncompetition Agreement (including
his obligations under Sections 3, 6 and 12) shall survive the expiration of the
Noncompetition Period. The expiration of the Noncompetition Period shall not
operate to relieve the Stockholder of any obligation or liability arising from
any prior breach by the Stockholder of any provision of this Noncompetition
Agreement.
6.
<PAGE> 7
17. OBLIGATIONS ABSOLUTE. Subject to the last sentence of Section 2, the
Stockholder's obligations under this Noncompetition Agreement are absolute and
shall not be terminated or otherwise limited by virtue of any breach (on the
part of the Purchaser, the Company, any other Indemnitee or any other Person) of
any provision of the Purchase Agreement or any other agreement, or by virtue of
any failure to perform or other breach of any obligation of the Purchaser, the
Company, any other Indemnitee or any other Person.
18. AMENDMENT. This Noncompetition Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of the Stockholder, the Purchaser (or any
successor to the Purchaser) and the Company (or any successor to the Company).
19. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
(b) "Competing Product" means any: (i) probe card, automatic test
equipment interface assembly, automatic test equipment test board, socket,
receptacle, adapter or similar product used in the semiconductor manufacturing
industry; (ii) product, equipment, device or system that has been designed,
developed, manufactured, assembled, promoted, sold, supplied, distributed,
resold, installed, supported, maintained, repaired, refurbished, licensed,
sublicensed, financed, leased or subleased by or on behalf of any of the
Acquired Companies (or any predecessor of any of the Acquired Companies) at any
time on or prior to this date of this Noncompetition Agreement; (iii) product,
equipment, device or system that is designed, developed, manufactured,
assembled, promoted, sold, supplied, distributed, resold, installed, supported,
maintained, repaired, refurbished, licensed, sublicensed, financed, leased or
subleased by or on behalf of the Purchaser, any of the Acquired Companies or any
of the Purchaser's other subsidiaries at any time during the Noncompetition
Period; or (iv) product, equipment, device or system that is substantially the
same as, incorporates, is a material component or part of, is based upon, is
functionally similar to or competes in any material respect with any product,
equipment, device or system of the type referred to in clause "(i)", clause
"(ii)" or clause "(iii)" of this sentence.
(c) "Competing Service" means any: (i) service that has been provided,
performed or offered by or on behalf of any of the Acquired Companies (or any
predecessor of any of the Acquired Companies) at any time on or prior to the
date of this Noncompetition Agreement; (ii) service that is provided, performed
or offered by the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries at any time during the Noncompetition Period;
(iii) service that facilitates, supports or otherwise relates to the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (iv)
service that is substantially the same as, is based upon or competes in any
material respect with any service referred to in clause "(i)", clause "(ii)" or
clause "(iii)" of this sentence.
7.
<PAGE> 8
(d) A Person shall be deemed to be engaged in "Competition" if: (a) such
Person or any of such Person's subsidiaries or other Affiliates (other than the
Purchaser, the Acquired Companies or any of the Purchaser's other subsidiaries)
is engaged directly or indirectly in the design, development, manufacture,
assembly, promotion, sale, supply, distribution, resale, installation, support,
maintenance, repair, refurbishment, licensing, sublicensing, financing, leasing
or subleasing of any Competing Product; or (b) such Person or any of such
Person's subsidiaries or other Affiliates (other than the Purchaser, the
Acquired Companies or any of the Purchaser's other subsidiaries) is engaged
directly or indirectly in providing, performing or offering any Competing
Service.
(e) "Confidential Information" means any non-public information (whether
or not in written form and whether or not expressly designated as confidential)
relating directly or indirectly to the Purchaser, any of the Acquired Companies
or any of the Purchaser's other subsidiaries or relating directly or indirectly
to the business, operations, financial affairs, performance, prospects, assets,
technology, processes, products, contracts, customers, licensees, sublicensees,
suppliers, personnel, consultants or plans of the Purchaser, any of the Acquired
Companies or any of the Purchaser's other subsidiaries (including any such
information consisting of or otherwise relating to trade secrets, know-how,
technology, inventions, prototypes, designs, drawings, sketches, processes,
methods, license or sublicense arrangements, formulae, proposals, research and
development activities, customer lists or preferences, pricing lists, referral
sources, marketing or sales techniques or plans, operations manuals, service
manuals, financial information, projections, lists of consultants, lists of
suppliers or lists of distributors); provided, however, that "Confidential
Information" shall not be deemed to include information of the Purchaser, any of
the Acquired Companies or any of the Purchaser's other subsidiaries that (a) was
already publicly known and in the public domain prior to the time of its initial
disclosure to the Stockholder or (ii) is required to be disclosed by law. The
Stockholder shall advise the Purchaser, in writing at 1150 North Fiesta
Boulevard, Gilbert, AZ 85233 (Attention: Randal L. Buness), of any subpoena or
similar legal inquiry to disclose any Confidential Information so that the
Purchaser may seek appropriate legal relief.
(f) "Indemnitees" shall include: (i) the Purchaser, (ii) the Company,
(iii) each Person who is or becomes an Affiliate of the Purchaser or the
Company, and (iv) the successors and assigns of each of the Persons referred to
in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(g) "Noncompetition Period" shall mean the period commencing on the date
of this Noncompetition Agreement and ending on the third anniversary of the date
of this Noncompetition Agreement.
(h) "Person" means any: (i) individual, (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity, or (iii) governmental body or authority.
(i) "Restricted Territory" means each county or similar political
subdivision of each State of the United States of America (including each of the
counties in the State of Arizona), each State, territory or possession of the
United States of America, and all other countries in which the Purchaser, any of
the Acquired Companies or any of the Purchaser's other
8.
<PAGE> 9
subsidiaries conducts business as of the date of this Noncompetition Agreement
or during the Noncompetition Period.
9.
<PAGE> 10
IN WITNESS WHEREOF, the Stockholder has duly executed and delivered this
Noncompetition Agreement as of the date first above written.
------------------------------------------
IRAJ BARABI
Address:
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Telephone No.:( )
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Facsimile:( )
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10.
<PAGE> 1
Exhibit 9
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
December 3, 1999 by ALI BUSHEHRI (the "Stockholder") in favor of, and for the
benefit of, OZ TECHNOLOGIES, INC., a California corporation (the "Company"),
CERPROBE CORPORATION, a Delaware corporation (the "Purchaser"), and the other
"Indemnitees" (as hereinafter defined). Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 19.
RECITALS
A. As a direct or indirect stockholder and employee of the Company, the
Stockholder has obtained extensive and valuable knowledge and confidential
information concerning the businesses of the Company and its subsidiaries. (The
Company and its subsidiaries are referred to collectively herein as the
"Acquired Companies.")
B. Pursuant to a Stock Purchase Agreement dated as of December 3, 1999
among the Purchaser, the Company, the Stockholder, the other stockholders of the
Company, and certain trustees for certain trusts in which certain of the
stockholders of the Company hold their shares of the Company's common stock (the
"Purchase Agreement"), the Company's direct and indirect stockholders are
selling all of the outstanding stock of the Company to the Purchaser
contemporaneously with the execution and delivery of this Noncompetition
Agreement. As a result of the Purchaser's acquisition of all of the outstanding
stock of the Company, the Acquired Companies are becoming subsidiaries of the
Purchaser.
C. In connection with the acquisition by the Purchaser of all of the
outstanding stock of the Company pursuant to the Purchase Agreement (and as a
condition to the consummation of such acquisition), and to enable the Purchaser
to secure more fully the benefits of such acquisition, the Purchaser has
required that the Stockholder enter into this Noncompetition Agreement, and the
Stockholder is entering into this Noncompetition Agreement in order to induce
the Purchaser to consummate the acquisition contemplated by the Purchase
Agreement.
AGREEMENT
In order to induce the Purchaser to consummate the transactions contemplated by
the Purchase Agreement, and for other good and valuable consideration, the
Stockholder agrees as follows:
1. RESTRICTION ON COMPETITION. The Stockholder agrees that, during the
Noncompetition Period, the Stockholder shall not, and shall not permit any of
his Affiliates to:
(a) engage directly or indirectly in Competition in any Restricted
Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, proprietor, Affiliate, partner, promoter,
employee, agent, representative, designer, consultant, advisor, manager,
licensor, sublicensor, licensee or sublicensee of, for or to, or otherwise be
or become associated with or acquire or hold (of record, beneficially or
otherwise) any direct or indirect interest in, any Person that engages
directly or indirectly in Competition in any Restricted Territory;
<PAGE> 2
provided, however, that the Stockholder may, without violating this Section 1,
(i) perform his obligations under any employee agreement executed by the
Purchaser and the Stockholder substantially contemporaneously with the execution
and delivery of this Agreement (an "Employment Agreement") and (ii) own, as a
passive investment, shares of capital stock of a publicly-held corporation that
engages in Competition if (i) such shares are actively traded on an established
national securities market in the United States, (ii) the number of shares of
such corporation's capital stock that are owned beneficially (directly or
indirectly) by the Stockholder and the number of shares of such corporation's
capital stock that are owned beneficially (directly or indirectly) by the
Stockholder's Affiliates collectively represent less than one percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither the Stockholder nor any Affiliate of the Stockholder is otherwise
associated directly or indirectly with such corporation or with any Affiliate of
such corporation.
2. NO HIRING OR SOLICITATION OF EMPLOYEES; NO SOLICITATION OF CUSTOMERS OR
SUPPLIERS. The Stockholder agrees that, while the Stockholder is employed in any
capacity by, or serves as an independent contractor or consultant to, the
Purchaser or any of the Acquired Companies, and for a period of one year
following the termination of such employment or independent service, the
Stockholder shall not, and shall not permit any of his Affiliates (other than,
in each case, in connection with performing his obligations under any Employment
Agreement), to hire any Specified Employee (including as an independent
contractor). The Stockholder also agrees that, during the Noncompetition Period,
the Stockholder shall not, and shall not permit any of his Affiliates (other
than, in each case, in connection with performing his obligations under any
Employment Agreement), to: (a) directly or indirectly, personally or through
others, encourage, induce, attempt to induce, solicit or attempt to solicit (on
the Stockholder's own behalf or on behalf of any other Person) any Specified
Employee or any other employee to leave his or her employment with the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries, or (b) directly or indirectly, personally or through others,
solicit or attempt to solicit (on the Stockholder's own behalf or on behalf of
any other Person) a Specified Customer or Supplier if such solicitation or
attempt to solicit is for or related to any Competing Product or Competing
Service. (For purposes of this Section 2, "Specified Employee" shall mean any
individual who (i) is or was an employee of any of the Acquired Companies on the
date of this Noncompetition Agreement or during the 12 month period ending on
the date of this Noncompetition Agreement, and (ii) remains or becomes an
employee of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries on the date of this Noncompetition Agreement or
at any time during the Noncompetition Period, and "Specified Customer or
Supplier" shall mean any customer or supplier of any of the Acquired Companies
who is or was such a customer or supplier on the date of this Noncompetition
Agreement or during the 12 month period ending on the date of this
Noncompetition Agreement and any customer or supplier of the Purchaser, any of
the Acquired Companies or the Purchaser's other subsidiaries who is or becomes
such a customer or supplier following the date of this Noncompetition Agreement
and prior to the expiration of the Noncompetition Period.) In the event that the
Stockholder violates any of his obligations under this Section 2, the
Noncompetition Period shall be extended with respect to such obligations by the
period of time equal to that period beginning when the activities constituting
such violation commenced and ending when the activities constituting such
violation terminated. The provisions of Section 1 and Section 2 of this
Agreement shall terminate if the Purchaser does not cause all amounts payable on
any maturity date provided for in the Note (as defined in the Purchase
Agreement) to
2.
<PAGE> 3
be paid to the Agent (as defined in the Purchase Agreement) or his successor
within thirty days of such maturity date.
3. CONFIDENTIALITY. The Stockholder agrees that he shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period): (a) reveal, report, publish,
disclose or transfer any Confidential Information to any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries), except in the performance of his obligations under any Employment
Agreement, (b) use any Confidential Information for any purpose, except in the
performance of his obligations under any Employment Agreement, or (c) use any
Confidential Information for the benefit of any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries).
4. REPRESENTATIONS AND WARRANTIES. The Stockholder represents and warrants,
to and for the benefit of the Indemnitees, that: (a) he has full power and
capacity to execute and deliver, and to perform all of his obligations under,
this Noncompetition Agreement; and (b) neither the execution and delivery of
this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which the Stockholder or any of his Affiliates is or
may be bound, or (ii) any law, rule or regulation. The Stockholder's
representations and warranties shall survive the expiration of the
Noncompetition Period for an unlimited period of time.
5. SPECIFIC PERFORMANCE. The Stockholder agrees that, in the event of any
breach or threatened breach by the Stockholder of any covenant or obligation
contained in this Noncompetition Agreement, each of the Purchaser, the Company
and the other Indemnitees shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek and obtain (a)
a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. The Stockholder further agrees that no
Indemnitee shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5, and the Stockholder irrevocably waives any right he may
have to require any Indemnitee to obtain, furnish or post any such bond or
similar instrument.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, the Stockholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises directly or indirectly out of or by
virtue of, or relates directly or indirectly to, (a) any inaccuracy in or breach
of any representation or warranty contained in this Noncompetition Agreement, or
(b) any failure on the part of the Stockholder to observe, perform or abide by,
or any other breach of, any restriction, covenant, obligation or other provision
contained in this Noncompetition Agreement.
3.
<PAGE> 4
\ 7. NON-EXCLUSIVITY. The rights and remedies of the Purchaser, the Company
and the other Indemnitees under this Noncompetition Agreement are not exclusive
of or limited by any other rights or remedies which they may have, whether at
law, in equity, by contract or otherwise, all of which shall be cumulative (and
not alternative). Without limiting the generality of the foregoing, the rights
and remedies of the Purchaser, the Company and the other Indemnitees under this
Noncompetition Agreement, and the obligations and liabilities of the Stockholder
under this Noncompetition Agreement, are in addition to their respective rights,
remedies, obligations and liabilities under the law of unfair competition, under
laws relating to misappropriation of trade secrets, under other laws and common
law requirements and under all applicable rules and regulations. Nothing in this
Noncompetition Agreement shall limit any of the Stockholder's obligations, or
the rights or remedies of the Purchaser, the Company or any of the other
Indemnitees, under the Purchase Agreement or any Employment Agreement, and
(subject to the last sentence of Section 2) nothing in the Purchase Agreement or
any Employment Agreement shall limit any of the Stockholder's obligations, or
any of the rights or remedies of the Purchaser, the Company, or any of the other
Indemnitees, under this Noncompetition Agreement. Subject to the last sentence
of Section 2, no breach on the part of the Purchaser, the Company or any other
party of any covenant or obligation contained in the Purchase Agreement, any
Employment Agreement or any other agreement shall limit or otherwise affect any
right or remedy of the Purchaser, the Company or any of the other Indemnitees
under this Noncompetition Agreement.
8. SEVERABILITY. If any provision of this Noncompetition Agreement or any
part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW; VENUE.
(a) This Noncompetition Agreement shall be construed in accordance with,
and governed in all respects by, the laws of the State of California (without
giving effect to principles of conflicts of laws).
4.
<PAGE> 5
(b) Any legal action or other legal proceeding relating to this
Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of San Diego, California (the "Agreed-to
State"). The Stockholder:
(i) expressly and irrevocably consents and submits to the jurisdiction
of each state and federal court located in the County of San Diego,
California (and each appellate court located in the State of California), in
connection with any such legal proceeding;
(ii) agrees that service of any process, summons, notice or document
by U.S. mail addressed to him at the address set forth on the signature page
of this Noncompetition Agreement shall constitute effective service of such
process, summons, notice or document for purposes of any such legal
proceeding;
(iii) agrees that each state and federal court located in the County
of San Diego, California, shall be deemed to be a convenient forum; and
(iv) agrees not to assert (by way of motion, as a defense or
otherwise), in any such legal proceeding commenced in any state or federal
court located in the County of San Diego, California, any claim that the
Stockholder is not subject personally to the jurisdiction of such court, that
such legal proceeding has been brought in an inconvenient forum, that the
venue of such proceeding is improper or that this Noncompetition Agreement or
the subject matter of this Noncompetition Agreement may not be enforced in or
by such court.
Nothing contained in this Section 9 shall be deemed to limit or otherwise affect
the right of any Indemnitee to commence any legal proceeding or otherwise
proceed against the Stockholder in any other forum or jurisdiction; provided,
however, that the Indemnitees may not commence any legal proceeding against the
Stockholder in any State other than the Agreed-to State if the Stockholder is
domiciled, at the time of commencement of the applicable legal proceeding, in
the Agreed-to State, unless the Indemnitees are seeking to enforce any existing
judgment.
(c) THE STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY TRIAL IN
CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION AGREEMENT
OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
10. WAIVER. No failure on the part of the Purchaser, the Company or any
other Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of the Purchaser, the Company
or any other Indemnitee in exercising any power, right, privilege or remedy
under this Noncompetition Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise thereof
or of any other power, right, privilege or remedy. No Indemnitee shall be deemed
to have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver
5.
<PAGE> 6
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Indemnitee; and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
11. SUCCESSORS AND ASSIGNS. Each of the Purchaser, the Company and the
other Indemnitees may freely assign any or all of its rights under this
Noncompetition Agreement, at any time, in whole or in part, to any Person
without obtaining the consent or approval of the Stockholder or of any other
Person. This Noncompetition Agreement shall be binding upon the Stockholder and
his heirs, executors, estate, personal representatives, successors and assigns,
and shall inure to the benefit of the Purchaser, the Company and the other
Indemnitees.
12. FURTHER ASSURANCES. The Stockholder shall (at the Stockholder's sole
expense) execute and/or cause to be delivered to each Indemnitee such
instruments and other documents, and shall (at the Stockholder's sole expense)
take such other actions, as such Indemnitee may reasonably request at any time
(whether during or after the Noncompetition Period) for the purpose of carrying
out or evidencing any of the provisions of this Noncompetition Agreement.
13. ATTORNEYS' FEES. If any legal action or other legal proceeding relating
to this Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement is brought against the Stockholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
14. CAPTIONS. The captions contained in this Noncompetition Agreement are
for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
15. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
16. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein, the
obligations of the Stockholder under this Noncompetition Agreement (including
his obligations under Sections 3, 6 and 12) shall survive the expiration of the
Noncompetition Period. The expiration of the Noncompetition Period shall not
operate to relieve the Stockholder of any obligation or liability arising from
any prior breach by the Stockholder of any provision of this Noncompetition
Agreement.
6.
<PAGE> 7
17. OBLIGATIONS ABSOLUTE. Subject to the last sentence of Section 2, the
Stockholder's obligations under this Noncompetition Agreement are absolute and
shall not be terminated or otherwise limited by virtue of any breach (on the
part of the Purchaser, the Company, any other Indemnitee or any other Person) of
any provision of the Purchase Agreement or any other agreement, or by virtue of
any failure to perform or other breach of any obligation of the Purchaser, the
Company, any other Indemnitee or any other Person.
18. AMENDMENT. This Noncompetition Agreement may not be amended, modified,
altered or supplemented other than by means of a written instrument duly
executed and delivered on behalf of the Stockholder, the Purchaser (or any
successor to the Purchaser) and the Company (or any successor to the Company).
19. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person, any other
Person that, directly or indirectly, through one or more intermediaries,
controls, is controlled by or is under common control with such specified
Person.
(b) "Competing Product" means any: (i) probe card, automatic test
equipment interface assembly, automatic test equipment test board, socket,
receptacle, adapter or similar product used in the semiconductor manufacturing
industry; (ii) product, equipment, device or system that has been designed,
developed, manufactured, assembled, promoted, sold, supplied, distributed,
resold, installed, supported, maintained, repaired, refurbished, licensed,
sublicensed, financed, leased or subleased by or on behalf of any of the
Acquired Companies (or any predecessor of any of the Acquired Companies) at any
time on or prior to this date of this Noncompetition Agreement; (iii) product,
equipment, device or system that is designed, developed, manufactured,
assembled, promoted, sold, supplied, distributed, resold, installed, supported,
maintained, repaired, refurbished, licensed, sublicensed, financed, leased or
subleased by or on behalf of the Purchaser, any of the Acquired Companies or any
of the Purchaser's other subsidiaries at any time during the Noncompetition
Period; or (iv) product, equipment, device or system that is substantially the
same as, incorporates, is a material component or part of, is based upon, is
functionally similar to or competes in any material respect with any product,
equipment, device or system of the type referred to in clause "(i)", clause
"(ii)" or clause "(iii)" of this sentence.
(c) "Competing Service" means any: (i) service that has been provided,
performed or offered by or on behalf of any of the Acquired Companies (or any
predecessor of any of the Acquired Companies) at any time on or prior to the
date of this Noncompetition Agreement; (ii) service that is provided, performed
or offered by the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries at any time during the Noncompetition Period;
(iii) service that facilitates, supports or otherwise relates to the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (iv)
service that is substantially the same as, is based upon or competes in any
material respect with any service referred to in clause "(i)", clause "(ii)" or
clause "(iii)" of this sentence.
7.
<PAGE> 8
(d) A Person shall be deemed to be engaged in "Competition" if: (a) such
Person or any of such Person's subsidiaries or other Affiliates (other than the
Purchaser, the Acquired Companies or any of the Purchaser's other subsidiaries)
is engaged directly or indirectly in the design, development, manufacture,
assembly, promotion, sale, supply, distribution, resale, installation, support,
maintenance, repair, refurbishment, licensing, sublicensing, financing, leasing
or subleasing of any Competing Product; or (b) such Person or any of such
Person's subsidiaries or other Affiliates (other than the Purchaser, the
Acquired Companies or any of the Purchaser's other subsidiaries) is engaged
directly or indirectly in providing, performing or offering any Competing
Service.
(e) "Confidential Information" means any non-public information (whether
or not in written form and whether or not expressly designated as confidential)
relating directly or indirectly to the Purchaser, any of the Acquired Companies
or any of the Purchaser's other subsidiaries or relating directly or indirectly
to the business, operations, financial affairs, performance, prospects, assets,
technology, processes, products, contracts, customers, licensees, sublicensees,
suppliers, personnel, consultants or plans of the Purchaser, any of the Acquired
Companies or any of the Purchaser's other subsidiaries (including any such
information consisting of or otherwise relating to trade secrets, know-how,
technology, inventions, prototypes, designs, drawings, sketches, processes,
methods, license or sublicense arrangements, formulae, proposals, research and
development activities, customer lists or preferences, pricing lists, referral
sources, marketing or sales techniques or plans, operations manuals, service
manuals, financial information, projections, lists of consultants, lists of
suppliers or lists of distributors); provided, however, that "Confidential
Information" shall not be deemed to include information of the Purchaser, any of
the Acquired Companies or any of the Purchaser's other subsidiaries that (a) was
already publicly known and in the public domain prior to the time of its initial
disclosure to the Stockholder or (ii) is required to be disclosed by law. The
Stockholder shall advise the Purchaser, in writing at 1150 North Fiesta
Boulevard, Gilbert, AZ 85233 (Attention: Randal L. Buness), of any subpoena or
similar legal inquiry to disclose any Confidential Information so that the
Purchaser may seek appropriate legal relief.
(f) "Indemnitees" shall include: (i) the Purchaser, (ii) the Company,
(iii) each Person who is or becomes an Affiliate of the Purchaser or the
Company, and (iv) the successors and assigns of each of the Persons referred to
in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(g) "Noncompetition Period" shall mean the period commencing on the date
of this Noncompetition Agreement and ending on the third anniversary of the date
of this Noncompetition Agreement.
(h) "Person" means any: (i) individual, (ii) corporation, general
partnership, limited partnership, limited liability partnership, trust, company
(including any limited liability company or joint stock company) or other
organization or entity, or (iii) governmental body or authority.
(i) "Restricted Territory" means each county or similar political
subdivision of each State of the United States of America (including each of the
counties in the State of Arizona), each State, territory or possession of the
United States of America, and all other countries in which the Purchaser, any of
the Acquired Companies or any of the Purchaser's other
8.
<PAGE> 9
subsidiaries conducts business as of the date of this Noncompetition Agreement
or during the Noncompetition Period.
9.
<PAGE> 10
IN WITNESS WHEREOF, the Stockholder has duly executed and delivered this
Noncompetition Agreement as of the date first above written.
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ALI BUSHEHRI
Address:
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Telephone No.:( )
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Facsimile:( )
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10.
<PAGE> 1
Exhibit 10
NONCOMPETITION AGREEMENT
THIS NONCOMPETITION AGREEMENT is being executed and delivered as of
December 3, 1999 by AHMAD BARABI (the "Stockholder") in favor of, and for the
benefit of, OZ TECHNOLOGIES, INC., a California corporation (the "Company"),
CERPROBE CORPORATION, a Delaware corporation (the "Purchaser"), and the other
"Indemnitees" (as hereinafter defined). Certain capitalized terms used in this
Noncompetition Agreement are defined in Section 19.
RECITALS
A. As a direct or indirect stockholder and employee of the Company, the
Stockholder has obtained extensive and valuable knowledge and confidential
information concerning the businesses of the Company and its subsidiaries. (The
Company and its subsidiaries are referred to collectively herein as the
"Acquired Companies.")
B. Pursuant to a Stock Purchase Agreement dated as of December 3, 1999
among the Purchaser, the Company, the Stockholder, the other stockholders of the
Company, and certain trustees for certain trusts in which certain of the
stockholders of the Company hold their shares of the Company's common stock (the
"Purchase Agreement"), the Company's direct and indirect stockholders are
selling all of the outstanding stock of the Company to the Purchaser
contemporaneously with the execution and delivery of this Noncompetition
Agreement. As a result of the Purchaser's acquisition of all of the outstanding
stock of the Company, the Acquired Companies are becoming subsidiaries of the
Purchaser.
C. In connection with the acquisition by the Purchaser of all of the
outstanding stock of the Company pursuant to the Purchase Agreement (and as a
condition to the consummation of such acquisition), and to enable the Purchaser
to secure more fully the benefits of such acquisition, the Purchaser has
required that the Stockholder enter into this Noncompetition Agreement, and the
Stockholder is entering into this Noncompetition Agreement in order to induce
the Purchaser to consummate the acquisition contemplated by the Purchase
Agreement.
AGREEMENT
In order to induce the Purchaser to consummate the transactions contemplated by
the Purchase Agreement, and for other good and valuable consideration, the
Stockholder agrees as follows:
1. RESTRICTION ON COMPETITION. The Stockholder agrees that, during the
Noncompetition Period, the Stockholder shall not, and shall not permit any of
his Affiliates to:
(a) engage directly or indirectly in Competition in any
Restricted Territory; or
(b) directly or indirectly be or become an officer, director,
stockholder, owner, co-owner, proprietor, Affiliate, partner, promoter,
employee, agent, representative, designer, consultant, advisor,
manager, licensor, sublicensor, licensee or sublicensee of, for or to,
or otherwise be or become associated with or acquire or hold (of
record, beneficially or otherwise) any direct or indirect interest in,
any Person that engages directly or indirectly in Competition in any
Restricted Territory;
<PAGE> 2
provided, however, that the Stockholder may, without violating this Section 1,
(i) perform his obligations under any employee agreement executed by the
Purchaser and the Stockholder substantially contemporaneously with the execution
and delivery of this Agreement (an "Employment Agreement") and (ii) own, as a
passive investment, shares of capital stock of a publicly-held corporation that
engages in Competition if (i) such shares are actively traded on an established
national securities market in the United States, (ii) the number of shares of
such corporation's capital stock that are owned beneficially (directly or
indirectly) by the Stockholder and the number of shares of such corporation's
capital stock that are owned beneficially (directly or indirectly) by the
Stockholder's Affiliates collectively represent less than one percent of the
total number of shares of such corporation's capital stock outstanding, and
(iii) neither the Stockholder nor any Affiliate of the Stockholder is otherwise
associated directly or indirectly with such corporation or with any Affiliate of
such corporation.
2. NO HIRING OR SOLICITATION OF EMPLOYEES; NO SOLICITATION OF CUSTOMERS
OR SUPPLIERS. The Stockholder agrees that, while the Stockholder is employed in
any capacity by, or serves as an independent contractor or consultant to, the
Purchaser or any of the Acquired Companies, and for a period of one year
following the termination of such employment or independent service, the
Stockholder shall not, and shall not permit any of his Affiliates (other than,
in each case, in connection with performing his obligations under any Employment
Agreement), to hire any Specified Employee (including as an independent
contractor). The Stockholder also agrees that, during the Noncompetition Period,
the Stockholder shall not, and shall not permit any of his Affiliates (other
than, in each case, in connection with performing his obligations under any
Employment Agreement), to: (a) directly or indirectly, personally or through
others, encourage, induce, attempt to induce, solicit or attempt to solicit (on
the Stockholder's own behalf or on behalf of any other Person) any Specified
Employee or any other employee to leave his or her employment with the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries, or (b) directly or indirectly, personally or through others,
solicit or attempt to solicit (on the Stockholder's own behalf or on behalf of
any other Person) a Specified Customer or Supplier if such solicitation or
attempt to solicit is for or related to any Competing Product or Competing
Service. (For purposes of this Section 2, "Specified Employee" shall mean any
individual who (i) is or was an employee of any of the Acquired Companies on the
date of this Noncompetition Agreement or during the 12 month period ending on
the date of this Noncompetition Agreement, and (ii) remains or becomes an
employee of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries on the date of this Noncompetition Agreement or
at any time during the Noncompetition Period, and "Specified Customer or
Supplier" shall mean any customer or supplier of any of the Acquired Companies
who is or was such a customer or supplier on the date of this Noncompetition
Agreement or during the 12 month period ending on the date of this
Noncompetition Agreement and any customer or supplier of the Purchaser, any of
the Acquired Companies or the Purchaser's other subsidiaries who is or becomes
such a customer or supplier following the date of this Noncompetition Agreement
and prior to the expiration of the Noncompetition Period.) In the event that the
Stockholder violates any of his obligations under this Section 2, the
Noncompetition Period shall be extended with respect to such obligations by the
period of time equal to that period beginning when the activities constituting
such violation commenced and ending when the activities constituting such
violation terminated. The provisions of Section 1 and Section 2 of this
Agreement shall terminate if the Purchaser does not cause all amounts payable on
any maturity date provided for in the Note (as defined in the Purchase
Agreement) to
2.
<PAGE> 3
be paid to the Agent (as defined in the Purchase Agreement) or his successor
within thirty days of such maturity date.
3. CONFIDENTIALITY. The Stockholder agrees that he shall hold all
Confidential Information in strict confidence and shall not at any time (whether
during or after the Noncompetition Period): (a) reveal, report, publish,
disclose or transfer any Confidential Information to any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries), except in the performance of his obligations under any Employment
Agreement, (b) use any Confidential Information for any purpose, except in the
performance of his obligations under any Employment Agreement, or (c) use any
Confidential Information for the benefit of any Person (other than the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries).
4. REPRESENTATIONS AND WARRANTIES. The Stockholder represents and
warrants, to and for the benefit of the Indemnitees, that: (a) he has full power
and capacity to execute and deliver, and to perform all of his obligations
under, this Noncompetition Agreement; and (b) neither the execution and delivery
of this Noncompetition Agreement nor the performance of this Noncompetition
Agreement will result directly or indirectly in a violation or breach of (i) any
agreement or obligation by which the Stockholder or any of his Affiliates is or
may be bound, or (ii) any law, rule or regulation. The Stockholder's
representations and warranties shall survive the expiration of the
Noncompetition Period for an unlimited period of time.
5. SPECIFIC PERFORMANCE. The Stockholder agrees that, in the event of
any breach or threatened breach by the Stockholder of any covenant or obligation
contained in this Noncompetition Agreement, each of the Purchaser, the Company
and the other Indemnitees shall be entitled (in addition to any other remedy
that may be available to it, including monetary damages) to seek and obtain (a)
a decree or order of specific performance to enforce the observance and
performance of such covenant or obligation, and (b) an injunction restraining
such breach or threatened breach. The Stockholder further agrees that no
Indemnitee shall be required to obtain, furnish or post any bond or similar
instrument in connection with or as a condition to obtaining any remedy referred
to in this Section 5, and the Stockholder irrevocably waives any right he may
have to require any Indemnitee to obtain, furnish or post any such bond or
similar instrument.
6. INDEMNIFICATION. Without in any way limiting any of the rights or
remedies otherwise available to any of the Indemnitees, the Stockholder shall
indemnify and hold harmless each Indemnitee against and from any loss, damage,
injury, harm, detriment, lost opportunity, liability, exposure, claim, demand,
settlement, judgment, award, fine, penalty, tax, fee (including attorneys'
fees), charge or expense (whether or not relating to any third-party claim) that
is directly or indirectly suffered or incurred at any time (whether during or
after the Noncompetition Period) by such Indemnitee, or to which such Indemnitee
otherwise becomes subject at any time (whether during or after the
Noncompetition Period), and that arises directly or indirectly out of or by
virtue of, or relates directly or indirectly to, (a) any inaccuracy in or breach
of any representation or warranty contained in this Noncompetition Agreement, or
(b) any failure on the part of the Stockholder to observe, perform or abide by,
or any other breach of, any restriction, covenant, obligation or other provision
contained in this Noncompetition Agreement.
3.
<PAGE> 4
7. NON-EXCLUSIVITY. The rights and remedies of the Purchaser, the
Company and the other Indemnitees under this Noncompetition Agreement are not
exclusive of or limited by any other rights or remedies which they may have,
whether at law, in equity, by contract or otherwise, all of which shall be
cumulative (and not alternative). Without limiting the generality of the
foregoing, the rights and remedies of the Purchaser, the Company and the other
Indemnitees under this Noncompetition Agreement, and the obligations and
liabilities of the Stockholder under this Noncompetition Agreement, are in
addition to their respective rights, remedies, obligations and liabilities under
the law of unfair competition, under laws relating to misappropriation of trade
secrets, under other laws and common law requirements and under all applicable
rules and regulations. Nothing in this Noncompetition Agreement shall limit any
of the Stockholder's obligations, or the rights or remedies of the Purchaser,
the Company or any of the other Indemnitees, under the Purchase Agreement or any
Employment Agreement, and (subject to the last sentence of Section 2) nothing in
the Purchase Agreement or any Employment Agreement shall limit any of the
Stockholder's obligations, or any of the rights or remedies of the Purchaser,
the Company, or any of the other Indemnitees, under this Noncompetition
Agreement. Subject to the last sentence of Section 2, no breach on the part of
the Purchaser, the Company or any other party of any covenant or obligation
contained in the Purchase Agreement, any Employment Agreement or any other
agreement shall limit or otherwise affect any right or remedy of the Purchaser,
the Company or any of the other Indemnitees under this Noncompetition
Agreement.
8. SEVERABILITY. If any provision of this Noncompetition Agreement or
any part of any such provision is held under any circumstances to be invalid or
unenforceable in any jurisdiction, then (a) such provision or part thereof
shall, with respect to such circumstances and in such jurisdiction, be deemed
amended to conform to applicable laws so as to be valid and enforceable to the
fullest possible extent, (b) the invalidity or unenforceability of such
provision or part thereof under such circumstances and in such jurisdiction
shall not affect the validity or enforceability of such provision or part
thereof under any other circumstances or in any other jurisdiction, and (c) the
invalidity or unenforceability of such provision or part thereof shall not
affect the validity or enforceability of the remainder of such provision or the
validity or enforceability of any other provision of this Noncompetition
Agreement. Each provision of this Noncompetition Agreement is separable from
every other provision of this Noncompetition Agreement, and each part of each
provision of this Noncompetition Agreement is separable from every other part of
such provision.
9. GOVERNING LAW; VENUE.
(a) This Noncompetition Agreement shall be construed in
accordance with, and governed in all respects by, the laws of the State of
California (without giving effect to principles of conflicts of laws).
4.
<PAGE> 5
(b) Any legal action or other legal proceeding relating to
this Noncompetition Agreement or the enforcement of any provision of this
Noncompetition Agreement may be brought or otherwise commenced in any state or
federal court located in the County of San Diego, California (the "Agreed-to
State"). The Stockholder:
(i) expressly and irrevocably consents and submits to
the jurisdiction of each state and federal court located in the County
of San Diego, California (and each appellate court located in the State
of California), in connection with any such legal proceeding;
(ii) agrees that service of any process, summons,
notice or document by U.S. mail addressed to him at the address set
forth on the signature page of this Noncompetition Agreement shall
constitute effective service of such process, summons, notice or
document for purposes of any such legal proceeding;
(iii) agrees that each state and federal court
located in the County of San Diego, California, shall be deemed to be a
convenient forum; and
(iv) agrees not to assert (by way of motion, as a
defense or otherwise), in any such legal proceeding commenced in any
state or federal court located in the County of San Diego, California,
any claim that the Stockholder is not subject personally to the
jurisdiction of such court, that such legal proceeding has been brought
in an inconvenient forum, that the venue of such proceeding is improper
or that this Noncompetition Agreement or the subject matter of this
Noncompetition Agreement may not be enforced in or by such court.
Nothing contained in this Section 9 shall be deemed to limit or otherwise affect
the right of any Indemnitee to commence any legal proceeding or otherwise
proceed against the Stockholder in any other forum or jurisdiction; provided,
however, that the Indemnitees may not commence any legal proceeding against the
Stockholder in any State other than the Agreed-to State if the Stockholder is
domiciled, at the time of commencement of the applicable legal proceeding, in
the Agreed-to State, unless the Indemnitees are seeking to enforce any existing
judgment.
(c) THE STOCKHOLDER IRREVOCABLY WAIVES THE RIGHT TO A JURY
TRIAL IN CONNECTION WITH ANY LEGAL PROCEEDING RELATING TO THIS NONCOMPETITION
AGREEMENT OR THE ENFORCEMENT OF ANY PROVISION OF THIS NONCOMPETITION AGREEMENT.
10. WAIVER. No failure on the part of the Purchaser, the Company or any
other Indemnitee to exercise any power, right, privilege or remedy under this
Noncompetition Agreement, and no delay on the part of the Purchaser, the Company
or any other Indemnitee in exercising any power, right, privilege or remedy
under this Noncompetition Agreement, shall operate as a waiver of such power,
right, privilege or remedy; and no single or partial exercise of any such power,
right, privilege or remedy shall preclude any other or further exercise thereof
or of any other power, right, privilege or remedy. No Indemnitee shall be deemed
to have waived any claim of such Indemnitee arising out of this Noncompetition
Agreement, or any power, right, privilege or remedy of such Indemnitee under
this Noncompetition Agreement, unless the waiver
5.
<PAGE> 6
of such claim, power, right, privilege or remedy is expressly set forth in a
written instrument duly executed and delivered on behalf of such Indemnitee; and
any such waiver shall not be applicable or have any effect except in the
specific instance in which it is given.
11. SUCCESSORS AND ASSIGNS. Each of the Purchaser, the Company and the
other Indemnitees may freely assign any or all of its rights under this
Noncompetition Agreement, at any time, in whole or in part, to any Person
without obtaining the consent or approval of the Stockholder or of any other
Person. This Noncompetition Agreement shall be binding upon the Stockholder and
his heirs, executors, estate, personal representatives, successors and assigns,
and shall inure to the benefit of the Purchaser, the Company and the other
Indemnitees.
12. FURTHER ASSURANCES. The Stockholder shall (at the Stockholder's
sole expense) execute and/or cause to be delivered to each Indemnitee such
instruments and other documents, and shall (at the Stockholder's sole expense)
take such other actions, as such Indemnitee may reasonably request at any time
(whether during or after the Noncompetition Period) for the purpose of carrying
out or evidencing any of the provisions of this Noncompetition Agreement.
13. ATTORNEYS' FEES. If any legal action or other legal proceeding
relating to this Noncompetition Agreement or the enforcement of any provision of
this Noncompetition Agreement is brought against the Stockholder, the prevailing
party shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which the prevailing party may
be entitled).
14. CAPTIONS. The captions contained in this Noncompetition Agreement
are for convenience of reference only, shall not be deemed to be a part of this
Noncompetition Agreement and shall not be referred to in connection with the
construction or interpretation of this Noncompetition Agreement.
15. CONSTRUCTION. Whenever required by the context, the singular number
shall include the plural, and vice versa; the masculine gender shall include the
feminine and neuter genders; and the neuter gender shall include the masculine
and feminine genders. Any rule of construction to the effect that ambiguities
are to be resolved against the drafting party shall not be applied in the
construction or interpretation of this Noncompetition Agreement. Neither the
drafting history nor the negotiating history of this Noncompetition Agreement
shall be used or referred to in connection with the construction or
interpretation of this Noncompetition Agreement. As used in this Noncompetition
Agreement, the words "include" and "including," and variations thereof, shall
not be deemed to be terms of limitation, and shall be deemed to be followed by
the words "without limitation." Except as otherwise indicated in this
Noncompetition Agreement, all references in this Noncompetition Agreement to
"Sections" are intended to refer to Sections of this Noncompetition Agreement.
16. SURVIVAL OF OBLIGATIONS. Except as specifically provided herein,
the obligations of the Stockholder under this Noncompetition Agreement
(including his obligations under Sections 3, 6 and 12) shall survive the
expiration of the Noncompetition Period. The expiration of the Noncompetition
Period shall not operate to relieve the Stockholder of any obligation or
liability arising from any prior breach by the Stockholder of any provision of
this Noncompetition Agreement.
6.
<PAGE> 7
17. OBLIGATIONS ABSOLUTE. Subject to the last sentence of Section 2,
the Stockholder's obligations under this Noncompetition Agreement are absolute
and shall not be terminated or otherwise limited by virtue of any breach (on the
part of the Purchaser, the Company, any other Indemnitee or any other Person) of
any provision of the Purchase Agreement or any other agreement, or by virtue of
any failure to perform or other breach of any obligation of the Purchaser, the
Company, any other Indemnitee or any other Person.
18. AMENDMENT. This Noncompetition Agreement may not be amended,
modified, altered or supplemented other than by means of a written instrument
duly executed and delivered on behalf of the Stockholder, the Purchaser (or any
successor to the Purchaser) and the Company (or any successor to the Company).
19. DEFINED TERMS. For purposes of this Noncompetition Agreement:
(a) "Affiliate" means, with respect to any specified Person,
any other Person that, directly or indirectly, through one or more
intermediaries, controls, is controlled by or is under common control with such
specified Person.
(b) "Competing Product" means any: (i) probe card, automatic
test equipment interface assembly, automatic test equipment test board, socket,
receptacle, adapter or similar product used in the semiconductor manufacturing
industry; (ii) product, equipment, device or system that has been designed,
developed, manufactured, assembled, promoted, sold, supplied, distributed,
resold, installed, supported, maintained, repaired, refurbished, licensed,
sublicensed, financed, leased or subleased by or on behalf of any of the
Acquired Companies (or any predecessor of any of the Acquired Companies) at any
time on or prior to this date of this Noncompetition Agreement; (iii) product,
equipment, device or system that is designed, developed, manufactured,
assembled, promoted, sold, supplied, distributed, resold, installed, supported,
maintained, repaired, refurbished, licensed, sublicensed, financed, leased or
subleased by or on behalf of the Purchaser, any of the Acquired Companies or any
of the Purchaser's other subsidiaries at any time during the Noncompetition
Period; or (iv) product, equipment, device or system that is substantially the
same as, incorporates, is a material component or part of, is based upon, is
functionally similar to or competes in any material respect with any product,
equipment, device or system of the type referred to in clause "(i)", clause
"(ii)" or clause "(iii)" of this sentence.
(c) "Competing Service" means any: (i) service that has been
provided, performed or offered by or on behalf of any of the Acquired Companies
(or any predecessor of any of the Acquired Companies) at any time on or prior to
the date of this Noncompetition Agreement; (ii) service that is provided,
performed or offered by the Purchaser, any of the Acquired Companies or any of
the Purchaser's other subsidiaries at any time during the Noncompetition Period;
(iii) service that facilitates, supports or otherwise relates to the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (iv)
service that is substantially the same as, is based upon or competes in any
material respect with any service referred to in clause "(i)", clause "(ii)" or
clause "(iii)" of this sentence.
7.
<PAGE> 8
(d) A Person shall be deemed to be engaged in "Competition"
if: (a) such Person or any of such Person's subsidiaries or other Affiliates
(other than the Purchaser, the Acquired Companies or any of the Purchaser's
other subsidiaries) is engaged directly or indirectly in the design,
development, manufacture, assembly, promotion, sale, supply, distribution,
resale, installation, support, maintenance, repair, refurbishment, licensing,
sublicensing, financing, leasing or subleasing of any Competing Product; or (b)
such Person or any of such Person's subsidiaries or other Affiliates (other than
the Purchaser, the Acquired Companies or any of the Purchaser's other
subsidiaries) is engaged directly or indirectly in providing, performing or
offering any Competing Service.
(e) "Confidential Information" means any non-public
information (whether or not in written form and whether or not expressly
designated as confidential) relating directly or indirectly to the Purchaser,
any of the Acquired Companies or any of the Purchaser's other subsidiaries or
relating directly or indirectly to the business, operations, financial affairs,
performance, prospects, assets, technology, processes, products, contracts,
customers, licensees, sublicensees, suppliers, personnel, consultants or plans
of the Purchaser, any of the Acquired Companies or any of the Purchaser's other
subsidiaries (including any such information consisting of or otherwise relating
to trade secrets, know-how, technology, inventions, prototypes, designs,
drawings, sketches, processes, methods, license or sublicense arrangements,
formulae, proposals, research and development activities, customer lists or
preferences, pricing lists, referral sources, marketing or sales techniques or
plans, operations manuals, service manuals, financial information, projections,
lists of consultants, lists of suppliers or lists of distributors); provided,
however, that "Confidential Information" shall not be deemed to include
information of the Purchaser, any of the Acquired Companies or any of the
Purchaser's other subsidiaries that (a) was already publicly known and in the
public domain prior to the time of its initial disclosure to the Stockholder or
(ii) is required to be disclosed by law. The Stockholder shall advise the
Purchaser, in writing at 1150 North Fiesta Boulevard, Gilbert, AZ 85233
(Attention: Randal L. Buness), of any subpoena or similar legal inquiry to
disclose any Confidential Information so that the Purchaser may seek appropriate
legal relief.
(f) "Indemnitees" shall include: (i) the Purchaser, (ii) the
Company, (iii) each Person who is or becomes an Affiliate of the Purchaser or
the Company, and (iv) the successors and assigns of each of the Persons referred
to in clauses "(i)", "(ii)" and "(iii)" of this sentence.
(g) "Noncompetition Period" shall mean the period commencing
on the date of this Noncompetition Agreement and ending on the third anniversary
of the date of this Noncompetition Agreement.
(h) "Person" means any: (i) individual, (ii) corporation,
general partnership, limited partnership, limited liability partnership, trust,
company (including any limited liability company or joint stock company) or
other organization or entity, or (iii) governmental body or authority.
(i) "Restricted Territory" means each county or similar
political subdivision of each State of the United States of America (including
each of the counties in the State of Arizona), each State, territory or
possession of the United States of America, and all other countries in which the
Purchaser, any of the Acquired Companies or any of the Purchaser's other
8.
<PAGE> 9
subsidiaries conducts business as of the date of this Noncompetition Agreement
or during the Noncompetition Period.
9.
<PAGE> 10
IN WITNESS WHEREOF, the Stockholder has duly executed and delivered
this Noncompetition Agreement as of the date first above written.
AHMAD BARABI
Address:
Telephone No.:( )
Facsimile:( )
10.
<PAGE> 1
Exhibit 11
LOAN AND SECURITY AGREEMENT
Dated as of December 3, 1999
Among
BANK OF AMERICA, N.A.
as the Lender
and
CERPROBE CORPORATION
CERPROBE INTERCONNECT SOLUTIONS, INC.
and (immediately following consummation of the Acquisition)
OZ TECHNOLOGIES, INC.
and
TRIPLE S ENGINEERING, INC.
as the Borrowers
<PAGE> 2
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Section Page
<S> <C>
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT................................................................1
1.1 Definitions.....................................................................................1
1.2 Accounting Terms...............................................................................23
1.3 Interpretive Provisions........................................................................23
ARTICLE 2 LOANS AND LETTERS OF CREDIT....................................................................24
2.1 Total Facility.................................................................................24
2.2 Revolving Loans................................................................................24
2.3 Term Loans.....................................................................................26
2.4 Letters of Credit..............................................................................26
2.5 Bank Products..................................................................................30
ARTICLE 3 INTEREST AND FEES..............................................................................30
3.1 Interest.......................................................................................30
3.2 Continuation and Conversion Elections..........................................................31
3.3 Maximum Interest Rate..........................................................................32
3.4 Closing Fee....................................................................................32
3.5 Unused Line Fee................................................................................32
3.6 Letter of Credit Fee...........................................................................33
ARTICLE 4 PAYMENTS AND PREPAYMENTS.......................................................................33
4.1 Revolving Loans................................................................................33
4.2 Termination of Facility........................................................................33
4.3 Repayment of the Term Loans....................................................................34
4.4 Voluntary Prepayments of the Term Loans; Voluntary Reduction of Inventory Sublimit.............34
4.5 Mandatory Prepayments of the Term Loans and Inventory Loans....................................34
4.6 Payments by the Borrowers......................................................................35
4.7 Payments as Revolving Loans....................................................................35
4.8 Application and Reversal of Payments...........................................................35
4.9 Indemnity for Returned Payments................................................................35
4.10 Lender's Books and Records; Monthly Statements.................................................36
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY.........................................................36
5.1 Taxes..........................................................................................36
5.2 Illegality.....................................................................................37
5.3 Increased Costs and Reduction of Return........................................................37
</TABLE>
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<TABLE>
<S> <C>
5.4 Funding Losses.................................................................................38
5.5 Inability to Determine Rates...................................................................38
5.6 Certificates of Lender.........................................................................39
5.7 Survival.......................................................................................39
ARTICLE 6 COLLATERAL.....................................................................................39
6.1 Grant of Security Interest.....................................................................39
6.2 Perfection and Protection of Security Interest.................................................40
6.3 Location of Collateral.........................................................................41
6.4 Title to, Liens on, and Sale and Use of Collateral.............................................41
6.5 Appraisals.....................................................................................41
6.6 Access and Examination; Confidentiality; Consent to Advertising................................41
6.7 Collateral Reporting...........................................................................42
6.8 Accounts.......................................................................................43
6.9 Collection of Accounts; Payments...............................................................44
6.10 Inventory; Perpetual Inventory.................................................................45
6.11 Equipment......................................................................................45
6.12 Assigned Contracts.............................................................................46
6.13 Documents, Instruments, and Chattel Paper......................................................46
6.14 Right to Cure..................................................................................47
6.15 Power of Attorney..............................................................................47
6.16 The Lender's Rights, Duties and Liabilities....................................................47
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES..............................................48
7.1 Books and Records..............................................................................48
7.2 Financial Information..........................................................................48
7.3 Notices to the Lender..........................................................................50
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS.........................................................52
8.1 Authorization, Validity, and Enforceability of this Agreement and the Loan Documents...........52
8.2 Validity and Priority of Security Interest.....................................................53
8.3 Organization and Qualification.................................................................53
8.4 Corporate Name; Prior Transactions.............................................................53
8.5 Subsidiaries and Affiliates....................................................................53
8.6 Financial Statements and Projections...........................................................54
8.7 Capitalization.................................................................................54
8.8 Solvency.......................................................................................54
8.9 Debt...........................................................................................54
8.10 Distributions..................................................................................55
8.11 Title to Property..............................................................................55
8.12 Real Estate; Leases............................................................................55
8.13 Proprietary Rights.............................................................................55
8.14 Trade Names....................................................................................55
</TABLE>
2
<PAGE> 4
<TABLE>
<S> <C>
8.15 Litigation.....................................................................................55
8.16 Restrictive Agreements.........................................................................55
8.17 Labor Disputes.................................................................................56
8.18 Environmental Laws.............................................................................56
8.19 No Violation of Law............................................................................57
8.20 No Default.....................................................................................57
8.21 ERISA Compliance...............................................................................57
8.22 Taxes..........................................................................................58
8.23 Regulated Entities.............................................................................58
8.24 Use of Proceeds; Margin Regulations............................................................58
8.25 Copyrights, Patents, Trademarks and Licenses, etc..............................................58
8.26 No Material Adverse Change; Year 2000..........................................................58
8.27 Full Disclosure................................................................................59
8.28 Material Agreements............................................................................59
8.29 Bank Accounts..................................................................................59
8.30 Governmental Authorization.....................................................................59
8.31 Representations and Warranties in Transaction Documents........................................59
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS.............................................................60
9.1 Taxes and Other Obligations....................................................................60
9.2 Corporate Existence and Good Standing..........................................................60
9.3 Compliance with Law and Agreements; Maintenance of Licenses....................................60
9.4 Maintenance of Property........................................................................60
9.5 Insurance......................................................................................60
9.6 Condemnation...................................................................................62
9.7 Environmental Laws.............................................................................62
9.8 Compliance with ERISA..........................................................................63
9.9 Mergers, Consolidations or Sales...............................................................63
9.10 Distributions; Capital Change; Restricted Investments..........................................63
9.11 Transactions Affecting Collateral or Obligations...............................................63
9.12 Guaranties.....................................................................................63
9.13 Debt...........................................................................................64
9.14 Prepayment; Subordinated Debt..................................................................64
9.15 Transactions with Affiliates...................................................................64
9.16 Investment Banking and Finder's Fees...........................................................65
9.17 [intentionally omitted]........................................................................65
9.18 Business Conducted.............................................................................65
9.19 Liens..........................................................................................65
9.20 Sale and Leaseback Transactions................................................................65
9.21 New Subsidiaries...............................................................................65
9.22 Fiscal Year....................................................................................65
9.23 [intentionally omitted]........................................................................65
9.24 Operating Lease Obligations....................................................................65
9.25 Adjusted Tangible Net Worth....................................................................66
9.26 Fixed Charge Coverage Ratio....................................................................66
9.27 Use of Proceeds................................................................................66
</TABLE>
3
<PAGE> 5
<TABLE>
<S> <C>
9.28 Further Assurances.............................................................................66
9.29 No Restrictions on Subsidiary Distributions....................................................67
ARTICLE 10 CONDITIONS OF LENDING..........................................................................67
10.1 Conditions Precedent to Making of Loans on the Closing Date....................................67
10.2 Conditions Precedent to Each Loan..............................................................70
ARTICLE 11 DEFAULT; REMEDIES..............................................................................70
11.1 Events of Default..............................................................................70
11.2 Remedies.......................................................................................72
ARTICLE 12 TERM AND TERMINATION...........................................................................74
12.1 Term and Termination...........................................................................74
ARTICLE 13 AMENDMENTS; WAIVERS; PARTICIPATIONS............................................................74
13.1 Amendments and Waivers.........................................................................74
13.2 Participations.................................................................................75
13.3 Pledge by Lender...............................................................................75
ARTICLE 14 MISCELLANEOUS..................................................................................75
14.1 No Waivers; Cumulative Remedies................................................................75
14.2 Severability...................................................................................75
14.3 Governing Law; Choice of Forum; Service of Process; Jury Trial Waiver..........................75
14.4 WAIVER OF JURY TRIAL...........................................................................77
14.5 Survival of Representations and Warranties.....................................................78
14.6 Other Security and Guaranties..................................................................78
14.7 Fees and Expenses..............................................................................78
14.8 Notices........................................................................................78
14.9 Waiver of Notices..............................................................................79
14.10 Binding Effect.................................................................................79
14.11 Indemnity of the Lender by the Borrowers.......................................................80
14.12 Limitation of Liability........................................................................80
14.13 Final Agreement................................................................................80
14.14 Counterparts...................................................................................81
14.15 Captions.......................................................................................81
14.16 Right of Setoff................................................................................81
14.17 Joint and Several Liability....................................................................81
14.18 Contribution and Indemnification among the Borrowers...........................................82
14.19 Agency of the Parent for each other Borrower; Joint Account....................................82
</TABLE>
4
<PAGE> 6
EXHIBITS AND SCHEDULES
EXHIBIT A - FORM OF TERM LOAN NOTE
EXHIBIT B - FORM OF BORROWING BASE CERTIFICATE
EXHIBIT C - FINANCIAL STATEMENTS
EXHIBIT D - FORM OF NOTICE OF BORROWING
EXHIBIT E - FORM OF NOTICE OF CONVERSION/CONTINUATION
EXHIBIT F - PRO FORMA BALANCE SHEET
SCHEDULE 1.1A - ASSIGNED CONTRACTS
SCHEDULE 1.1B - APPROVED FOREIGN ACCOUNT DEBTORS
SCHEDULE 1.1C - INVESTMENT POLICY
SCHEDULE 6.3 - LOCATIONS OF COLLATERAL, CHIEF EXECUTIVE OFFICES
SCHEDULE 8.3 - ORGANIZATION AND QUALIFICATIONS
SCHEDULE 8.4 - OTHER NAMES; PRIOR TRANSACTIONS
SCHEDULE 8.5 - SUBSIDIARIES AND AFFILIATES
SCHEDULE 8.7 - CAPITALIZATION
SCHEDULE 8.9 - DEBT
SCHEDULE 8.12 - REAL ESTATE; LEASES
SCHEDULE 8.13 - PROPRIETARY RIGHTS
SCHEDULE 8.14 - TRADE NAMES
SCHEDULE 8.15 - LITIGATION
SCHEDULE 8.17 - LABOR DISPUTES
SCHEDULE 8.18 - ENVIRONMENTAL LAW
SCHEDULE 8.21 - ERISA COMPLIANCE
SCHEDULE 8.28 - MATERIAL AGREEMENTS
5
<PAGE> 7
SCHEDULE 8.29 - BANK ACCOUNTS
SCHEDULE 9.12 - GUARANTIES
SCHEDULE 9.13 - PERMITTED LIENS
6
<PAGE> 8
LOAN AND SECURITY AGREEMENT
LOAN AND SECURITY AGREEMENT, dated as of December 3, 1999, by and among
BANK OF AMERICA, N.A. with an office at 55 South Lake Avenue, Pasadena,
California 91101 and CERPROBE CORPORATION, a Delaware corporation ("Cerprobe")
with offices at 1150 North Fiesta Boulevard, Gilbert, Arizona 85233, and its
wholly-owned Subsidiary, CERPROBE INTERCONNECT SOLUTIONS, INC., a Delaware
corporation ("CIS") with offices at 10365 Sanden Dr., Dallas, Texas 75238 and,
immediately following consummation of the Acquisition (as defined below) OZ
TECHNOLOGIES, INC., a California corporation ("Oz")") with offices at 3387
Investment Blvd., Hayward, California 94545 and TRIPLE S ENGINEERING, INC., a
California corporation ("TSE") with offices at 26010 Eden Landing Rd., Suite 3,
Hayward, California 94545 (collectively, the "Borrowers").
W I T N E S S E T H
WHEREAS, the Borrowers have requested the Lender to make
available to the Borrowers a revolving line of credit for loans and letters of
credit in an amount not to exceed $15,000,000 and to make certain term loans to
Cerprobe and CIS in the aggregate principal amount of $2,000,000, which
extensions of credit to Cerprobe will be used to fund a portion of the costs for
the acquisition by Cerprobe of all of the issued and outstanding capital stock
of Oz, and the balance will be used to refinance certain Debt and for the
working capital needs and general business purposes of the Borrowers;
WHEREAS, following the consummation of the Acquisition, Oz and
its wholly-owned Subsidiary, TSE will execute and deliver the Joinder Agreement
and thereupon become borrowers hereunder; and
WHEREAS, the Lender has agreed to make available to the
Borrowers a revolving credit facility and term loans upon the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual conditions and
agreements set forth in this Agreement, and for good and valuable consideration,
the receipt of which is hereby acknowledged, the Lender and the Borrowers hereby
agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Accounts" means, as to any Borrower, all of the Borrower's
now owned or hereafter acquired or arising accounts as defined in the UCC,
including any rights to payment for the sale or lease of goods or rendition of
services, whether or not they have been earned by performance.
1
<PAGE> 9
"Account Debtor" means each Person obligated in any way on or
in connection with an Account.
"ACH Transactions" means any cash management or related
services including the automatic clearing house transfer of funds by the Lender
for the account of a Borrower pursuant to agreement or overdrafts.
"Acquisition" means the purchase by Cerprobe of all the issued
and outstanding capital stock of Oz in accordance with the Purchase Agreement
and the other Transaction Documents.
"Adjusted Net Earnings from Operations" means, with respect to
any fiscal period, the net income of Cerprobe and its Subsidiaries after
provision for income taxes for such fiscal period, as determined in accordance
with GAAP and reported on the Financial Statements for such period, excluding
any and all of the following included in such net income: (a) gain or loss
arising from the sale of any capital assets; (b) gain arising from any write-up
in the book value of any asset; (c) earnings of any Person, substantially all
the assets of which have been acquired by a Borrower in any manner, to the
extent realized by such other Person prior to the date of acquisition; (d)
earnings of any Person in which a Borrower has an ownership interest unless (and
only to the extent) such earnings shall actually have been received by the
Borrower in the form of cash distributions; (e) earnings of any Person to which
assets of a Borrower shall have been sold, transferred or disposed of, or into
which the Borrower shall have been merged, or which has been a party with the
Borrower to any consolidation or other form of reorganization, prior to the date
of such transaction; (f) gain arising from the acquisition of debt or equity
securities of a Borrower or from cancellation or forgiveness of Debt; and (g)
gain arising from extraordinary items, as determined in accordance with GAAP, or
from any other non-recurring transaction.
"Affiliate" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person or which owns, directly or indirectly, five percent
(5%) or more of the outstanding equity interest of such Person. A Person shall
be deemed to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the other Person, whether through the ownership of
voting securities, by contract, or otherwise.
"Aggregate Availability" means, at any time, the sum of the
Availability of all Borrowers.
"Aggregate Revolver Outstandings" means with respect to a
Borrower or all Borrowers, as the case may be, at any date of determination, the
sum of (a) the unpaid balance of Revolving Loans, (b) the aggregate amount of
Pending Revolving Loans, (c) one hundred percent (100%) of the aggregate undrawn
face amount of all outstanding Letters of Credit, and (d) the aggregate amount
of any unpaid reimbursement obligations in respect of Letters of Credit.
"Agreement" means this Loan and Security Agreement.
"Anniversary Date" means each anniversary of the Closing Date.
2
<PAGE> 10
"Applicable Margin" means
(a) with respect to Base Rate Revolving Loans (other than
Inventory Loans) and all other Obligations (other than any
Term Loan and any LIBOR Rate Loan), 0.50%;
(b) with respect to the Term Loans and Inventory Loans, 2%;
(c) with respect to LIBOR Rate Loans, 2.75%.
"Assigned Contracts" means, collectively, all of each
Borrower's rights and remedies under, and all moneys and claims for money due or
to become due to such Borrower under those contracts set forth on Schedule 1.1,
and any other material contracts, and any and all amendments, supplements,
extensions, and renewals thereof including all rights and claims of the
Borrowers now or hereafter existing: (i) under any insurance, indemnities,
warranties, and guarantees provided for or arising out of or in connection with
any of the foregoing agreements; (ii) for any damages arising out of or for
breach or default under or in connection with any of the foregoing contracts;
(iii) to all other amounts from time to time paid or payable under or in
connection with any of the foregoing agreements; or (iv) to exercise or enforce
any and all covenants, remedies, powers and privileges thereunder.
"Attorney Costs" means and includes all reasonable fees,
expenses and disbursements of any law firm or other counsel engaged by the
Lender, the allocated costs of internal legal services of the Lender and the
reasonable expenses of internal counsel to the Lender.
"Availability" of a Borrower means, at any time, (a) the
Borrowing Base of such Borrower minus (b) the Aggregate Revolver Outstandings of
such Borrower.
"Bank Products" means any one or more of the following types
of services or facilities extended to any Borrower by the Lender or any
Affiliate of the Lender in reliance on the Lender's agreement to indemnify such
affiliate: (i) credit cards; (ii) ACH Transactions; and (iii) Hedge Agreements.
"Bank Product Reserves" means all reserves which the Lender
from time to time establishes in its sole discretion for the Bank Products then
provided or outstanding.
"Bankruptcy Code" means Title 11 of the United States Code (11
U.S.C. Section 101 et seq.).
"Base Rate" means, for any day, the rate of interest in effect
for such day as publicly announced from time to time by the Lender in Charlotte,
North Carolina as its "prime rate" (the "prime rate" being a rate set by the
Lender based upon various factors including the Lender's costs and desired
return, general economic conditions and other factors, and is used as a prime
point for pricing some loans, which may be priced at, above, or below such
announced rate). Any change in the prime rate announced by the Lender shall take
effect at the opening of business on the day specified in the public
announcement of such change. Each Interest Rate based upon the Base Rate shall
be adjusted simultaneously with any change in the Base Rate.
3
<PAGE> 11
"Base Rate Loans" means, collectively, the Base Rate Revolving
Loans and the Term Loans.
"Base Rate Revolving Loan" means a Revolving Loan during any
period in which it bears interest based on the Base Rate.
"Blocked Account Agreement" means an agreement among a
Borrower, the Lender and a Clearing Bank, in form and substance satisfactory to
the Lender, concerning the collection of payments which represent the proceeds
of Accounts or of any other Collateral.
"Borrower Guaranty" means the Guaranty executed by each
Borrower (including the Joinder Agreement) and delivered to the Lender to
guarantee the Obligations of the other Borrowers.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans or a Term Loan made on the same day by the Lender to a Borrower
or the issuance of Letters of Credit hereunder.
"Borrowing Base" means with respect to a Borrower, at any
time, an amount equal to (a) the lesser of (i) the Maximum Revolver Amount less
the Aggregate Revolver Outstandings of all other Borrowers or (ii) the sum of
(A) eighty-five percent (85%) of the Net Amount of Eligible Accounts; plus (B)
the lesser of (x) initially eighty-five percent (85%) of the value of Inventory
(valued at the lower of cost (first-in, first-out method) or market as reported
on Borrower's books and records consistent with past practices), reducing by two
percent (2%) per month effective as of the first day of each month and (y) the
Inventory Sublimit less the outstanding principal amount of Inventory Loans of
all other Borrowers; minus (b) the sum of (i) reserves for accrued and unpaid
interest on the Obligations of such Borrower, (ii) any Bank Product Reserves of
such Borrower and (iii) all other reserves which the Lender deems necessary in
the exercise of its reasonable credit judgment to maintain with respect to the
Borrower's account, including reserves for any amounts which the Lender may be
obligated to pay in the future for the account of such Borrower.
"Borrowing Base Certificate" means a certificate by a
Responsible Officer of the Borrowers, substantially in the form of Exhibit B (or
another form acceptable to the Lender), setting forth the calculation of the
Borrowing Base of each Borrower, including a calculation of each component
thereof, all in such detail as shall be satisfactory to the Lender. All
calculations of the Borrowing Base in connection with the preparation of any
Borrowing Base Certificate shall originally be made by the Borrowers and
certified to the Lender; provided, that the Lender shall have the right to
review and adjust, in the exercise of its reasonable credit judgment, any such
calculation (i) to reflect its reasonable estimate of declines in value of any
of the Collateral described therein, and (ii) to the extent that such
calculation is not in accordance with this Agreement.
"Business Day" means (a) any day that is not a Saturday,
Sunday, or a day on which banks in Los Angeles, California or Charlotte, North
Carolina are required or permitted to be closed, and (b) with respect to all
notices, determinations, fundings and payments in connection with the LIBOR Rate
or LIBOR Rate Loans, any day that is a Business Day pursuant
4
<PAGE> 12
to clause (a) above and that is also a day on which trading in Dollars is
carried on by and between banks in the London interbank market.
"Capital Adequacy Regulation" means any guideline, request or
directive of any central bank or other Governmental Authority, or any other law,
rule or regulation, whether or not having the force of law, in each case,
regarding capital adequacy of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether or not
paid) in respect of the cost of any fixed asset or improvement, or replacement,
substitution, or addition thereto, which has a useful life of more than one
year, including, without limitation, those costs arising in connection with the
direct or indirect acquisition of such asset by way of increased product or
service charges or in connection with a Capital Lease.
"Capital Lease" means any lease of property which, in
accordance with GAAP, should be reflected as a capital lease on the lessee's
balance sheet.
"Cash Flow" means, for any fiscal period, (a) EBITDA less (b)
income taxes paid or accrued less (c) Capital Expenditures made in cash, all
determined on a consolidated basis for Borrowers (but excluding any Subsidiary
which is not a Borrower).
"Change of Control" means (a) any Person or group (within the
meaning of Rule 13d-5, as in effect on the date hereof, under the Exchange Act)
shall become the beneficial owner of more than twenty-five percent (25%) of the
outstanding capital stock of Cerprobe entitled to vote for the election of the
board of directors; (b) during any period of twelve consecutive months
individuals who at the beginning of such period constituted a majority of the
board of directors of Cerprobe (together with new directors whose election by
such board or whose nomination for the election by the shareholders of Cerprobe
was approved by the majority of the directors still in office who were either
directors at the beginning of such period or whose election was previously so
approved) shall cease for any reason to constitute a majority of the board of
directors of Cerprobe then in office; or (c) Cerprobe shall cease to be the
legal and beneficial owner of all of the issued and outstanding capital stock of
each other Loan Party.
"Clearing Bank" means the Lender or any other banking
institution with whom a Payment Account has been established pursuant to a
Blocked Account Agreement.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as amended
from time to time, and any successor statute, and regulations promulgated
thereunder.
"Collateral" means the "Collateral" as defined in Section 6.1
and all other assets and properties of the Loan Parties on which a Lien is
granted to the Lender to secure the Obligations of the Borrowers.
5
<PAGE> 13
"Contaminant" means any waste, pollutant, hazardous substance,
toxic substance, hazardous waste, special waste, petroleum or petroleum-derived
substance or waste, asbestos in any form or condition, polychlorinated biphenyls
("PCBs"), or any constituent of any such substance or waste.
"Credit Support" has the meaning specified in Section 2.4(a).
"Debt" means, with respect to any Person and without
duplication, all liabilities, obligations and indebtedness of such Person to any
Person, of any kind or nature, now or hereafter owing, arising, due or payable,
howsoever evidenced, created, incurred, acquired or owing, whether primary,
secondary, direct, contingent, fixed or otherwise, and including, without in any
way limiting the generality of the foregoing: (a) liabilities and obligations to
trade creditors; (b) all Obligations; (c) all obligations and liabilities of any
Person secured by any Lien on the property of such Person, even though such
Person shall not have assumed or become liable for the payment thereof;
provided, however, that all such obligations and liabilities which are limited
in recourse to such property shall be included in Debt only to the extent of the
book value of such property as would be shown on a balance sheet of such Person
prepared in accordance with GAAP; (d) all obligations or liabilities created or
arising under any Capital Lease or conditional sale or other title retention
agreement with respect to property used or acquired by such Person, even if the
rights and remedies of the lessor, seller or lender thereunder are limited to
repossession of such property; provided, however, that all such obligations and
liabilities which are limited in recourse to such property shall be included in
Debt only to the extent of the book value of such property as would be shown on
a balance sheet of such Person prepared in accordance with GAAP; and (e) all
obligations and liabilities under Guaranties.
"Debt For Borrowed Money" means, as to any Person, and without
duplication, (a) Debt for borrowed money or as evidenced by notes, bonds,
debentures or similar evidences of any such Debt of such Person, (b) the
deferred and unpaid purchase price of any property or business (other than trade
accounts payable incurred in the ordinary course of business and constituting
current liabilities), (c) all obligations under Capital Leases and (d) all
Guaranties of any of the foregoing.
"Default" means any event or circumstance which, with the
giving of notice, the lapse of time, or both, would (if not cured, waived, or
otherwise remedied during such time) constitute an Event of Default.
"Default Rate" means a fluctuating per annum interest rate at
all times equal to the sum of (a) the otherwise applicable Interest Rate plus
(b) two percent (2%). Each Default Rate shall be adjusted simultaneously with
any change in the applicable Interest Rate. In addition, with respect to Letters
of Credit, the Default Rate shall mean an increase in the Letter of Credit Fee
by two percentage points.
"Distribution" means, in respect of any corporation: (a) the
payment or making of any dividend or other distribution of property in respect
of capital stock (or any options or warrants for or other rights with respect to
such stock) of such corporation, other than distributions in capital stock (or
any options or warrants for such stock) of the same class; or (b)
6
<PAGE> 14
the redemption or other acquisition by such corporation of any capital stock (or
any options or warrants for or other rights with respect to such stock) of such
corporation.
"DOL" means the United States Department of Labor or any
successor department or agency.
"Dollar" and "$" means dollars in the lawful currency of the
United States.
"EBITDA" means, for any fiscal period, for the Borrowers, the
sum of the following: (a) Adjusted Net Earnings from Operations (b) income taxes
paid or accrued, plus (c) interest expense paid in cash, plus (d) depreciation
and amortization, plus (e) non-recurring non-cash charges resulting from the
write-off of research and development costs acquired in an acquisition, plus (f)
minority interests, all determined in accordance with GAAP.
"Eligible Accounts" of a Borrower means the Accounts of such
Borrower which the Lender in the exercise of its reasonable commercial
discretion determines to be Eligible Accounts. Without limiting the discretion
of the Lender to establish other criteria of ineligibility, Eligible Accounts
shall not include any Account:
(a) with respect to which more than 90 days have
elapsed since the date of the original invoice therefor or which is more than 60
days past due;
(b) with respect to which any of the representations,
warranties, covenants, and agreements contained in Section 6.8 are not or have
ceased to be complete and correct or have been breached;
(c) with respect to which Account (or any other
Account due from such Account Debtor), in whole or in part, a check, promissory
note, draft, trade acceptance or other instrument for the payment of money has
been received, presented for payment and returned uncollected for any reason;
(d) which represents a progress billing (as
hereinafter defined) or as to which the Borrower has extended the time for
payment without the consent of the Lender; for the purposes hereof, "progress
billing" means any invoice for goods sold or leased or services rendered under a
contract or agreement pursuant to which the Account Debtor's obligation to pay
such invoice is conditioned upon the Borrower's completion of any further
performance under the contract or agreement;
(e) with respect to which any one or more of the
following events has occurred to the Account Debtor on such Account: death or
judicial declaration of incompetency of an Account Debtor who is an individual;
the filing by or against the Account Debtor of a request or petition for
liquidation, reorganization, arrangement, adjustment of debts, adjudication as a
bankrupt, winding-up, or other relief under the bankruptcy, insolvency, or
similar laws of the United States, any state or territory thereof, or any
foreign jurisdiction, now or hereafter in effect; the making of any general
assignment by the Account Debtor for the benefit of creditors; the appointment
of a receiver or trustee for the Account Debtor or for any of the assets of the
Account Debtor, including, without limitation, the appointment of or taking
possession by a "custodian," as defined in the Federal Bankruptcy Code; the
institution by or against the Account
7
<PAGE> 15
Debtor of any other type of insolvency proceeding (under the bankruptcy laws of
the United States or otherwise) or of any formal or informal proceeding for the
dissolution or liquidation of, settlement of claims against, or winding up of
affairs of, the Account Debtor; the sale, assignment, or transfer of all or any
material part of the assets of the Account Debtor; the nonpayment generally by
the Account Debtor of its debts as they become due; or the cessation of the
business of the Account Debtor as a going concern;
(f) if fifty percent (50%) or more of the aggregate
Dollar amount of outstanding Accounts owed at such time to all Borrowers by the
Account Debtor thereon is classified as ineligible under clause (a) above;
(g) owed by an Account Debtor which: (i) does not
maintain its chief executive office in the United States of America or Canada;
or (ii) is not organized under the laws of the United States of America or
Canada or any state or province thereof; or (iii) is the government of any
foreign country or sovereign state, or of any state, province, municipality, or
other political subdivision thereof, or of any department, agency, public
corporation, or other instrumentality thereof; except to the extent that (x)
such Account is secured or payable by a letter of credit satisfactory to the
Lender in its discretion or (y) the Account Debtor is listed on Schedule 1.1(b)
(as it may be revised from time to time by the Lender) or otherwise has been
approved in writing by the Lender;
(h) owed by an Account Debtor which is an Affiliate
or employee of any Borrower;
(i) except as provided in clause (k) below, with
respect to which either the perfection, enforceability, or validity of the
Lender's Lien in such Account, or the Lender's right or ability to obtain direct
payment to the Lender of the proceeds of such Account, is governed by any
federal, state, or local statutory requirements other than those of the UCC;
(j) owed by an Account Debtor to which any Borrower
or any of its Subsidiaries is indebted in any way, or which is subject to any
right of setoff or recoupment by the Account Debtor, unless the Account Debtor
has entered into an agreement acceptable to the Lender to waive setoff rights;
or if the Account Debtor thereon has disputed liability or made any claim with
respect to any other Account due from such Account Debtor; but in each such case
only to the extent of such indebtedness, setoff, recoupment, dispute, or claim;
(k) owed by the government of the United States of
America, or any department, agency, public corporation, or other instrumentality
thereof, unless the Federal Assignment of Claims Act of 1940, as amended (31
U.S.C. Section 3727 et seq.), and any other steps necessary to perfect the
Lender's Lien therein, have been complied with to the Lender's satisfaction with
respect to such Account;
(l) owed by any state, municipality, or other
political subdivision of the United States of America, or any department,
agency, public corporation, or other instrumentality thereof and as to which the
Lender determines that its Lien therein is not or cannot be perfected;
8
<PAGE> 16
(m) which represents a sale on a bill-and-hold,
guaranteed sale, sale and return, sale on approval, consignment, or other
repurchase or return basis;
(n) which is evidenced by a promissory note or other
instrument or by chattel paper;
(o) if the Lender believes, in the exercise of its
reasonable judgment, that the prospect of collection of such Account is impaired
or that the Account may not be paid by reason of the Account Debtor's financial
inability to pay;
(p) with respect to which the Account Debtor is
located in any state requiring the filing of a Notice of Business Activities
Report or similar report in order to permit the Borrower to seek judicial
enforcement in such State of payment of such Account, unless such Borrower has
qualified to do business in such state or has filed a Notice of Business
Activities Report or equivalent report for the then current year;
(q) which arises out of a sale not made in the
ordinary course of the Borrower's business;
(r) with respect to which the goods giving rise to
such Account have not been shipped and delivered to and accepted by the Account
Debtor or the services giving rise to such Account have not been performed by
the Borrower, and, if applicable, accepted by the Account Debtor, or the Account
Debtor revokes its acceptance of such goods or services;
(s) owed by an Account Debtor which is obligated to
the Borrower respecting Accounts the aggregate unpaid balance of which exceeds
fifteen percent (15%) (or with respect to Intel Corporation and its
Subsidiaries, thirty-five percent (35%)) of the aggregate unpaid balance of all
Accounts owed to the Borrower at such time by all of the Borrower's Account
Debtors, but only to the extent of such excess;
(t) which arises out of an enforceable contract or
order which, by its terms, forbids, restricts or makes void or unenforceable the
granting of a Lien by the Borrower to the Lender with respect to such Account;
or
(u) which is not subject to a first priority and
perfected security interest in favor of the Lender.
If any Account at any time ceases to be an Eligible Account,
then such Account shall promptly be excluded from the calculation of Eligible
Accounts.
"Eligible Inventory" of a Borrower means Inventory of such
Borrower which the Lender, in its reasonable discretion, determines to be
Eligible Inventory. Without limiting the discretion of the Lender to establish
other criteria of eligibility, Eligible Inventory shall meet all of the
following requirements:
(a) such Inventory is owned by the Borrower;
9
<PAGE> 17
(b) such Inventory is subject to the Lender's Liens, which are
perfected as to such Inventory, and is subject to no other Lien whatsoever
(other than the Liens described in clause (d) of the definition of Permitted
Liens provided that such Permitted Liens (i) are junior in priority to the
Lender's Liens and (ii) do not impair directly or indirectly the ability of the
Lender to realize on or obtain the full benefit of the Collateral);
(c) such Inventory consists of finished goods or raw
materials;
(d) such Inventory does not consist of work-in-process,
chemicals, supplies, subassemblies, or packing and shipping materials;
(e) such Inventory shall exclude the amount of Borrower's
Inventory reserves, as shown on its books and records and established pursuant
to policies in effect on the date hereof;
(f) such Inventory is located within the United States of
America or Canada (and not in-transit from vendors or suppliers);
(g) if such Inventory is located in a public warehouse or in
possession of a bailee or in a facility leased by the Borrower, the
warehouseman, or the bailee, or the lessor has delivered to the Lender, if
requested by the Lender, a subordination agreement in form and substance
satisfactory to the Lender;
(h) if such Inventory contains or bears any Proprietary Rights
licensed to a Borrower by any Person, the Lender shall be satisfied that it may
sell or otherwise dispose of such Inventory in accordance with Article 11
without infringing the rights of the licensor of such Proprietary Rights or
violating any contract with such licensor (and without payment of any royalties
other than any royalties due with respect to the sale or disposition of such
Inventory pursuant to the existing license agreement), and, if the Lender deems
it necessary, the applicable Borrower shall deliver to the Lender a consent or
sublicense agreement from such licensor in form and substance acceptable to the
Lender; and
(i) If any Inventory at any time ceases to be Eligible
Inventory, such Inventory shall promptly be excluded from the calculation of
Eligible Inventory.
"Environmental Claims" means all claims, however asserted, by
any Governmental Authority or other Person alleging potential liability or
responsibility for violation of any Environmental Law, or for a Release or
injury to the environment.
"Environmental Laws" means all federal, state or local laws,
statutes, common law duties, rules, regulations, ordinances and codes, together
with all administrative orders, directed duties, licenses, authorizations and
permits of, and agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any Governmental
Authority for (a) any liability under Environmental Laws, or (b) damages arising
from, or costs incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
10
<PAGE> 18
"Equipment" of a Borrower means all of the Borrower's now
owned and hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except Inventory), including
motor vehicles with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, and office equipment, as well as all of such types
of property leased by the Borrower and all of the Borrower's rights and
interests with respect thereto under such leases (including, without limitation,
options to purchase); together with all present and future additions and
accessions thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all substitutes for any
of the foregoing, and all manuals, drawings, instructions, warranties and rights
with respect thereto; wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security Act of
1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) under common control with the Borrower within the meaning of
Section 414(b) or (c) of the Code (and Sections 414(m) and (o) of the Code for
purposes of provisions relating to Section 412 of the Code).
"ERISA Event" means (a) a Reportable Event with respect to a
Pension Plan, (b) a withdrawal by the Borrower or any ERISA Affiliate from a
Pension Plan subject to Section 4063 of ERISA during a plan year in which it was
a substantial employer (as defined in Section 4001(a)(2) of ERISA) or a
cessation of operations which is treated as such a withdrawal under Section
4062(e) of ERISA, (c) a complete or partial withdrawal by the Borrower or any
ERISA Affiliate from a Multi-employer Plan or notification that a Multi-employer
Plan is in reorganization, (d) the filing of a notice of intent to terminate,
the treatment of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to terminate a Pension
Plan or Multi-employer Plan, (e) the occurrence of an event or condition which
might reasonably be expected to constitute grounds under Section 4042 of ERISA
for the termination of, or the appointment of a trustee to administer, any
Pension Plan or Multi-employer Plan, or (f) the imposition of any liability
under Title IV of ERISA, other than for PBGC premiums due but not delinquent
under Section 4007 of ERISA, upon the Borrower or any ERISA Affiliate.
"Event of Default" has the meaning specified in Section 11.1.
"Exchange Act" means the Securities Exchange Act of 1934, and
regulations promulgated thereunder.
"FDIC" means the Federal Deposit Insurance Corporation, and
any Governmental Authority succeeding to any of its principal functions.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers on such
day, as published by the Federal Reserve Bank of New York on the Business Day
next succeeding such day; provided that (a) such day is not a Business Day, the
11
<PAGE> 19
Federal Funds Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding Business Day,
and (b) if no such rate is so published on such next succeeding Business Day,
the Federal Funds Rate for such day shall be the average rate charged to the
Lender on such day on such transactions as determined by the Lender.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System or any successor thereto.
"Financial Statements" means, according to the context in
which it is used, the financial statements referred to in Section 8.6 or any
other financial statements required to be given to the Lender pursuant to this
Agreement.
"Fiscal Year" means the Borrowers' fiscal year for financial
accounting purposes. The current Fiscal Year of the Borrowers will end on
December 31, 1999.
"Fixed Assets" of a Borrower means the Equipment and Real
Estate of the Borrower.
"Fixed Charge Coverage" means, for any fiscal period, the
ratio of (a) Cash Flow for such period to (b) the sum of (i) interest expense of
Borrowers for such period plus (ii) principal payments with respect to Debt for
Borrowed Money of Borrowers for such period, in the case of (i) and (ii) to the
extent paid in cash.
"Foreign Subsidiary" means any Subsidiary of Cerprobe or any
of its Subsidiaries which is organized under the laws of any jurisdiction other
than the United States or any state thereof.
"Funding Date" means the date on which a Borrowing occurs.
"GAAP" means generally accepted accounting principles and
practices set forth from time to time in the opinions and pronouncements of the
Accounting Principles Board and the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board (or agencies with similar functions of comparable stature and
authority within the U.S. accounting profession), which are applicable to the
circumstances as of the Closing Date.
"General Intangibles" of a Borrower means all of the
Borrower's now owned or hereafter acquired general intangibles, chooses in
action and causes of action and all other intangible personal property of the
Borrower of every kind and nature (other than Accounts), including, without
limitation, all contract rights, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications, patents, patent
applications, trademarks, service marks, trade names, trade secrets, goodwill,
copyrights, computer software, customer lists, registrations, licenses,
franchises, tax refund claims, any funds which may become due to the Borrower in
connection with the termination of any Plan or other employee benefit plan or
any rights thereto and any other amounts payable to the Borrower from any Plan
or other employee benefit plan, rights and claims against carriers and shippers,
rights to indemnification, business interruption insurance and proceeds thereof,
property, casualty or any
12
<PAGE> 20
similar type of insurance and any proceeds thereof, proceeds of insurance
covering the lives of key employees on which the Borrower is beneficiary, and
any letter of credit, guarantee, claim, security interest or other security held
by or granted to the Borrower.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, any central bank (or similar
monetary or regulatory authority) thereof, any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guaranty" means, with respect to any Person, all obligations
of such Person which in any manner directly or indirectly guarantee or assure,
or in effect guarantee or assure, the payment or performance of any
indebtedness, dividend or other obligations of any other Person (the "guaranteed
obligations"), or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including any such obligations
incurred through an agreement, contingent or otherwise: (a) to purchase the
guaranteed obligations or any property constituting security therefor; (b) to
advance or supply funds for the purchase or payment of the guaranteed
obligations or to maintain a working capital or other balance sheet condition;
or (c) to lease property or to purchase any debt or equity securities or other
property or services.
"Hedge Agreement" means any and all transactions, agreements
or documents now existing or hereafter entered into, which provides for an
interest rate, credit, commodity or equity swap, cap, floor, collar, forward
foreign exchange transaction, currency swap, cross currency rate swap, currency
option, or any combination of, or option with respect to, these or similar
transactions, for the purpose of hedging a Borrower's exposure to fluctuations
in interest or exchange rates, loan, credit exchange, security or currency
valuations or commodity prices.
"Intercompany Accounts" means all assets and liabilities,
however arising, which are due to a Borrower from, which are due from the
Borrower to, or which otherwise arise from any transaction by a Borrower with
any Affiliate.
"Interest Period" means, as to any LIBOR Rate Loan, the period
commencing on the Funding Date of such Loan or on the Continuation/Conversion
Date on which the Loan is converted into or continued as a LIBOR Rate Loan, and
ending on the date one, two, three or six months thereafter as selected by a
Borrower in its Notice of Borrowing, in the form attached hereto as Exhibit D,
or Notice of Continuation/Conversion, in the form attached hereto as Exhibit E;
provided that:
(a) if any Interest Period would otherwise end on a
day that is not a Business Day, that Interest Period shall be extended to the
following Business Day unless the result of such extension would be to carry
such Interest Period into another calendar month, in which event such Interest
Period shall end on the preceding Business Day;
(b) any Interest Period pertaining to a LIBOR Rate
Loan that begins on the last Business Day of a calendar month (or on a day for
which there is no numerically corresponding day in the calendar month at the end
of such Interest Period) shall end on the last Business Day of the calendar
month at the end of such Interest Period; and
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<PAGE> 21
(c) no Interest Period shall extend beyond the Stated
Termination Date.
"Interest Rate" means each or any of the interest rates,
including the Default Rate, set forth in Section 3.1.
"Inventory" of a Borrower means all of the Borrower's now
owned and hereafter acquired inventory, goods and merchandise, wherever located,
to be furnished under any contract of service or held for sale or lease, all
returned goods, raw materials, other materials and supplies of any kind, nature
or description which are used or consumed in the Borrower's business or used in
connection with the packing, shipping, advertising, selling or finishing of such
goods, merchandise and such other personal property, and all documents of title
or other documents representing them.
"Inventory Loans" means Revolving Loans the amount of which is
based on Eligible Inventory. All Revolving Loans shall be deemed first to be
Inventory Loans to the maximum amount permitted under the definition of
Borrowing Base.
"Inventory Sublimit" initially, for all Borrowers, $5,834,000,
decreasing on the first day of each month hereafter by an amount equal to
$243,083.33 until December 1, 2000, on which date the Inventory Sublimit shall
reduce to zero. The Inventory Sublimit may be permanently reduced by the
Borrowers in accordance with Section 4.4 hereof and shall be permanently reduced
in accordance with Section 4.5 hereof.
"Investment Property" of a Borrower means all of the
Borrower's right title and interest in and to any and all: (a) securities
whether certificated or uncertificated; (b) securities entitlements; (c)
securities accounts; (d) commodity contracts; or (e) commodity accounts.
"IRS" means the Internal Revenue Service and any Governmental
Authority succeeding to any of its principal functions under the Code.
"Joinder Agreement" means the Borrower Joinder Agreement
executed and delivered by Oz and TSE on the Closing Date immediately following
consummation of the Acquisition.
"Latest Projections" means: (a) on the Closing Date and
thereafter until the Lender receives new projections pursuant to Section 7.2(f),
the projections of the Borrowers' financial condition, results of operations,
and cash flows, for the period commencing on December 31, 1999 and ending on
December 31, 2001 and delivered to the Lender prior to the Closing Date; and (b)
thereafter, the projections most recently received by the Lender pursuant to
Section 7.2(f).
"Lender" means Bank of America, N.A., a national banking
association, or any successor entity thereto.
"Letter of Credit" has the meaning specified in Section 2.4.
"Letter of Credit Fee" has the meaning specified in Section
3.6.
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<PAGE> 22
"Letter of Credit Issuer" means the Lender, any affiliate of
the Lender or any other financial institution that issues any Letter of Credit
pursuant to this Agreement.
"LIBOR Rate" means, for any Interest Period, with respect to
LIBOR Rate Loans, the rate of interest per annum determined pursuant to the
following formula:
<TABLE>
<CAPTION>
<S> <C>
LIBOR Rate = Offshore Base Rate
____________________________________
1.00 - Eurodollar Reserve Percentage
</TABLE>
Where,
"Offshore Base Rate" means the rate per annum
appearing on Telerate Page 3750 (or any successor page) as the
London interbank offered rate for deposits in Dollars at
approximately 11:00 a.m. (London time) two Business Days prior
to the first day of such Interest Period for a term comparable
to such Interest Period. If for any reason such rate is not
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum appearing on Reuters Screen LIBO
Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term
comparable to such Interest Period; provided, however, if more
than one rate is specified on Reuters Screen LIBO Page, the
applicable rate shall be the arithmetic mean of all such
rates. If for any reason none of the foregoing rates is
available, the Offshore Base Rate shall be, for any Interest
Period, the rate per annum determined by the Lender as the
rate of interest at which dollar deposits in the approximate
amount of the LIBOR Rate Loan comprising part of such
Borrowing would be offered by the Lender's London Branch to
major banks in the offshore dollar market at their request at
or about 11:00 a.m. (London time) two Business Days prior to
the first day of such Interest Period for a term comparable to
such Interest Period.
"Eurodollar Reserve Percentage" means, for any day
during any Interest Period, the reserve percentage (expressed
as a decimal, rounded upward to the next 1/100th of 1%) in
effect on such day applicable to Lender under regulations
issued from time to time by the Federal Reserve Board for
determining the maximum reserve requirement (including any
emergency, supplemental or other marginal reserve requirement)
with respect to Eurocurrency funding (currently referred to as
"Eurocurrency liabilities"). The Offshore Rate for each
outstanding LIBOR Rate Loan shall be adjusted automatically as
of the effective date of any change in the Eurodollar Reserve
Percentage.
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"LIBOR Rate Loan" means a Revolving Loan during any period in
which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner of the
property, whether such interest is based on the common law, statute, or
contract, and including a security interest, charge, claim, or lien arising from
a mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment,
deposit arrangement, agreement, security agreement, conditional sale or trust
receipt or a lease, consignment or bailment for security purposes; (b) to the
extent not included under clause (a), any reservation, exception, encroachment,
easement, right-of-way, covenant, condition, restriction, lease or other title
exception or encumbrance affecting property; and (c) any contingent or other
agreement to provide any of the foregoing.
"Loan Account" of a Borrower means the loan account of the
Borrower, which account shall be maintained by the Lender.
"Loan Documents" means this Agreement, the Term Loan Notes,
the Patent and Trademark Agreements, the Borrower Guaranty, the Pledge
Agreements, the Joinder Agreement, and any other agreements, instruments, and
documents heretofore, now or hereafter evidencing, securing, guaranteeing or
otherwise relating to the Obligations, the Collateral, or any other aspect of
the transactions contemplated by this Agreement.
"Loans" means, collectively, all loans and advances provided
for in Article 2.
"Margin Stock" means "margin stock" as such term is defined in
Regulation T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse change
in, or a material adverse effect upon, the operations, business, properties,
condition (financial or otherwise) or prospects of the Borrowers taken as a
whole or the Collateral; (b) a material impairment of the ability of any
Borrower to perform under any Loan Document to which it is a party and to avoid
any Event of Default; or (c) a material adverse effect upon the legality,
validity, binding effect or enforceability against any Borrower of any Loan
Document to which it is a party.
"Maximum Revolver Amount" means $15,000,000.
"Multi-employer Plan" means a "multi-employer plan" as defined
in Section 4001(a)(3) of ERISA which is or was at any time during the current
year or the immediately preceding six (6) years contributed to by any Borrower
or any ERISA Affiliate.
"Net Amount of Eligible Accounts" of a Borrower means, at any
time, the gross amount of Eligible Accounts of such Borrower less sales, excise
or similar taxes, and less returns, discounts, claims, credits and allowances of
any nature at any time issued, owing, granted, outstanding, available or
claimed.
"Notice of Borrowing" has the meaning specified in Section
2.2(b).
"Notice of Conversion/Continuation" has the meaning specified
in Section 3.2(b).
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"Obligations" of a Borrower means all present and future
loans, advances, liabilities, obligations, covenants, duties, and debts owing by
the Borrower to the Lender whether or not arising under or pursuant to this
Agreement or any of the other Loan Documents, whether or not evidenced by any
note, or other instrument or document, whether arising from an extension of
credit, opening of a letter of credit, acceptance, loan, guaranty (including the
Borrower Guaranty), indemnification or otherwise, whether direct or indirect
(including those acquired by assignment from others, and any participation by
the Lender in the Borrower's debts owing to others), absolute or contingent, due
or to become due, primary or secondary, as principal or guarantor, and including
all principal, interest, charges, expenses, fees, attorneys' fees, filing fees
and any other sums chargeable to the Borrower hereunder or under any of the
other Loan Documents. "Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter arising from or in connection with
the Letters of Credit and (b) all debts, liabilities and obligations now or
hereafter arising from or in connection with Bank Products.
"Other Taxes" means any present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies which
arise from any payment made hereunder or from the execution, delivery or
registration of, or otherwise with respect to, this Agreement or any other Loan
Documents.
"Participant" means any Person who shall have been granted the
right by the Lender to participate in the financing provided by the Lender under
this Agreement, and who shall have entered into a participation agreement in
form and substance satisfactory to the Lender.
"Patent and Trademark Agreements" means, collectively, the
Patent and Trademark Security Agreements, each dated as of the date hereof,
executed and delivered by any Borrower to the Lender to evidence and perfect the
Lender's security interest in the Borrower's present and future patents,
trademarks, and related licenses and rights.
"Payment Account" of a Borrower means each bank account
established pursuant to Section 6.9, to which the proceeds of Accounts and other
Collateral are deposited or credited, and which is maintained in the name of the
Lender or the Borrower, as the Lender may determine, on terms acceptable to the
Lender.
"PBGC" means the Pension Benefit Guaranty Corporation or any
Governmental Authority succeeding to the functions thereof.
"Pending Revolving Loans" means, with respect to any Borrower
or all Borrowers, as the case may be, at any time, the aggregate principal
amount of all Revolving Loans requested in any Notice of Borrowing received by
the Lender which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in Section
3(2) of ERISA) subject to Title IV of ERISA which any Borrower sponsors,
maintains, or to which it makes, is making, or is obligated to make
contributions, or in the case of a Multiple-employer Plan has made contributions
at any time during the immediately preceding five (5) plan years.
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"Permitted Liens" means:
(a) Liens for taxes not delinquent or statutory Liens
for taxes in an amount not to exceed $100,000 provided that the payment of such
taxes which are due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which adequate financial
reserves have been established on the applicable Borrower's books and records
and a stay of enforcement of any such Lien is in effect;
(b) the Lender's Liens;
(c) Liens consisting of deposits made in the ordinary
course of business in connection with, or to secure payment of, obligations
under worker's compensation, unemployment insurance, social security and other
similar laws, or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity, performance or
other similar bonds for the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure statutory obligations
(other than liens arising under ERISA or Environmental Liens) or surety or
appeal bonds, or to secure indemnity, performance or other similar bonds;
(d) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and other like
Persons, provided that if any such Lien arises from the nonpayment of such
claims or demand when due, such claims or demands do not exceed $100,000 in the
aggregate;
(e) Liens constituting encumbrances in the nature of
reservations, exceptions, encroachments, easements, rights of way, covenants
running with the land, and other similar title exceptions or encumbrances
affecting any Real Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere with its use
in the ordinary conduct of any Borrower's business;
(f) Liens arising from judgments and attachments in
connection with court proceedings provided that the attachment or enforcement of
such Liens would not result in an Event of Default hereunder and such Liens are
being contested in good faith by appropriate proceedings, adequate reserves have
been set aside and no material Property is subject to a material risk of loss or
forfeiture and the claims in respect of such Liens are fully covered by
insurance (subject to ordinary and customary deductibles) and a stay of
execution pending appeal or proceeding for review is in effect;
(g) Liens existing on the Closing Date and listed on
Schedule 9.19;
(h) Liens securing purchase money Debt or Capital
Leases permitted hereunder which encumber only the Fixed Assets purchased or
leased as permitted hereby;
(i) Liens securing Debt previously permitted to be
secured hereunder and which has been extended, renewed or refunded so long as
(x) the principal amount of the Debt so secured is not increased, (y) such Liens
encumber only the assets theretofore subject to a Permitted Lien and (z) at the
time of such extension, renewal or refunding and after giving effect thereto, no
Default or Event of Default shall have occurred and be continuing;
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(j) Liens securing Debt of a newly acquired
Subsidiary permitted under Section 9.13, provided that such Liens shall not
encumber any assets other than those subject to such Liens at the time of the
acquisition; and
(k) Liens on Cerprobe's interest in CRPB Investors
L.L.C., subject to the terms of the Subordination Agreement.
"Permitted Rentals" has the meaning specified in Section 9.24.
"Person" means any individual, sole proprietorship,
partnership, limited liability company, joint venture, trust, unincorporated
organization, association, corporation, Governmental Authority, or any other
entity.
"Plan" means an employee benefit plan (as defined in Section
3(3) of ERISA) which any Borrower sponsors or maintains or to which the Borrower
makes, is making, or is obligated to make contributions and includes any Pension
Plan.
"Pledge Agreements" means, collectively, the pledge
agreements, each dated the date hereof, executed and delivered by Borrowers to
the Lender to pledge and grant a security interest in the capital stock of
Subsidiaries and any notes or other instruments.
"Post Closing Letter" means that certain letter agreement
dated the Closing Date among the Borrowers and the Lender.
"Proprietary Rights" of a Borrower means all of the Borrower's
now owned and hereafter arising or acquired: licenses, franchises, permits,
patents, patent rights, copyrights, works which are the subject matter of
copyrights, trademarks, service marks, trade names, trade styles, patent,
trademark and service mark applications, and all licenses and rights related to
any of the foregoing, including those patents, trademarks, service marks, trade
names and copyrights set forth on Schedule 8.13 hereto, and all other rights
under any of the foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing, and all rights
to sue for past, present and future infringement of any of the foregoing.
"Purchase Agreement" means that certain Stock Purchase
Agreement dated as of December 3, 1999 among Cerprobe, as purchaser, Oz, and the
Sellers.
"Real Estate" of a Borrower means all of the Borrower's now or
hereafter owned or leased estates in real property, including, without
limitation, all fees, leaseholds and future interests, together with all of the
Borrower's now or hereafter owned or leased interests in the improvements
thereon, the fixtures attached thereto and the easements appurtenant thereto.
"Real Estate Note: means the promissory note in the original
principal amount of $2,800,000 owed by Cerprobe to the Sellers and secured
solely by the Texas Real Estate.
"Release" means a release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration of a
Contaminant into the indoor or outdoor environment or into or out of any Real
Estate or other property, including the movement of
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Contaminants through or in the air, soil, surface water, groundwater or Real
Estate or other property.
"Rentals" has the meaning specified in Section 9.24.
"Reportable Event" means, any of the events set forth in
Section 4043(b) of ERISA or the regulations thereunder, other than any such
event for which the 30-day notice requirement under ERISA has been waived in
regulations issued by the PBGC.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or determination of an
arbitrator or of a Governmental Authority, in each case applicable to or binding
upon the Person or any of its property or to which the Person or any of its
property is subject.
"Responsible Officer" of a Borrower means the chief executive
officer, the chairman of the board of directors, the president or the chief
financial officer of such Borrower, or any other officer having substantially
the same authority and responsibility; or, with respect to compliance with
financial covenants and the preparation of any Borrowing Base Certificate, the
chief financial officer or the treasurer of such Borrower, or any other officer
having substantially the same authority and responsibility.
"Restricted Investment" means, as to any Person, any
acquisition of property by such Person in exchange for cash or other property,
whether in the form of an acquisition of stock, debt, or other indebtedness or
obligation, or the purchase or acquisition of any other property, or a loan,
advance, capital contribution, or subscription (each, an "Investment"), except
the following: (a) acquisitions of Equipment to be used in the business of such
Person so long as the acquisition costs thereof constitute Capital Expenditures
permitted hereunder; (b) acquisitions of Inventory in the ordinary course of
business of such Person; (c) acquisitions of current assets acquired in the
ordinary course of business of such Person; (d) direct obligations of the United
States of America, or any agency or instrumentality thereof, or obligations
guaranteed by the United States of America, provided that such obligations
mature within one year from the date of acquisition thereof; (e) acquisitions of
certificates of deposit maturing within one year from the date of acquisition,
bankers' acceptances, Eurodollar bank deposits, or overnight bank deposits, in
each case issued by, created by, or with a bank or trust company organized under
the laws of the United States or any state thereof having capital and surplus
aggregating at least $100,000,000; (f) acquisitions of commercial paper given a
rating of "A2" or better by Standard & Poor's Corporation or "P2" or better by
Moody's Investors Service, Inc. and maturing not more than 90 days from the date
of creation thereof; (g) other Investments permitted under Cerprobe's investment
policy attached hereto as Exhibit 1.1C; (h) Hedge Agreements; (i) acquisitions
of all of the capital stock of another Person or substantially all of the assets
of another Person solely in exchange for the capital stock of Cerprobe;
provided, that any Subsidiary shall become a Guarantor hereunder in compliance
with Section 9.28 of this Agreement; (j) Investments existing on the date
hereof; (k) Investments by a Borrower with respect to Debt of a Borrower to
another Borrower; (l) Investments by a Borrower in another Borrower; (m)
Investments consisting of promissory notes received as proceeds of asset
dispositions permitted hereunder; (n) Investments made in connection with
acquisitions permitted under Section 9.9; (o) advances to its employees or
employees of any of its
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Subsidiaries for travel or other ordinary business expenses in amounts which are
consistent with a Borrower's past practices as in effect on the Closing Date;
[(p) advances to subcontractors and suppliers in maximum aggregate amounts which
are consistent with a Borrower's past practices determined as of the Closing
Date;] and (q) shares of stock, obligations or other securities received in
settlement of claims arising in the ordinary course of business.
"Revolving Loans" has the meaning specified in Section 2.2.
"Seller Subordinated Note" means that certain subordinated
promissory note executed and delivered by Cerprobe to the Sellers in accordance
with the Purchase Agreement, which shall contain terms and conditions, including
without limitation payment and subordination terms, satisfactory to Lender, and
which shall be in the initial aggregate outstanding principal amount of
$2,830,000, as increased (or decreased) as required by the terms of the Purchase
Agreement.
"Sellers" means Nasser Barabi, Iraj Barabi, Ali Busheri, Ahmad
Barabi, Ali Busheri as trustee for the Ali and Nassrin Busheri Trust, and Ahmad
Barabi, as trustee for the Ahmad and Zakieh Barabi Trust.
"Solvent" means when used with respect to any Person that at
the time of determination:
(a) the assets of such Person, at a fair valuation, are in
excess of the total amount of its debts (including contingent
liabilities); and
(b) the present fair saleable value of its assets is greater
than its probable liability on its existing debts as such debts become
absolute and matured; and
(c) it is then able and expects to be able to pay its debts
(including contingent debts and other commitments) as they mature; and
(d) it has capital sufficient to carry on its business as
conducted and as proposed to be conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or matured liability.
"Stated Termination Date" means December 2, 2002.
"Subordination Agreement" means that certain Subordination
Agreement dated the date hereof among Sellers and the Lender.
"Subsidiary" of a Person means any corporation, association,
partnership, joint venture or other business entity of which more than fifty
percent (50%) of the voting stock or other equity interests (in the case of
Persons other than corporations), is owned or controlled directly or indirectly
by the Person, or one or more of the Subsidiaries of the Person, or a
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combination thereof. Unless the context otherwise clearly requires, references
herein to a "Subsidiary" refer to a Subsidiary of a Borrower.
"Tangible Net Worth" means, at any date, (a) the gross book
value of the assets of Cerprobe and its Subsidiaries minus goodwill, patents,
trademarks, trade names, organization expense, treasury stock, unamortized debt
discount and expense, deferred research and development costs, deferred
marketing expenses, and other like intangibles and monies due from affiliates,
officers, directors or shareholders of Cerprobe and its Subsidiaries and related
reserves less (b) total liabilities of Cerprobe and its Subsidiaries, including
but not limited to accrued and deferred income taxes, and any reserves against
assets, all determined in accordance with GAAP.
"Taxes" means any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all liabilities with respect
thereto, excluding, in the case of the Lender, such taxes (including income
taxes or franchise taxes) as are imposed on or measured by the Lender's net
income in any jurisdiction (whether federal, state or local and including any
political subdivision thereof) under the laws of which the Lender is organized
or maintains a lending office.
"Term Loans" means the Term Loans made pursuant to Section
2.3(b).
"Term Loan Note" has the meaning specified in Section 2.3(b).
"Termination Date" means the earliest to occur of (a) the
Stated Termination Date, (b) the date the Total Facility is terminated either by
the Borrowers pursuant to Section 4.2 or by the Lender pursuant to Section 11.2,
and (c) the date this Agreement is otherwise terminated for any reason
whatsoever pursuant to the terms of this Agreement.
"Texas Real Estate" means the Real Estate owned by Cerprobe in
Dallas, Texas, encumbered by the mortgage secured by the Real Estate Note.
"Total Facility" has the meaning specified in Section 2.1.
"Transaction Documents" means the Purchase Agreement and all
other documents, agreements and instruments executed and delivered in connection
with the Acquisition.
"UCC" means the Uniform Commercial Code (or any successor
statute), as in effect from time to time, of the State of California or of any
other state the laws of which are required as a result thereof to be applied in
connection with the issue of perfection of security interests.
"Unfunded Pension Liability" means the excess of a Plan's
benefit liabilities under Section 4001(a)(16) of ERISA, over the current value
of that Plan's assets, determined in accordance with the assumptions used for
funding the Pension Plan pursuant to Section 412 of the Code for the applicable
plan year.
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"Unused Letter of Credit Subfacility" means an amount equal to
$3,000,000 minus the sum of (a) the aggregate undrawn amount of all outstanding
Letters of Credit plus (b) the aggregate unpaid reimbursement obligations with
respect to all Letters of Credit.
"Unused Line Fee" has the meaning specified in Section 3.5.
1.2 Accounting Terms. Any accounting term used in this Agreement shall
have, unless otherwise specifically provided herein, the meaning customarily
given in accordance with GAAP, and all financial computations hereunder shall be
computed, unless otherwise specifically provided herein, in accordance with GAAP
as consistently applied and using the same method for inventory valuation as
used in the preparation of the Financial Statements.
1.3 Interpretive Provisions. (a) The meanings of defined terms are
equally applicable to the singular and plural forms of the defined terms.
(b) The words "hereof," "herein," "hereunder" and similar
words refer to this Agreement as a whole and not to any particular provision of
this Agreement; and Subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.
(ii) The term "including" is not limiting and means
"including without limitation."
(iii) In the computation of periods of time from a
specified date to a later specified date,
the word "from" means "from and including," the words "to" and "until" each mean
"to but excluding" and the word "through" means "to and including."
(d) Unless otherwise expressly provided herein, (i) references
to agreements (including this Agreement) and other contractual instruments shall
be deemed to include all subsequent amendments and other modifications thereto,
but only to the extent such amendments and other modifications are not
prohibited by the terms of any Loan Document, and (ii) references to any statute
or regulation are to be construed as including all statutory and regulatory
provisions consolidating, amending, replacing, supplementing or interpreting the
statute or regulation.
(e) The captions and headings of this Agreement are for
convenience of reference only and shall not affect the interpretation of this
Agreement.
(f) This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms.
(g) This Agreement and the other Loan Documents are the result
of negotiations among and have been reviewed by counsel to the Lender, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against
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the Lender or the Lender merely because of the Lender's or Lender' involvement
in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Total Facility. Subject to all of the terms and conditions of this
Agreement, the Lender agrees to make available a total credit facility of up to
$17,000,000 (the "Total Facility") for the Borrowers' use from time to time
during the term of this Agreement. The Total Facility shall be composed of: (a)
a revolving line of credit consisting of Revolving Loans and Letters of Credit
up to the Borrowing Bases of the Borrowers, as described in Sections 2.2 and
2.4; and (b) the Term Loans described in Section 2.3.
2.2 Revolving Loans. (a) Amounts. Subject to the satisfaction of the
conditions precedent set forth in Article 10, the Lender agrees, upon a
Borrower's request from time to time on any Business Day during the period from
the Closing Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower in amounts not to exceed the Borrowing Base
of such Borrower. The Lender, however, may elect to make Revolving Loans or
issue or arrange to have issued Letters of Credit in excess of the Availability
of a Borrower on one or more occasions but if it does so the Lender shall not be
deemed thereby to have changed the limits of the Borrowing Base or to be
obligated to exceed such limits on any other occasion. If the Aggregate Revolver
Outstandings of a Borrower exceed the Borrowing Base of such Borrower, or the
Aggregate Revolver Outstandings of all Borrowers exceed the Borrowing Base of
all Borrowers or the Aggregate Availability, the Lender may refuse to make or
otherwise restrict the making of Revolving Loans as the Lender determines until
such excess has been eliminated. All Revolving Loans shall be deemed first to be
Inventory Loans to the maximum amount permitted under the definition of
Borrowing Base, and payments of Revolving Loans shall be applied first to
Revolving Loans other than Inventory Loans except as required by Section 4.4 or
4.5.
(b) Procedure for Borrowing.
(i) Each Borrowing shall be made upon a Borrower's
irrevocable written notice delivered to the Lender in the form of a notice of
borrowing ("Notice of Borrowing") together with a Borrowing Base Certificate
reflecting sufficient Availability of such Borrower, (which must be received by
the Lender prior to 11:00 a.m. (Los Angeles time) (A) three Business Days prior
to the requested Funding Date, in the case of LIBOR Rate Loans and (B) no later
than 11:00 a.m. on the requested Funding Date, in the case of Base Rate Loans,
specifying:
(1) the amount of the Borrowing;
(2) the requested Funding Date, which shall
be a Business Day;
(3) whether the Revolving Loans requested
are to be Base Rate Revolving Loans or LIBOR Rate Loans (and if not specified,
it shall be deemed a request for a Base Rate Revolving Loan); and
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(4) the duration of the Interest Period if
the requested Revolving Loans are to be LIBOR Rate Loans. If the Notice of
Borrowing fails to specify the duration of the Interest Period for any Borrowing
comprised of LIBOR Rate Loans, such Interest Period shall be one month;
provided, however, that with respect to the Borrowing to be made on the Closing
Date and all Inventory Loans, such Borrowings will consist of Base Rate
Revolving Loans only.
(ii) With respect to any request for Base Rate
Revolving Loans, in lieu of delivering the above-described Notice of Borrowing
the Borrower may give the Lender telephonic notice of such request by the
required time, with such telephonic notice to be confirmed in writing within 24
hours of the giving of such notice but the Lender at all times shall be entitled
to rely on such telephonic notice in making such Revolving Loans, regardless of
whether any such confirmation is received by the Lender.
(iii) No Borrower shall have the right to request a
LIBOR Rate Loan while a Default or Event of has occurred and is continuing.
(c) Reliance upon Authority. Each Borrower shall deliver to
the Lender prior to the Closing Date, a writing setting forth the account of the
Borrower to which the Lender is authorized to transfer the proceeds of the
Revolving Loans requested pursuant to this Section 2.2, which shall be
reasonably satisfactory to the Lender. The Lender shall be entitled to rely
conclusively on any person's request for Revolving Loans on behalf of a
Borrower, the proceeds of which are to be transferred to any of the accounts
specified by such Borrower pursuant to the immediately preceding sentence, until
the Lender receives written notice from such Borrower that the proceeds of the
Revolving Loans are to be sent to a different account. The Lender shall have no
duty to verify the identity of any individual representing himself or herself as
a person authorized by such Borrower to make such requests on its behalf.
(d) No Liability. The Lender shall not incur any liability to
any Borrower as a result of acting upon any notice referred to in Sections
2.2(b) and (c), which notice the Lender believes in good faith to have been
given by an officer or other person duly authorized by such Borrower to request
Revolving Loans on its behalf or for otherwise acting in good faith under this
Section 2.2, and the crediting of Revolving Loans to the Borrower's deposit
account, as the Borrower shall direct, shall conclusively establish the
obligation of the Borrower to repay such Revolving Loans as provided herein.
(e) Notice Irrevocable. Any Notice of Borrowing (or telephonic
notice in lieu thereof) made pursuant to Section 2.2(b) shall be irrevocable and
the Borrower shall be bound to borrow the funds requested therein in accordance
therewith.
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2.3 Term Loans.
(a) Amount of the Term Loans. The Lender agrees to make a term
loan (a "Term Loan") to Cerprobe and CIS on the Closing Date, upon the
satisfaction of the conditions precedent set forth in Article 10, in an
aggregate amount equal to $2,000,000. The Term Loans shall be Base Rate Loans.
(b) Term Loan Notes. Cerprobe and CIS shall execute and
deliver to the Lender on the Closing Date a promissory note substantially in the
form of Exhibit A attached hereto and made a part hereof (each, a "Term Loan
Note") to evidence Term Loans. Each Term Loan Note shall be dated the Closing
Date and the principal amount thereof shall be payable in thirty-five (35)
monthly installments of $24,916.67 each for Cerprobe's Term Loan and $8,416.67
for CIS's Term Loan, in each case with the first installment due on the first
day of the month following the Closing Date, and a final installment due on the
Stated Maturity Date in the outstanding balances of the Term Loan Notes.
2.4 Letters of Credit.
(a) Agreement to Issue or Cause To Issue. Subject to the terms
and conditions of this Agreement, and in reliance upon the representations and
warranties of the Borrowers herein set forth, the Lender agrees (i) to cause the
Letter of Credit Issuer to issue for the account of any Borrower one or more
commercial/documentary and standby letters of credit ("Letter of Credit") and/or
(ii) to provide credit support or other enhancement to a Letter of Credit Issuer
acceptable to Lender, which issues a Letter of Credit for the account of any
Borrower (any such credit support or enhancement being herein referred to as a
"Credit Support") in accordance with this Section 2.4 from time to time during
the term of this Agreement.
(b) Amounts; Outside Expiration Date. The Lender shall not
have any obligation to take steps to issue or cause to be issued any Letter of
Credit or to provide Credit Support for any Letter of Credit at any time if: (i)
the maximum face amount of the requested Letter of Credit is greater than the
Unused Letter of Credit Subfacility at such time; (ii) the maximum undrawn
amount of the requested Letter of Credit and all commissions, fees, and charges
due from the Borrower in connection with the opening thereof exceed the
Availability of such Borrower or of all Borrowers at such time; or (iii) such
Letter of Credit has an expiration date later than thirty (30) days prior to the
Stated Termination Date or more than twelve (12) months from the date of
issuance for standby letters of credit and 180 days for merchandise letters of
credit.
(c) Other Conditions. In addition to being subject to the
satisfaction of the applicable conditions precedent contained in Article 10, the
obligation of the Lender to issue or to cause to be issued any Letter of Credit
or to provide Credit Support for any Letter of Credit is subject to the
following conditions precedent having been satisfied in a manner reasonably
satisfactory to the Lender:
(i) The Borrower shall have delivered to the Letter
of Credit Issuer, at such times and in such manner as such Letter of Credit
Issuer may prescribe, an application in
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form and substance satisfactory to such Letter of Credit Issuer and the Lender
for the issuance of the Letter of Credit and such other documents as may be
required pursuant to the terms thereof, and the form and terms of the proposed
Letter of Credit shall be reasonably satisfactory to the Lender and the Letter
of Credit Issuer; and
(ii) As of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its terms to enjoin
or restrain money center banks generally from issuing letters of credit of the
type and in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from any Governmental
Authority with jurisdiction over money center banks generally shall prohibit, or
request that the proposed Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or the issuance of such Letters of Credit.
(d) Issuance of Letters of Credit.
(i) Request for Issuance. A Borrower shall give the
Lender three (3) Business Days prior written notice of the Borrower's request
for the issuance of a Letter of Credit. Such notice shall be irrevocable and
shall specify the original face amount of the Letter of Credit requested, the
effective date (which date shall be a Business Day) of issuance of such
requested Letter of Credit, whether such Letter of Credit may be drawn in a
single or in partial draws, the date on which such requested Letter of Credit is
to expire (which date shall be a Business Day), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the requested Letter of
Credit. The Borrower shall attach to such notice the proposed form of the Letter
of Credit.
(ii) Responsibilities of the Lender; Issuance. The
Lender shall determine, as of the Business Day immediately preceding the
requested effective date of issuance of the Letter of Credit set forth in the
notice from the Borrower pursuant to Section 2.4(d)(1), (A) the amount of the
applicable Unused Letter of Credit Subfacility and (B) the Availability as of
such date. If (i) the undrawn amount of the requested Letter of Credit is not
greater than the Unused Letter of Credit Subfacility and (ii) the amount of such
requested Letter of Credit and all commissions, fees, and charges due from the
Borrower in connection with the opening thereof would not exceed the
Availability, the Lender shall, so long as the other conditions hereof are met,
cause the Letter of Credit Issuer to issue the requested Letter of Credit on
such requested effective date of issuance.
(iii) No Extensions or Amendment. The Lender shall
not be obligated to extend or amend any Letter of Credit issued hereunder unless
the requirements of this Section 2.4 are met as though a new Letter of Credit
were being requested and issued.
(e) Payments Pursuant to Letters of Credit.
(i) Payment of Letter of Credit Obligations. Each
Borrower agrees promptly upon demand to reimburse the Letter of Credit Issuer
for any draw under any Letter of Credit and the Lender upon any payment pursuant
to any Credit Support, and to pay the Letter of Credit Issuer the amount of all
other obligations and other amounts payable to such Letter of
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<PAGE> 35
Credit Issuer under or in connection with any Letter of Credit immediately when
due, irrespective of any claim, setoff, defense or other right which the
Borrower may have at any time against such issuer or any other Person.
(ii) Revolving Loans to Satisfy Reimbursement
Obligations. Each drawing under any Letter of Credit shall constitute a request
by the applicable Borrower to the Lender for a Borrowing of a Base Rate
Revolving Loan in the amount of such drawing. The Funding Date with respect to
such borrowing shall be the date of such drawing.
(f) Indemnification; Exoneration; Power of Attorney
(i) Indemnification. In addition to amounts payable
as elsewhere provided in this Section 2.4, each Borrower hereby agrees to
protect, indemnify, pay and save the Lender harmless from and against any and
all claims, demands, liabilities, damages, losses, costs, charges and expenses
(including reasonable attorneys' fees) which the Lender (other than the Lender
in its capacity as Letter of Credit Issuer) may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit or the
provision of any Credit Support or enhancement in connection therewith. The
agreement in this Section 2.4(g)(1) shall survive payment of all Obligations.
Nothing contained in this Agreement is intended to limit the Borrower's rights,
if any, with respect to the Letter of Credit Issuer which arise as a result of
the letter of credit application and related documents executed by and between
the Borrower and the Letter of Credit Issuer.
(ii) Assumption of Risk by the Borrowers. As among
the Borrowers and the Lender, the Borrowers assume all risks of the acts and
omissions of, or misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not in limitation of
the foregoing, the Lender shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any document submitted by
any Person in connection with the application for and issuance of and
presentation of drafts with respect to any of the Letters of Credit, even if it
should prove to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any instrument
transferring or assigning or purporting to transfer or assign any Letter of
Credit or the rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason; (C) the
failure of the beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit; (D) errors,
omissions, interruptions, or delays in transmission or delivery of any messages,
by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher;
(E) errors in interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order to make a drawing
under any Letter of Credit or of the proceeds thereof; (G) the misapplication by
the beneficiary of any Letter of Credit of the proceeds of any drawing under
such Letter of Credit; or (H) any consequences arising from causes beyond the
control of the Lender, including any act or omission, whether rightful or
wrongful, of any present or future de jure or de facto Governmental Authority.
None of the foregoing shall affect, impair or prevent the vesting of any rights
or powers of the Lender under this Section 2.4(g).
(iii) Exoneration. In furtherance and extension, and
not in limitation, of the specific provisions set forth above, any action taken
or omitted by the Lender under or in
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<PAGE> 36
connection with any of the Letters of Credit or any related certificates, if
taken or omitted in good faith, shall not put the Lender under any resulting
liability to the Borrowers or relieve the Borrowers of any obligations hereunder
to the Lender. Nothing contained in this Agreement is intended to limit any
Borrower's rights, if any, with respect to the Letter of Credit Issuer which
arise as a result of the letter of credit application and related documents
executed by and between the Borrower and the Letter of Credit Issuer.
(iv) Power of Attorney. In connection with all
Inventory financed by Letters of Credit, each Borrower hereby appoints the
Lender, or the Lender's designee, as its attorney, with full power and
authority: (a) to sign and/or endorse the Borrower's name upon any warehouse or
other receipts; (b) to sign the Borrower's name on bills of lading and other
negotiable and non-negotiable documents; (c) to clear Inventory through customs
in the Lender's or the Borrower's name, and to sign and deliver to customs
officials powers of attorney in the Borrower's name for such purpose; (d) to
complete in the Borrower's or the Lender's name, any order, sale, or
transaction, obtain the necessary documents in connection therewith, and collect
the proceeds thereof; and (e) to do such other acts and things as are necessary
in order to enable the Lender to obtain possession or control of the Inventory
and to obtain payment of the Obligations. Neither the Lender nor its designee,
as the Borrower's attorney, will be liable for any acts or omissions, nor for
any error of judgment or mistakes of fact or law. This power, being coupled with
an interest, is irrevocable until all Obligations have been paid and satisfied.
(v) Account Party. Each Borrower hereby authorizes
and directs any Letter of Credit Issuer to name the Borrower as the "Account
Party" therein and to deliver to the Lender all instruments, documents and other
writings and property received by the Letter of Credit Issuer pursuant to the
Letter of Credit, and to accept and rely upon the Lender's instructions and
agreements with respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(vi) Control of Inventory. In connection with all
Inventory financed by Letters of Credit, each Borrower will, at the Lender's
request, instruct all suppliers, carriers, forwarders, customs brokers,
warehouses or others receiving or holding cash, checks, Inventory, documents or
instruments in which the Lender holds a security interest to deliver them to the
Lender and/or subject to the Lender's order, and if they shall come into the
Borrower's possession, to deliver them, upon request, to the Lender in their
original form. The Borrower shall also, at the Lender's request, designate the
Lender as the consignee on all bills of lading and other negotiable and
non-negotiable documents.
(h) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.4(b) and Section 12.1 any Letter of
Credit is outstanding upon the termination of this Agreement, then upon such
termination the Borrowers shall deposit with the Lender, with respect to each
Letter of Credit or Credit Support then outstanding, as the Lender in its
discretion shall specify, either (i) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the Lender, issued by
an issuer satisfactory to the Lender in an amount equal to the greatest amount
for which such Letter of Credit or such Credit Support may be drawn plus any
fees and expenses associated with such Letter of Credit or such Credit Support,
under which Supporting Letter of Credit the Lender is entitled to draw amounts
necessary to reimburse the Lender for payments to be made by the Lender under
such Letter of
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Credit or Credit Support and any fees and expenses associated with such Letter
of Credit or Credit Support, or (ii) cash in amounts necessary to reimburse the
Lender for payments made by the Lender under such Letter of Credit or such
Credit Support and any fees and expenses associated with such Letter of Credit.
Such Supporting Letter of Credit or deposit of cash shall be held by the Lender
as security for, and to provide for the payment of, the aggregate undrawn amount
of such Letters of Credit or such Credit Support remaining outstanding.
2.5 Bank Products.
A Borrower may request and the Lender may, in its sole and
absolute discretion, arrange for the Borrower to obtain from the Lender or the
Lender's Affiliates Bank Products although the Borrower is not required to do
so. To the extent Bank Products are provided by an Affiliate, the Borrowers
agree to indemnify and hold the Lender harmless from any and all costs and
obligations now or hereafter incurred by the Lender which arise from the
indemnity given by the Lender to its Affiliate relating to such Bank Products;
provided, however, nothing contained herein is intended to limit the Borrowers'
rights, with respect to the Lender or its Affiliates, if any, which arise as a
result of the execution of documents by and between a Borrower and the Lender or
its Affiliates which relate to Bank Products. The agreement contained in this
section shall survive termination of the Agreement. Each Borrower acknowledges
and agrees that the obtaining of Bank Products from the Lender or the Lender's
Affiliates (a) is in the sole and absolute discretion of the Lender or the
Lender's Affiliates, and (b) is subject to all rules and regulations of the
Lender or the Lender's Affiliates.
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall bear
interest on the unpaid principal amount thereof (including, to the extent
permitted by law, on interest thereon not paid when due) from the date made
until paid in full in cash at a rate determined by reference to the Base Rate or
the LIBOR Rate and Sections 3.1(a)(i) or (ii), as applicable, but not to exceed
the Maximum Rate described in Section 3.3. Subject to the provisions of Section
3.2, any of the Revolving Loans other than Inventory Loans may be converted
into, or continued as, Base Rate Loans or LIBOR Rate Loans in the manner
provided in Section 3.2. The Term Loans and all Inventory Loans shall be Base
Rate Loans. If at any time Revolving Loans are outstanding with respect to which
notice has not been delivered to the Lender in accordance with the terms of this
Agreement specifying the basis for determining the interest rate applicable
thereto, then those Loans shall be Base Rate Loans and shall bear interest at a
rate determined by reference to the Base Rate until notice to the contrary has
been given to the Lender in accordance with this Agreement and such notice has
become effective. Except as otherwise provided herein, the outstanding
Obligations shall bear interest as follows:
(i) For the Term Loans at a fluctuating per annum
rate equal to the Base Rate plus the Applicable Margin;
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(ii) For all Base Rate Revolving Loans and other
Obligations (other than the Term Loans and LIBOR Rate Loans) at a fluctuating
per annum rate equal to the Base Rate plus the Applicable Margin; and
(iii) For all LIBOR Rate Loans at a per annum rate
equal to the LIBOR Rate plus the Applicable Margin.
Each change in the Base Rate shall be reflected in the interest rate described
in clause (i) above as of the effective date of such change. All interest
charges shall be computed on the basis of a year of 360 days and actual days
elapsed (which results in more interest being paid than if computed on the basis
of a 365-day year). Interest accrued on all Loans will be payable in arrears on
the first day of each month hereafter and on the Termination Date.
(b) Default Rate. If any Default or Event of Default occurs
and is continuing and the Lender in its discretion so elect, then, while any
such Default or Event of Default is continuing, all of the Obligations shall
bear interest at the Default Rate applicable thereto.
3.2 Continuation and Conversion Elections. (a) A Borrower may, upon
irrevocable written notice to the Lender in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Revolving Loans (other than Inventory Loans) to convert any such Loans
(or any part thereof in an amount not less than $1,000,000, or that is in an
integral multiple of $500,000 in excess thereof) into LIBOR Rate Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Rate Loans having Interest Periods
expiring on such day (or any part thereof in an amount not less than $1,000,000,
or that is in an integral multiple of $500,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR Rate Loans in
respect of any Borrowing is reduced, by payment, prepayment, or conversion of
part thereof to be less than $1,000,000, such LIBOR Rate Loans shall
automatically convert into Base Rate Loans, and on and after such date the right
of the Borrower to continue such Loans as, and convert such Loans into, LIBOR
Rate Loans, as the case may be, shall terminate, and provided further that if
the notice shall fail to specify the duration of the Interest Period, such
Interest Period shall be one month.
(b) Each Borrower shall deliver a notice of
continuation/conversion ("Notice of Continuation/Conversion") to be received by
the Lender not later than 11:00 a.m. (Los Angeles time) at least three (3)
Business Days in advance of the Continuation/Conversion Date, if the Loans are
to be converted into or continued as LIBOR Rate Loans and specifying:
(i) the proposed Continuation/Conversion Date;
(ii) the aggregate amount of Loans to be converted or
renewed;
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(iii) the type of Loans resulting from the proposed
conversion or continuation; and
(iv) the duration of the requested Interest Periods.
(c) If upon the expiration of any Interest Period applicable
to LIBOR Rate Loans, a Borrower has failed to select timely a new Interest
Period to be applicable to LIBOR Rate Loans or if any Default or Event of
Default then exists, the Borrower shall be deemed to have elected to convert
such LIBOR Rate Loans into Base Rate Loans effective as of the expiration date
of such Interest Period.
(d) During the existence of a Default or Event of Default, no
Borrower may elect to have a Loan converted into or continued as a LIBOR Rate
Loan.
(e) After giving effect to any conversion or continuation of
Loans, there may not be more than four (4) different Interest Periods in effect
hereunder.
3.3 Maximum Interest Rate. In no event shall any interest rate provided
for hereunder exceed the maximum rate legally chargeable by the Lender under
applicable law with respect to loans of the type provided for hereunder (the
"Maximum Rate"). If, in any month, any interest rate, absent such limitation,
would have exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that interest rate would
otherwise be less than the Maximum Rate, then that interest rate shall remain at
the Maximum Rate until such time as the amount of interest paid hereunder equals
the amount of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in full of the
Obligations, the total amount of interest paid or accrued under the terms of
this Agreement is less than the total amount of interest which would, but for
this Section 3.3, have been paid or accrued if the interest rate otherwise set
forth in this Agreement had at all times been in effect, then the Borrower
shall, to the extent permitted by applicable law, pay the Lender an amount equal
to the excess of (a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in effect or (ii) the
amount of interest which would have accrued had the interest rate otherwise set
forth in this Agreement, at all times, been in effect over (b) the amount of
interest actually paid or accrued under this Agreement. In the event that a
court of competent jurisdiction determines that the Lender has received interest
and other charges hereunder in excess of the Maximum Rate, such excess shall be
deemed received on account of, and shall automatically be applied to reduce, the
Obligations other than interest, in the inverse order of maturity, and if there
are no Obligations outstanding, the Lender shall refund to the applicable
Borrower such excess.
3.4 Closing Fee. The Borrowers, jointly and severally, agree to pay the
Lender on the Closing Date a closing fee (the "Closing Fee") in the amount of
$170,000, which Closing Fee shall be fully earned by the Lender on the Closing
Date, and non-refundable. The Lender and the Borrowers agree that the Closing
Fee shall be financed by the Lender as a Revolving Loan.
3.5 Unused Line Fee. Until the Loans have been paid in full and the
Agreement terminated, the Borrowers, jointly and severally, agree to pay, on the
first day of each month and on the Termination Date, to the Lender an unused
line fee (the "Unused Line Fee") equal to
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three-eighths of one percent (3/8%) per annum times the amount by which the
Maximum Revolver Amount exceeded the sum of the average daily outstanding amount
of Revolving Loans and the average daily undrawn face amount of outstanding
Letters of Credit, during the immediately preceding month or shorter period if
calculated on the Termination Date. The Unused Line Fee shall be computed on the
basis of a 360-day year for the actual number of days elapsed. All payments
received by the Lender shall be deemed to be credited to the Borrowers' Loan
Accounts immediately upon receipt for purposes of calculating the Unused Line
Fee pursuant to this Section 3.5.
3.6 Letter of Credit Fee. Each Borrower agrees to pay to the Lender for
each Letter of Credit issued for its account, a fee (the "Letter of Credit Fee")
equal to one and one-quarter percent (1 1/4%) per annum of the undrawn face
amount of each Letter of Credit, plus all out-of-pocket costs, fees and expenses
incurred by the Lender in connection with the application for, processing of,
issuance of, or amendment to any Letter of Credit, which costs, fees and
expenses shall include a "fronting fee" payable to such issuer; The Letter of
Credit Fee shall be payable monthly in arrears on the first day of each month
following any month in which a Letter of Credit was issued and/or in which a
Letter of Credit remains outstanding and on the Termination Date. The Letter of
Credit Fee shall be computed on the basis of a 360-day year for the actual
number of days elapsed.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrowers shall repay the outstanding
principal balance of the Revolving Loans, plus all accrued but unpaid interest
thereon, on the Termination Date. The Borrowers may prepay Revolving Loans at
any time, and reborrow subject to the terms of this Agreement; provided,
however, that with respect to any LIBOR Rate Loans prepaid by the Borrowers
prior to the expiration date of the Interest Period applicable thereto, the
Borrowers shall pay to the Lender the amounts described in Section 5.4. In
addition, and without limiting the generality of the foregoing, upon demand each
Borrower shall pay to the Lender the amount, without duplication, by which the
Aggregate Revolver Outstandings of such Borrower exceeds its Borrowing Base, or
the aggregate Inventory Loans of such Borrower exceed the Inventory Sublimit of
such Borrower.
4.2 Termination of Facility. The Borrowers may terminate this Agreement
upon at least thirty (30) Business Days' notice to the Lender, upon (a) the
payment in full of all outstanding Revolving Loans, together with accrued
interest thereon, and the cancellation and return of all outstanding Letters of
Credit, (b) the prepayment in full of the Term Loans, together with accrued and
unpaid interest thereon, (c) the payment of the early termination fee set forth
in the next sentence, (d) the payment in full in cash of all other Obligations,
together with accrued and unpaid interest thereon, and (e) with respect to any
LIBOR Rate Loans prepaid in connection with such termination prior to the
expiration date of the Interest Period applicable thereto, the payment of the
amounts described in Section 5.4. If this Agreement is terminated at any time
prior to the Stated Termination Date, whether pursuant to this Section or
pursuant to
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<PAGE> 41
Section 11.2, the Borrowers shall, jointly and severally, pay to the Lender an
early termination fee determined in accordance with the following table:
<TABLE>
<CAPTION>
PERIOD DURING WHICH
EARLY TERMINATION EARLY TERMINATION
OCCURS FEE
------------------- -----------------
<S> <C>
On or prior to the first Anniversary Date 3% of the average Loans and Letters of Credit
outstanding during the 180 days (or lesser period
if within 180 days of the Closing Date) prior to
the date of termination.
After the first Anniversary Date but on or 2% of the average Loans and Letters of Credit
prior to the second Anniversary Date outstanding during the 180 days prior to the
date of termination.
After the second Anniversary Date but prior 1% of the average Loans and Letters of Credit
to the Stated Termination Date outstanding during the 180 days prior to the
date of termination.
</TABLE>
Notwithstanding the foregoing, no early termination fee shall be
payable if the Loans are repaid in full (a) with the proceeds of Debt extended
by another division of the Lender, or a subsidiary or affiliate of the Lender,
(b) repaid in full from the proceeds of a Debt or equity offering arranged by
another division of the Lender, or a subsidiary of affiliate of the Lender, or
(c) concurrently with the consummation of a transaction involving the merger of
Cerprobe, or the acquisition of substantially all of the assets of Cerprobe, for
which transaction the Lender, or a subsidiary or affiliate of the Lender, acted
as the financial advisor for Cerprobe.
4.3 Repayment of the Term Loans. Cerprobe and CIS, as the case may be,
agree to repay the principal of the Term Loans to the Lender in accordance with
the terms of the Term Loan Notes and Section 2.3(b) above.
4.4 Voluntary Prepayments of the Term Loans; Voluntary Reduction of
Inventory Sublimit. The Borrowers may prepay the principal of the Term Loans in
whole or in part, and may prepay the Inventory Loans and concurrently
permanently reduce the Inventory Sublimit, at any time and from time to time
upon at least five (5) Business Days' prior written notice to the Lender. Any
voluntary prepayment under this Section 4.4 of less than all of the outstanding
principal of any Term Loan shall be applied to the installments of principal of
the applicable Term Loan in the inverse order of maturity, and any reduction of
the Inventory Sublimit shall be applied in inverse order of the scheduled
reductions. Amounts prepaid in respect of any Term Loan pursuant to this Section
4.4 may not be reborrowed. No early termination fee is required unless such
prepayments are made concurrently with the termination of this Agreement and a
termination fee is then payable under Section 4.2.
4.5 Mandatory Prepayments of the Term Loans and Inventory Loans. (a)
The Borrowers shall prepay the entire unpaid principal balance of the Term
Loans, and all accrued but unpaid interest thereon, on the Termination Date.
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(b) In addition, the Term Loans shall be prepaid to the extent
and in the manner required by Sections 6.11, 9.5(c) and 9,6(b).
(c) On the last Business Day of each month, commencing in
March 2000, the Borrowers shall prepay the Inventory Loans and permanently
reduce the Inventory Sublimit by an amount equal to the amount by which the
average Aggregate Availability plus cash or cash equivalents of the Borrowers
during the immediately preceding three months exceeded $4,000,000. Any
prepayments shall permanently reduce the Inventory Sublimit in the inverse order
of scheduled reductions in the amount of each prepayment.
4.6 Payments by the Borrowers. (a) All payments to be made by the
Borrowers shall be made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrowers shall be made
to the Lender at the account designated by the Lender, and shall be made in
Dollars and in immediately available funds, no later than 1:00 p.m. (Los Angeles
time) on the date specified herein. Any payment received by the Lender later
than 1:00 p.m. (Los Angeles time) shall be deemed to have been received on the
following Business Day and any applicable interest or fee shall continue to
accrue.
(b) Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be due on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.
4.7 Payments as Revolving Loans. All payments of principal, interest,
reimbursement obligations in connection with Letters of Credit and Credit
Support for Letters of Credit, fees, premiums and other sums payable hereunder,
including all reimbursements for expenses pursuant to Section 14.7, may, at the
option of the Lender, in its sole discretion, subject only to the terms of this
Section 4.7, be paid from the proceeds of Revolving Loans made hereunder,
whether made following a request by a Borrower pursuant to Section 2.2 or a
deemed request as provided in this Section 4.7. Each Borrower hereby irrevocably
authorizes the Lender to charge its Loan Account for the purpose of paying
principal, interest, reimbursement obligations in connection with Letters of
Credit and Credit Support for Letters of Credit, fees, premiums and other sums
payable hereunder, including reimbursing expenses pursuant to Section 14.7, and
agrees that all such amounts charged shall constitute Revolving Loans and that
all such Revolving Loans so made shall be deemed to have been requested by
Borrowers pursuant to Section 2.2.
4.8 Application and Reversal of Payments. The Lender shall determine in
its sole discretion the order and manner in which Proceeds of Collateral and
other payments that the Lender receives are applied to the Revolving Loans, the
Term Loans, interest thereon, and the other Obligations, and each Borrower
hereby irrevocably waives the right to direct the application of any payment or
Proceeds. The Lender shall have the continuing and exclusive right to apply and
reverse and reapply any and all such Proceeds and payments to any portion of the
Obligations.
4.9 Indemnity for Returned Payments. If after receipt of any payment
which is applied to the payment of all or any part of the Obligations, the
Lender is for any reason compelled to
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<PAGE> 43
surrender such payment or proceeds to any Person because such payment or
application of proceeds is invalidated, declared fraudulent, set aside,
determined to be void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the Obligations or part
thereof intended to be satisfied shall be revived and continued and this
Agreement shall continue in full force as if such payment or proceeds had not
been received by the Lender and the Borrowers shall be liable to pay to the
Lender and hereby indemnify the Lender and hold the Lender harmless for the
amount of such payment or proceeds surrendered. The provisions of this Section
4.9 shall be and remain effective notwithstanding any contrary action which may
have been taken by the Lender in reliance upon such payment or application of
proceeds, and any such contrary action so taken shall be without prejudice to
the Lender's rights under this Agreement and shall be deemed to have been
conditioned upon such payment or application of proceeds having become final and
irrevocable. The provisions of this Section 4.9 shall survive the termination of
this Agreement.
4.10 Lender's Books and Records; Monthly Statements. Each Borrower
agrees that the Lender's books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan Documents shall be
admissible in any action or proceeding arising therefrom, and shall constitute
rebuttably presumptive proof thereof, irrespective of whether any Obligation is
also evidenced by a promissory note or other instrument. The Lender will provide
to the Borrowers a monthly statement of Loans, payments, and other transactions
pursuant to this Agreement. Such statement shall be deemed correct, accurate,
and binding on the Borrowers and an account stated (except for reversals and
reapplications of payments made as provided in Section 4.8 and corrections of
errors discovered by the Lender), unless the Borrowers notify the Lender in
writing to the contrary within thirty (30) days after such statement is
rendered. In the event a timely written notice of objections is given by the
Borrowers, only the items to which exception is expressly made will be
considered to be disputed by the Borrowers.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes. (a) Any and all payments by the Borrowers to the Lender
under this Agreement and any other Loan Document shall be made free and clear
of, and without deduction or withholding for any Taxes. In addition, the
Borrowers shall pay all Other Taxes.
(b) The Borrowers agree to indemnify and hold harmless the
Lender for the full amount of Taxes or Other Taxes (including any Taxes or Other
Taxes imposed by any jurisdiction on amounts payable under this Section) paid by
the Lender and any liability (including penalties, interest, additions to tax
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the Lender makes
written demand therefor.
(c) If the Borrowers shall be required by law to deduct or
withhold any Taxes or Other Taxes from or in respect of any sum payable
hereunder to the Lender, then:
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(i) the sum payable shall be increased as necessary
so that after making all required deductions and withholdings (including
deductions and withholdings applicable to additional sums payable under this
Section) the Lender receives an amount equal to the sum it would have received
had no such deductions or withholdings been made;
(ii) the Borrowers shall make such deductions and
withholdings;
(iii) the Borrowers shall pay the full amount
deducted or withheld to the relevant taxing authority or other authority in
accordance with applicable law; and
(iv) the Borrowers shall also pay to the Lender at
the time interest is paid, all additional amounts which the Lender specifies as
necessary to preserve the after-tax yield the Lender would have received if such
Taxes or Other Taxes had not been imposed.
(d) Within 30 days after the date of any payment by the
Borrowers of Taxes or Other Taxes, the Borrowers shall furnish the Lender the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment satisfactory to the Lender.
(e) If the Borrowers are required to pay additional amounts to
the Lender pursuant to subsection (c) of this Section, then the Lender shall use
reasonable efforts (consistent with legal and regulatory restrictions) to change
the jurisdiction of its lending office so as to eliminate any such additional
payment by the Borrowers which may thereafter accrue, if such change in the
judgment of the Lender is not otherwise disadvantageous to the Lender.
5.2 Illegality. (a) If the Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law, or in the
interpretation or administration of any Requirement of Law, has made it
unlawful, or that any central bank or other Governmental Authority has asserted
that it is unlawful, for the Lender or its applicable lending office to make
LIBOR Rate Loans, then, on notice thereof by the Lender to the Borrowers, any
obligation of the Lender to make LIBOR Rate Loans shall be suspended until the
Lender notifies the Borrowers that the circumstances giving rise to such
determination no longer exist.
(b) If the Lender determines that it is unlawful to maintain
any LIBOR Rate Loan, the Borrowers shall, upon receipt of notice of such fact
and demand from the Lender, prepay in full such LIBOR Rate Loans of the Lender
then outstanding, together with interest accrued thereon and amounts required
under Section 5.4, either on the last day of the Interest Period thereof, if the
Lender may lawfully continue to maintain such LIBOR Rate Loans to such day, or
immediately, if the Lender may not lawfully continue to maintain such LIBOR Rate
Loan. If the Borrower is required to so prepay any LIBOR Rate Loan, then
concurrently with such prepayment, the Borrowers shall borrow from the Lender,
in the amount of such repayment, a Base Rate Loan.
5.3 Increased Costs and Reduction of Return. (a) If the Lender
determines that due to either (i) the introduction of or any change in the
interpretation of any law or regulation or (ii) the compliance by the Lender
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to the Lender of agreeing to make or making, funding or maintaining
any LIBOR Rate Loans, then the Borrower shall be liable for, and shall from time
to time, upon demand, pay to
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the Lender additional amounts as are sufficient to compensate the Lender for
such increased costs.
(b) If the Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change in any Capital
Adequacy Regulation, (iii) any change in the interpretation or administration of
any Capital Adequacy Regulation by any central bank or other Governmental
Authority charged with the interpretation or administration thereof, or (iv)
compliance by the Lender or any corporation or other entity controlling the
Lender with any Capital Adequacy Regulation, affects or would affect the amount
of capital required or expected to be maintained by the Lender or any
corporation or other entity controlling the Lender and (taking into
consideration the Lender's or such corporation's or other entity's policies with
respect to capital adequacy and the Lender's desired return on capital)
determines that the amount of such capital is increased as a consequence of its
Commitments, loans, credits or obligations under this Agreement, then, upon
demand of the Lender to the Borrowers, the Borrowers shall pay to the Lender,
from time to time as specified by the Lender, additional amounts sufficient to
compensate the Lender for such increase.
5.4 Funding Losses. The Borrowers shall reimburse the Lender and hold
the Lender harmless from any loss or expense which the Lender may sustain or
incur as a consequence of:
(a) the failure of the Borrowers to make on a timely basis any
payment of principal of any LIBOR Rate Loan;
(b) the failure of the Borrowers to borrow, continue or
convert a Revolving Loan after a Borrower has given (or is deemed to have given)
a Notice of Borrowing or a Notice of Continuation/Conversion; or
(c) the prepayment or other payment (including after
acceleration thereof) of any LIBOR Rate Loan on a day that is not the last day
of the relevant Interest Period;
including any such loss of anticipated profit and any loss or expense arising
from the liquidation or reemployment of funds obtained by it to maintain its
LIBOR Rate Loans or from fees payable to terminate the deposits from which such
funds were obtained. Borrowers shall also pay any customary administrative fees
charged by the Lender in connection with the foregoing.
5.5 Inability to Determine Rates. If the Lender determines that for any
reason adequate and reasonable means do not exist for determining the LIBOR
Revolving for any requested Interest Period with respect to a proposed LIBOR
Rate Loan, or that the LIBOR Revolving for any requested Interest Period with
respect to a proposed LIBOR Rate Loan does not adequately and fairly reflect the
cost to the Lender of funding such Loan, the Lender will promptly so notify the
Borrowers. Thereafter, the obligation of the Lender to make or maintain LIBOR
Rate Loans hereunder shall be suspended until the Lender revokes such notice in
writing. Upon receipt of such notice, the Borrowers may revoke any Notice of
Borrowing or Notice of Conversion/Continuation then submitted by it. If the
Borrowers do not revoke such Notice, the Lender shall make, convert or continue
the Loans, as proposed by the Borrowers, in the amount specified in the
applicable notice submitted by the Borrowers, but such Loans shall be made,
converted or continued as Base Rate Loans instead of LIBOR Rate Loans.
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5.6 Certificates of Lender. In the event the Lender claims
reimbursement or compensation under this Article 5 it shall deliver to the
Borrowers a certificate setting forth in reasonable detail the amount payable to
the Lender hereunder and such certificate shall be conclusive and binding on the
Borrowers in the absence of manifest error.
5.7 Survival. The agreements and obligations of the Borrowers in this
Article 5 shall survive the payment of all other Obligations.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest. (a) As security for payment and
performance all of its Obligations, each Borrower hereby grants to the Lender a
continuing security interest in, lien on, assignment of and right of set-off
against, all of the following property and assets of such Borrower, whether now
owned or existing or hereafter acquired or arising, regardless of where located:
(i) all Accounts (including any credit enhancement
therefor);
(ii) all Inventory;
(iii) all contract rights, letters of credit,
Assigned Contracts, chattel paper, instruments, notes, documents, and documents
of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all Investment Property
(vii) all money, cash, cash equivalents, securities
and other property of any kind of such Borrower held directly or indirectly by
the Lender;
(viii) all of such Borrower's deposit accounts,
credits, and balances with and other claims against the Lender or any of its
Affiliates or any other financial institution with which the Borrower maintains
deposits, including any Payment Accounts;
(ix) all books, records and other property related to
or referring to any of the foregoing, including books, records, account ledgers,
data processing records, computer software and other property and General
Intangibles at any time evidencing or relating to any of the foregoing; and
(x) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing, including, but not
limited to, proceeds of any insurance policies, claims against third parties,
and condemnation or requisition payments with respect to all or any of the
foregoing.
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All of the foregoing, and all other property of the Borrowers in which the
Lender may at any time be granted a Lien, is herein collectively referred to as
the "Collateral."
(b) As additional security for all of its Obligations,
Cerprobe and CIS shall simultaneously herewith execute and deliver to the Lender
a Pledge Agreement and immediately following consummation of the Acquisition Oz
and TSE shall execute and deliver to the Lender a Pledge Agreement, in each case
pledging to the Lender all of the issued and outstanding capital stock of each
Subsidiary other than any Foreign Subsidiary, and no less than 65% of the issued
and outstanding capital stock of each direct Foreign Subsidiaries.
(c) All of the Obligations of a Borrower shall be secured by
all of the Collateral of a Borrower.
6.2 Perfection and Protection of Security Interest. (a) The Borrowers
shall, at their expense, perform all steps requested by the Lender at any time
to perfect, maintain, protect, and enforce the Lender's Liens, including: (i)
executing, delivering and/or filing and recording of, the Patent and Trademark
Agreements and executing and filing financing or continuation statements, and
amendments thereof, in form and substance reasonably satisfactory to the Lender;
(ii) delivering to the Lender the originals of all instruments, documents, and
chattel paper, and all other Collateral of which the Lender determines it should
have physical possession in order to perfect and protect the Lender's security
interest therein, duly pledged, endorsed or assigned to the Lender without
restriction; (iii) delivering to the Lender warehouse receipts covering any
portion of the Collateral located in warehouses and for which warehouse receipts
are issued and certificates of title covering any portion of the collateral for
which certificates of title have been issued; (iv) when an Event of Default
exists, transferring Inventory to warehouses or other locations designated by
the Lender; (v) placing notations on the Borrower's books of account to disclose
the Lender's security interest; (vii) delivering to the Lender all letters of
credit on which any Borrower is named beneficiary; and (viii) taking such other
steps as are deemed necessary or desirable by the Lender to maintain and protect
the Lender's Liens. To the extent permitted by applicable law, the Lender may
file, without the applicable Borrower's signature, one or more financing
statements disclosing the Lender's Liens. Each Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this Agreement or of a
financing statement is sufficient as a financing statement.
(b) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Borrower's agents or
processors, then the Borrower shall notify the Lender thereof and shall, at the
request of Lender, notify such Person of the Lender's security interest in such
Collateral and instruct such Person to hold all such Collateral for the Lender's
account subject to the Lender's instructions. If at any time any Collateral is
located in any operating facility of a Borrower not owned by the Borrower, then
the Borrower shall, at the request of the Lender, obtain written landlord lien
waivers or subordinations, in form and substance reasonably satisfactory to the
Lender, of all present and future Liens to which the owner or lessor of such
premises may be entitled to assert against the Collateral.
(c) From time to time, each Borrower shall, upon the Lender's
request, execute and deliver confirmatory written instruments pledging to the
Lender the Collateral, but the Borrower's failure to do so shall not affect or
limit any security interest or any other rights of
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the Lender in and to the Collateral. So long as this Agreement is in effect and
until all Obligations have been fully satisfied, the Lender's Liens shall
continue in full force and effect in all Collateral (whether or not deemed
eligible for the purpose of calculating the Borrowing Base of any Borrower or as
the basis for any advance, loan, extension of credit, or other financial
accommodation).
6.3 Location of Collateral. Each Borrower represents and warrants to
the Lender that: after giving effect to the Acquisition and the addition of Oz
and TSE as Borrowers hereunder, (a) Schedule 6.3 is a correct and complete list
of the Borrowers' chief executive offices, the location of their books and
records, the locations of the Collateral, and the locations of all other places
of business of the Borrowers; and (b) Schedule 6.3 correctly identifies any of
such facilities and locations that are not owned by the applicable Borrower and
sets forth the names of the owners and lessors or sublessors of such facilities
and locations. Each Borrower covenants and agrees that it will not (a) maintain
any Collateral at any location other than those locations listed for such
Borrower on Schedule 6.3, (b) otherwise change or add to any of such locations,
or (c) change the location of its chief executive office from the location
identified in Schedule 6.3, unless it gives the Lender at least thirty (30)
days' prior written notice thereof and executes any and all financing statements
and other documents that the Lender reasonably requests in connection therewith.
Without limiting the foregoing, each Borrower represents that all of its
Inventory (other than Inventory in transit) is, and covenants that all of its
Inventory will be, located either (a) on premises owned by such Borrower, (b) on
premises leased by such Borrower, provided that the Lender has, if requested by
the Lender, received an executed landlord waiver from the landlord of such
premises in form and substance satisfactory to the Lender within thirty (30)
days after the Closing Date, or (c) in a warehouse or with a bailee, provided
that the Lender has, if requested by the Lender, received an executed bailee
letter from the applicable Person in form and substance satisfactory to the
Lender.
6.4 Title to, Liens on, and Sale and Use of Collateral. Each Borrower
represents and warrants to the Lender and agrees with the Lender that: (a) all
of the Collateral is and will continue to be owned by the applicable Borrower
free and clear of all Liens whatsoever, except for Permitted Liens; (b) the
Lender's Liens in the Collateral will not be subject to any prior Lien except
for Permitted Liens; and (c) the Borrowers will use, store, and maintain the
Collateral with all reasonable care and will use such Collateral for lawful
purposes only.
6.5 Appraisals. Whenever a Default or Event of Default exists, and at
such other times not more frequently than once a year as the Lender requests,
the Borrowers shall, at their expense and upon the Lender's request, provide the
Lender with appraisals or updates thereof of any or all of the Collateral from
an appraiser, and prepared on a basis, reasonably satisfactory to the Lender,
such appraisals and updates to include, without limitation, information required
by applicable law and regulation and by the internal policies of the Lender.
6.6 Access and Examination; Confidentiality; Consent to Advertising.
(a) The Lender may at all reasonable times during regular business hours upon
prior notice (and at any time when a Default or Event of Default exists and is
continuing) have access to, examine, audit, make extracts from or copies of and
inspect any or all of the Borrowers' records, files, and books of account and
the Collateral, and discuss the Borrowers' affairs with the Borrowers' officers
and management. The Borrowers will deliver to the Lender any instrument
necessary for the
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Lender to obtain records from any service bureau maintaining records for any
Borrower. The Lender may, at any time when a Default or Event of Default exists,
and at the Borrowers' expense, make copies of all of the Borrowers' books and
records, or require the Borrowers to deliver such copies to the Lender. The
Lender may, without expense to the Lender, use such of the Borrowers' respective
personnel, supplies, and Real Estate as may be reasonably necessary for
maintaining or enforcing the Lender's Liens. The Lender shall have the right, at
any time, in the Lender's name or in the name of a nominee of the Lender, to
verify the validity, amount or any other matter relating to the Accounts,
Inventory, or other Collateral, by mail, telephone, or otherwise.
(b) The Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information identified as "confidential" or "secret" by the Borrowers and
provided to the Lender by or on behalf of the Borrowers, under this Agreement or
any other Loan Document; provided, however, that the Lender may disclose such
information (a) at the request or pursuant to any requirement of any
Governmental Authority to which the Lender is subject or in connection with an
examination of the Lender by any such Governmental Authority; (b) pursuant to
subpoena or other court process; (c) when required to do so in accordance with
the provisions of any applicable Requirement of Law; (d) to the extent
reasonably required in connection with any litigation or proceeding (including,
but not limited to, any bankruptcy proceeding) to which the Lender or its
respective Affiliates may be party; (e) to the extent reasonably required in
connection with the exercise of any remedy hereunder or under any other Loan
Document; (f) to the Lender's independent auditors, accountants, attorneys and
other professional advisors; (g) to any prospective Participant, actual or
potential, provided that such prospective Participant agrees to keep such
information confidential to the same extent required of the Lender; (h) as
expressly permitted under the terms of any other document or agreement regarding
confidentiality to which any Borrower is party or is deemed party with the
Lender; and (i) to its Affiliates.
6.7 Collateral Reporting. The Borrowers shall provide the Lender with
the following documents at the following times in form satisfactory to the
Lender: (a) on a daily basis, a schedule of each Borrower's Accounts created
since the last such schedule and a Borrowing Base Certificate; (b) on a monthly
basis, by the 10th day of the following month, or more frequently if requested
by the Lender, an aging of each Borrower's Accounts, together with a
reconciliation to the previous month's aging of the Borrower's Accounts and to
each Borrower's general ledger; (c) on a monthly basis, by the 15th day of the
following month, or more frequently if requested by the Lender, an aging of the
Borrower's accounts payable; (d) on a monthly basis, by the 10th day of the
following month, or more frequently if requested by the Lender, Inventory
reports by category, with additional detail showing additions to and deletions
from the Inventory during such month; (e) on a monthly basis, by the 10th day of
the following month, or more frequently if requested by the Lender, a
reconciliation of the Inventory to the general ledger; (f) upon request, copies
of invoices in connection with the Borrowers' Accounts, customer statements,
credit memos, remittance advices and reports, deposit slips, shipping and
delivery documents in connection with the Borrowers' Accounts and for Inventory
and Equipment acquired by the Borrowers, purchase orders and invoices; (g) upon
request, a statement of the balance of each of the Intercompany Accounts; (h)
such other reports as to the Collateral of the Borrowers as the Lender shall
reasonably request from time to time; (i) on a monthly basis, by the last
Business Day of the following month, a report of the average cash and
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cash equivalents held by the Borrowers during the prior month and, commencing in
March 2000, during the prior three months; provided that no report shall be
required with respect to cash or cash equivalents held at Bank of America; and
(j) with the delivery of each of the foregoing, a certificate of each Borrower
executed by a Responsible Officer thereof certifying as to the accuracy and
completeness of the foregoing. If any of the Borrowers' records or reports of
the Collateral are prepared by an accounting service or other Lender, the
Borrowers hereby authorize such service or Lender to deliver such records,
reports, and related documents to the Lender.
6.8 Accounts. (a) Each Borrower hereby represents and warrants to the
Lender, with respect to its Accounts, that: (i) each existing Account
represents, and each future Account will represent, a bona fide sale or lease
and delivery of goods by the Borrower, or rendition of services by the Borrower,
in the ordinary course of the Borrower's business; (ii) each existing Account
is, and each future Account will be, for a liquidated amount payable by the
Account Debtor thereon on the terms set forth in the invoice therefor or in the
schedule thereof delivered to the Lender, without any offset, deduction,
defense, or counterclaim except those known to the Borrower and disclosed to the
Lender pursuant to this Agreement; (iii) no payment will be received with
respect to any Account, and no credit, discount, or extension, or agreement
therefor will be granted on any Account, except as reported to the Lender in
accordance with this Agreement; (iv) each copy of an invoice delivered to the
Lender by the Borrowers will be a genuine copy of the original invoice sent to
the Account Debtor named therein; and (v) all goods described in any invoice
representing a sale of goods will have been delivered to the Account Debtor and
all services of the Borrowers described in each invoice will have been
performed.
(b) No Borrower shall re-date any invoice or sale or make
sales on extended dating beyond that customary in the Borrower's business or
extend or modify any Account. If a Borrower becomes aware of any matter
adversely affecting the collectibility of any Account or the Account Debtor
therefor involving an amount greater than $100,000, including information
regarding the Account Debtor's creditworthiness, the Borrower will promptly so
advise the Lender.
(c) No Borrower shall accept any note or other instrument
(except a check or other instrument for the immediate payment of money) with
respect to any Account without the Lender's written consent, which shall not be
unreasonably withheld. If the Lender consents to the acceptance of any such
instrument, it shall be considered as evidence of the Account and not payment
thereof and the Borrower will promptly deliver such instrument to the Lender,
endorsed by the Borrower to the Lender in a manner satisfactory in form and
substance to the Lender. Regardless of the form of presentment, demand, notice
of protest with respect thereto, the Borrower shall remain liable thereon until
such instrument is paid in full.
(d) Each Borrower shall notify the Lender promptly of all
disputes and claims in excess of $100,000 with any Account Debtor, and agrees to
settle, contest, or adjust such dispute or claim at no expense to the Lender. No
discount, credit or allowance shall be granted to any such Account Debtor
without the Lender's prior written consent, which shall not be unreasonably
withheld, except for discounts, credits and allowances made or given in the
ordinary course of the Borrower's business when no Event of Default exists
hereunder. At the Lender's request, each Borrower shall send the Lender a copy
of each credit memorandum in excess of $25,000 as soon as issued. The Lender may
at all times when an Event of Default
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exists hereunder, settle or adjust disputes and claims directly with Account
Debtors for amounts and upon terms which the Lender shall consider advisable
and, in all cases, the Lender will credit the Borrowers' Loan Account with the
net amounts received by the Lender in payment of any Accounts.
(e) If an Account Debtor returns any Inventory to a Borrower
when no Event of Default exists, then the Borrower shall promptly determine the
reason for such return and shall issue a credit memorandum to the Account Debtor
in the appropriate amount. Each Borrower shall immediately report to the Lender
any return involving an amount in excess of $100,000. Each such report shall
indicate the reasons for the returns and the locations and condition of the
returned Inventory. In the event any Account Debtor returns Inventory to a
Borrower when an Event of Default exists, the Borrower, upon the request of the
Lender, shall: (i) hold the returned Inventory in trust for the Lender; (ii)
segregate all returned Inventory from all of its other property; (iii) dispose
of the returned Inventory solely according to the Lender's written instructions;
and (iv) not issue any credits or allowances with respect thereto without the
Lender's prior written consent. All returned Inventory shall be subject to the
Lender's Liens thereon. Whenever any Inventory is returned, the related Account
shall be deemed ineligible to the extent of the amount owing by the Account
Debtor with respect to such returned Inventory.
6.9 Collection of Accounts; Payments. (a) The Borrowers shall establish
a lock-box service for collections of Accounts at a Clearing Bank reasonably
acceptable to the Lender and subject to a Blocked Account Agreement and other
documentation reasonably acceptable to the Lender, or, as the Lender may elect,
shall enter into a Blocked Account Agreement with a Clearing Bank reasonably
acceptable to the Lender. The Borrowers shall instruct all Account Debtors to
make all payments directly to the address established for such lock-box service.
If the Lender does not require that payments be delivered to a lock-box, or if
notwithstanding such instructions a Borrower receives any proceeds of Accounts,
each Borrower shall receive such payments as the Lender's trustee, and shall
immediately deliver such payments to the Lender in their original form duly
endorsed in blank or deposit them into a Payment Account, as the Lender may
direct. All collections received in any lock-box or Payment Account or directly
by the Borrowers or the Lender, and all funds in any Payment Account or other
account to which such collections are deposited shall be subject to the Lender's
sole control and withdrawals by the Borrowers shall not be permitted. The Lender
or the Lender's designee may, at any time after the occurrence of an Event of
Default, notify Account Debtors that the Accounts have been assigned to the
Lender and of the Lender's security interest therein, and may collect them
directly and charge the collection costs and expenses to the Borrower's Loan
Account as a Revolving Loan. The Borrowers, at the Lender's request, shall
execute and deliver to the Lender such documents as the Lender shall require to
grant the Lender access to any post office box in which collections of Accounts
are received.
(b) If sales of Inventory are made or services are rendered
for cash, the Borrowers shall immediately deliver to the Lender or deposit into
a Payment Account the cash which any Borrower receives.
(c) All payments including immediately available funds
received by the Lender at a bank account designated by it will be the Lender's
sole property and will be credited to the Borrower's Loan Account (conditional
upon final collection) upon receipt of good funds.
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(d) In the event the Borrowers repay all of the Obligations
upon the termination of this Agreement or upon acceleration of the Obligations,
other than through the Lender's receipt of payments on account of the Accounts
or proceeds of the other Collateral, such payment will be credited (conditional
upon final collection) to the Borrower's Loan Account after the Lender's receipt
of good funds.
6.10 Inventory; Perpetual Inventory. Each Borrower represents and
warrants to the Lender and agrees with the Lender that all of the Inventory
owned by the Borrowers is and will be held for sale or lease, or to be furnished
in connection with the rendition of services, in the ordinary course of the
Borrowers' business, and is and will be fit for such purposes. Each Borrower
will keep its Inventory in good and marketable condition, except for damaged or
defective goods arising in the ordinary course of the Borrower's business.
Borrowers will not, without the prior written consent of the Lender, acquire or
accept any Inventory on consignment or approval. Each Borrower agrees that all
Inventory produced by the Borrower in the United States of America will be
produced in accordance with the Federal Fair Labor Standards Act of 1938, as
amended, and all rules, regulations, and orders thereunder. Each Borrower will
conduct a physical count of the Inventory at least once per Fiscal Year, and
after and during the continuation of an Event of Default, at such other times as
the Lender requests. Each Borrower will maintain a perpetual inventory reporting
system at all times. No Borrower will, without the Lender's written consent,
sell any Inventory on a bill-and-hold, guaranteed sale, sale and return, sale on
approval, consignment, or other repurchase or return basis.
6.11 Equipment. (a) Each Borrower represents and warrants to the Lender
and agrees with the Lender that all of the Equipment owned by the Borrower is
and will be used or held for use in the Borrower's business, and is and will be
fit for such purposes. Each Borrower shall keep and maintain its Equipment in
good operating condition and repair (ordinary wear and tear excepted) and shall
make all necessary replacements thereof.
(b) The Borrowers shall promptly inform the Lender of any
material additions to or deletions from the Equipment. No Borrower shall permit
any Equipment to become a fixture with respect to real property or to become an
accession with respect to other personal property with respect to which real or
personal property the Lender does not have a Lien. No Borrower will, without the
Lender's prior written consent, alter or remove any identifying symbol or number
on any of the Borrower's Equipment constituting of Collateral.
(c) The Borrowers shall not, without the Lender's prior
written consent, sell, lease as a lessor, or otherwise dispose of any of the
Borrowers' Equipment; provided, however, that the Borrowers may dispose of
obsolete or unusable Equipment having an orderly liquidation value no greater
than $100,000 in the aggregate in any Fiscal Year, or $300,000 in the aggregate
during the term of this Agreement, without the Lender's consent, subject to the
conditions set forth in the next sentence. In the event any of such Equipment is
sold, transferred or otherwise disposed of pursuant to the proviso contained in
the immediately preceding sentence, (1) if such sale, transfer or disposition is
effected without replacement of such Equipment, or such Equipment is replaced by
Equipment leased by a Borrower or by Equipment purchased by a Borrower subject
to a Lien, then the Borrower shall deliver the net cash proceeds of any such
sale, transfer or disposition to the Lender, which proceeds shall be applied to
the reduction of Term Loans A (in the inverse order of Maturity) and after
payment in full of Term Loans A, pro
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rata to the reduction of Term Loan B (in the inverse order of maturity) and the
Revolving Loans, with a permanent reduction of the Inventory Sublimit in a
corresponding amount (in the inverse order of reductions), or (2) if such sale,
transfer or disposition is made in connection with the purchase by the Borrower
of replacement Equipment, then the Borrower shall use the proceeds of such sale,
transfer or disposition to purchase such replacement Equipment and shall deliver
to the Lender written evidence of the use of the proceeds for such purchase. All
replacement Equipment purchased by the Borrowers shall be free and clear of all
Liens except the Lender's Lien.
6.12 Assigned Contracts. Each Borrower shall fully perform all of its
obligations under each of the Assigned Contracts, and shall enforce all of its
rights and remedies thereunder, in each case, as it deems appropriate in its
business judgment; provided, however, that the Borrowers shall not take any
action or fail to take any action with respect to its Assigned Contracts which
would cause the termination of a material Assigned Contract. Without limiting
the generality of the foregoing, the Borrowers shall take all action necessary
or appropriate to permit, and shall not take any action which would have any
materially adverse effect upon, the full enforcement of all indemnification
rights under its Assigned Contracts. The Borrowers shall notify the Lender in
writing, promptly after a Borrower becomes aware thereof, of any event or fact
which could give rise to a material claim by it for indemnification under any of
its Assigned Contracts, and shall diligently pursue such right and report to the
Lender on all further developments with respect thereto. The Borrowers shall
deposit into the Payment Account or remit directly to the Lender for application
to the Obligations in such order as the Lender shall determine, all amounts
received by the Borrowers as indemnification or otherwise pursuant to its
Assigned Contracts. If a Borrower shall fail after the Lender's demand to pursue
diligently any right under its Assigned Contracts, or if an Event of Default
then exists, the Lender may directly enforce such right in its own or the
Borrower's name and may enter into such settlements or other agreements with
respect thereto as the Lender shall determine. In any suit, proceeding or action
brought by the Lender under any Assigned Contract for any sum owing thereunder
or to enforce any provision thereof, the Borrowers shall indemnify and hold the
Lender harmless from and against all expense, loss or damage suffered by reason
of any defense, setoff, counterclaims, recoupment, or reduction of liability
whatsoever of the obligor thereunder arising out of a breach by a Borrower of
any obligation thereunder or arising out of any other agreement, indebtedness or
liability at any time owing from any Borrower to or in favor of such obligor or
its successors. All such obligations of the Borrowers shall be and remain
enforceable only against the Borrowers and shall not be enforceable against the
Lender. Notwithstanding any provision hereof to the contrary, the Borrowers
shall at all times remain liable to observe and perform all of their duties and
obligations under all Assigned Contracts, and the Lender's exercise of any of
their respective rights with respect to the Collateral shall not release the
Borrowers from any of such duties and obligations. The Lender shall not be
obligated to perform or fulfill any of a Borrower's duties or obligations under
its Assigned Contracts or to make any payment thereunder, or to make any inquiry
as to the nature or sufficiency of any payment or property received by it
thereunder or the sufficiency of performance by any party thereunder, or to
present or file any claim, or to take any action to collect or enforce any
performance, any payment of any amounts, or any delivery of any property.
6.13 Documents, Instruments, and Chattel Paper. Each Borrower
represents and warrants to the Lender that (a) all documents, instruments, and
chattel paper describing,
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evidencing, or constituting Collateral, and all signatures and endorsements
thereon, are and will be complete, valid, and genuine, and (b) all goods
evidenced by such documents, instruments, and chattel paper are and will be
owned by the Borrower, free and clear of all Liens other than Permitted Liens.
6.14 Right to Cure. The Lender may, in its discretion, pay any amount
or do any act required of the Borrowers hereunder or under any other Loan
Document in order to preserve, protect, maintain or enforce the Obligations, the
Collateral or the Lender's Liens therein, and which the Borrowers fail to pay or
do, including payment of any judgment against Borrower, any insurance premium,
any warehouse charge, any finishing or processing charge, any landlord's or
bailee's claim, and any other Lien upon or with respect to the Collateral. All
payments that the Lender makes under this Section 6.14 and all out-of-pocket
costs and expenses that the Lender pays or incurs in connection with any action
taken by it hereunder shall be charged to the Borrowers' Loan Account as a
Revolving Loan. Any payment made or other action taken by the Lender under this
Section 6.14 shall be without prejudice to any right to assert an Event of
Default hereunder and to proceed thereafter as herein provided.
6.15 Power of Attorney. Each Borrower hereby appoints the Lender and
the Lender's designee as the Borrower's attorney, with power: (a) to endorse the
Borrower's name on any checks, notes, acceptances, money orders, or other forms
of payment or security that come into the Lender's possession; (b) to sign the
Borrower's name on any invoice, bill of lading, warehouse receipt or other
document of title relating to any Collateral, on drafts against customers, on
assignments of Accounts, on notices of assignment, financing statements and
other public records and to file any such financing statements by electronic
means with or without a signature as authorized or required by applicable law or
filing procedure; (c) so long as any Event of Default has occurred and is
continuing, to notify the post office authorities to change the address for
delivery of the Borrower's mail to an address designated by the Lender and to
receive, open and dispose of all mail addressed to the Borrower; (d) to send
requests for verification of Accounts to customers or Account Debtors; (e) to
clear Inventory through customs in the Borrower's name, the Lender's name or the
name of the Lender's designee, and to sign and deliver to customs officials
powers of attorney in the Borrower's name for such purpose; and (f) to do all
things necessary to carry out this Agreement. Each Borrower ratifies and
approves all acts of such attorney. The Lender and its attorneys will not be
liable for any acts or omissions or for any error of judgment or mistake of fact
or law except for their willful misconduct. This power, being coupled with an
interest, is irrevocable until this Agreement has been terminated and the
Obligations have been fully satisfied.
6.16 The Lender's Rights, Duties and Liabilities. Each Borrower assumes
all responsibility and liability arising from or relating to the use, sale or
other disposition of the Collateral. The Obligations shall not be affected by
any failure of the Lender to take any steps to perfect the Lender's Liens or to
collect or realize upon the Collateral, nor shall loss of or damage to the
Collateral release any Borrower from any of its Obligations. Following the
occurrence and continuation of an Event of Default, the Lender may (but shall
not be required to), without notice to or consent from any Borrower, sue upon or
otherwise collect, extend the time for payment of, modify or amend the terms of,
compromise or settle for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and take or omit
to take any other action with respect to the Collateral, any security therefor,
any agreement
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relating thereto, any insurance applicable thereto, or any Person liable
directly or indirectly in connection with any of the foregoing, without
discharging or otherwise affecting the liability of the Borrowers for the
Obligations or under this Agreement or any other agreement now or hereafter
existing between the Lender and any Borrower.
6.17 Release of Lien on L.L.C. Interests. Upon payment in full of the
Inventory Loans and reduction of the Inventory Sublimit to zero, if no Default
or Event of Default has occurred and is continuing, the Lender agrees to release
its Lien on Cerprobe's membership interests in CRPB Investors, Inc., and will,
at the expense of Borrowers, execute and deliver such partial release documents
as Borrowers may reasonably request.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. Each Borrower shall maintain, at all times,
correct and complete books, records and accounts in which complete, correct and
timely entries are made of its transactions in accordance with GAAP applied
consistently with the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). Each Borrower shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements proper
liabilities and reserves for all taxes and proper provision for depreciation and
amortization of property and bad debts, all in accordance with GAAP. Each
Borrower shall maintain at all times books and records pertaining to the
Collateral in such detail, form and scope as the Lender shall reasonably
require, including, but not limited to, records of (a) all payments received and
all credits and extensions granted with respect to the Accounts; (b) the return,
rejections, repossession, stoppage in transit, loss, damage, or destruction of
any Inventory; and (c) all other dealings affecting the Collateral.
7.2 Financial Information. The Borrowers shall promptly furnish to the
Lender all such financial information as the Lender shall reasonably request.
Without limiting the foregoing, the Borrowers will furnish to the Lender in such
detail as the Lender shall request, the following:
(a) As soon as available, but in any event not later than
ninety (90) days after the close of each Fiscal Year, consolidated audited
balance sheets, and statements of income and expense, cash flow and of
stockholders' equity and the unaudited consolidating balance sheets and income
statements for Cerprobe and its Subsidiaries for such Fiscal Year, and the
accompanying notes thereto, setting forth in each case in comparative form
figures for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations of Cerprobe and
its Subsidiaries as at the date thereof and for the Fiscal Year then ended, and
prepared in accordance with GAAP. Such statements shall be examined in
accordance with generally accepted auditing standards by and, in the case of
such statements performed on a consolidated basis, accompanied by a report
thereon unqualified in any respect of independent certified public accountants
selected by the Borrowers and reasonably satisfactory to the Lender.
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(b) As soon as available, but in any event not later than
thirty (30) days after the end of each month (other than any month which is also
the end of a fiscal quarter), consolidated and consolidating unaudited balance
sheets of Cerprobe and its Subsidiaries as at the end of such month, and
consolidated and consolidating unaudited statements of income and expense for
Cerprobe and its consolidated Subsidiaries for the period from the beginning of
the Fiscal Year to the end of such month, all in reasonable detail, fairly
presenting the financial position and results of operations of Cerprobe and its
Subsidiaries as at the date thereof and for such periods, and prepared in
accordance with GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 7.2(a). The Borrowers shall certify
by a certificate signed by the chief financial officer of Cerprobe that all such
statements have been prepared in accordance with GAAP and present fairly,
subject to normal year-end adjustments, Borrowers' financial position as at the
dates thereof and its results of operations for the periods then ended.
(c) As soon as available, but in any event not later than
forty-five (45) days after the close of each fiscal quarter other than the
fourth quarter of a Fiscal Year, consolidated and consolidating unaudited
balance sheets of Cerprobe and its Subsidiaries as at the end of such quarter,
and consolidated and consolidating unaudited statements of income and expense
and statement of cash flows for Cerprobe and its Subsidiaries for the period
from the beginning of the Fiscal Year to the end of such quarter, all in
reasonable detail, fairly presenting the financial position and results of
operation of Cerprobe and its Subsidiaries as at the date thereof and for such
periods, prepared in accordance with GAAP consistent with the audited Financial
Statements required to be delivered pursuant to Section 7.2(a).
(d) [INTENTIONALLY OMITTED]
(e) With each of the annual audited Financial Statements
delivered pursuant to Section 7.2(a), and within thirty days after the end of
each month (other than any month which is also the end of a fiscal quarter) and
within forty-five (45) days after the end of each fiscal quarter, a certificate
of the chief financial officer of each Borrower (i) setting forth in reasonable
detail the calculations required to establish that the Borrowers were in
compliance with the covenants set forth in Sections 9.13, 9.24, 9.25 and 9.26
during the period covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in reasonable detail in such
certificate, (A) all of the representations and warranties of the Borrowers
contained in this Agreement and the other Loan Documents are correct and
complete in all material respects as at the date of such certificate as if made
at such time, except for those that speak as of a particular earlier date, (B)
each Borrower is, at the date of such certificate, in compliance in all material
respects with all of its respective covenants and agreements in this Agreement
and the other Loan Documents, (C) no Default or Event of Default then exists or
existed during the period covered by such Financial Statements, (D) describing
and analyzing in reasonable detail all material trends, changes, and
developments in each and all Financial Statements; and (E) explaining the
variances of the figures in the corresponding budgets and prior Fiscal Year
financial statements. If such certificate discloses that a representation or
warranty is not correct or complete, or that a covenant has not been complied
with, or that a Default or Event of Default existed or exists, such certificate
shall set forth what action the applicable Borrower has taken or proposes to
take with respect thereto.
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(f) No sooner than sixty (60) days and not less than thirty
(30) days prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated and consolidating balance sheets, statements of
income and expenses and statements of cash flow) for Cerprobe and its
Subsidiaries as at the end of and for each fiscal quarter of such Fiscal Year.
(g) Promptly after filing with the PBGC and the IRS, a copy of
each annual report or other filing filed with respect to each Plan of any
Borrower.
(h) Promptly upon the filing thereof, copies of all reports,
if any, to or other documents filed by Cerprobe or any of its Subsidiaries with
the Securities and Exchange Commission under the Exchange Act, and all reports,
notices, or statements sent or received by any Borrower or any of its
Subsidiaries to or from the holders of any equity interests of any Borrower
(other than routine non-material correspondence sent by shareholders of a
Borrower to the Borrower) or any such Subsidiary or of any Debt for Borrowed
Money of any Borrower or any of its Subsidiaries registered under the Securities
Act of 1933 or to or from the trustee under any indenture under which the same
is issued.
(i) As soon as available, but in any event not later than 15
days after Cerprobe's receipt thereof, a copy of all management reports and
management letters prepared for Cerprobe and its Subsidiaries by any independent
certified public accountants of such Borrower.
(j) Promptly after their preparation, copies of any and all
proxy statements, financial statements, and reports which a Borrower makes
available to its shareholders.
(k) Promptly after filing with the IRS, a copy of the
consolidated tax return filed by Cerprobe and its Subsidiaries.
(l) Such additional information as the Lender may from time to
time reasonably request regarding the financial and business affairs of any
Borrower or any Subsidiary.
7.3 Notices to the Lender. The Borrowers shall notify the Lender in
writing of the following matters at the following times:
(a) Immediately after becoming aware of any Default or Event
of Default:
(b) Immediately after becoming aware of the assertion by the
holder of any capital stock of any Borrower or of any Subsidiary or of any Debt
in a face amount in excess of $100,000 that a default exists with respect
thereto or that any Borrower or such Subsidiary is not in compliance with the
terms thereof, or the threat or commencement by such holder of any enforcement
action because of such asserted default or non-compliance;
(c) Immediately after becoming aware of any event or
circumstance which could have a Material Adverse Effect;
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(d) Immediately after becoming aware of any pending or
threatened action, suit, proceeding, by any Person, or any pending or threatened
investigation by a Governmental Authority, which may have a Material Adverse
Effect;
(e) Immediately after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or other labor
dispute affecting any Borrower or any of its Subsidiaries in a manner which
could reasonably be expected to have a Material Adverse Effect;
(f) Immediately after becoming aware of any violation of any
law, statute, regulation, or ordinance of a Governmental Authority affecting any
Borrower or any Subsidiary which could reasonably be expected to have a Material
Adverse Effect;
(g) Immediately after receipt of any notice of any violation
by any Borrower or any of its Subsidiaries of any Environmental Law which could
reasonably be expected to have a Material Adverse Effect or that any
Governmental Authority has asserted in writing that any Borrower or any
Subsidiary is not in compliance with any Environmental Law or is investigating
any Borrower's or such Subsidiary's compliance therewith;
(h) Immediately after receipt of any written notice that any
Borrower or any of its Subsidiaries is or may be liable to any Person as a
result of the Release or threatened Release of any Contaminant or that any
Borrower or any Subsidiary is subject to investigation by any Governmental
Authority evaluating whether any remedial action is needed to respond to the
Release or threatened Release of any Contaminant which, in either case, is
reasonably likely to give rise to liability in excess of $100,000;
(i) Immediately after receipt of any written notice of the
imposition of any Environmental Lien against any property of any Borrower or any
of its Subsidiaries;
(j) Any change in any Borrower's name, state of organization,
or form of organization, trade names under which any Borrower will sell
Inventory or create Accounts, or to which instruments in payment of Accounts may
be made payable, in each case at least thirty (30) days prior thereto;
(k) Within ten (10) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know, that an ERISA Event or a prohibited
transaction (as defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the IRS, the DOL or
the PBGC with respect thereto;
(l) Upon request, or, in the event that such filing reflects a
significant change with respect to the matters covered thereby, within three (3)
Business Days after the filing thereof with the PBGC, the DOL or the IRS, as
applicable, copies of the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the IRS with
respect to each Plan, (ii) a copy of each funding waiver request filed with the
PBGC, the DOL or the IRS with respect to any Plan and all communications
received by any Borrower or any ERISA Affiliate from the PBGC, the DOL or the
IRS with respect to such request, and (iii) a copy of each other filing or
notice filed with the PBGC, the DOL or the IRS, with respect to each Plan of any
Borrower or any ERISA Affiliate;
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(m) Upon request, copies of each actuarial report for any Plan
or Multi-employer Plan and annual report for any Multi-employer Plan; and within
three (3) Business Days after receipt thereof by any Borrower or any ERISA
Affiliate, copies of the following: (i) any notices of the PBGC's intention to
terminate a Plan or to have a trustee appointed to administer such Plan; (ii)
any favorable or unfavorable determination letter from the IRS regarding the
qualification of a Plan under Section 401(a) of the Code; or (iii) any notice
from a Multi-employer Plan regarding the imposition of withdrawal liability;
(n) Within three (3) Business Days after the occurrence
thereof: (i) any changes in the benefits of any existing Plan which increase any
Borrower's annual costs with respect thereto by an amount in excess of $250,000,
or the establishment of any new Plan or the commencement of contributions to any
Plan to which any Borrower or any ERISA Affiliate was not previously
contributing; or (ii) any failure by any Borrower or any ERISA Affiliate to make
a required installment or any other required payment under Section 412 of the
Code on or before the due date for such installment or payment; or
(o) Within three (3) Business Days after any Borrower or any
ERISA Affiliate knows or has reason to know that any of the following events has
or will occur: (i) a Multi-employer Plan has been or will be terminated; (ii)
the administrator or plan sponsor of a Multi-employer Plan intends to terminate
a Multi-employer Plan; or (iii) the PBGC has instituted or will institute
proceedings under Section 4042 of ERISA to terminate a Multi-employer Plan.
(p) Promptly following receipt or delivery of any notice or
claim under the Purchase Agreement (including any notice of any addition to or
subtraction from the Seller Subordinated Note), a copy of such notice.
Each notice given under this Section shall describe the
subject matter thereof in reasonable detail, and shall set forth the action that
the applicable Borrower, its Subsidiary, or any ERISA Affiliate, as applicable,
has taken or proposes to take with respect thereto.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Borrower warrants and represents to the Lender that,
except as hereafter disclosed to and accepted by the Lender in writing, and both
before and after giving effect to the Acquisition (it being understood that all
representations and warranties and disclosure schedules shall include Oz and its
Subsidiaries):
8.1 Authorization, Validity, and Enforceability of this Agreement and
the Loan Documents. Each Borrower has the corporate power and authority to
execute, deliver and perform this Agreement and the other Loan Documents and
Transaction Documents to which it is a party, to incur the Obligations, and to
grant to the Lender Liens upon and security interests in the Collateral. Each
Borrower has taken all necessary corporate action (including obtaining approval
of its stockholders if necessary) to authorize its execution, delivery, and
performance of this Agreement and the other Loan Documents and Transaction
Documents to which it is a party.
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This Agreement and the other Loan Documents and Transaction Documents to which
it is a party have been duly executed and delivered by each Borrower, and
constitute the legal, valid and binding obligations of the Borrower, enforceable
against it in accordance with their respective terms without defense, setoff or
counterclaim except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting the
enforcement of creditors' rights generally and except to the extent that
availability of the remedy of specific performance or injunctive relief is
subject to the discretion of the court before which any proceeding therefor may
be brought. No Borrower's execution, delivery, and performance of this Agreement
and the other Loan Documents and Transaction Documents to which it is a party do
or will conflict with, or constitute a violation or breach of, or constitute a
default under, or result in, or require the creation or imposition of any Lien
upon the property of Borrower or any of its Subsidiaries by reason of the terms
of (a) any contract, mortgage, Lien, lease, agreement, indenture, or instrument
to which any Borrower or any of its Subsidiaries is a party or which is binding
upon it, (b) any Requirement of Law applicable to any Borrower or any of its
Subsidiaries, or (c) the certificate or articles of incorporation or by-laws of
the Borrower or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The provisions of this
Agreement and the other Loan Documents create legal and valid Liens on all the
Collateral in favor of the Lender and upon filing of the UCC-1 financing
statements delivered to the Lender on or before the Closing Date and filing of
the Patent and Trademark Agreements with the United States Patent and Trademark
Office, such Liens will constitute perfected and continuing Liens on all the
Collateral, having priority over all other Liens on the Collateral, except for
those Liens identified in clauses (c), (d), (e), (g) and (j) of the definition
of Permitted Liens securing, all the Obligations, and enforceable against the
Borrowers and all third parties.
8.3 Organization and Qualification. Each Borrower (a) is duly
incorporated and organized and validly existing in good standing under the laws
of the state of its incorporation, (b) is qualified to do business as a foreign
corporation and is in good standing in the jurisdictions set forth on Schedule
8.3, except to the extent that failure to be so qualified could not reasonably
be expected to have a Material Adverse Effect which are the only jurisdictions
in which qualification is necessary in order for it to own or lease its property
and conduct its business and (c) has all requisite power and authority to
conduct its business and to own its property.
8.4 Corporate Name; Prior Transactions. No Borrower has, during the
past five (5) years, been known by or used any other corporate or fictitious
name, or been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of its property
outside of the ordinary course of business, except as described on Schedule 8.4.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct and complete
list of the name and relationship to each Borrower of each and all of each
Borrower's Subsidiaries and other Affiliates. Each Subsidiary is (a) duly
incorporated and organized and validly existing in good standing under the laws
of its jurisdiction of incorporation set forth on Schedule 8.5, and (b)
qualified to do business as a foreign corporation and in good standing in each
jurisdiction in which the failure to so qualify or be in good standing could
reasonably be expected to have a material adverse effect on any such
Subsidiary's business, operations, prospects, property, or
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condition (financial or otherwise) and (c) has all requisite power and authority
to conduct its business and own its property.
8.6 Financial Statements and Projections. (a) The Borrowers have
delivered to the Lender the audited balance sheet and related statements of
income, retained earnings, cash flows, and changes in stockholders' equity for
Cerprobe and its consolidated Subsidiaries as of December 31, 1995, 1996, 1997,
1998, and for the Fiscal Years then ended, accompanied by the report thereon of
Cerprobe's independent certified public accountants, KPMG Peat Marwick and the
unaudited balance sheet and related statements of income, retained earnings,
cash flows, and changes in stockholders' equity for Oz and its consolidated
Subsidiaries as of December 31, 1997 and 1998, and for the Fiscal Years then
ended, accompanied by the report on the December 31, 1998 balance sheet of Oz's
certified public accountants, Frank, Rimerman & Co. The Borrowers have also
delivered to the Lender the unaudited balance sheets and related statements of
income and cash flows for Cerprobe and its consolidated Subsidiaries and for Oz
and its consolidated Subsidiaries, each as of September 30, 1999. Such financial
statements are attached hereto as Exhibit C. All such financial statements have
been prepared in accordance with GAAP and present accurately and fairly the
financial position of the Cerprobe and its consolidated Subsidiaries and Oz and
its consolidated Subsidiaries as at the dates thereof and their results of
operations for the periods then ended.
(b) The Latest Projections when submitted to the Lender as
required herein represent the Borrowers' best estimate of the future financial
performance of Cerprobe and its basis of the assumptions set forth therein,
which the Borrowers believe are fair and reasonable in light of current and
reasonably foreseeable business conditions at the time submitted to the Lender.
(c) The pro forma balance sheet of the Borrowers as at
September 30, 1999, attached hereto as Exhibit F, presents fairly and accurately
in all material respects the Borrowers' financial condition as at such date
after giving effect to the Acquisition as if it had occurred on such date and
the Closing Date had been such date, and has been prepared in accordance with
GAAP.
8.7 Capitalization. Schedule 8.7 sets forth the authorized and
outstanding capital stock of each Borrower and each of its Subsidiaries, and the
record and beneficial owners of such capital stock, in each case as of the
Closing Date. All of such capital stock has been duly and validly issued in
compliance with all applicable Requirements of Law, and is fully paid and
non-assessable. Except as set forth on Schedule 8.7, there are no options,
warrants or other rights to acquire the capital stock of any Borrower or any of
its Subsidiaries, and no outstanding securities convertible into such capital
stock.
8.8 Solvency. Each Borrower is Solvent prior to and after giving effect
to the making of the Term Loans and the Revolving Loans to be made on the
Closing Date and the issuance of the Letters of Credit to be issued on the
Closing Date and the consummation of the Acquisition, and shall remain Solvent
during the term of this Agreement.
8.9 Debt. After giving effect to the making of the Term Loans and the
Revolving Loans to be made on the Closing Date, the Borrowers and their
Subsidiaries have no Debt, except (a)
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the Obligations, (b) Debt described on Schedule 8.9, (c) trade payables and
other contractual obligations arising in the ordinary course of business, and
(d) other Debt existing on the Closing Date and reflected in the Financial
Statements attached hereto as Exhibit C and the pro forma balance sheet attached
hereto as Exhibit F.
8.10 Distributions. Since October 31, 1999, no Distribution has been
declared, paid, or made upon or in respect of any capital stock or other
securities of Cerprobe or any of its Subsidiaries.
8.11 Title to Property. Each Borrower has good and marketable title in
fee simple to the Real Estate identified on Schedule 8.12 as owned by such
Borrower, and each Borrower has good, indefeasible, and merchantable title to
all of its other property (including the assets reflected on the Financial
Statements delivered to the Lender, except as disposed of in the ordinary course
of business since the date thereof), free of all Liens except Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth, as of the Closing
Date, a correct and complete list of all Real Estate owned by any Borrower and
of any real property owned by any of its Subsidiaries, all leases and subleases
of real or personal property held by any Borrower or any of its Subsidiaries as
lessee or sublessee (other than leases of personal property as to which a
Borrower is lessee or sublessee for which the value of such personal property is
less than $50,000), and all leases and subleases of real or personal property
held by any Borrower or any of its Subsidiaries as lessor, or sublessor. Each of
such leases and subleases is valid and enforceable in accordance with its terms
and is in full force and effect, and to the best knowledge of any Borrower, no
default by any party to any such lease or sublease exists.
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct and
complete list of all of Proprietary Rights of each Borrower. None of the
Proprietary Rights is subject to any licensing agreement or similar arrangement
except as set forth on Schedule 8.13. To the best of the Borrowers' knowledge,
none of the Proprietary Rights infringes on or conflicts with any other Person's
property, and no other Person's property infringes on or conflicts with the
Proprietary Rights. The Proprietary Rights described on Schedule 8.13 constitute
all of the property of such type necessary to the current and anticipated future
conduct of the Borrowers' business.
8.14 Trade Names. All trade names or styles under which any Borrower or
any of its Subsidiaries will sell Inventory or create Accounts, or to which
instruments in payment of Accounts may be made payable, are listed on Schedule
8.14.
8.15 Litigation. Except as set forth on Schedule 8.15, there is no
pending or to the best of the Borrowers' knowledge threatened, action, suit,
proceeding, or counterclaim by any Person, or to the best of the Borrowers'
knowledge investigation by any Governmental Authority, or any basis for any of
the foregoing, which could reasonably be expected to cause a Material Adverse
Effect.
8.16 Restrictive Agreements. No Borrower is a party to any contract or
agreement, or subject to any charter or other corporate restriction, which
affects its ability to execute, deliver, and perform the Loan Documents or the
Transaction Documents and repay the Obligations or which could reasonably be
expected to cause a Material Adverse Effect.
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8.17 Labor Disputes. Except as set forth on Schedule 8.17, as of the
Closing Date (a) there is no collective bargaining agreement or other labor
contract covering employees of any Borrower or any of its Subsidiaries, (b) no
such collective bargaining agreement or other labor contract is scheduled to
expire during the term of this Agreement, (c) no union or other labor
organization is seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Borrower or any of its Subsidiaries or for
any similar purpose, and (d) there is no pending or (to the best of the
Borrowers' knowledge) threatened, strike, work stoppage, material unfair labor
practice claim, or other material labor dispute against or affecting any
Borrower or its Subsidiaries or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on Schedule
8.18:
(a) Each Borrower and its Subsidiaries have complied in all
material respects with all Environmental Laws and neither any Borrower nor any
Subsidiary nor any of its presently owned real property or presently conducted
operations, nor its previously owned real property or prior operations, is
subject to any enforcement order from or liability agreement with any
Governmental Authority or private Person respecting (i) compliance with any
Environmental Law or (ii) any potential liabilities and costs or remedial action
arising from the Release or threatened Release of a Contaminant.
(b) Each Borrower and its Subsidiaries have obtained all
permits necessary for their current operations under Environmental Laws, and all
such permits are in good standing and each Borrower and its Subsidiaries are in
compliance with all material terms and conditions of such permits.
(c) Neither any Borrower nor any of its Subsidiaries, nor, to
the best of the Borrowers' knowledge, any of its predecessors in interest, has
in violation of applicable law stored, treated or disposed of any hazardous
waste.
(d) Neither any Borrower nor any of its Subsidiaries has
received any summons, complaint, order or similar written notice indicating that
it is not currently in compliance with, or that any Governmental Authority is
investigating its compliance with, any Environmental Laws or that it is or may
be liable to any other Person as a result of a Release or threatened Release of
a Contaminant.
(e) To the best of the Borrowers' knowledge, none of the
present or past operations of any Borrower and its Subsidiaries is the subject
of any investigation by any Governmental Authority evaluating whether any
remedial action is needed to respond to a Release or threatened Release of a
Contaminant.
(f) There is not now, nor to the best of the Borrowers'
knowledge has there ever been on or in the Real Estate:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos-containing material, or
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(3) any polychlorinated biphenyls (PCBs) used in
hydraulic oils, electrical transformers or other equipment.
(g) Neither any Borrower nor any of its Subsidiaries has filed
any notice under any requirement of Environmental Law reporting a spill or
accidental and unpermitted Release or discharge of a Contaminant into the
environment.
(h) Neither any Borrower nor any of its Subsidiaries has
entered into any negotiations or settlement agreements with any Person
(including the prior owner of its property) imposing material obligations or
liabilities on any Borrower or any of its Subsidiaries with respect to any
remedial action in response to the Release of a Contaminant or environmentally
related claim.
(i) None of the products manufactured, distributed or sold by
any Borrower or any of its Subsidiaries contain asbestos containing material.
(j) No Environmental Lien has attached to the Real Estate.
8.19 No Violation of Law. Neither any Borrower nor any of its
Subsidiaries is in violation of any law, statute, regulation, ordinance,
judgment, order, or decree applicable to it which violation could reasonably be
expected to have a Material Adverse Effect.
8.20 No Default. Neither any Borrower nor any of its Subsidiaries is in
default with respect to any note, indenture, loan agreement, mortgage, lease,
deed, or other agreement to which any Borrower or such Subsidiary is a party or
by which it is bound, which default could reasonably be expected to have a
Material Adverse Effect.
8.21 ERISA Compliance. Except as specifically disclosed in Schedule
8.21:
(a) Each Plan is in compliance in all material respects with
the applicable provisions of ERISA, the Code and other federal or state law.
Each Plan which is intended to qualify under Section 401(a) of the Code has
received a favorable determination letter from the IRS and to the best knowledge
of the Borrowers, nothing has occurred which would cause the loss of such
qualification. Each Borrower and each ERISA Affiliate has made all required
contributions to any Plan subject to Section 412 of the Code, and no application
for a funding waiver or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(b) There are no pending or, to the best knowledge of
Borrowers, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to result in a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to result in a
Material Adverse Effect.
(c) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any Unfunded Pension Liability; (iii) neither
any Borrower nor any ERISA Affiliate has incurred, or reasonably expects to
incur, any liability under Title IV of ERISA with
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respect to any Pension Plan (other than premiums due and not delinquent under
Section 4007 of ERISA); (iv) neither any Borrower nor any ERISA Affiliate has
incurred, or reasonably expects to incur, any liability (and no event has
occurred which, with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA with respect to a
Multi-employer Plan; and (v) neither any Borrower nor any ERISA Affiliate has
engaged in a transaction that could be subject to Section 4069 or 4212(c) of
ERISA.
8.22 Taxes. The Borrowers and their Subsidiaries have filed all federal
and other tax returns and reports required to be filed, and have paid all
federal and other taxes, assessments, fees and other governmental charges levied
or imposed upon them or their properties, income or assets otherwise due and
payable unless such unpaid taxes and assessments would constitute a Permitted
Lien.
8.23 Regulated Entities. None of any Borrower, any Person controlling
any Borrower, or any Subsidiary, is an "Investment Company" within the meaning
of the Investment Company Act of 1940. No Borrower is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act, any state public utilities code or law, or any other
federal or state statute or regulation limiting its ability to incur
indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of the Term
Loans and the Revolving Loans made to Cerprobe and to CIS on the Closing Date
will be used solely to fund a portion of the purchase price for the Acquisition
and costs associated with the Loan Documents and the Transaction Documents, to
refinance certain Debt and for other corporate purposes. The proceeds of the
Revolving Loans made to Oz and TSE on the Closing Date will be used solely to
refinance certain Debt, to pay certain costs associated with the Acquisition and
the Loan Documents and for other corporate purposes. The proceeds of the
Revolving Loans made after the Closing Date are to be used solely for working
capital purposes. Neither any Borrower nor any Subsidiary is engaged in the
business of purchasing or selling Margin Stock or extending credit for the
purpose of purchasing or carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc. Each Borrower
owns or is licensed or otherwise has the right to use all of the patents,
trademarks, service marks, trade names, copyrights, contractual franchises,
licenses, rights of way, authorizations and other rights that are reasonably
necessary for the operation of its businesses, without conflict with the rights
of any other Person. To the best knowledge of the Borrowers, no slogan or other
advertising device, product, process, method, substance, part or other material
now employed, or now contemplated to be employed, by any Borrower or any
Subsidiary infringes upon any rights held by any other Person. No claim or
litigation regarding any of the foregoing is pending or threatened, and no
patent, invention, device, application, principle or any statute, law, rule,
regulation, standard or code is pending or, to the knowledge of the Borrowers,
proposed, which, in either case, could reasonably be expected to have a Material
Adverse Effect.
8.26 No Material Adverse Change; Year 2000. No material adverse change
has occurred in the Property, business, operations, or condition (financial or
otherwise) or prospects of any Borrower (or, as of the Closing Date, of Oz and
its Subsidiaries) since the date of the Financial Statements delivered to the
Lender. On the basis of a comprehensive review and assessment undertaken by
Borrowers of each Borrower's computers and computer applications
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and inquiry made of Borrowers' material suppliers, vendors and customers,
Borrowers reasonably believe that the "Year 2000 problem" (that is, the risk
that computers and computer applications used by any person may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999) will not result in a Material
Adverse Effect.
8.27 Full Disclosure. None of the representations or warranties made by
any Borrower or any Subsidiary in the Loan Documents as of the date such
representations and warranties are made or deemed made, and none of the
statements contained in any exhibit, report, statement or certificate furnished
by or on behalf of any Borrower or any Subsidiary in connection with the Loan
Documents (including the offering and disclosure materials delivered by or on
behalf of the Borrower to the Lender prior to the Closing Date) or any
Transaction Document, contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth as of the
Closing Date all material agreements and contracts to which any Borrower or any
of its Subsidiaries is a party or is bound as of the date hereof.
8.29 Bank Accounts. Schedule 8.29 contains as of the Closing Date a
complete and accurate list of all bank accounts maintained by any Borrower with
any bank or other financial institution.
8.30 Governmental Authorization. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority or other Person is necessary or required in connection
with the execution, delivery or performance by, or enforcement against, any
Borrower or any of its Subsidiaries of this Agreement or any other Loan Document
or Transaction Document, other than those obtained and copies of which have been
delivered to the Lender. No filing is required under the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976 to effect the Acquisition.
8.31 Representations and Warranties in Transaction Documents. Each of
the representations and warranties contained in the Transaction Documents is
true, correct and complete in all material respects of the Closing Date, and is
incorporated herein by reference.
8.32 CPRB Investors, L.L.C.. The grant by Cerprobe of security
interests in the membership interests in CRPB Investors, L.L.C. and any
realization by the Sellers upon such security interest will not constitute a
breach or default under, or permit CRPB Investors, L.L.C. to terminate or
modify, the terms of the facility lease for Cerprobe's Real Estate in Gilbert,
Arizona.
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ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
----------------------------------
Each Borrower covenants to the Lender that so long as any of
the Obligations remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. Each Borrower shall, and shall cause each
of its Subsidiaries to, (a) file when due all tax returns and other reports
which it is required to file; (b) pay, or provide for the payment, when due, of
all taxes, fees, assessments and other governmental charges against it or upon
its property, income and franchises, make all required withholding and other tax
deposits, and establish adequate reserves for the payment of all such items, and
provide to the Lender, upon request, satisfactory evidence of its timely
compliance with the foregoing; and (c) pay when due all Debt owed by it and all
claims of materialmen, mechanics, carriers, warehousemen, landlords, processors
and other like Persons, and all other indebtedness owed by it and perform and
discharge in a timely manner all other obligations undertaken by it; provided,
however, so long as the Borrower has notified the Lender in writing, neither any
Borrower nor any of its Subsidiaries need pay any tax, fee, assessment, or
governmental charge, that (i) it is contesting in good faith by appropriate
proceedings diligently pursued, (ii) the Borrower or its Subsidiary, as the case
may be, has established proper reserves for as provided in GAAP, and (iii) no
Lien (other than a Permitted Lien) results from such non-payment.
9.2 Corporate Existence and Good Standing. Each Borrower shall, and shall
cause each of its Subsidiaries to, maintain its corporate existence and its
qualification and good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could reasonably be
expected to have a Material Adverse Effect.
9.3 Compliance with Law and Agreements; Maintenance of Licenses. Each
Borrower shall comply, and shall cause each Subsidiary to comply, in all
material respects with all Requirements of Law of any Governmental Authority
having jurisdiction over it or its business (including the Federal Fair Labor
Standards Act and all Environmental Laws). Each Borrower shall, and shall cause
each of its Subsidiaries to, obtain and maintain all licenses, permits,
franchises, and governmental authorizations necessary to own its property and to
conduct its business as conducted on the Closing Date. No Borrower shall, nor
shall it permit any Subsidiary to, modify, amend or alter its certificate or
articles of incorporation other than in a manner which does not adversely affect
the rights of the Lender (including its rights under any Pledge Agreement).
9.4 Maintenance of Property. Each Borrower shall, and shall cause each of
its Subsidiaries to, maintain all of its property necessary and useful in the
conduct of its business in good operating condition and repair, ordinary wear
and tear excepted.
9.5 Insurance. (a) Each Borrower shall maintain, and shall cause each of
its Subsidiaries to maintain, with financially sound and reputable insurers
having a rating of at least AVII or better by Best Rating Guide, insurance
against loss or damage by fire with extended coverage; theft, burglary,
pilferage and loss in transit; public liability and third party property damage;
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larceny, embezzlement or other criminal liability; business interruption; public
liability and third party property damage; and such other hazards or of such
other types as is customary for Persons engaged in the same or similar business,
as the Lender in its discretion shall specify, in amounts, and under policies
acceptable to the Lender. Without limiting the foregoing, each Borrower shall
also maintain, and shall cause each of its Subsidiaries to maintain, flood
insurance for Inventory or Equipment, in the event of a designation of the area
in which any Real Estate on which such Inventory and Equipment is located as
"flood prone" or a "flood risk area," (hereinafter "SFHA") as defined by the
Flood Disaster Protection Act of 1973, in an amount to be reasonably determined
by the Lender, and shall comply with the additional requirements of the National
Flood Insurance Program as set forth in said Act.
(b) Each Borrower shall cause the Lender to be named as secured
party or mortgagee and sole loss payee or additional insured, in a manner
acceptable to the Lender. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty (30) days' prior
written notice to the Lender in the event of cancellation of the policy for any
reason whatsoever and a clause or endorsement stating that the interest of the
Lender shall not be impaired or invalidated by any act or neglect of any
Borrower or any of its Subsidiaries or the owner of any Real Estate for purposes
more hazardous than are permitted by such policy. All premiums for such
insurance shall be paid by the Borrowers when due, and certificates of insurance
and, if requested by the Lender, photocopies of the policies, shall be delivered
to the Lender. If the Borrowers fail to procure such insurance or to pay the
premiums therefor when due, the Lender may, do so from the proceeds of Revolving
Loans.
(c) Each Borrower shall promptly notify the Lender of any loss,
damage, or destruction to the Collateral, whether or not covered by insurance.
The Lender is hereby authorized to collect all insurance proceeds in respect of
Collateral directly and to apply or remit them as follows:
(i) With respect to insurance proceeds relating to Collateral
other than Fixed Assets, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Lender in the collection or handling thereof,
the Lender shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(ii) With respect to insurance proceeds relating to Collateral
consisting of Fixed Assets, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Lender in the collection or handling thereof,
the Lender shall apply such proceeds to the reduction of the Term Loans and the
Inventory Loans (applying such proceeds first to the installments of the Term
Loans in the inverse order of maturity and then to Inventory Loans which
payments shall permanently reduce the Inventory Sublimit in the inverse order of
scheduled reductions, or may permit or require the Borrowers to use such money,
or any part thereof, to replace, repair, restore or rebuild the relevant Fixed
Assets in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the loss, damage or
destruction; provided, however, that so long as there does not then exist any
Default or Event of Default, the Borrowers shall be permitted to use insurance
proceeds relating to Collateral consisting of Fixed Assets in an aggregate
amount not to exceed $50,000 with respect to any occurrence, to replace, repair,
restore or rebuild the relevant Fixed Assets, in the manner set forth in this
sentence; and provided, further, that the Borrowers first (i) provide
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the Lender with plans and specifications for any such repair or restoration
which shall be reasonably satisfactory to the Lender and (ii) demonstrate to the
reasonable satisfaction of the Lender that the funds available to it will be
sufficient to complete such project in the manner provided therein.
9.6 Condemnation. (a) Each Borrower shall, immediately upon learning of the
institution of any proceeding for the condemnation or other taking of any of its
property, notify the Lender of the pendency of such proceeding, and agrees that
the Lender may participate in any such proceeding, and the Borrowers from time
to time will deliver to the Lender all instruments reasonably requested by the
Lender to permit such participation.
(b) The Lender is hereby authorized to collect the proceeds of any
condemnation claim or award directly, and to apply or remit them as follows:
(i) With respect to condemnation proceeds relating to Collateral
other than Fixed Assets, after deducting from such proceeds the reasonable
expenses, if any, incurred by the Lender in the collection or handling thereof,
the Lender shall apply such proceeds, ratably, to the reduction of the
Obligations in the order provided for in Section 4.8.
(ii) With respect to condemnation proceeds relating to
Collateral consisting of Fixed Assets, after deducting from such proceeds the
reasonable expenses, if any, incurred by the Lender in the collection or
handling thereof, the Lender shall apply such proceeds to the reduction of the
Term Loans and the Inventory Loans (applying such proceeds first to the
installments of the Term Loans and reduction of the Inventory Sublimit in the
inverse order of maturity and then to Inventory Loans which payments shall
permanently reduce the Inventory Sublimit in the inverse order of scheduled
reductions), or may permit or require the Borrowers to use such money, or any
part thereof, to replace, repair, restore or rebuild the relevant Fixed Assets
in a diligent and expeditious manner with materials and workmanship of
substantially the same quality as existed before the condemnation; provided,
however, that so long as there does not then exist any Default or Event of
Default, the Borrowers shall be permitted to use proceeds relating to Collateral
consisting of Fixed Assets in an aggregate amount not to exceed $50,000 with
respect to any occurrence, to replace, repair, restore or rebuild the relevant
Fixed Assets, in the manner set forth in this sentence; and provided, further,
that plans and specifications for any such repair or restoration shall be
reasonably satisfactory to the Lender and shall be subject to the reasonable
approval of the Lender.
9.7 Environmental Laws. (a) Each Borrower shall, and shall cause each of
its Subsidiaries to, conduct its business in compliance with all Environmental
Laws applicable to it, including those relating to the generation, handling,
use, storage, and disposal of any Contaminant. Each Borrower shall, and shall
cause each of its Subsidiaries to, take prompt and appropriate action to respond
to any non-compliance with Environmental Laws and shall regularly report to the
Lender on such response.
(b) Without limiting the generality of the foregoing, each
Borrower shall submit to the Lender annually, commencing on the first
Anniversary Date, and on each Anniversary Date thereafter, an update of the
status of each environmental compliance or liability issue. The Lender may
request copies of technical reports prepared by any Borrower
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and its communications with any Governmental Authority to determine whether any
Borrower or any of its Subsidiaries is proceeding reasonably to correct, cure or
contest in good faith any alleged non-compliance or environmental liability. The
Borrowers shall, at the Lender's reasonable request and at the Borrowers'
expense, (i) retain an independent environmental engineer acceptable to the
Lender to evaluate the site, including tests if appropriate, where the
non-compliance or alleged non-compliance with Environmental Laws has occurred
and prepare and deliver to the Lender, a report setting forth the results of
such evaluation, a proposed plan for responding to any environmental problems
described therein, and an estimate of the costs thereof, and (ii) provide to the
Lender a supplemental report of such engineer whenever the scope of the
environmental problems, or the response thereto or the estimated costs thereof,
shall change in any material respect.
9.8 Compliance with ERISA. Each Borrower shall, and shall cause each of
its ERISA Affiliates to: (a) maintain each Plan in compliance in all material
respects with the applicable provisions of ERISA, the Code and other federal or
state law; (b) cause each Plan which is qualified under Section 401(a) of the
Code to maintain such qualification; (c) make all required contributions to any
Plan subject to Section 412 of the Code; (d) not engage in a prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan; and (e) not engage in a transaction that could be subject to Section
4069 or 4212(c) of ERISA.
9.9 Mergers, Consolidations or Sales. Neither any Borrower nor any of its
Subsidiaries shall enter into any transaction of merger, reorganization, or
consolidation, or transfer, sell, assign, lease, or otherwise dispose of all or
any part of its property, or wind up, liquidate or dissolve, or agree to do any
of the foregoing, except (a) for sales of Inventory in the ordinary course of
its business, (b) for sales or other dispositions of Equipment in the ordinary
course of business that are obsolete or no longer useable by a Borrower in its
business as permitted by Section 6.11, (c) any Borrower may voluntarily
liquidate into, merge into or transfer assets to another Borrower, and (d) a
Foreign Subsidiary may voluntarily liquidate into, merge into or transfer assets
to another Foreign Subsidiary, and (e) sale of the Texas Real Estate permitted
under Section 9.20. The inclusion of proceeds in the definition of Collateral
shall not be deemed to constitute the Lender's consent to any sale or other
disposition of the Collateral except as expressly permitted herein.
9.10 Distributions; Capital Change; Restricted Investments. Neither any
Borrower nor any of its Subsidiaries shall (i) directly or indirectly declare or
make, or incur any liability to make, any Distribution, except Distributions to
a Borrower by its Subsidiaries, (ii) make any change in its capital structure
which could have a Material Adverse Effect or (iii) until the Inventory Loans
have been paid in full and the Inventory Sublimit reduced to zero, make any
Restricted Investment.
9.11 Transactions Affecting Collateral or Obligations. Neither any
Borrower nor any of its Subsidiaries shall enter into any transaction which
would be reasonably expected to have a Material Adverse Effect.
9.12 Guaranties. Neither any Borrower nor any of its Subsidiaries shall
make, issue, or be or become liable on any Guaranty, except Guaranties of the
Obligations in favor of the Lender and Guaranties outstanding on the Closing
Date and listed on Schedule 9.12 and unsecured
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Guaranties by Borrower of Capital Leases and operating leases of its
Subsidiaries if such leases are permitted hereunder.
9.13 Debt. Neither any Borrower nor any of its Subsidiaries shall incur or
maintain any Debt, other than: (a) the Obligations; (b) trade payables and
contractual obligations to suppliers and customers arising in the ordinary
course of business; (c) other Debt existing on the Closing Date and reflected in
the Financial Statements attached hereto as Exhibit C; (d) Debt described on
Schedule 8.9; (e) the Seller Subordinated Debt; (f) Debt of one Borrower to
another incurred after the Closing Date if (i) as of the date of incurrence no
Default or Event of Default shall have occurred and be continuing and each
Borrower is, and after giving effect to such Debt will be, Solvent, (ii) all
such Debt is evidenced by a promissory note, in form and substance satisfactory
to the Lender, which is pledged to the Lender in accordance with the Pledge
Agreement; and (iii) such Debt is subordinated to repayment of the Obligations
in a manner satisfactory to the Lender; (g) Debt of Foreign Subsidiaries owing
to a Borrower if (i) as of the date of incurrence no Default or Event of Default
shall have occurred and be continuing and each Borrower is, and after giving
effect to such Debt will be, Solvent, (ii) all such Debt shall be evidenced by a
promissory note, in form and substance satisfactory to the Lender, which is
pledged to the Lender in accordance with the Pledge Agreement; and (iii) until
payment in full of all Inventory Loans and reduction of the Inventory Sublimit
to zero, the aggregate outstanding amount of such Debt owed by Foreign
Subsidiaries shall not exceed the amount existing on the Closing Date at any
time (except for Debt arising from the sale of Inventory in the ordinary course
of business consistent with practices in effect on the Closing Date which Debt
is paid within 60 days); (h) Capital Leases and purchase money Debt entered into
after the date hereof; (i) Debt evidenced by the Real Estate Note; (j) unsecured
Debt of Borrowers not to exceed $1,000,000 in the aggregate outstanding at any
time; (k) unsecured Debt incurred to refinance the Inventory Loans in an
aggregate principal amount not to exceed the amount refinanced; and (l) Debt of
a newly acquired Subsidiary existing at the time of acquisition, and not
incurred in anticipation of such acquisition.
9.14 Prepayment; Subordinated Debt; Payment of Real Estate Note. Neither
any Borrower nor any of its Subsidiaries shall (a) voluntarily prepay any Debt,
except the Obligations in accordance with the terms of this Agreement, or (b)
make any payments or prepayments of or with respect to the Seller Subordinated
Debt except payments expressly permitted by the terms of the Subordination
Agreement or (c) make any cash payments on the Real Estate Note except from the
proceeds of sale thereof; nor shall they amend, supplement or otherwise modify
the terms of any Seller Subordinated Debt, except as permitted by the
Subordination Agreement.
9.15 Transactions with Affiliates. Except as set forth below, neither any
Borrower nor any of its Subsidiaries shall sell, transfer, distribute, or pay
any money or property, including, but not limited to, any fees or expenses of
any nature (including, but not limited to, any fees or expenses for management
services), to any Affiliate, or lend or advance money or property to any
Affiliate, or invest in (by capital contribution or otherwise) or purchase or
repurchase any stock or indebtedness, or any property, of any Affiliate, or
become liable on any Guaranty of the indebtedness, dividends, or other
obligations of any Affiliate. Notwithstanding the foregoing, while no Event of
Default has occurred and is continuing, a Borrower and its Subsidiaries may
engage in transactions with Affiliates in the ordinary course of business
consistent with past
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practices, in amounts and upon terms fully disclosed to the Lender and no less
favorable to the Borrower and its Subsidiaries than would be obtained in a
comparable arm's-length transaction with a third party who is not an Affiliate
(but in the case of Debt, subject to the restrictions of Section 9.13.)
9.16 Investment Banking and Finder's Fees. Neither any Borrower nor any of
its Subsidiaries shall pay or agree to pay, or reimburse any other party with
respect to, any investment banking or similar or related fee, underwriter's fee,
finder's fee, or broker's fee to any Person in connection with this Agreement.
The Borrowers shall defend and indemnify the Lender against and hold the Lender
harmless from all claims of any Person that any Borrower is obligated to pay for
any such fees, and all costs and expenses (including attorneys' fees) incurred
by the Lender in connection therewith.
9.17 [intentionally omitted].
9.18 Business Conducted. No Borrower shall, nor shall it permit any of its
Subsidiaries to, engage directly or indirectly, in any line of business other
than the businesses in which the Borrowers and their Subsidiaries are engaged on
the Closing Date.
9.19 Liens. Neither any Borrower nor any of its Subsidiaries shall create,
incur, assume, or permit to exist any Lien on any property now owned or
hereafter acquired by any of them, except Permitted Liens.
9.20 Sale and Leaseback Transactions. Neither any Borrower nor any of its
Subsidiaries shall, directly or indirectly, enter into any arrangement with any
Person providing for the Borrower or such Subsidiary to lease or rent property
that the Borrower or such Subsidiary has sold or will sell or otherwise transfer
to such Person, except that the foregoing shall not prohibit the transfer of the
Texas Real Estate to the Sellers and the leaseback by CIS as contemplated by the
Purchase Agreement (provided that any shortfall in the purchase price from the
amount of the Real Estate Note shall be added to the Seller Subordinated Note
and not paid in cash), or the sale by CIS of such Real Estate to a third party,
the proceeds of which are used to satisfy in full the Real Estate Note (with any
shortfall in the purchase price from the amount of the Real Estate Note to be
added to the Seller Subordinated Note), and the leaseback of such property by
CIS.
9.21 New Subsidiaries. No Borrower shall, directly or indirectly,
organize, create, acquire or permit to exist any Subsidiary other than those
listed on Schedule 8.5 and any Subsidiary which is acquired solely for common
stock of Cerprobe.
9.22 Fiscal Year. No Borrower shall change its Fiscal Year.
9.23 [intentionally omitted].
9.24 Operating Lease Obligations. Neither any Borrower nor any of its
Subsidiaries shall enter into, or suffer to exist, any lease of real or personal
property as lessee or sublessee (other than a Capital Lease), if, after giving
effect thereto, the aggregate amount of Rentals (as hereinafter defined) payable
by the Borrowers and their Subsidiaries in any Fiscal Year in respect of such
lease and all other such leases would exceed $1,000,000 (such amount being
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referred to herein as "Permitted Rentals"). The term "Rentals" means all
payments due from the lessee or sublessee under a lease, including, without
limitation, basic rent, percentage rent, property taxes, utility or maintenance
costs, and insurance premiums.
9.25 Tangible Net Worth. Cerprobe and its Subsidiaries will maintain
consolidated Tangible Net Worth, determined for Cerprobe and its Subsidiaries on
a consolidated basis, equal to (a) $28,000,000 as of December 31, 1999 and (b)
as of the last day of each month thereafter, the sum of (a) the greater of (i)
$28,000,000 and (ii) the Tangible Net Worth of Cerprobe and its Subsidiaries as
of December 31, 1999 (as determined by the audited consolidated balance sheet as
at that date) minus $1,000,000 plus (b) seventy-five percent (75%) of the
consolidated net income of Cerprobe and its Subsidiaries (not to be reduced by
any net losses incurred) for each fiscal quarter ending after December 31, 1999.
Following repayment in full of the Inventory Loans and reduction of the
Inventory Sublimit to zero, the required Tangible Net Worth shall have no
further increases.
9.26 Fixed Charge Coverage Ratio. The Borrowers will maintain a Fixed
Charge Coverage Ratio for each period set forth below ended at the end of each
fiscal quarter in each Fiscal Year set forth below of not less than the ratio
set forth below opposite such fiscal quarter:
- --------------------------------------------------------------------------------
Fiscal Quarter Fixed Charge Coverage Period
- --------------------------------------------------------------------------------
3/2000 2 to 1 1 quarter
- --------------------------------------------------------------------------------
6/2000 2.1 to 1 2 quarters
- --------------------------------------------------------------------------------
9/2000 2.6 to 1 3 quarters
- --------------------------------------------------------------------------------
each fiscal quarter thereafter 3 to 1 4 quarters
- --------------------------------------------------------------------------------
provided, that after repayment of the Inventory Loans and reduction of
the Inventory Sublimit to zero, the Borrowers will maintain a Fixed Charge
Coverage Ratio for the relevant period ending at the end of each fiscal quarter
of not less than 2 to 1.
9.27 Use of Proceeds. No Borrower shall, nor shall it suffer or permit any
Subsidiary to, use any portion of the Loan proceeds, directly or indirectly, (a)
to purchase or carry Margin Stock, (b) to repay or otherwise refinance
indebtedness of any Borrower or others incurred to purchase or carry Margin
Stock, (c) to extend credit for the purpose of purchasing or carrying any Margin
Stock, or (d) to acquire any security in any transaction that is subject to
Section 13 or 14 of the Exchange Act.
9.28 Further Assurances. The Borrowers shall execute and deliver, or cause
to be executed and delivered, to the Lender such documents and agreements, and
shall take or cause to be taken such actions, as the Lender may, from time to
time, request to carry out the terms and conditions of this Agreement and the
other Loan Documents. If any Borrower acquires a
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Subsidiary, such Subsidiary (unless is a Foreign Subsidiary) shall execute and
deliver to the Lender a Guaranty of the Obligations of the Borrowers, secured by
a Lien on its assets and the applicable Borrower shall pledge the stock of such
Subsidiary to the Lender (limited, in the case of any Foreign Subsidiary, to 65%
of the capital stock).
9.29 No Restrictions on Subsidiary Distributions. The Borrowers will not,
and will not permit any Subsidiary directly or indirectly to, create or
otherwise cause or permit to exist any restriction on the ability of any such
Subsidiary to pay dividends or make distributions to any Borrower, pay any Debt
owed to any Borrower or make any loans or advances to any Borrower
ARTICLE 10
CONDITIONS OF LENDING
10.1 Conditions Precedent to Making of Loans on the Closing Date. The
obligation of the Lender to make the initial Revolving Loans on the Closing Date
and to make the Term Loans, and the obligation of the Lender to cause the Letter
of Credit Issuer to issue any Letter of Credit on the Closing Date are subject
to the following conditions precedent having been satisfied in a manner
satisfactory to the Lender:
(a) This Agreement and the other Loan Documents shall have
been executed by each party thereto and the Borrowers shall have performed and
complied with all covenants, agreements and conditions contained herein and the
other Loan Documents which are required to be performed or complied with by the
Borrowers before or on such Closing Date.
(b) Upon making the Revolving Loans (including such Revolving
Loans made to finance the Acquisition and the Closing Fee or otherwise as
reimbursement for fees, costs and expenses then payable under this Agreement or
the Transaction Documents and to refinance Debt) and with all obligations
current, the Borrowers (including Oz and TSE) would have Aggregate Availability
in an amount no less than $2,000,000.
(c) All representations and warranties made hereunder and in
the other Loan Documents shall be true and correct as if made on such date.
(d) No Default or Event of Default shall exist on the Closing
Date, or would exist after giving effect to the Loans to be made, the Letters of
Credit to be issued and the Credit Support to be in place on such date.
(e) The Lender shall have received such opinions of counsel
for the Borrowers and their Subsidiaries as the Lender shall request, each such
opinion to be in a form, scope, and substance reasonably satisfactory to the
Lender and its counsel.
(f) The Lender shall have received:
(i) acknowledgment copies of proper financing statements,
duly filed on or before the Closing Date under the UCC of all jurisdictions that
the Lender may deem necessary or desirable in order to perfect the Lender's
Lien; and
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(ii) duly executed UCC-3 Termination Statements and
such other instruments, in form and substance satisfactory to the Lender, as
shall be necessary to terminate and satisfy all Liens on the Property of the
Borrowers and their Subsidiaries except Permitted Liens;
(iii) all stock certificates and instruments required
to be delivered under any Pledge Agreement (except for the stock certificate of
CIS, which shall be delivered to the Lender within thirty days and as set forth
in the Post Closing Letter) and
(iv) the Patent and Trademark Agreements.
(g) The Borrowers shall have paid all fees and expenses of the
Lender and the Attorney Costs incurred in connection with any of the Loan
Documents and the transactions contemplated thereby to the extent invoiced.
(h) The Lender shall have received evidence, in form, scope, and
substance, reasonably satisfactory to the Lender, of all insurance coverage as
required by this Agreement.
(i) The Lender shall have had an opportunity, if it so chooses, to
examine the books of account and other records and files of the Borrowers and to
make copies thereof, and to conduct a pre-closing audit which shall include,
without limitation, verification of Inventory, Accounts, and the Borrowing Base
of all Borrowers, and the results of such examination and audit shall have been
satisfactory to the Lender in all respects.
(j) All proceedings taken in connection with the execution of
this Agreement, the Term Loan Notes, all other Loan Documents, the Transaction
Documents and all documents and papers relating thereto shall be satisfactory in
form, scope, and substance to the Lender.
(k) No material adverse change shall have occurred, as
determined by the Lender in its sole discretion, in the business, operations,
profits or prospects of Cerprobe its Subsidiaries, taken as a whole, or of Oz
and its Subsidiaries, taken as a whole, since September 30, 1999, and as of the
Closing Date, the financial condition and results of operations of Cerprobe and
its Subsidiaries, taken as a whole, and of Oz and its Subsidiaries, taken as a
whole, shall be in compliance with the financial projections delivered to the
Lender and dated November 17, 1999, as determined by the Lender in its sole
discretion.
(l) There shall exist no action, suit, investigation,
litigation or proceeding pending or threatened in any court or before any
arbitrator or governmental instrumentality that, in the Lender's reasonable
judgment, could reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Borrowers (including Oz or TSE), taken as a
whole, or which could impair any Borrower's ability to perform satisfactorily
under the Loan Documents or could reasonably be expected to materially and
adversely affect the transactions contemplated by the Loan Documents or the
Transaction Documents.
(m) The Lender shall have received, within 30 days prior to
the Closing Date, a pro forma balance sheet of the Borrowers, giving effect to
the Acquisition and the making of the Loans on the Closing Date, dated as of the
Closing Date, which balance sheet shall reflect no
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material adverse changes from the most recent pro forma balance sheet previously
delivered to Lender.
(n) All terms and conditions of the Transaction Documents
shall be reasonably satisfactory to the Lender. The Acquisition shall be
consummated on the Closing Date, in compliance with all applicable Requirements
of Law and the terms of the Transaction Documents, without any waiver of such
terms and conditions not approved by the Lender, and immediately following such
consummation Oz and TSE shall deliver to the Lender such Loan Documents as
required by the Lender and shall become Borrowers hereunder.
(o) The Lender shall have received, in form and substance
satisfactory to the Lender and from appraisers reasonably acceptable to the
Lender, an appraisal of each Borrower's Inventory and Equipment, which
appraisals shall reflect liquidation values of the Inventory and Equipment
acceptable to the Lender.
(p) The Lender shall have completed its due diligence with
respect to each Borrower's books, records, assets and liabilities, with results
satisfactory to the Lender.
(q) The Borrowers shall have established a cash management
system, including lock-boxes and Payment Accounts as required by Section 6.9,
satisfactory to Lender.
(r) The Seller Subordinated Debt shall be on terms
satisfactory to the Lender and shall be subordinated to the repayment of the
Obligations on terms satisfactory to the Lender. The lenders of such Debt shall
have entered into the Subordination Agreement with the Lender, on terms and
conditions satisfactory to the Lender (which shall include, without limitation,
prohibition on exercising any rights and remedies with respect to any collateral
securing such subordinated Debt until final payment and satisfaction of the
Obligations of all Borrowers).
(s) The Lender shall have received evidence, in form and
substance reasonably satisfactory to Lender, of compliance by the Borrowers and
their Subsidiaries with all Environmental Laws and the absence of any material
liability with respect to environmental matters.
(t) The Lender shall have received consolidating projections,
giving effect to the Acquisition, on a quarterly basis for the Fiscal Year
ending December 31, 2000, which shall not differ from the annual projections
dated November 17, 1999 previously delivered to the Lender.
(u) The Lender shall have received such certificates,
financial statements and other information as it determines to be necessary to
demonstrate that, after giving effect to the Loans and the Acquisition, each
Borrower is Solvent.
The acceptance by the Borrowers of any Loans made or Letters
of Credit issued on the Closing Date shall be deemed to be a representation and
warranty made by the Borrowers to the effect that all of the conditions
precedent to the making of such Loans or the issuance of such Letters of Credit
have been satisfied, with the same effect as delivery to the Lender of a
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certificate signed by a Responsible Officer of the Borrowers, dated the Closing
Date, to such effect.
10.2 Conditions Precedent to Each Loan. The obligation of the Lender to
make each Loan, including the initial Revolving Loans on the Closing Date and
the Term Loans, and the obligation of the Lender to cause the Letter of Credit
Issuer to issue any Letter of Credit shall be subject to the further conditions
precedent that on and as of the date of any such extension of credit:
(a) the following statements shall be true, and the acceptance
by any Borrower of any extension of credit shall be deemed to be a statement to
the effect set forth in clauses (i) and (ii), with the same effect as the
delivery to the Lender of a certificate signed by a Responsible Officer, dated
the date of such extension of credit, stating that:
(i) The representations and warranties contained in this
Agreement and the other Loan Documents are correct in all material respects on
and as of the date of such extension of credit as though made on and as of such
date, other than any such representation or warranty which relates to a
specified prior date and except to the extent the Lender has been notified by
the Borrowers that any representation or warranty is not correct and the Lender
has explicitly waived in writing compliance with such representation or
warranty; and
(ii) No event has occurred and is continuing, or would result
from such extension of credit, which constitutes a Default or an Event of
Default; and
(iii) No event or circumstance shall have occurred which
constitutes a Material Adverse Effect.
(b) The amount of the Borrowing Base of the applicable Borrower
shall be sufficient to make such Revolving Loans or issue such Letters
of Credit without exceeding the Availability as such Borrower; and
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of default ("Event of
Default") if any one or more of the following shall occur for any reason:
(a) any failure by any Borrower to pay the principal of or interest
or premium on any of the Obligations or any fee or other amount owing hereunder
when due, whether upon demand or otherwise;
(b) any representation or warranty made or deemed made by any
Borrower in this Agreement or by any Borrower or any of its Subsidiaries in any
of the other Loan Documents, any Financial Statement, or any certificate
furnished by any Borrower or any of its Subsidiaries at any time to the Lender
shall prove to be untrue in any material respect as of the date on which made,
deemed made, or furnished;
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(c) (i) any default shall occur in the observance or performance of
any of the covenants contained in Sections 9.1 through 9.4, 9.7 or 9.8 which
continues for more than 30 days or (ii) any default shall occur in the
observance or performance of any of the other covenants and agreements contained
in this Agreement, any other Loan Documents, or any other agreement entered into
at any time to which any Borrower or any Subsidiary and the Lender are party
(including in respect of any Bank Products), or if any such agreement or
document shall terminate (other than in accordance with its terms or the terms
hereof or with the written consent of the Lender) or become void or
unenforceable, without the written consent of the Lender;
(d) default shall occur with respect to any Debt For Borrowed
Money (other than the Obligations) in an outstanding principal amount which
exceeds $100,000, or under any agreement or instrument under or pursuant to
which any such Debt For Borrowed Money may have been issued, created, assumed,
or guaranteed by any Borrower or any of its Subsidiaries, and such default shall
continue for more than the period of grace, if any, therein specified, if the
effect thereof (with or without the giving of notice or further lapse of time or
both) is to accelerate, or to permit the holders of any such Debt For Borrowed
Money to accelerate, the maturity of any such Debt For Borrowed Money; or any
such Debt For Borrowed Money shall be declared due and payable or be required to
be prepaid (other than by a regularly scheduled required prepayment) prior to
the stated maturity thereof;
(e) any Borrower or any of its Subsidiaries shall (i) file a
voluntary petition in bankruptcy or file a voluntary petition or an answer or
otherwise commence any action or proceeding seeking reorganization, arrangement
or readjustment of its debts or for any other relief under the federal
Bankruptcy Code, as amended, or under any other bankruptcy or insolvency act or
law, state or federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply for or
acquiesce in the appointment of a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for it or for all or any part of
its property; (iii) make an assignment for the benefit of creditors; or (iv) be
unable generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed or an
action or proceeding otherwise commenced seeking reorganization, arrangement,
consolidation or readjustment of the debts of any Borrower or any of its
Subsidiaries or for any other relief under the federal Bankruptcy Code, as
amended, or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing and shall not have been dismissed within 60
days;
(g) a receiver, assignee, liquidator, sequestrator, custodian,
monitor, trustee or similar officer for any Borrower or any of its Subsidiaries
or for all or any part of its property shall be appointed without the
acquiescence of the Borrower or such Subsidiary or a warrant of attachment,
execution or similar process shall be issued against any part of the property of
any Borrower or any of its Subsidiaries and shall not have been dismissed within
60 days;
(h) any Borrower or any of its Subsidiaries shall file a
certificate of dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against it any action
or proceeding for dissolution, winding-up or liquidation, or shall take any
corporate action in furtherance thereof;
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(i) all or any material part of the property of any Borrower or any
of its Subsidiaries shall be nationalized, expropriated or condemned, seized or
otherwise appropriated, or custody or control of such property or of any
Borrower or such Subsidiary shall be assumed by any Governmental Authority or
any court of competent jurisdiction at the instance of any Governmental
Authority, except where contested in good faith by proper proceedings diligently
pursued where a stay of enforcement is in effect;
(j) any Guaranty of the Obligations shall be terminated, revoked or
declared void or invalid;
(k) one or more judgments, orders, decrees or arbitration
awards is entered against any Borrower involving in the aggregate liability (to
the extent not covered by independent third-party insurance as to which the
insurer does not dispute coverage) as to any single or related or unrelated
series of transactions, incidents or conditions, of $250,000 or more, and the
same shall remain unsatisfied, unvacated and unstayed pending appeal for a
period of 15 days after the entry thereof;
(l) any loss, theft, damage or destruction of any item or
items of Collateral, or other property of any Borrower or any Subsidiary occurs
which could reasonably be expected to cause a Material Adverse Effect and is not
adequately covered by insurance;
(m) there is filed against any Borrower or any of its
Subsidiaries any action, suit or proceeding under any federal or state
racketeering statute (including the Racketeer Influenced and Corrupt
Organization Act of 1970), which action, suit or proceeding (i) is not dismissed
within one hundred twenty (120) days, and (ii) could reasonably be expected to
result in the confiscation or forfeiture of any material portion of the
Collateral;
(n) for any reason other than the failure of the Lender to
take any action available to it to maintain perfection of the Lender's Liens,
pursuant to the Loan Documents, any Loan Document ceases to be in full force and
effect or any Lien with respect to any material portion of the Collateral
intended to be secured thereby ceases to be, or is not, valid, perfected and
prior to all other Liens (other than Permitted Liens) or is terminated, revoked
or declared void;
(o) an ERISA Event shall occur with respect to a Pension Plan
or Multi-employer Plan which has resulted or could reasonably be expected to
result in liability of any Borrower under Title IV of ERISA to the Pension Plan,
Multi-employer Plan or the PBGC in an aggregate amount in excess of $100,000;
(ii) the aggregate amount of Unfunded Pension Liability among all Pension Plans
at any time exceeds $100,000; or (iii) any Borrower or any ERISA Affiliate shall
fail to pay when due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability under Section 4201
of ERISA under a Multi-employer Plan in an aggregate amount in excess of
$100,000; or
(p) there occurs a Change of Control.
11.2 Remedies. (a) If a Default or an Event of Default exists, the Lender
may, in its discretion, do one or more of the following at any time or times and
in any order, without notice to or demand on any Borrower: (i) reduce the
Maximum Revolver Amount, or the advance rates
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against Eligible Accounts and/or Eligible Inventory used in computing the
Borrowing Base, or reduce one or more of the other elements used in computing
the Borrowing Base; (ii) restrict the amount of or refuse to make Revolving
Loans; and (iii) restrict or refuse to provide Letters of Credit or Credit
Support. If an Event of Default exists, the Lender may do one or more of the
following, in addition to the actions described in the preceding sentence, at
any time or times and in any order, without notice to or demand on any Borrower:
(A) terminate this Agreement; (B) declare any or all Obligations to be
immediately due and payable; provided, however, that upon the occurrence of any
Event of Default described in Sections 11.1(e), 11.2(f), 11.1(g), or 11.1(h),
the Agreement shall automatically and immediately expire and all Obligations
shall automatically become immediately due and payable without notice or demand
of any kind; and (C) pursue its other rights and remedies under the Loan
Documents and applicable law.
(b) If an Event of Default has occurred and is continuing: (i)
the Lender shall have, in addition to all other rights of the Lender, the rights
and remedies of a secured party under the UCC; (ii) the Lender may, at any time,
take possession of the Collateral and keep it on any Borrower's premises, at no
cost to the Lender, or remove any part of it to such other place or places as
the Lender may desire, or the Borrowers shall, upon the Lender's demand, at the
Borrowers' cost, assemble the Collateral and make it available to the Lender at
a place reasonably convenient to the Lender; and (iii) the Lender may sell and
deliver any Collateral at public or private sales, for cash, upon credit or
otherwise, at such prices and upon such terms as the Lender deems advisable, in
its sole discretion, and may, if the Lender deems it reasonable, postpone or
adjourn any sale of the Collateral by an announcement at the time and place of
sale or of such postponed or adjourned sale without giving a new notice of sale.
Without in any way requiring notice to be given in the following manner, each
Borrower agrees that any notice by the Lender of sale, disposition or other
intended action hereunder or in connection herewith, whether required by the UCC
or otherwise, shall constitute reasonable notice to the Borrowers if such notice
is mailed by registered or certified mail, return receipt requested, postage
prepaid, or is delivered personally against receipt, at least five (5) Business
Days prior to such action to the Borrower's address specified in or pursuant to
Section 14.8. If any Collateral is sold on terms other than payment in full at
the time of sale, no credit shall be given against the Obligations until the
Lender or the Lender receive payment, and if the buyer defaults in payment, the
Lender may resell the Collateral without further notice to the Borrowers. In the
event the Lender seeks to take possession of all or any portion of the
Collateral by judicial process, each Borrower irrevocably waives: (A) the
posting of any bond, surety or security with respect thereto which might
otherwise be required; (B) any demand for possession prior to the commencement
of any suit or action to recover the Collateral; and (C) any requirement that
the Lender retain possession and not dispose of any Collateral until after trial
or final judgment. Each Borrower agrees that the Lender has no obligation to
preserve rights to the Collateral or marshal any Collateral for the benefit of
any Person. The Lender is hereby granted a license or other right to use,
without charge, the Borrower's labels, patents, copyrights, name, trade secrets,
trade names, trademarks, and advertising matter, or any similar property, in
completing production of, advertising or selling any Collateral, and the
Borrowers' rights under all licenses and all franchise agreements shall inure to
the Lender's benefit for such purpose. The proceeds of sale shall be applied
first to all expenses of sale, including attorneys' fees, and then to the
Obligations. The Lender will return any excess to the Borrowers and the
Borrowers shall remain liable for any deficiency.
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(c) If an Event of Default occurs, each Borrower hereby waives all
rights to notice and hearing prior to the exercise by the Lender of the Lender's
rights to repossess the Collateral without judicial process or to reply, attach
or levy upon the Collateral without notice or hearing.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall end on the
Stated Termination Date. The Lender may terminate this Agreement without notice
upon the occurrence of an Event of Default. Upon the effective date of
termination of this Agreement for any reason whatsoever, all Obligations
(including all unpaid principal, accrued and unpaid interest and any early
termination or prepayment fees or penalties) shall become immediately due and
payable and the Borrowers shall immediately arrange for the cancellation and
return of Letters of Credit then outstanding. Notwithstanding the termination of
this Agreement, until all Obligations are indefeasibly paid and performed in
full in cash, the Borrowers shall remain bound by the terms of this Agreement
and shall not be relieved of any of their Obligations hereunder or under any
other Loan Document, and the Lender shall retain all its rights and remedies
hereunder (including the Lender's Liens in and all rights and remedies with
respect to all then existing and after-arising Collateral).
ARTICLE 13
AMENDMENTS; WAIVERS; PARTICIPATIONS
13.1 Amendments and Waivers. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no consent with respect to any
departure by the Borrowers therefrom, shall be effective unless the same shall
be in writing and signed by the Lender and the Borrowers and then any such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given.
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13.2 Participations. The Lender may at any time sell participating
interests in any Loans and the other interest of the Lender hereunder and under
the other Loan Documents; provided, however, that (i) the Lender's obligations
under this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible for the performance of such obligations, and (iii) the Borrowers
shall continue to deal solely and directly with the Lender in connection with
the Lender's rights and obligations under this Agreement and the other Loan
Documents. If amounts outstanding under this Agreement are due and unpaid, or
shall have been declared or shall have become due and payable upon the
occurrence of an Event of Default, each Participating Lender shall be deemed to
have the right of set-off in respect of its participating interest in amounts
owing under this Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender under this
Agreement.
13.3 Pledge by Lender. Notwithstanding any other provision in this
Agreement, the Lender may at any time create a security interest in, or pledge,
all or any portion of its rights under and interest in this Agreement in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.
ARTICLE 14
MISCELLANEOUS
14.1 No Waivers; Cumulative Remedies. No failure by the Lender to exercise
any right, remedy, or option under this Agreement or any present or future
supplement thereto, or in any other agreement between or among any Borrower and
the Lender, or delay by the Lender in exercising the same, will operate as a
waiver thereof. No waiver by the Lender will be effective unless it is in
writing, and then only to the extent specifically stated. No waiver by the
Lender on any occasion shall affect or diminish the Lender's rights thereafter
to require strict performance by the Borrowers of any provision of this
Agreement. The Lender may proceed directly to collect the Obligations without
any prior recourse to the Collateral. The Lender's rights under this Agreement
will be cumulative and not exclusive of any other right or remedy which the
Lender may have.
14.2 Severability. The illegality or unenforceability of any provision of
this Agreement or any Loan Document or any instrument or agreement required
hereunder shall not in any way affect or impair the legality or enforceability
of the remaining provisions of this Agreement or any instrument or agreement
required hereunder.
14.3 Governing Law; Choice of Forum; Service of Process; Jury Trial
Waiver. (a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS AND LIABILITIES
OF THE PARTIES HERETO DETERMINED IN ACCORDANCE WITH THE INTERNAL LAWS (AS
OPPOSED TO THE CONFLICT OF LAWS PROVISIONS, PROVIDED THAT PERFECTION ISSUES WITH
RESPECT TO ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR CONFLICT
OF LAW RULES SET FORTH IN ARTICLE 9
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OF THE UCC) OF THE STATE OF CALIFORNIA; PROVIDED THAT THE LENDER SHALL RETAIN
ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE
OF CALIFORNIA OR OF THE UNITED STATES OF AMERICA FOR THE CENTRAL DISTRICT OF
CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT, EACH OF THE
BORROWERS AND THE LENDER CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO
THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS. EACH OF THE BORROWERS AND THE
LENDER IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING
OF VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION
IN RESPECT OF THIS AGREEMENT OR ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE
FOREGOING: (1) THE LENDER SHALL HAVE THE RIGHT TO BRING ANY ACTION OR PROCEEDING
AGAINST ANY BORROWER OR ITS PROPERTY IN THE COURTS OF ANY OTHER JURISDICTION THE
LENDER DEEM NECESSARY OR APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR
OTHER SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE IMMEDIATELY
PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT LOCATED OUTSIDE THOSE
JURISDICTIONS.
(c) EACH BORROWER HEREBY WAIVES PERSONAL SERVICE OF ANY AND
ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE BY
REGISTERED MAIL (RETURN RECEIPT REQUESTED) DIRECTED TO THE BORROWER AT ITS
ADDRESS SET FORTH IN SECTION 14.8 AND SERVICE SO MADE SHALL BE DEEMED TO BE
COMPLETED FIVE (5) DAYS AFTER THE SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S.
MAILS POSTAGE PREPAID. NOTHING CONTAINED HEREIN SHALL AFFECT THE RIGHT OF LENDER
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS AGREEMENT TO
THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR AMONG THE PARTIES, ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT INCLUDING ANY CLAIM
BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE REQUEST OF EITHER PARTY
HERETO BE DETERMINED BY BINDING ARBITRATION. The arbitration shall be conducted
in accordance with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement, and under the
Commercial Rules of the American Arbitration Association ("AAA"). The
arbitrator(s) shall give effect to statutes of limitation in determining any
claim. Any controversy concerning whether an issue is arbitrable shall be
determined by the arbitrator(s). Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and maintenance of an
action for judicial relief or pursuant to a provisional or ancillary remedy
shall not constitute a waiver of the right of either
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party, including the plaintiff, to submit the controversy or claim to
arbitration if any other party contests such action for judicial relief.
(e) Notwithstanding the provisions of (d) above, no
controversy or claim shall be submitted to arbitration without the consent of
all parties if, at the time of the proposed submission, such controversy or
claim arises from or related to an obligation to the Lender which is secured by
real estate property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of such a
controversy or claim to arbitration, the controversy or claim shall be
determined as provided in Section 14.3(f).
(f) At the request of either party a controversy or claim
which is not submitted to arbitration as provided and limited in Section 14.3(d)
and (e) shall be determined by judicial reference. If such an election is made,
the parties shall designate to the court a referee or referees selected under
the auspices of the AAA in the same manner as arbitrators are selected in
AAA-sponsored proceedings. The presiding referee of the panel, or the referee if
there is a single referee, shall be an active attorney or retired judge.
Judgment upon the award rendered by such referee or referees shall be entered in
the court in which such proceeding was commenced.
(g) No provision of Sections (d) through (g) shall limit the
right of the Lender to exercise self-help remedies such as setoff, foreclosure
against or sale of any real or personal property collateral or security, or
obtaining provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any arbitration or other
proceeding. The exercise of a remedy does not waive the right of either party to
resort to arbitration or reference. At the Lender's option, foreclosure under a
deed of trust or mortgage may be accomplished either by exercise of power of
sale under the deed of trust or mortgage or by judicial foreclosure.
14.4 WAIVER OF JURY TRIAL. SUBJECT TO THE PROVISIONS OF SECTION 14.3(d),
EACH BORROWER AND THE LENDER EACH IRREVOCABLY WAIVE THEIR RESPECTIVE RIGHTS TO A
TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF OR
RELATED TO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF
ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
LENDER-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH RESPECT TO CONTRACT
CLAIMS, TORT CLAIMS, OR OTHERWISE. EACH BORROWER AND THE LENDER EACH AGREE THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE THAT THEIR
RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY OPERATION OF THIS SECTION AS TO
ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART,
TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL APPLY TO ANY
SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT
AND THE OTHER LOAN DOCUMENTS.
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14.5 Survival of Representations and Warranties. All of the Borrowers'
representations and warranties contained in this Agreement shall survive the
execution, delivery, and acceptance thereof by the parties, notwithstanding any
investigation by the Lender or their respective agents.
14.6 Other Security and Guaranties. The Lender, may, without notice or
demand and without affecting the Borrowers' obligations hereunder, from time to
time: (a) take from any Person and hold collateral (other than the Collateral)
for the payment of all or any part of the Obligations and exchange, enforce or
release such collateral or any part thereof; and (b) accept and hold any
endorsement or guaranty of payment of all or any part of the Obligations and
release or substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the payment of all or any
part of the Obligations, or any other Person in any way obligated to pay all or
any part of the Obligations.
14.7 Fees and Expenses. The Borrowers agree to pay to the Lender, on
demand, all reasonable costs and expenses that Lender pays or incurs in
connection with the negotiation, preparation, syndication, consummation,
administration, enforcement, and termination of this Agreement or any of the
other Loan Documents, including: (a) Attorney Costs; (b) costs and expenses
(including reasonable attorneys' and paralegals' fees and disbursements) for any
amendment, supplement, waiver, consent, or subsequent closing in connection with
the Loan Documents and the transactions contemplated thereby; (c) costs and
expenses of lien and title searches and title insurance; (d) taxes, fees and
other charges for, filing financing statements and continuations, and other
actions to perfect, protect, and continue the Lender's Liens (including costs
and expenses paid or incurred by the Lender in connection with the consummation
of Agreement); (e) sums paid or incurred to pay any amount or take any action
required of the Borrowers under the Loan Documents that the Borrowers fail to
pay or take; (f) costs of appraisals, inspections, and verifications of the
Collateral, including travel, lodging, and meals for inspections of the
Collateral and the Borrowers' operations by the Lender plus the Lender's then
customary charge for field examinations and audits and the preparation of
reports thereof (such charge is currently $750 per day (or portion thereof) for
the Lender or employee of the Lender with respect to each field examination or
audit); (g) costs and expenses of forwarding loan proceeds, collecting checks
and other items of payment, and establishing and maintaining Payment Accounts
and lock boxes; (h) costs and expenses of preserving and protecting the
Collateral; and (i) costs and expenses (including Attorneys' Costs) paid or
incurred to obtain payment of the Obligations, enforce the Lender's Liens, sell
or otherwise realize upon the Collateral, and otherwise enforce the provisions
of the Loan Documents, or to defend any claims made or threatened against the
Lender arising out of the transactions contemplated hereby (including
preparations for and consultations concerning any such matters). The foregoing
shall not be construed to limit any other provisions of the Loan Documents
regarding costs and expenses to be paid by the Borrowers. All of the foregoing
costs and expenses shall be charged to the Borrowers' Loan Account as Revolving
Loans as described in Section 4.7.
14.8 Notices. Except as otherwise provided herein, all notices, demands
and requests that any party is required or elects to give to any other shall be
in writing, or by a telecommunications device capable of creating a written
record, and any such notice shall become effective (a) upon personal delivery
thereof, including, but not limited to, delivery by overnight mail and courier
service, (b) four (4) days after it shall have been mailed by United
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States mail, first class, certified or registered, with postage prepaid, or (c)
in the case of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified as follows:
If to the Lender:
Bank of America, N.A.
55 South Lake Avenue
Suite 900
Pasadena, CA 91101
Attention:___________________
Telecopy No.:________________
with copies to:
Bank of America, N.A.
10124 Old Grove Road
San Diego, CA 92131
Attention: General Counsel
Telecopy No.: ________________
If to any Borrower:
Cerprobe Corporation
1150 North Fiesta Blvd.
Gilbert, Arizona 85233
Attention:___________________
Telecopy No.:________________
or to such other address as each party may designate for itself by like notice.
Failure or delay in delivering copies of any notice, demand, request, consent,
approval, declaration or other communication to the persons designated above to
receive copies shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other communication.
14.9 Waiver of Notices. Unless otherwise expressly provided herein, each
Borrower waives presentment and notice of demand or dishonor and protest as to
any instrument, notice of intent to accelerate the Obligations and notice of
acceleration of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on any Borrower which the
Lender may elect to give shall entitle any Borrower to any or further notice or
demand in the same, similar or other circumstances.
14.10 Binding Effect. The provisions of this Agreement shall be binding
upon and inure to the benefit of the respective representatives, successors, and
assigns of the parties hereto; provided, however, that no interest herein may be
assigned by any Borrower without prior written consent of the Lender. The rights
and benefits of the Lender hereunder shall, if such Persons so agree, inure to
any party acquiring any interest in the Obligations or any part thereof.
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14.11 Indemnity of the Lender by the Borrowers.
(a) Each Borrower agrees to defend, indemnify and hold the Lender
and each of its respective officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, charges, expenses and disbursements (including Attorney
Costs) of any kind or nature whatsoever which may at any time be imposed on,
incurred by, or asserted against any such Person in any way relating to or
arising out of this Agreement or any document contemplated by or referred to
herein, or the transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the foregoing, including
with respect to any investigation, litigation or proceeding (including any
Insolvency Proceeding or appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Loans or the use of the proceeds
thereof, whether or not any Indemnified Person is a party thereto (all the
foregoing, collectively, the "Indemnified Liabilities"); provided, that the
Borrowers shall have no obligation hereunder to any Indemnified Person with
respect to Indemnified Liabilities resulting solely from the gross negligence or
willful misconduct of such Indemnified Person. The agreements in this Section
shall survive payment of all other Obligations.
(b) Each Borrower agrees to indemnify, defend and hold harmless the
Lender from any loss or liability directly or indirectly arising out of the use,
generation, manufacture, production, storage, release, threatened release,
discharge, disposal or presence of a hazardous substance relating to the
Borrowers' operations, business or property. This indemnity will apply whether
the hazardous substance is on, under or about any Borrower's property or
operations or property leased to any Borrower. The indemnity includes but is not
limited to Attorneys Costs. The indemnity extends to the Lender, their parents,
affiliates, subsidiaries and all of their directors, officers, employees,
agents, successors, attorneys and assigns. "Hazardous substances" means any
substance, material or waste that is or becomes designated or regulated as
"toxic," "hazardous," "pollutant," or "contaminant" or a similar designation or
regulation under any federal, state or local law (whether under common law,
statute, regulation or otherwise) or judicial or administrative interpretation
of such, including petroleum or natural gas. This indemnity will survive
repayment of all other Obligations.
14.12 Limitation of Liability. No claim may be made by any Borrower
against the Lender, or the affiliates, directors, officers, officers, employees,
or agents of the Lender for any special, indirect, consequential or punitive
damages in respect of any claim for breach of contract or any other theory of
liability arising out of or related to the transactions contemplated by this
Agreement or any other Loan Document, or any act, omission or event occurring in
connection therewith, and each Borrower hereby waives, releases and agrees not
to sue upon any claim for such damages, whether or not accrued and whether or
not known or suspected to exist in its favor.
14.13 Final Agreement. This Agreement and the other Loan Documents are
intended by the Borrowers and the Lender to be the final, complete, and
exclusive expression of the agreement between them. This Agreement supersedes
any and all prior oral or written agreements relating to the subject matter
hereof. No modification, rescission, waiver, release, or amendment of any
provision of this Agreement or any other Loan Document shall be made,
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except by a written agreement signed by the Borrowers and a duly authorized
officer of the Lender.
14.14 Counterparts. This Agreement may be executed in any number of
counterparts, and by the Lender, and the Borrowers in separate counterparts,
each of which shall be an original, but all of which shall together constitute
one and the same agreement; signature pages may be detached from multiple
separate counterparts and attached to a single counterpart so that all signature
pages are physically attached to the same document.
14.15 Captions. The captions contained in this Agreement are for
convenience of reference only, are without substantive meaning and should not be
construed to modify, enlarge, or restrict any provision.
14.16 Right of Setoff. In addition to any rights and remedies of the
Lender provided by law, if an Event of Default exists or the Loans have been
accelerated, the Lender is authorized at any time and from time to time, without
prior notice to the Borrowers, any such notice being waived by the Borrowers to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, the Lender to or for the credit or
the account of any Borrower against any and all Obligations owing to the Lender,
now or hereafter existing, irrespective of whether or not the Lender shall have
made demand under this Agreement or any Loan Document and although such
Obligations may be contingent or unmatured.
14.17 Joint and Several Liability. Each Borrower shall be liable for all
amounts due to the Lender under this Agreement, regardless of which Borrower
actually receives Loans or other extensions of credit hereunder or the amount of
such Loans received or the manner in which the Lender accounts for such Loans or
other extensions of credit on its books and records. The Borrower's Obligations
with respect to Loans made to it, and the Borrower's Obligations arising as a
result of the joint and several liability of the Borrowers hereunder, with
respect to Loans made to the other Borrowers hereunder, shall be separate and
distinct obligations, but all such Obligations shall be primary obligations of
the Borrowers.
Each Borrower's Obligations arising as a result of the joint and
several liability of the Borrowers hereunder with respect to Loans or other
extensions of credit made to the other Borrowers hereunder shall, to the fullest
extent permitted by law, be unconditional irrespective of (i) the validity or
enforceability, avoidance or subordination of the Obligations of the other
Borrowers or of any promissory note or other document evidencing all or any part
of the Obligations of the other Borrowers, (ii) the absence of any attempt to
collect the Obligations from the other Borrowers, any other guarantor, or any
other security therefor, or the absence of any other action to enforce the same,
(iii) the waiver, consent, extension, forbearance or granting of any indulgence
by the Lender with respect to any provision of any instrument evidencing the
Obligations of the other Borrowers, or any part thereof, or any other agreement
now or hereafter executed by the other Borrowers and delivered to the Lender,
(iv) the failure by the Lender to take any steps to perfect and maintain its
security interest in, or to preserve its rights to, any security or collateral
for the Obligations of the other Borrowers, (v) the Lender's election, in any
proceeding instituted under the Bankruptcy Code, of the application of Section
1111(b)(2) of the Bankruptcy Code, (vi) any borrowing or grant of a security
interest by the other Borrowers, as
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debtor-in-possession under Section 364 of the Bankruptcy Code, (vii) the
disallowance of all or any portion of the Lender's claim(s) for the repayment of
the Obligations of the other Borrowers under Section 502 of the Bankruptcy Code,
or (viii) any other circumstances which might constitute a legal or equitable
discharge or defense of a guarantor or of the other Borrowers. With respect to
the Borrower's Obligations arising as a result of the joint and several
liability of the Borrowers hereunder with respect to Loans or other extensions
of credit made to either of the other Borrowers hereunder, each Borrower waives,
until the Obligations shall have been paid in full and the Loan Agreement shall
have been terminated, any right to enforce any right of subrogation or any
remedy which the Lender now has or may hereafter have against any Borrower, any
endorser or any guarantor of all or any part of the Obligations, and any benefit
of, and any right to participate in, any security or collateral given to the
Lender to secure payment of the Obligations or any other liability of the
Borrowers to the Lender.
Upon any Event of Default, the Lender may proceed directly and at
once, without notice, against any Borrower to collect and recover the full
amount, or any portion of the Obligations, without first proceeding against the
other Borrowers or any other Person, or against any security or collateral for
the Obligations. Each Borrower consents and agrees that the Lender shall be
under no obligation to marshal any assets in favor of the Borrower or against or
in payment of any or all of the Obligations.
14.18 Contribution and Indemnification among the Borrowers. Each Borrower
is obligated to repay the Obligations as joint and several obligors under this
Agreement. To the extent that any Borrower shall, under this Agreement as a
joint and several obligor, repay any of the Obligations constituting Loans made
to another Borrower hereunder or other Obligations incurred directly and
primarily by any other Borrower (an "Accommodation Payment"), then the Borrower
making such Accommodation Payment shall be entitled to contribution and
indemnification from, and be reimbursed by, each of the other Borrowers in an
amount, for each of such other Borrowers, equal to a fraction of such
Accommodation Payment, the numerator of which fraction is such other Borrower's
"Allocable Amount" (as defined below) and the denominator of which is the sum of
the Allocable Amounts of all of the Borrowers. As of any date of determination,
the "Allocable Amount" of each Borrower shall be equal to the maximum amount of
liability for Accommodation Payments which could be asserted against such
Borrower hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101 (31) of the Bankruptcy Code, Section 2 of the Uniform
Fraudulent Transfer Act ("UFTA") or Section 2 of the Uniform Fraudulent
Conveyance Act ("UFCA"), (ii) leaving such Borrower with unreasonably small
capital or assets, within the meaning of Section 548 of the Bankruptcy Code,
Section 4 of the UFTA, or Section 5 of the UFCA, or (iii) leaving such Borrower
unable to pay its debts as they become due within the meaning of Section 548 of
the Bankruptcy Code or Section 4 of the UFTA, or Section 5 of the UFCA. All
rights and claims of contribution, indemnification and reimbursement under this
section shall be subordinate in right of payment to the prior payment in full of
the Obligations. The provisions of this section shall, to the extent expressly
inconsistent with any provision in any Loan Document, supersede such
inconsistent provision.
14.19 Agency of the Parent for each other Borrower; Joint Account. Each of
the other Borrowers appoints Cerprobe as its Agent for all purposes relevant to
this Agreement, including the giving and receipt of notices and execution and
delivery of all documents, instruments and
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certificates contemplated herein and all modifications hereto. Any
acknowledgement, consent, direction, certification or other action which might
otherwise be valid or effective only if given or taken by all of the Borrowers
or acting singly, shall be valid and effective if given or taken only by
Cerprobe, whether or not any of the other Borrowers joins therein. At the
request of the Borrowers, the Lender shall deposit all proceeds of the Loans
into an account in the name of Cerprobe. The Borrowers acknowledge and agree
that the Borrowers are engaged in an integrated operation that requires
financing on the basis of credit availability to each Borrower, and that each
Borrower expects to derive, directly or indirectly, benefit from such credit
availability to the other Borrowers. The Lender shall have no responsibility to
the Borrowers to enquire into the allocation or apportionness of the proceeds of
any Loans made hereunder
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have entered into this Loan and
Security Agreement on the date first above written.
"BORROWERS"
CERPROBE CORPORATION
By
----------------------------------
Name
--------------------------------
Title:
------------------------------
CERPROBE INTERCONNECT
SOLUTIONS, INC.
By
----------------------------------
Name
-------------------------------
Title:
------------------------------
"LENDER"
BANK OF AMERICA, N.A.
By
----------------------------------
Name
--------------------------------
Title:
------------------------------
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EXHIBIT C
FINANCIAL STATEMENTS
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EXHIBIT D
NOTICE OF BORROWING
Date: _____________, ____
To: Bank of America, N.A.
55 South Lake Avenue
Suite 900
Pasadena, CA 91101
Attention: ___________
Ladies and Gentlemen:
The undersigned, ___________________________ (the "Borrower"), refers
to the Loan and Security Agreement, dated as of December ___, 1999 ("Loan and
Security Agreement") by and among the Borrower, certain of its Affiliates and
Bank of America, N.A. ("Lender") and hereby gives you notice irrevocably of the
Borrowing specified below:
1. The Business Day of the proposed Borrowing is ___________ , _____.
2. The aggregate amount of the proposed Borrowing is $_______________.
3. The Borrowing is to be comprised of $_____________ of Base Rate Loans
and $__________________ of LIBOR Rate Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans, if any,
included in the Borrowing shall be _____ months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the date of the proposed Borrowing,
before and after giving effect thereto and to the application of the proceeds
therefrom:
(a) The representations and warranties of the Borrowers contained in
the Loan and Security Agreement are true and correct in all material respects as
though made on and as of such date other than any such representation or
warranty which relates to a specified prior date, and except to the extent the
Lender has been notified by the Borrowers that any representation or warranty is
not correct and the Lender has explicitly waived in writing compliance with such
representation or warranty;
(b) No Default or Event of Default has occurred and is continuing, or
would result from such proposed Borrowing; and
(c) No event or circumstance has occurred which constitutes a Material
Adverse Effect;
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(d) The proposed Borrowing will not (i) cause the aggregate principal
amount of all outstanding Revolving Loans to the undersigned plus the aggregate
amount available for drawing under all outstanding Letters of Credit for the
benefit of the undersigned to exceed the Availability of the undersigned or (ii)
cause, together with any proposed Borrowing on the date hereof by all other
Borrowers, the aggregate principal amount of all outstanding Revolving Loans
plus the aggregate amount available for drawing under all outstanding Letters of
Credit to all Borrowers to exceed the Maximum Loan Amount or the Aggregate
Availability or the aggregate principal amount of all Inventory Loans to exceed
the Inventory Sublimit.
[NAME OF BORROWER]
By:___________________________
Title:________________________
By:___________________________
Title:________________________
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EXHIBIT E
NOTICE OF CONTINUATION/CONVERSION
Date: __________ , _____
To: Bank of America, N.A.
55 South Lake Avenue
Suite 900
Pasadena, CA 91101
Attention:_______________
Ladies and Gentlemen:
The undersigned, ___________________________ (the "Borrower"), refers
to the Loan and Security Agreement dated as of December ___, 1999 by and among
the Borrower, certain of its Affiliates and Bank of America, N.A. ("Lender") and
hereby gives you notice irrevocably of the [CONTINUATION] [CONVERSION] of the
Loans specified herein, that:
1. The Continuation/Conversion Date is ____________ , ________.
2. The aggregate amount of the Loans to be [CONTINUED] [CONVERTED]
is $____________________.
3. The Loans are to be [CONVERTED INTO] [CONTINUED AS] [LIBOR Rate] [BASE
RATE] Loans.
4. The duration of the Interest Period for the LIBOR Rate Loans included
in the [CONVERSION] [CONTINUATION] shall be months.
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the proposed Continuation/Conversion
Date, before and after giving effect thereto and to the application of the
proceeds therefrom:
(a) The representations and warranties of the Borrower contained in the
Loan and Security Agreement are true and correct in all material respects as
though made on and as of such date other than any such representation or
warranty which relates to a specified prior date, and except to the extent the
Lender has been notified by the Borrowers that any representation or warranty is
not correct and the Lender has explicitly waived in writing compliance with such
representation or warranty;
(b) No Default or Event of Default has occurred and is continuing, or
would result from such proposed [CONTINUATION] [CONVERSION]; and
(c) No event or circumstance has occurred which constitutes a Material
Adverse Effect;
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(d) The proposed conversion-continuation will not (i) cause the
aggregate principal amount of all outstanding Revolving Loans to the undersigned
plus the aggregate amount available for drawing under all outstanding Letters of
Credit for the benefit of the undersigned to exceed the Availability of the
undersigned or (ii) cause, together with any proposed Borrowing on the date
hereof by all other Borrowers, the aggregate principal amount of all outstanding
Revolving Loans plus the aggregate amount available for drawing under all
outstanding Letters of Credit to all Borrowers to exceed the Maximum Loan Amount
or the Aggregate Availability or the aggregate principal amount of all Inventory
Loans to exceed the Inventory Sublimit.
[NAME OF BORROWER]
By:
-------------------------------
Title:
----------------------------
By:
-------------------------------
Title:
----------------------------
2
