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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): May 7, 1997
NOVELLUS SYSTEMS, INC.
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(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA
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(State or Other Jurisdiction of Incorporation)
000-1757 77-0024666
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(Commission File Number) (I.R.S. Employer Identification No.)
3970 North First Street, San Jose, CA 95134
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(Address of Principal Executive Offices) (Zip Code)
(408) 943-9700
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(Registrant's Telephone Number, Including Area Code)
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
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INFORMATION TO BE INCLUDED IN REPORT
Item 2. Acquisition or Disposition of Assets.
On June 20, 1997, pursuant to that certain Asset Purchase Agreement
dated as of May 7, 1997, between the Registrant, as buyer, and Varian
Associates, Inc., a Delaware corporation ("Varian"), as seller, as amended by
that certain First Amendment to Asset Purchase Agreement dated as of June 20,
1997, between the Registrant and Varian (as so amended the "Asset Purchase
Agreement"), the Registrant purchased, itself or through certain of the
Registrant's wholly-owned subsidiaries, Varian's Thin Film Systems Business (the
"Business"), which includes, the development, manufacture and sale of products
for physical vapor deposition and chemical vapor deposition of thin films, for a
cash purchase price of $145.5 million, subject to adjustment based on a final
closing balance sheet currently being prepared (as adjusted, the "Purchase
Price"). Subject to adjustment as described above, the Purchase Price was paid
and the closing deliveries were made on June 20, 1997. However, the transfer of
the Business and the payment of the Purchase Price were deemed made and effected
as of June 13, 1997. Accordingly, the closing balance sheet and all adjustments
to the Purchase Price will be prepared and made as of June 13, 1997.
The assets included in the Business purchased by the Registrant,
include, among other things, the Business' accounts receivable, inventory,
fixed and tangible personal property (including, without limitation, all
machinery, equipment, supplies, tools, tooling, furniture, fixtures, hardware,
dies and spare parts), intangible personal property, contracts, and books and
records. The assets purchased by the Registrant also included certain
intellectual property used in the Business. In addition to the intellectual
property purchased by the Registrant, pursuant to a certain Cross-License
Agreement dated as of May 7, 1997 (the "Cross-License Agreement"), between
Varian and the Registrant, among other things, the Registrant was granted
certain licenses to use certain additional intellectual property owned by
Varian, and the Registrant granted to Varian certain licenses to use certain
intellectual property owned by the Registrant. Seller and the Registrant also
have entered into an agreement relating to certain expense reimbursement and
indemnification obligations of Seller with respect to certain pending
litigation involving certain of the assets sold to the Registrant pursuant to
the Asset Purchase Agreement.
In addition to the personal property assets acquired by the Registrant,
the Registrant also acquired Varian's interest as tenant in and to Varian's
lease (the "Lease") of certain real property in Palo Alto, California, from the
Leland Stanford Junior University, and all of the improvements and fixtures
located thereon (such improvements and fixtures, the "Facility"). Varian agreed
that, for a period of up to one year, Varian will provide to the Registrant
certain services required by Registrant to operate the Business at the Facility.
Varian also agreed to permit the Registrant, for a period of up to 24 months, to
share the use of certain other facilities of Varian where portions of the
Business are conducted.
In addition to the assets, the Registrant assumed certain liabilities
relating to the Business.
All of the assets acquired by the Registrant will continue to be used
by the Registrant in conducting the Business, as conducted when the same was
acquired by the Registrant, provided that the Registrant may transfer the
locations at which portions of the Business are presently conducted to different
locations.
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The Purchase Price paid at the closing was comprised of $80.5 million
paid from the Registrant's own working capital funds, and a $65 million loan
made to the Registrant pursuant to a Credit Agreement dated June 9, 1997, among
the Registrant, ABN AMRO Bank N.V., as agent, and a syndicate of lenders named
in such Credit Agreement. The Purchase Price was determined through arms-length
negotiations between the Registrant and Varian, which negotiations took into
account the Business' financial position, operating history, products,
intellectual property and other factors relating to the Business. There are no
material relationships between Varian and the Registrant or any of its
affiliates, any director or officer of the Registrant, or any associate of any
such director or officer, except that Richard A. Aurelio, Executive Vice
President of Varian is a member of the board of directors of the Registrant. Mr.
Aurelio was appointed to the board of directors of the Registrant in May 1997,
after the execution of the Asset Purchase Agreement (prior to amendment thereof)
and the Cross-License Agreement.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(a) Financial Statements of Businesses Acquired
The audited financial statements of the Thin Film Systems Business of
Varian Associates, Inc., are not yet completed. The required audited
financial statements will be filed with the Securities and Exchange
Commission within 60 days of the filing of this report on Form 8-K.
(b) Pro Forma Financial Information
The unaudited pro forma financial information of Novellus Systems, Inc.
and the Thin Film Systems Business of Varian Associates, Inc., are not
yet completed. The required unaudited pro forma financial information
will be filed with the Securities and Exchange Commission within 60
days of the filing of this report on Form 8-K.
(c) Exhibits
The Exhibit Index appearing on page 5 is incorporated herein by
reference.
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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
undersigned hereunto duly authorized.
NOVELLUS SYSTEMS, INC.
By: /s/ Robert H. Smith
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Robert H. Smith
Executive Vice President Finance and
Administration, Chief Financial Officer and
Secretary
Dated: July 7, 1997
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EXHIBIT INDEX
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<CAPTION>
Sequentially
Exhibit Numbered
Number Description Page
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<S> <C> <C>
2.1 Asset Purchase Agreement by and between Varian 6
Associates, Inc. and Novellus Systems, Inc.
2.2 First Amendment to Asset Purchase Agreement by
and between Varian Associates, Inc. and Novellus
Systems, Inc.
2.3 Assignment and Assumption of Lessee's Interest in
Lease (Units 8 and 9, Palo Alto) and Covenants,
Conditions and Restrictions on Leasehold
Interests (Units 1-12, Palo Alto)
2.4 Sublease (Portion of Unit 9, Palo Alto)
2.5 Shared Use Agreement
2.6 Environmental Agreement
2.7 Cross-License Agreement between Varian
Associates, Inc. and Novellus Systems, Inc.
2.8 Parts Supply Agreement
</TABLE>
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EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
dated as of May 7, 1997
by and between
VARIAN ASSOCIATES, INC., a Delaware corporation
and
NOVELLUS SYSTEMS, INC., a California corporation
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TABLE OF CONTENTS
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Page
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1. DEFINITIONS...................................................................................... 1
2. SALE AND PURCHASE OF ASSETS...................................................................... 4
2.1 Sale of Assets.......................................................................... 4
2.2 Assets Not Purchased.................................................................... 6
2.3 Purchase Price.......................................................................... 7
2.4 No Assignment in Certain Circumstances.................................................. 9
2.5 Assumed Liabilities..................................................................... 9
2.6 Closing................................................................................. 10
2.7 Consent of Third Parties................................................................ 12
3. REPRESENTATIONS AND WARRANTIES OF SELLER......................................................... 12
3.1 Organization and Authority.............................................................. 13
3.2 Authority Relating to this Agreement and Other Agreements; No
Violation of Other Instruments.......................................................... 13
3.3 Ownership and Delivery of Assets........................................................ 14
3.4 Compliance with Law..................................................................... 14
3.5 Financial Statements.................................................................... 15
3.6 Absence of Certain Changes or Events.................................................... 15
3.7 Inventory............................................................................... 15
3.8 Personal Property....................................................................... 16
3.9 Lease................................................................................... 16
3.10 Intellectual Property................................................................... 16
3.11 Product Warranties and Returns.......................................................... 17
3.12 Litigation.............................................................................. 17
3.13 Protection of Intangible Property....................................................... 17
3.14 Personnel............................................................................... 17
3.15 Brokers and Finders..................................................................... 18
3.16 Contracts............................................................................... 18
3.17 Absence of Environmental Liabilities.................................................... 18
4. REPRESENTATIONS AND WARRANTIES OF BUYER.......................................................... 18
4.1 Organization and Authority.............................................................. 18
4.2 Authority Relating to this Agreement; No Violation of Other
Instruments............................................................................. 18
4.3 [Intentionally Omitted]................................................................. 19
4.4 Sufficient Funds........................................................................ 19
5. CONDITIONS TO THE OBLIGATIONS OF BUYER........................................................... 19
5.1 Compliance Certificate.................................................................. 19
5.2 Landlord's Consent to Assignment........................................................ 19
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5.3 Opinion of Counsel...................................................................... 19
5.4 No Orders............................................................................... 20
5.5 Delivery of Closing Documents........................................................... 20
5.6 HSR Act................................................................................. 20
6. CONDITIONS TO THE OBLIGATIONS OF SELLER.......................................................... 20
6.1 Compliance Certificate.................................................................. 20
6.2 Landlord's Consent to Assignment........................................................ 20
6.3 Opinion of Counsel...................................................................... 20
6.4 No Orders............................................................................... 20
6.5 Delivery of Closing Documents........................................................... 20
6.6 HSR Act................................................................................. 20
7. COVENANTS OF SELLER.............................................................................. 20
7.1 Access to Properties and Records........................................................ 20
7.2 Conduct of the Business Prior to Closing Date........................................... 21
7.3 Advice of Developments.................................................................. 22
7.4 Acquisition, Merger or Similar Negotiations With Other Parties......................... 22
7.5 Financial Covenants..................................................................... 22
7.6 Non-Compete............................................................................. 23
7.7 Seller's Auditors....................................................................... 24
7.8 Transition Services..................................................................... 24
7.9 Satisfaction of Conditions.............................................................. 24
8. COVENANTS OF BUYER............................................................................... 25
8.1 Satisfaction of Conditions.............................................................. 25
8.2 Warranty Obligations.................................................................... 25
8.3 Prohibition on Use of Names, Etc........................................................ 25
9. EMPLOYMENT MATTERS............................................................................... 26
9.1 Employees............................................................................... 26
9.2 Employee Plans.......................................................................... 26
10. HSR ACT.......................................................................................... 27
10.1 Filings Under HSR Act................................................................... 27
11. INDEMNITY........................................................................................ 27
11.1 Survival of Representations and Warranties.............................................. 27
11.2 Seller's Indemnity ..................................................................... 27
11.3 Buyer's Indemnity....................................................................... 28
11.4 Procedure for Indemnification -- Third Party Claims..................................... 28
11.5 Collection of Accounts Receivable....................................................... 29
11.6 Limitations on Indemnification.......................................................... 29
12. TERMINATION...................................................................................... 30
12.1 Mutual Agreement........................................................................ 30
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<TABLE>
<S> <C> <C>
12.2 Permanent Injunction.................................................................... 30
12.3 Termination by Buyer.................................................................... 30
12.4 Termination by Seller................................................................... 30
12.5 Confidentiality and Effect of Termination............................................... 30
13. MISCELLANEOUS.................................................................................... 31
13.1 Assignment.............................................................................. 31
13.2 Allocation of Purchase Price............................................................ 31
13.3 Prorations.............................................................................. 31
13.4 Confidentiality......................................................................... 32
13.5 Transfer Taxes.......................................................................... 32
13.6 Expenses................................................................................ 32
13.7 Further Assurances...................................................................... 32
13.8 Dispute Resolution...................................................................... 33
13.9 Notices................................................................................. 33
13.10 Entire Agreement and Modification....................................................... 34
13.11 No Other Remedies....................................................................... 34
13.12 Governing Law........................................................................... 35
13.13 Buyer's Brokers......................................................................... 35
13.14 Severability............................................................................ 35
13.15 Headings................................................................................ 35
13.16 Counterparts............................................................................ 36
</TABLE>
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TABLE OF EXHIBITS
Exhibit 2.6.2(a): Bill of Sale
Exhibit 2.6.2(b): Assignment of Trademarks
Exhibit 2.6.2(c): Assignment of Patents
Exhibit 2.6.2(d): Assignment of Licenses
Exhibit 2.6.2(e): Assumption Agreement
Exhibit 2.6.2(f): Secretary's Certificate of Seller
Exhibit 2.6.2(g): Compliance Certificate of Seller
Exhibit 2.6.2(h): Consent to Assignment
Exhibit 2.6.2(i): Opinion of Seller's General Counsel
Exhibit 2.6.3(b): Secretary's Certificate of Buyer
Exhibit 2.6.3(c): Compliance Certificate of Buyer
Exhibit 2.6.3(d): Opinion of Buyer's Counsel
TABLE OF SCHEDULES
Schedule 2.1(e): Patents, trademarks and trademark applications
Schedule 3.5: Balance Sheets for the Business dated as of December
27, 1996 and as of March 28, 1997
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ASSET PURCHASE AGREEMENT
This Asset Purchase Agreement (the "Agreement") is made as of May 7,
1997, between Varian Associates, Inc., a Delaware corporation ("Seller"), and
Novellus Systems, Inc., a California corporation ("Buyer").
R E C I T A L S
A. Seller conducts the business of, among other things, the
development, manufacture and sale of products for physical vapor deposition and
chemical vapor deposition of thin films through its Thin Film Systems Business
(collectively, the "Business"). The Business is conducted by Seller primarily at
its facility at 3175 Hanover Drive, Palo Alto, California (the "Facility") and
is conducted by Seller, in part, internationally through certain of Seller's
Subsidiaries.
B. Seller also conducts the business of the development,
manufacture, sale and service of ion implant equipment (the "IIS Business"),
primarily at a facility in Gloucester, Massachusetts.
C. Subject to the terms and conditions of this Agreement,
Buyer desires to purchase, and Seller desires to sell, certain of the assets,
rights and tangible and intangible properties constituting the Business as
presently conducted, and to assume certain of Seller's liabilities associated
therewith.
D. Buyer and Seller are concurrently executing and delivering
(i) an Assignment and Assumption of Lessee's Interest in Lease and Covenants,
Conditions and Restrictions on Leasehold Interests (the "Assignment of Lease
Agreement"), (ii) a Sublease (the "Sublease"), (iii) a Shared Use Agreement (the
"Shared Use Agreement"), (iv) an Environmental Agreement (the "Environmental
Agreement"), (v) a Cross-License Agreement (the "Cross-License Agreement"), and
(vi) a Parts Supply Agreement (the "Supply Agreement"), all of which shall be
effective as of the Closing Date, and are hereinafter sometimes collectively
referred to as the "Ancillary Documents."
TERMS, COVENANTS AND CONDITIONS
1. DEFINITIONS.
For the purposes of this Agreement, in addition to any other
terms defined in this Agreement, the definitions cross-referenced below shall be
applicable:
<TABLE>
<S> <C>
1.1 Accounts Payable: shall be as defined in Section 2.5.1(a).
1.2 Accounts Receivable: shall be as defined in Section 2.1(a).
1.3 Agreement: shall be as defined in the preamble.
</TABLE>
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<TABLE>
<S> <C>
1.4 Ancillary Documents: shall be as defined in the recitals.
1.5 Approval: shall be as defined in Section 2.4.1
1.6 Assets: shall be as defined in Section 2.1.
1.7 Assignment of Lease Agreement: shall be as defined in the recitals.
1.8 Assumed Liabilities: shall be as defined in Section 2.5.1.
1.9 Books and Records: shall be as defined in Section 2.2(i).
1.10 Business: shall be as defined in the recitals.
1.11 Buyer: shall be as defined in the preamble.
1.12 Buyer Closing Documents: shall be as defined in Section 2.6.3.
1.13 Buyer's Damages: shall be as defined in Section 11.2.
1.14 CERCLA: shall be as defined in Section 3.17.
1.15 Closing: shall be as defined in Section 2.6.1.
1.16 Closing Date: shall be as defined in Section 2.6.1.
1.17 Closing Date Balance Sheet: shall be as defined in Section 2.3.2(b).
1.18 Contract Advances: shall be as defined in Section 2.5.1(b).
1.19 Contracts: shall be as defined in Section 2.1(g).
1.20 Cross-License Agreement: shall be as defined in the recitals.
1.21 Damages: shall be as defined in Section 11.3.
1.22 Employee Plan: shall be as defined in Section 9.2.
1.23 ERISA: shall be as defined in Section 9.2.
1.24 Estimated Adjustment: shall be as defined in Section 2.3.2(a).
1.25 Excluded Assets: shall be as defined in Section 2.2.
1.26 Exclusively Used in the Business: shall be as defined in Section 2.1
1.27 Facility: shall be as defined in the recitals.
1.28 Facility Improvements: shall be as defined in Section 2.1(d).
</TABLE>
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<TABLE>
<S> <C>
1.29 Final Adjustment: shall be as defined in Section 2.3.2(b).
1.30 Financial Statements: shall be as defined in Section 3.5.
1.31 GAAP: shall be as defined in Section 2.3.2(b).
1.32 Hazardous Material: shall be as defined in Section 3.17.
1.33 HSR Act: shall be as defined in Section 10.
1.34 IIS Business: shall be as defined in the recitals.
1.35 Intangible Personal Property: shall be as defined in Section 2.1(f).
1.36 Intellectual Property: shall be as defined in Section 2.1(e).
1.37 Inventory: shall be as defined in Section 2.1(b).
1.38 IRC: shall be as defined in Section 9.2.
1.39 Lease: shall be as defined in Section 3.9.
1.40 Licensed Intellectual Property: shall be as defined in Section 2.1(e).
1.41 Liens: shall be as defined in Section 3.3.
1.42 Machinery and Equipment: shall be as defined in Section 2.1(c).
1.43 Material Adverse Effect: shall be as defined in Section 3.
1.44 Net Asset Amount: shall be as defined in Section 2.3.2(b).
1.45 Permitted Liens: shall be as defined in Section 3.3.
1.46 Primarily Used in the Business: shall be as defined in Section 2.1.
1.47 Proprietary Rights and Information Agreement: shall be as defined in
Section 3.13.
1.48 Purchase Price: shall be as defined in Section 2.3.1.
1.49 Reference Balance Sheet: shall be as defined in Section 2.3.2(b).
1.50 Seller: shall be as defined in the preamble.
1.51 Seller Closing Documents: shall be as defined in Section 2.6.2.
1.52 Seller's Damages: shall be as defined in Section 11.3.
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<S> <C>
1.53 Seller's Key Officers: shall be as defined in Section 3.
1.54 Seller Logos: shall be as defined in Section 8.3.1.
1.55 Seller Names: shall be as defined in Section 8.3.1.
1.56 Shared Use Agreement: shall be as defined in the recitals.
1.57 Sublease: shall be as defined in the recitals.
1.58 Subsidiary: shall be as defined in Section 2.1.
1.59 Supply Agreement: shall be as defined in the recitals.
1.60 Taxes: shall be as defined in Section 2.2(e).
1.61 TFS Intellectual Property: shall be as defined in Section 2.1(e).
1.62 Transition Services: shall be as defined in Section 7.8.
1.63 Warranty Obligations: shall be as defined in Section 2.5.1(f).
</TABLE>
2. SALE AND PURCHASE OF ASSETS.
2.1 Sale of Assets.
Subject to the terms and conditions of this Agreement and for
the consideration set forth herein, (a) Seller shall, at the Closing, sell,
convey, assign, transfer and deliver to Buyer, and Buyer shall purchase and
acquire from Seller, and (b) Seller shall cause Seller's Subsidiaries, at the
Closing, to sell, convey, assign, transfer and deliver to Buyer or the foreign
Subsidiaries of Buyer (if and as designated in writing by Buyer), and Buyer or
such foreign Subsidiaries of Buyer, if applicable, shall purchase and acquire
from Seller's Subsidiaries, in each case, all of the right, title and interest
of Seller or Seller's Subsidiaries, as applicable, in and to the assets, rights
and tangible and intangible property Primarily Used in the Business (other than
the Excluded Assets), including, without limitation, the assets, right, tangible
and intangible property specifically described in Sections 2.1(a)-(i) below, as
the same may exist at the Closing (the "Assets"). As used in this Agreement, (x)
the term "Primarily Used in the Business" with respect to any asset, right,
tangible and intangible property, liability or obligation, shall mean (1) the
use or accrual of such item primarily relates to or primarily derives from the
Business, and (2) the item is reasonably necessary for the operation of the
Business as presently conducted and as conducted on the Closing Date, and (y)
the term "Exclusively Used in the Business" with respect to any asset, right,
tangible and intangible property, liability or obligation, shall mean such item
is solely used in or accrues solely from or relates solely to the operation of
the Business and not from any other operations or activities of Seller or any of
Seller's Subsidiaries. As used herein, "Subsidiary" shall mean, with respect to
a specified company, an entity controlled, directly or indirectly by such
company, including, without limitation, by such company's beneficial
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ownership of 50% or more of such entity's outstanding voting stock or other
equity interests. Without limiting the generality of the foregoing, the Assets
shall include, without duplication, the right, title and interest of Seller or
its Subsidiaries in and to the following as the same may exist at the Closing:
(a) Accounts Receivable. All accounts receivable of
Seller and its Subsidiaries accrued in the Business and outstanding as of the
Closing Date (the "Accounts Receivable").
(b) Inventory. All inventories of raw materials,
work-in-process, finished goods (including installation tooling), supplies and
repair materials owned by Seller or its Subsidiaries Primarily Used in the
Business existing as of the Closing Date, whether on or within the Facility, en
route thereto or elsewhere (the "Inventory").
(c) Fixed Assets and Tangible Personal Property. All fixed
assets and tangible personal property owned or leased by Seller or its
Subsidiaries (other than the Inventory and the Facility Improvements) Primarily
Used in the Business, including, without limitation, all machinery (including
replacement parts), equipment (including demo equipment and replacement parts),
supplies, tools, tooling, furniture, fixtures, hardware, dies and spare parts
Primarily Used in the Business ("Machinery and Equipment").
(d) Facility Improvements. All leasehold improvements
and fixtures located at the Facility (the "Facility Improvements").
(e) Intellectual Property. All patents, trademarks and
trademark applications listed on Schedule 2.1(e) attached hereto, all patent
applications and invention disclosures set forth in a letter, dated the date
hereof, concurrently delivered by Seller to Buyer, and all service marks,
service mark applications, trade and other names (either registered, common law
or registration applied for), copyrights, copyright applications, trade secrets,
know-how, processes, manufacturing or marketing procedures, recipes, formulae,
drawings, schematics and patterns ("Intellectual Property") owned by Seller or
its Subsidiaries that are Exclusively Used in the Business (all such
Intellectual Property, collectively, the "TFS Intellectual Property"). Without
limitation of the foregoing, the Assets shall be deemed to further include any
drawings, documentation, schematics, manuals or other materials, whether in
written or magnetic form to the extent that the same describe, disclose or
otherwise set forth any of the TFS Intellectual Property. The TFS Intellectual
Property shall not include any Intellectual Property that is not TFS
Intellectual Property, including, without limitation, the Intellectual Property
listed on Exhibit A to the Cross-License Agreement (the "Licensed Intellectual
Property").
(f) Intangible Personal Property. All warranties, guaranties,
vendor lists, customer lists, customer files, customer records, trade and other
association memberships and rights, licenses and permits susceptible of transfer
under regulatory agency rules Exclusively Used in the Business (the "Intangible
Personal Property").
(g) Contracts. Subject to the Cross-License Agreement and
excluding the Licensed Intellectual Property, all contracts of Seller
Exclusively Used in the Business,
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including, without limitation, (i) all patent, technology, software and other
intellectual property license agreements, assignment agreements, purchase
contracts, purchase orders, sales contracts, sales orders, rights to discounts,
maintenance agreements, sales representative agreements, service agreements,
distribution agreements, joint development contracts and agreements for leased
equipment Exclusively Used in the Business, (ii) that certain Professional
Services Agreement dated as of March 27, 1996 (the "Professional Services
Agreement"), between Seller and John W. Vanderpot ("Vanderpot"), and (iii) that
certain Development and Design Agreement dated August 1, 1996 (the "Development
and Design Agreement"), between Seller and Multilevel Metals, Inc. (the
"Contracts").
(h) Facility. Subject to the terms of the Assignment of Lease
Agreement, and subject to the existing sublease in favor of a third party and
the Sublease, all of Seller's right, title and interest as tenant in and to the
Lease. The parties agree to reasonably cooperate to amend the Assignment of
Lease Agreement, in non-material respects only, if requested by the Landlord
under the Lease.
(i) Books and Records. All books, records, logs, plans,
specifications, blueprints, data, operating manuals, drawings, sketches,
diagrams, marketing materials, and other reports or documents Exclusively Used
in the Business (collectively, "Books and Records").
2.2 Assets Not Purchased.
Notwithstanding Section 2.1, Seller shall not sell, and Buyer
shall not acquire any interest in, any of the following (collectively, the
"Excluded Assets"):
(a) Cash. Any cash, cash deposits, other cash equivalents,
cash refunds, insurance policies or rights thereunder, security bonds or
deposits, or bank accounts.
(b) Other Intellectual Property. Any patents, patent
applications, trademark, trademark applications, software or other Intellectual
Property of Seller or any of its Subsidiaries that are not TFS Intellectual
Property.
(c) Royalty Bearing Licenses. Any agreements by Seller to
license or assign patent, technology, software or other intellectual property
license agreements to other parties where royalties (or claims with respect
thereto) accrue to the licensor.
(d) Other Real Property. Real property or real property
interests other than as set forth in the Assignment of Lease Agreement (with
respect to the Facility) or the Shared Use Agreement.
(e) Tax Refunds. Any refund of the following: any federal,
state, local, or foreign income, gross receipts, license, payroll, parking,
employment, excise, severance, stamp, occupation, premium, windfall profits,
environmental (including, without limitation, taxes under IRC Code Sec. 59A),
customs duties, capital stock, franchise, profits, withholding, social security
(or similar), unemployment, disability, real property, personal property, sales,
use, transfer, registration, documentary, value added, alternative or add-on
minimum, estimated tax or
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other tax of any kind whatsoever (collectively, "Taxes"), or any claim for a
refund of Taxes for periods before the Closing. Notwithstanding the foregoing,
or anything else to the contrary set forth in this Agreement, neither Buyer nor
Seller shall have any obligation to apply for, pursue or otherwise seek to
obtain any refund for Taxes for periods prior to or after the Closing.
(f) Contingent Benefits. Other than (1) accounts or notes
receivable, (2) any Assets reflected on the Closing Date Balance Sheet, or (3)
rights described in clause (g) of Section 2.1 with respect to Contracts that
remain executory, any claims or rights against third parties arising from the
ownership of the Assets or the conduct of the Business before the Closing Date.
(g) Intercompany Agreements. Any distributor, representative
or service agreements, contracts or commitments between or among any of Seller
and its Subsidiaries, except as expressly set forth in the Supply Agreement.
(h) Other Intangible Personal Property. Any warranties,
guaranties, vendor lists, customer lists, customer files, customer records,
trade and other association memberships or rights, licenses and permits that are
not Intangible Personal Property.
(i) Other Contracts. Any contracts, patent agreements,
technology agreements, software agreements or other intellectual property
license agreements, assignment agreements, purchase contracts, purchase orders,
sales contracts, sales orders, right to discounts, maintenance agreements, sales
representative agreements, service agreements, distribution agreements, joint
development agreements or agreements for leased equipment, that are not included
within the Contracts.
(j) Other Book and Records. Any books, records, logs, plans,
specifications, blueprints, data, operating manuals, drawings, sketches,
diagrams, marketing materials, and other reports or documents that are not Books
and Records.
(k) Unrelated Assets and Businesses. Any businesses,
operations, subsidiaries or divisions, properties or assets of Seller or its
Subsidiaries not Primarily Used in the Business, including, without limitation,
Seller's Ion Implant Systems business, Health Care Systems business, Instruments
business, Ginzton Research Center (other than Assets included therein) and
corporate functions of Seller.
(l) Stock in Subsidiaries. Any capital stock in any of
Seller's Subsidiaries.
Such assets shall remain the property of Seller and Buyer
shall have no liability or other responsibility with respect thereto.
2.3 Purchase Price.
2.3.1 Purchase Price. Subject to the terms and conditions of
this Agreement (including, without limitation, adjustment pursuant to Sections
2.3.2 and 13.3 below), as consideration for the Business and the Assets: (a)
Buyer shall pay to Seller (acting on behalf of
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<PAGE> 13
itself and as agent for the applicable Subsidiaries of Seller) One Hundred Fifty
Million Dollars ($150,000,000) (the "Purchase Price") payable to Seller at the
Closing, in immediately available funds; and (b) Buyer shall assume the Assumed
Liabilities (but no other liabilities).
2.3.2 Purchase Price Adjustment.
(a) At the Closing, a reasonable estimate of the
adjustment to the Purchase Price provided for in Section 2.3.2(b) below shall be
made by Seller based upon a review of the Assets, Accounts Payable and Contract
Advances, as of a date as close as practicable to the Closing Date (the
"Estimated Adjustment"). The Estimated Adjustment shall be used as the basis of
calculating and paying the Purchase Price at the Closing until such time as the
Final Adjustment is fully determined.
(b) The Purchase Price shall be adjusted upward
or downward on a dollar for dollar basis to (i) provide to Buyer a credit in the
amount of the value of any accrued employee vacation or sick leave transferred
to Buyer pursuant to Section 9.1 below to the extent not reflected on the
Closing Date Balance Sheet, and (ii) reflect any difference between the Net
Asset Amount reflected on the unaudited balance sheet of the Business as at
December 27, 1996 attached hereto as Schedule 3.5 (which excludes Excluded
Assets) (the "Reference Balance Sheet") and the Net Asset Amount reflected on
the audited Closing Date balance sheet of the Business as at the close of
business on the Closing Date, which shall be prepared by Seller and its
accountants from the books and records of the Business in accordance with this
Agreement and generally accepted accounting principles ("GAAP") applied on a
basis consistent with the Reference Balance Sheet (the "Closing Date Balance
Sheet"); provided that Buyer shall reimburse Seller for the fees and expenses of
its auditors or any out-of-pocket expenses incurred by Seller in connection with
auditing such balance sheet. In furtherance thereof, Buyer shall cooperate with
Seller and its accountants, and shall provide such persons full access to the
books, records, work papers, information, facilities and employees of Buyer
relating to the Business as conducted by Buyer from and after the Closing Date.
Seller shall deliver the Closing Date Balance Sheet to Buyer within sixty-five
(65) days following the Closing. Buyer shall have thirty (30) days from receipt
of the Closing Date Balance Sheet in which to notify Seller in detail of any
specific objections thereto, during which period Seller shall provide Buyer and
its accountants with reasonable access to Seller's and Seller's accountants'
working papers used in preparing the Reference Balance Sheet and the Closing
Date Balance Sheet. If such notice is given and the parties are unable to
resolve their disagreements within fifteen (15) days following Seller's receipt
of such notice, the matter in dispute shall be resolved by arbitration as
provided in Section 13.8 hereof. Resolution of such dispute by agreement of the
parties hereto or by arbitration shall be final, conclusive and binding on the
parties. The Purchase Price shall be adjusted based upon such final resolution
(the "Final Adjustment"). Within ten (10) business days following the date of
such final resolution, Seller or Buyer, as the case may be, shall remit in cash
the amount of the difference between the Estimated Adjustment and the Final
Adjustment to the other party. For purposes of this Section 2.3.2(b), the "Net
Asset Amount" shall mean the difference between the book value of the assets and
liabilities of the Business as such assets and liabilities are reflected in the
Reference Balance Sheet or the Closing Date Balance Sheet, as applicable.
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<PAGE> 14
2.4 No Assignment in Certain Circumstances.
2.4.1 Consents. Notwithstanding anything else contained in
this Agreement to the contrary, this Agreement shall not constitute an agreement
to sell, convey, assign, transfer or deliver any interest in any instrument,
commitment, contract, lease, permit or other agreement or arrangement or any
claim, right or benefit arising thereunder or resulting therefrom if such a
transfer or an attempt to make such a transfer without the authorization,
approval, consent or waiver (collectively, "Approval") of a third party would
constitute a breach or violation thereof, or affect adversely the rights of
Buyer, Buyer's Subsidiaries, Seller or Seller's Subsidiaries thereunder, or
constitute a Material Adverse Effect; and any such transfer to Buyer or its
Subsidiaries that requires the Approval of a third party shall be made subject
only to such Approval being obtained. Seller shall use its commercially
reasonable efforts to obtain any such Approval prior to the Closing Date, and
Buyer shall reasonably cooperate, at Seller's cost, in connection therewith. In
the event that any such Approval is not obtained on or prior to the Closing
Date, Seller shall, for a period of six (6) months thereafter, continue to use
its commercially reasonable efforts to obtain any such Approval and cooperate
with Buyer in any reasonable and lawful arrangement to provide that Buyer or its
Subsidiaries, as the case may be, shall receive all of Seller's and any of
Seller's Subsidiaries' right, title and interest in any Asset with respect to
which such Approval is required, including, without limitation, performance by
Seller or such Subsidiary of Seller, as agent; provided, however, that, in
connection with the foregoing, Seller shall not be obligated to commence or
prosecute any proceeding of any nature before any governmental entity or pay any
amount to any third party other than at the sole expense of Buyer; provided
further, however, that any and all consent and assignment costs or charges
expressly set forth in the Contracts, including, without limitation, payments
stated to be due in connection with the sale, transfer, or other disposition of
the Business by Seller, shall be paid by Seller. Except as provided in section
2.4.2 below, no such Approval shall be a condition to Closing.
2.4.2 Required Consent. Notwithstanding anything to the
contrary set forth in Section 2.4.1 above, the landlord consent of the Leland
Stanford Junior University to the assignment of the Lease pursuant to the
Assignment of Lease (as the same may be modified in accordance with Section
2.1(h)), shall be a condition to Closing.
2.5 Assumed Liabilities.
2.5.1 Assumption of Liabilities. In connection with the
purchase and sale of the Assets pursuant to this Agreement, Buyer shall assume
in writing at the Closing pursuant to the Assumption Agreement only those
liabilities and obligations of Seller and Seller's Subsidiaries, as applicable,
set forth below (collectively, the "Assumed Liabilities"):
(a) Accounts Payable. Those accounts payable of Seller
and its Subsidiaries, outstanding as of the Closing Date, arising from Seller's
and any of its Subsidiaries' operation of the Business ("Accounts Payable").
9
<PAGE> 15
(b) Contract Advances. Any liability or credit of or
owing from Seller and its Subsidiaries for deposits, prepayments or advances
paid to Seller or its Subsidiaries prior to the Closing Date with respect to
Contracts ("Contract Advances").
(c) Contract Obligations. Any obligation remaining to be
performed under the Contracts, including, without limitation, installation
obligations, but specifically excluding any and all amounts required to be paid
by Seller pursuant to (i) Section 3.2 of the Professional Services Agreement,
and (ii) Sections 5.2 and 5.3 of the Development and Design Agreement, which
amounts shall be the sole responsibility of Seller.
(d) Balance Sheet Liabilities. The amounts for any liabilities
reflected on the Closing Date Balance Sheet.
(e) Product Liability. Any liability for bodily injury or
property damage arising from occurrences after the Closing as a result of any
alleged or actual defects in products of the Business designed, manufactured or
assembled by or on behalf of Seller or any of its Subsidiaries (including,
without limitation, liabilities for negligence, failures to warn, and breach of
express or implied warranty), other than any such liability relating to a
product shipped or sold or service rendered by Seller or any of its Subsidiaries
prior to the Closing.
(f) Warranty Obligations. Any continuing obligation of Seller
or its Subsidiaries with respect to the performance of warranty and/or service
obligations with respect to products of the Business shipped or sold prior to
the Closing Date by Seller or any of its Subsidiaries ("Warranty Obligations").
(g) Sales Taxes. Any transfer, sales, value added or similar
Taxes arising out of or incurred in connection with the transfer of the Assets
or the Business.
Except as provided in this Section 2.5, no other liabilities
or obligations of any nature, whether known or unknown, foreseen or unforeseen,
fixed or contingent, liquidated or unliquidated, accrued or unaccrued, shall be
assumed by Buyer in connection with the purchase and sale of the Assets
hereunder, and any such liabilities and obligations of any nature of Seller or
its Subsidiaries not expressly assumed by Seller pursuant to this Section 2.5
shall remain the sole and absolute responsibility of Seller (collectively, the
"Retained Liabilities").
2.6 Closing.
2.6.1 Closing Date. Subject to Sections 5 and 6, the closing
of the purchase and sale of the Assets and the assumption of the Assumed
Liabilities (the "Closing") shall take place at the offices of Morrison &
Foerster LLP, 755 Page Mill Road, Palo Alto, California at 10:00 a.m. on the
date that is three (3) business days after the later of (i) delivery by the
landlord of its consent to assignment of the Lease as contemplated hereby or
(ii) expiration of the period set forth in Sections 5.6 and 6.6, or at such
other place, date or time as Buyer and Seller may agree in writing. The date of
the Closing shall constitute the "Closing Date."
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<PAGE> 16
2.6.2 Seller's Deliveries at Closing. At the
Closing, Seller shall deliver or cause to be delivered to Buyer:
<TABLE>
<S> <C>
(a) An executed Bill of Sale substantially in the form of
Exhibit 2.6.2(a) (the "Bill of Sale");
(b) An executed Assignment of Trademarks substantially in the form
of Exhibit 2.6.2(b) (the "Assignment of Trademarks");
(c) An executed Assignment of Patents substantially in the form of
Exhibit 2.6.2(c) (the "Assignment of Patents");
(d) An executed Assignment of Licenses, Contracts and Intangibles
substantially in the form of Exhibit 2.6.2(d) (the "Assignment of
Licenses");
(e) An executed counterpart of an Assumption of Liabilities
Agreement substantially in the form of Exhibit 2.6.2(e) (the
"Assumption Agreement");
(f) A Secretary's Certificate certifying the
resolutions of the Executive Committee of
the Board of Directors of Seller authorizing
consummation of the transactions
contemplated by this Agreement substantially
in the form of Exhibit 2.6.2(f);
(g) A compliance certificate substantially in the form of
Exhibit 2.6.2(g);
(h) Subject to execution by the landlord, a written consent to
assignment executed by the landlord under the Lease substantially
in the form of Exhibit 2.6.2(h); and
(i) The opinion of Seller's General Counsel substantially in the form
of Exhibit 2.6.2(i).
</TABLE>
The documents referred to in Sections 2.6.2(a)-(e) above are hereinafter
referred to, collectively, as the "Seller Closing Deliveries." The Seller
Closing Deliveries and the Ancillary Documents are hereinafter referred to,
collectively, as the "Seller Closing Documents."
2.6.3 Buyer's Deliveries at Closing. At the Closing, Buyer
shall deliver or cause to be delivered to Seller the following instruments and
documents against delivery of the items specified in Section 2.6.2:
<TABLE>
<S> <C>
(a) The Purchase Price, subject to any
adjustment thereto pursuant to Section 2.3.2
or Section 13.3 below, by wire transfer of
immediately available funds to an account
designated by Seller;
</TABLE>
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<PAGE> 17
<TABLE>
<S> <C>
(b) A Secretary's Certificate certifying the
resolutions of the Board of Directors of
Buyer authorizing consummation of the
transactions contemplated by this Agreement
substantially in the form of Exhibit
2.6.3(b);
(c) A compliance certificate substantially in the form of
Exhibit 2.6.3(c).
(d) The opinion of Buyer's counsel substantially in the form of
Exhibit 2.6.3(d); and
(e) An executed counterpart of the Bill of Sale,
Assignment of Trademarks, Assignment of
Patents, Assignment of Licenses and an
executed Assumption Agreement.
</TABLE>
The documents referred to in Section 2.6.3(e) above, are hereinafter referred to
collectively, as the "Buyer Closing Deliveries." The Buyer Closing Deliveries
and the Ancillary Documents are hereinafter referred to, collectively, as the
"Buyer Closing Documents."
2.7 Consent of Third Parties. At the Closing, Seller shall provide
Buyer with copies of such third party consents as may have been actually
obtained by Seller through the Closing Date.
3. REPRESENTATIONS AND WARRANTIES OF SELLER.
The sale of the Assets to Buyer pursuant to this Agreement
shall, except as otherwise expressly provided in this Agreement, be without any
representations or warranties of any kind or nature, express or implied, as to
the title to, or the condition, value or quality of, the Assets or the Business
and, except as otherwise expressly provided in this Section 3 of this Agreement
or in Section 15 of the Assignment of Lease Agreement, Seller SPECIFICALLY
DISCLAIMS ANY REPRESENTATION OR WARRANTY OF MERCHANTABILITY, USAGE, SUITABILITY
OR FITNESS FOR ANY PARTICULAR PURPOSE WITH RESPECT TO THE ASSETS, OR ANY PART
THEREOF, OR AS TO THE WORKMANSHIP THEREOF, OR THE ABSENCE OF ANY DEFECTS
THEREIN, WHETHER LATENT OR PATENT, IT BEING UNDERSTOOD THAT SUCH ASSETS SHALL BE
SO SOLD "AS IS, WHERE IS" AND IN THEIR PRESENT CONDITION.
Seller hereby represents and warrants to Buyer that the
following statements (Sections 3.1 through 3.17) are true and correct as of the
date of this Agreement. Whenever the term "to Seller's knowledge" or "to the
best of Seller's knowledge" or similar expression appears in any representation
or warranty in this Section 3, it means to the actual knowledge (without
investigation) of Seller's (i) Vice President, Finance and Chief Financial
Officer, (ii) Executive Vice President, Semiconductor Equipment, (iii) Vice
President, General Counsel and Secretary, and (iv) Associate General Counsel,
Intellectual Property (collectively, "Seller's Key Officers"). Whenever the term
"Seller has received no notice" or like expression appears in any representation
or warranty in this Section 3, it means that none of Seller's Key Officers has
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<PAGE> 18
received actual oral or written notice of the matter to which such term is
applied, without inquiry as to whether notice has been received. Whenever the
term "Material Adverse Effect" or similar expression appears in this Agreement,
it means, an effect, on the Assets or the Business, which is or is reasonably
likely to be materially adverse to (a) the results of operations or financial
condition of the Business, taken as a whole, or (b) Buyer's ability to operate
the Business as presently conducted after the Closing Date.
3.1 Organization and Authority. Seller: (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as and where it is now being conducted and
to enter into and perform this Agreement; and (iii) is qualified to do business
in all jurisdictions in which the failure to so qualify would have a Material
Adverse Effect. Each of Seller's Subsidiaries: (i) is duly organized, validly
existing and in good standing under the laws of the jurisdiction in which it was
formed; (ii) has all necessary corporate or entity power to own and lease its
properties, and to carry on its business as now being conducted; and (iii) is
qualified to do business in all jurisdictions in which the failure to so qualify
would have a Material Adverse Effect.
3.2 Authority Relating to this Agreement and Other Agreements;
No Violation of Other Instruments.
3.2.1 The execution and delivery of this Agreement and the
Seller Closing Documents and the performance by Seller of its obligations
hereunder and thereunder have been duly authorized by all necessary corporate
action on the part of Seller and, assuming execution of this Agreement by Buyer,
this Agreement and each of the Seller Closing Documents will constitute legal,
valid and binding obligations of Seller, enforceable against Seller in
accordance with their respective terms, subject as to enforcement only: (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting creditors' rights
generally; and (ii) to general principles of equity.
3.2.2 To Seller's knowledge, neither execution of this
Agreement nor any of the Seller Closing Documents, nor the performance hereof or
thereof by Seller or any of its Subsidiaries, will: (i) conflict with or result
in any breach or violation of the terms of any decree, judgment, order, law or
regulation of any court or other governmental body now in effect applicable to
Seller or any of Seller's Subsidiaries; (ii) conflict with, or result in, with
or without the passage of time or the giving of notice (or both), any breach of
any of the terms, conditions and provisions of, or constitute a default under,
or result in the creation of, any Lien upon any of the Assets pursuant to, any
indenture, mortgage, lease, agreement or other instrument to which Seller or any
Subsidiary of Seller is a party or by which it or any such Subsidiary or any of
the Assets are bound; or (iii) violate or conflict with any provision of
Seller's or any of Seller's Subsidiaries' Certificate of Incorporation, By-laws,
or similar organizational instruments.
3.2.3 Except as provided in Section 2.4.2 or the HSR Act, no
consent from any third party and no consent, approval or authorization of, or
declaration, filing or registration with, any government or regulatory authority
is required to be made or obtained by Seller or any of its
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<PAGE> 19
Subsidiaries in order to (i) assign and transfer the TFS Intellectual Property
to Buyer and to perform Seller's obligations under the License Agreement, except
for such consents which the failure to obtain would not have, in the aggregate,
a Material Adverse Effect; or (ii) to Seller's knowledge, permit the execution,
delivery or performance of this Agreement or any of the Seller Closing Documents
by Seller, or the consummation by Seller or any of its Subsidiaries of any of
the other transactions contemplated by this Agreement.
3.3 Ownership and Delivery of Assets. Seller and/or Subsidiaries of
Seller have, or immediately prior to the Closing will have, good and marketable
title to all of the Assets consisting of personal property (other than Assets
which are leased by or licensed to Seller or its Subsidiaries) and Seller has
all necessary power and authority to transfer the Assets to Buyer, free and
clear of all liens, charges, easements, covenants, mortgages, restrictions or
other encumbrances or limitations (collectively, "Liens") other than any (a)
mechanics', carriers', workers' and other similar Liens arising in the ordinary
course of business; (b) Liens for current real property Taxes and assessments
not yet due and payable; (c) usual and customary non-monetary real property
encumbrances that do not materially interfere with the operation of that portion
of the Business conducted on such property; (d) Liens securing purchase money
obligations or obligations under equipment leases which, in the aggregate, are
not material in amount and have not arisen other than in the ordinary course of
business; (e) all applicable zoning ordinances and land use restrictions, with
which Seller and its Subsidiaries have complied in all material respects and
which do not interfere materially with the operation of that portion of the
Business currently conducted on the property subject to such ordinances or
restrictions; (f) with respect to any Asset which consists of a leasehold or
other possessory interest in real property, all liens, mortgages, covenants,
imperfections in title, charges, easements, restrictions, encumbrances and other
title matters (whether or not the same are recorded) of which Seller has no
knowledge to which the underlying fee estate in such real property is subject,
which were not created or incurred by Seller or any of Seller's Subsidiaries and
which do not interfere materially with the operation of that portion of the
Business currently conducted on such property; and (g) with respect to the
Lease, the subleasehold estate created in favor of Communications & Power
Industries Inc. with respect to Parcel B as described in the Lease; (h) with
respect to patents, patent applications, trademarks, trademark applications,
software and other Intellectual Property, any licenses which may have been
granted by Seller to third parties and (i) Liens associated with Accounts
Payable assumed by Buyer (collectively, "Permitted Liens").
3.4 Compliance with Law. Except with respect to the matters described
in Section 3.17, which are treated separately in Section 3.17, to Seller's
knowledge, Seller and/or Seller's Subsidiaries hold all licenses, permits and
authorizations necessary for the lawful conduct of the Business whenever and
wherever conducted pursuant to all applicable statutes, laws, ordinances, rules
and regulations of all foreign and domestic governmental bodies, agencies and
subdivisions having, asserting or claiming jurisdiction over Seller, Seller's
Subsidiaries, or the Assets, or over any part of Seller's or Seller's
Subsidiaries' operations, and to Seller's knowledge, there is no violation
thereof or default thereunder. Except with respect to the matters
described in Section 3.17, which are treated separately in Section 3.17, to
Seller's knowledge, neither Seller nor any of Seller's Subsidiaries is in
violation of any decree, judgment, order, law or regulation of any court or
other foreign or domestic governmental body (including,
14
<PAGE> 20
without limitation, applicable equal employment and civil rights regulations,
wages, hours and the payment of social security taxes and occupational health
and safety legislation).
3.5 Financial Statements. Seller has delivered financial statements of
Seller for the Business (the "Financial Statements") to Buyer as follows:
<TABLE>
<CAPTION>
Financial Statement Delivery to Buyer
- ------------------- -----------------
<S> <C>
Balance Sheet for the Business dated as of Schedule 3.5 hereto
December 27, 1996
Balance Sheet for the Business dated as of March 28, Schedule 3.5 hereto
1997
</TABLE>
The Financial Statements are in accordance with the books and records of
Seller, fairly present, in all material respects, the financial condition of
the Business at the dates indicated, and have been prepared in all material
respects in accordance with GAAP consistently applied. Notwithstanding
anything else herein to the contrary, Seller makes no representation or
warranty as to the adequacy of any reserves reflected in the Financial
Statements.
3.6 Absence of Certain Changes or Events.
(a) Since March 28, 1997, except as contemplated by this
Agreement or to the extent reflected in the Closing Date Balance Sheet as an
adjustment to the Purchase Price pursuant to Section 2.3.2, there have been no
material changes in the condition, financial or otherwise, of any of the Assets,
liabilities, business, or operations of the Business, other than changes in the
ordinary course of business which in the aggregate would not have a Material
Adverse Effect.
(b) Without limiting the foregoing, since March 28, 1997,
except as contemplated by this Agreement or to the extent reflected in the
Closing Date Balance Sheet as an adjustment to the Purchase Price pursuant to
Section 2.3: (i) to Seller's knowledge, neither Seller nor any Subsidiary of
Seller has entered into any transaction other than in the ordinary course of
business relating to or affecting the Assets or the Business; (ii) there have
been no losses or damage to any of the Assets due to fire or other casualty,
whether or not insured, amounting to more than Fifty Thousand Dollars ($50,000)
in the aggregate; (iii) to Seller's knowledge, neither Seller nor any Subsidiary
of Seller has executed, created, amended or terminated any Contract except in
the ordinary course of business; (iv) there has been no waiver or compromise by
Seller or any of its Subsidiaries of a material right or of a material debt owed
to it which would have a Material Adverse Effect; (v) there has been no
revaluation by Seller or any of its Subsidiaries of any of the Assets; and (vi)
there has been no revocation of any license, permit, approval or right to do
business granted to Seller or any of its Subsidiaries relating to or affecting
the Business which would have a Material Adverse Effect.
3.7 Inventory. Except for Inventories received but not yet inspected by
Seller, all of the Inventory is of the type used in the ordinary course of the
Business, except for excess,
15
<PAGE> 21
defective, obsolete and slow-moving items, all of which have been written down
to net realizable market value or for which a reserve has been provided on the
Reference Balance Sheet or the Closing Date Balance Sheet in accordance with
GAAP and Seller's standard accounting methods and policies consistently applied;
provided that, no representation or warranty is given as to the adequacy of any
such reserves. All of the Inventory reflected on the Reference Balance Sheet and
the Closing Date Balance Sheet has been, or will be, so reflected in accordance
with GAAP and Seller's standard accounting methods and policies consistently
applied. Seller has previously furnished to Buyer in writing a chart showing
orders either booked by the Business as of March 28, 1997 or forecasted by
Seller (as of such date) to be received by the Business during the succeeding
twelve (12) months with respect to M2i, MB2 and Inline products. Seller used the
foregoing information to assist Seller in determining the Inventory reserves
with respect to such products reflected in the March 28, 1997 balance sheet
referred to in Section 3.5 above. No representation or warranty is given as to
the accuracy of such information or forecasts or as to whether such forecast
will in fact be achieved.
3.8 Personal Property. All Machinery and Equipment is in good operating
condition reasonable wear and tear excepted. All of the leases to personal
property utilized in the Business are valid and enforceable and are not, with or
without the passage of time, the delivery of notice (or both), in default by any
party thereto, which defaults would, in the aggregate, have a Material Adverse
Effect.
3.9 Lease. The lease for the Facility (the "Lease") is a valid and
binding obligation of Seller and, to Seller's knowledge, the landlord
thereunder, and is enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency, reorganization,
moratorium or other similar laws affecting the enforcement of creditors' rights
generally and general principles of equity (regardless of whether enforceability
is considered in a proceeding at law or in equity) and is not, with or without
the passage of time or the delivery of notice (or both), in default by any party
thereto. Except with respect to matters described in Section 3.17, which are
treated separately in Section 3.17, to Seller's knowledge, the Facility
Improvements (including plumbing, heating, air conditioning and electrical
systems) conform to any and all applicable health, fire, safety and building
laws, ordinances and regulations.
3.10 Intellectual Property. Except as previously disclosed in writing
by Seller to Buyer, all of the TFS Intellectual Property is owned by Seller or
its Subsidiaries, free and clear of all Liens (other than Permitted Liens and
other than as provided in the Cross-License Agreement). To Seller's knowledge,
the use of any of the TFS Intellectual Property or the Licensed Intellectual
Property in the conduct of the Business does not violate any license agreement
between Seller and any third party. Except as previously disclosed in writing by
Seller to Buyer, with respect to the Business, Seller has received no written
notice of any alleged infringement on the rights of any third party. Except as
previously disclosed in writing by Seller to Buyer, Seller has received no
written notice of any action or proceeding pending or threatened, contesting the
validity, ownership or right to use, sell, license or dispose of the TFS
Intellectual Property or the Licensed Intellectual Property. Seller has the
right to transfer and assign the TFS Intellectual Property to Buyer hereunder
and to license the Licensed Intellectual Property to Buyer pursuant to the
Cross-License Agreement. To Seller's knowledge, there has been no
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<PAGE> 22
infringement or unauthorized use by any other person or entity of any TFS
Intellectual Property, except as previously disclosed in writing by Seller to
Buyer. To Seller's knowledge, the TFS Intellectual Property comprises all of the
Intellectual Property Exclusively Used in the Business by Seller and its
Subsidiaries on the date hereof and on the Closing Date; and the Licensed
Intellectual Property, together with the TFS Intellectual Property, comprise all
of the Intellectual Property Primarily Used in the Business by Seller and its
Subsidiaries on the date hereof and on the Closing Date.
3.11 Product Warranties and Returns. Except to the extent reserves
therefor are reflected in the Closing Date Balance Sheet, which reserves are
determined in accordance with GAAP and consistent with the Reference Balance
Sheet, neither Seller nor any of Seller's Subsidiaries has made any warranties
or guarantees relating to its products that will be in effect as of the Closing
Date. No representation or warranty is given as to the adequacy of any such
reserves.
3.12 Litigation. None of Seller, Seller's Subsidiaries, or any officer,
director, shareholder, employee or agent of any of the foregoing, is a party to
any pending or, to Seller's knowledge, threatened action, suit, proceeding or
investigation, at law or in equity or otherwise in, for or by any court or other
governmental body which would have a Material Adverse Effect. Neither Seller nor
any of Seller's Subsidiaries is subject to any pending or, to Seller's
knowledge, threatened product liability claim relating to the Assets or the
Business. Neither Seller nor any of Seller's Subsidiaries is subject to any
decree, judgment, order, law or regulation of any court or other governmental
body which would have a Material Adverse Effect.
3.13 Protection of Intangible Property. It has been, during the last 24
months, Seller's practice to require all employees of Seller who have worked on
or contributed in any material respect to the development of the TFS
Intellectual Property or Licensed Intellectual Property to execute a proprietary
rights and information agreement substantially in the form previously delivered
by Seller to Buyer (the "Proprietary Rights and Information Agreement").
Seller's rights under any such Proprietary Rights and Information Agreements,
for all purposes with respect to the TFS Intellectual Property, are included in
the Contracts. Seller's and Seller's Subsidiaries' rights under such Proprietary
Rights and Information Agreements are freely assignable to Buyer.
3.14 Personnel. Except with respect to employees located outside the
United States, Seller has no union contracts or collective bargaining agreements
with, or any other obligations to, employee organizations or groups relating to
the Business, nor is Seller currently engaged in any labor negotiations, except
in minor grievances not involving any employee organization or group, nor, to
the knowledge of Seller, is Seller the subject of any union organization
affecting its Business. There is no pending or, to Seller's knowledge,
threatened labor dispute, strike or work stoppage affecting the Business. No
employees of the Business are parties to any employment agreement or other
arrangement with Seller or any of Seller's Subsidiaries providing for such
employees to receive any bonus or other payment (in cash or otherwise) upon such
employees' termination of employment, other than ordinary accrued but unpaid
salary, vacation pay and/or severance pay under Seller's policies or law.
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3.15 Brokers and Finders. None of Seller or any Subsidiary,
shareholder, director, officer, employee or agent of Seller has retained any
broker or finder in connection with the transactions contemplated by this
Agreement.
3.16 Contracts. Neither Seller, any Subsidiary of Seller nor, to
Seller's knowledge, any other party to any Contract is, with or without the
passage of time or the giving of notice (or both), in default in the performance
of, or not in compliance with, any provisions of such Contract, other than any
such default or non-compliance which would not have a Material Adverse Effect.
Seller has no knowledge of any intent by any other party not to perform its
obligations under any Contract.
3.17 Absence of Environmental Liabilities. To Seller's knowledge,
neither Seller nor all or any portion of the Facility is in violation of any
federal, state or local law, ordinance or regulation relating to industrial
hygiene, worker safety, environmental protection or Hazardous Materials. To
Seller's knowledge, all environmental licenses, permits, clearances, covenants
and authorizations material to and required for the current conduct of the
Business have been obtained by Seller and are in full force and effect. As used
herein, the term "Hazardous Materials" means any hazardous or toxic substance,
material or waste which is or becomes regulated by any local government
authority, the State of California, any other state or the United States
Government, including, without limitation, any material or substance which is:
(1) PCB; (2) petroleum; (3) asbestos; (4) defined as a "hazardous substance"
under Section 25316 of the California Health and Safety Code, Division 20,
Chapter 6.8 (Carpenter-Presley-Tanner Hazardous Substance Account Act); or (5)
defined as a "hazardous substance" under Section 101 of the Comprehensive
Environmental Response Compensation and Liability Act, 42 U.S.C.
Section 9601 et seq., as amended ("CERCLA").
4. REPRESENTATIONS AND WARRANTIES OF BUYER.
Buyer hereby represents and warrants to Seller that the
following statements (Sections 4.1 through 4.4) are true and correct as of the
date of this Agreement.
4.1 Organization and Authority. Buyer (i) is a corporation duly
organized, validly existing and in good standing under the laws of the State of
California; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a material adverse
effect on the business, results of operations or financial condition of Buyer
taken as a whole.
4.2 Authority Relating to this Agreement; No Violation of Other
Instruments.
4.2.1 The execution and delivery of this Agreement and the
Buyer Closing Documents and the performance hereunder and thereunder by Buyer
have been duly authorized by all necessary corporate action on the part of Buyer
and, assuming execution of this Agreement by Seller, this Agreement and each of
the Buyer Closing Documents will constitute a legal, valid and binding
obligation of Buyer, enforceable against Buyer in accordance with their
respective terms, subject as to enforcement only: (i) to bankruptcy, insolvency,
reorganization, arrangement,
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moratorium and other similar laws of general applicability relating to or
affecting creditors' rights generally; and (ii) to general principles of equity.
4.2.2 To Buyer's knowledge, neither the execution of this
Agreement or any of the Buyer Closing Documents, nor the performance hereof or
thereof by Buyer will: (i) conflict with or result in the breach or violation of
the terms of any decree, judgment, order, law or regulation of any court or
other governmental body now in effect applicable to Buyer; (ii) conflict with,
or result in, with or without the passage of time or the giving of notice, any
breach of any of the terms, conditions and provisions of, or constitute a
default under, any indenture, mortgage, lease, agreement or other instrument to
which Buyer is a party or by which it is bound; or (iii) violate or conflict
with any provisions of Buyer's Articles of Incorporation, Bylaws, or similar
organizational instruments.
4.2.3 Except as required pursuant to the HSR Act, no consent
from any third party and no consent, approval or authorization of, or
declaration, filing or registration with, any governmental or regulatory
authority is required to be made or obtained by Buyer in order to permit the
execution, delivery or performance of this Agreement by Buyer, or the
consummation by Buyer of its obligations contemplated by this Agreement, except
for such consents (i) where the failure to obtain the same would not have a
material adverse effect on the business, results of operations or financial
condition of Buyer taken as a whole, or (ii) which have not been received by
Buyer and may be necessary for Buyer to execute, deliver and perform this
Agreement and to consummate the transactions set forth herein, and all of which
shall be obtained by Buyer on or prior to the Closing Date.
4.3 [Intentionally Omitted]
4.4 Sufficient Funds. Buyer will have on the Closing Date
sufficient funds available to pay the Purchase Price.
5. CONDITIONS TO THE OBLIGATIONS OF BUYER.
Except as otherwise specifically set forth herein or as
contemplated by this Agreement, all obligations of Buyer under this Agreement
are subject to the fulfillment, satisfaction or waiver in writing by Buyer,
prior to or at the Closing Date, of each of the following conditions:
5.1 Compliance Certificate. Buyer shall have received a certificate of
the Vice President, Finance and Chief Financial Officer of Seller substantially
in the form of Exhibit 2.6.2(g), dated the Closing Date, certifying to the
fulfillment of all Closing conditions contained in this Section 5.
5.2 Landlord's Consent to Assignment. The landlord under the Lease
shall have given its consent to the assignment thereof pursuant to Section
2.4.2.
5.3 Opinion of Counsel. Buyer shall have been furnished with an
opinion of Seller's General Counsel, dated the Closing Date, substantially in
the form of Exhibit 2.6.2(i).
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5.4 No Orders. There shall not have been issued any preliminary or
permanent court order enjoining or restraining the transactions contemplated by
this Agreement; provided that, in the event of any such preliminary order, the
Closing shall be delayed pending the lifting of such order, subject to Buyer's
rights pursuant to Section 12.3 below.
5.5 Delivery of Closing Documents. Seller shall have delivered to Buyer
the Seller Closing Documents.
5.6 HSR Act. The waiting period with regard to the purchase and sale of
the Assets and the Business under the HSR Act shall have expired or terminated.
6. CONDITIONS TO THE OBLIGATIONS OF SELLER.
Except as otherwise specifically set forth herein, all
obligations of Seller under this Agreement are subject to the fulfillment,
satisfaction or waiver in writing by Seller, prior to or at the Closing, of each
of the following conditions:
6.1 Compliance Certificate. Seller shall have received a certificate of
the President and Secretary of Buyer substantially in the form of Exhibit
2.6.3(c), dated the Closing Date, certifying to the fulfillment of all Closing
conditions contained in this Section 6.
6.2 Landlord's Consent to Assignment. The landlord under the Lease
shall have given its consent to the assignment thereof pursuant to Section
2.4.2.
6.3 Opinion of Counsel. Seller shall have been furnished with an
opinion of Morrison & Foerster LLP, dated the Closing Date, substantially in the
form of Exhibit 2.6.3(d).
6.4 No Orders. There shall not have been issued any preliminary or
permanent court order enjoining or restraining the transactions contemplated by
this Agreement; provided that, in the event of any such preliminary order, the
Closing shall be delayed pending the lifting of such order, subject to Seller's
rights pursuant to Section 12.4 below.
6.5 Delivery of Closing Documents. Buyer shall have delivered to Seller
the Buyer Closing Documents.
6.6 HSR Act. The waiting period with regard to the purchase and sale of
the Assets and the Business under the HSR Act shall have expired or terminated.
7. COVENANTS OF SELLER
Seller and, to the extent obligations of Buyer are set forth
in Sections 7.5, 7.6 and 7.8 of this Section 7, Buyer, covenant as follows:
7.1 Access to Properties and Records. Throughout the period between the
date of this Agreement and the Closing Date, Seller shall give to Buyer and
Buyer's authorized representatives reasonable access, during reasonable business
hours, in such a manner as to not unduly disrupt the normal business activities
of Seller, to the Facility and any and all of the
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properties, documents, books, records, commitments and affairs of Seller
relating to the Business that would be relevant to Buyer for the transactions
contemplated hereby, and that would be reasonably necessary for purposes of
facilitating the consummation of the transactions contemplated hereby, provided
that, notwithstanding anything herein to the contrary, Seller shall not be
required to disclose any documents or information subject to any confidentiality
obligation that would by the terms of such confidentiality obligation prohibit
such disclosure. Any unintentionally disclosed confidential or privileged
documents shall be kept confidential and returned immediately upon request by
Seller without further disclosure. Without limiting the foregoing, Buyer shall
be permitted to interview during regular business hours all employees of Seller
reasonably determined by Buyer to be important to the Business. A representative
of Seller shall have the right to be present at all such interviews. Buyer's
satisfaction with respect to information revealed by such access shall not be a
condition to Closing.
7.2 Conduct of the Business Prior to Closing Date. Between the date of
this Agreement and the Closing, and except as otherwise consented to or approved
by an officer of Buyer in writing or as required by this Agreement:
(i) The Business shall be operated in the ordinary course
consistent with past practices and in a normal businesslike fashion (including,
without limitation, its normal accounts receivable practice), and Seller shall
take such actions as are in its business judgment reasonably necessary to
facilitate a smooth transition of the operation of the Business from Seller to
Buyer at the Closing. Seller shall use its commercially reasonable efforts to
preserve and maintain its goodwill, including relationships with employees,
suppliers and customers. Seller shall maintain quantities of Inventories in a
manner consistent with prior practice and in a normal businesslike fashion. In
addition, Seller shall maintain records and books of account for the Business
consistent with past practices and in a normal businesslike fashion, and shall
continue to carry all of the insurance for the Business consistent with past
practice.
(ii) Seller shall not take (and shall not permit its
Subsidiaries to take) any action which would cause any material change in any of
the items and matters covered by the representations and warranties set forth in
Section 3, including, without limitation:
(a) incurring or becoming subject to, or agreeing to
incur or become subject to, any obligation or liability (absolute or contingent)
primarily related to the Business, except current liabilities incurred, and
obligations under contracts entered into, in the ordinary course of business
consistent with past practices;
(b) mortgaging, pledging or assuming any Lien (other than
any Permitted Lien), or agreeing to do so, in respect to any of the Assets,
except in each case in the ordinary course of business consistent with past
practices;
(c) waiving or compromising any material rights or any
material debt owed to Seller with respect to the Business;
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(d) entering into any transactions primarily related to
the Business, other than in the ordinary course of business consistent with past
practices and in a normal businesslike fashion;
(e) increasing the rate of compensation payable or to
become payable to any employees working primarily in the Business, other than in
the ordinary course of the business consistent with past practices;
(f) terminating or amending any Contract, unless
terminated or amended in the ordinary course of business consistent with past
practices and in a normal businesslike fashion;
(g) introducing any new method of accounting with respect
to the Business or any of the Assets or liabilities of the Business (assumed or
not assumed) (including, without limitation, any change in depreciation or
amortization policies or rates);
(h) making any capital expenditures or entering into
commitments for capital expenditures for the Business exceeding, in the
aggregate, One Hundred Thousand Dollars ($100,000);
(i) without Buyer's prior consent (which consent Buyer
shall not unreasonably withhold or delay), hire or terminate employees engaged
in and primarily dedicated to the Business;
(j) alter its practice for creating or accounting for
Inventory; or
(k) commencing any litigation relating to the Business,
except those related to insured claims or arising in the ordinary course of
business consistent with past practices.
7.3 Advice of Developments. Seller shall have continuing obligations
after the date of this Agreement through the Closing Date to advise Buyer of all
significant matters concerning the Business.
7.4 Acquisition, Merger or Similar Negotiations With Other Parties.
From the date hereof until the earlier of termination of this Agreement or
consummation of transactions contemplated hereby, none of Seller or any of its
officers, directors, employees, representatives, agents or affiliates shall
directly or indirectly encourage, solicit, initiate or conduct discussions or
negotiations with, provide any information to, or enter into any agreement with,
any corporation, partnership, limited liability company, person or other entity
or group concerning any merger, combination, consolidation, sale of assets
(other than in the ordinary course of business) or other similar transaction
directly involving the Business or the Assets.
7.5 Financial Covenants. At all times prior to the Closing and for the
five (5) year period thereafter, (a) Seller and Buyer shall maintain and make
available to the other and such other's consultants and auditors its books,
records and financial information with respect to the
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Assets and the Business, and (b) otherwise provide information reasonably
requested by the other regarding the Assets and the Business in connection with
any of such other's reporting or other obligations under the Securities Act of
1933, as amended, or the Securities Exchange Act of 1934, as amended; provided
that the requesting party shall reimburse the other for any auditors' fees or
other out-of-pocket costs and expenses incurred by such other party in
connection with its compliance with clauses (a) or (b) above. After the Closing,
Buyer and Seller shall make available to the other and to any taxing authority,
as reasonably requested, all information, records or documents relating to tax
liabilities or potential tax liabilities of or relating to the Business for all
periods prior to or including the Closing Date and shall preserve all such
information, records and documents until the expiration of any applicable
statute of limitations or extensions thereof. Buyer and Seller shall each
prepare and provide to each other any federal, state, local or foreign Tax data
and other information, including such information required by their respective
customary tax and accounting questionnaires, requested by Buyer or Seller, as
applicable, for its use in preparing its tax returns. Buyer and Seller shall
prepare such Tax data and other information and shall provide the same to the
other party within ninety (90) days after the Closing. Each party shall bear its
own expenses in complying with the preceding two sentences.
7.6 Non-Compete. (a) Provided that nothing herein shall prevent Seller
and/or its Subsidiaries from owning, in the aggregate, not more than 10% of the
outstanding stock or other equity interests in any company with shares or other
equity interests registered pursuant to Sections 12(b) or 12(g) of the
Securities Exchange Act of 1934, as amended, Seller agrees that, for a period of
three (3) years from the Closing Date, Seller will not (1) make, sell or service
(whether directly, indirectly or through any Subsidiary or affiliate), or (2)
directly or indirectly engage or invest in, own, manage, operate, finance,
control, or participate in the ownership, management, operation or control of,
any business that makes, sells or services products that compete with any
products included in the Novellus Field of Use (as defined in the Cross- License
Agreement) (a "Competing Business"); provided, however, that the term "Competing
Business" shall not include a direct or indirect acquisition by Seller and/or
its Subsidiaries of, or a merger or consolidation of Seller and/or its
Subsidiaries with or into, another company or business whose competitive
business either (1) represents less than 10% of the total annual sales for such
entity's last fiscal year, or (2) represents less than 40% of such sales and
Seller has first offered Buyer the opportunity to purchase that portion of the
entity which is competitive, on the same terms available to Seller, and at a
price determined by an independent appraiser, mutually acceptable to both
parties.
(b) Seller and Buyer each further agrees that, for a period of
two (2) years following the Closing Date, neither will, directly or indirectly,
either for itself, or any other person or entity, induce or attempt to induce
any employee of the other (including all employees of the Business) or any
entity under common control with the other to leave the employ of such other
(other than pursuant to advertisements of general circulation).
(c) Buyer agrees that, for a period of three (3) years from
the Closing Date, Buyer will not (whether directly or indirectly through any
Subsidiary or affiliate) make, sell or
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service products that compete with products of Seller's IIS Business as
conducted at and after the Closing Date.
7.7 Seller's Auditors. Seller will use its commercially reasonable
efforts to cause its management and its independent auditors to facilitate on a
timely basis (i) the preparation of financial statements (including pro forma
financial statements if required) as reasonably required by Buyer to comply with
applicable SEC regulations under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, and (ii) the review by Buyer and
its independent auditors of Seller's audit work papers for up to the past three
(3) years with respect to such audit; provided that Buyer shall reimburse Seller
for all auditors' fees and other out-of-pocket fees and expenses incurred by
Seller in connection with its compliance with this Section 7.7.
7.8 Transition Services.
(a) For the period after the Closing Date until Buyer
otherwise notifies Seller in writing, such period not to exceed one (1) year
after the Closing Date (the "Transition Period"), Seller shall provide to Buyer
any administrative services reasonably requested by Buyer in order to continue
the Business (the "Transition Services"); provided, however, that the Transition
Services shall not include (i) any services not provided by Seller to the
Business in the ordinary course as of the Closing, or (ii) any legal,
environmental, medical emergency response, OSHA compliance or import-export
services. During the Transition Period, Buyer shall use its commercially
reasonable efforts to cease the Transition Services by eliminating the need for,
providing to itself, or otherwise obtaining, such services.
(b) Buyer shall reimburse Seller for all of Seller's (i)
normal direct labor charges (including overtime) for actual time devoted to
performance of the Transition Services requested by Buyer, plus an allocation
(based on such actual time) of fringe benefit costs, then multiplied by a factor
of 1.2 for overhead, and (ii) out-of-pocket expenses (including, without
limitation, materials costs consumed in providing such services), all to the
extent reasonably incurred and necessary to provide the Transition Services. Any
reimbursements required to be made by Buyer to Seller under this Section 7.8(b)
shall be made to Seller within thirty (30) days after Buyer's receipt of
Seller's invoices therefor, which invoices shall include supporting
documentation providing, in reasonable detail, a description of all amounts
subject to reimbursement.
(c) Seller's total liability to Buyer arising out of or
relating to the Transition Services shall not exceed the aggregate amount of
reimbursements paid by Buyer to Seller for the Transition Services, and in no
event shall Seller be liable to Buyer for any incidental, consequential,
indirect or special loss or damage of any kind, including without limitation
lost business, lost profits, costs of downtime, whether based in contract, tort
or any other legal theory.
7.9 Satisfaction of Conditions. Seller shall in good faith proceed to
take or cause to be taken all actions within its power necessary to satisfy all
conditions to its obligations to close and consummate the transactions
contemplated by this Agreement.
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8. COVENANTS OF BUYER.
Buyer and, to the extent obligations of Seller are set forth in Section
8.3.2 of this Section 8, Seller, covenant as follows:
8.1 Satisfaction of Conditions. Buyer shall in good faith proceed to
take or cause to be taken all actions within its power necessary to satisfy all
conditions to its obligations to close and consummate the transactions
contemplated by this Agreement.
8.2 Warranty Obligations. Buyer shall perform the Warranty Obligations
following the Closing Date in a timely and workmanlike manner in accordance with
the obligations of Seller with respect thereto that are to be assumed by Buyer
as of the Closing pursuant to Section 2.5.1(f) hereof.
8.3 Prohibition on Use of Names, Etc.
8.3.1 Buyer acknowledges that Seller has the absolute and
exclusive proprietary right to all names, marks, trade names, trademarks and
service marks (collectively, "Seller Names") incorporating "Varian" and/or the
initials "VA" in any form, and to all corporate symbols or logos (collectively,
"Seller Logos") incorporating "Varian" and/or the initials "VA," including the
VA in a circle logo, all rights to which and the goodwill represented thereby
and pertaining thereto are being retained by Seller. Buyer shall not use, and
Buyer shall cause its Subsidiaries not to use, the name "Varian" or "VA" or any
Seller Logo incorporating either such Seller Name in connection with the sale of
any products or services, and if any of the Assets bear such Seller Name or
Seller Logo, Buyer shall, prior to the use or sale of such Assets, delete such
Seller Name or Seller Logo and clearly and prominently indicate that the
business conducted with the Assets is no longer affiliated with Seller or any of
its Subsidiaries or affiliates.
8.3.2 Notwithstanding Section 8.3.1. and subject to Section
8.3.4 below, Seller grants to Buyer a paid up nonexclusive nontransferable
license (i) to use Seller Logos and Seller Names affixed to products of the
Business manufactured before the Closing or manufactured by Buyer after the
Closing and meeting the same quality standards met by Seller's products prior to
the Closing, in either case for a period of time not to exceed three (3) months
from the Closing Date; (ii) to use Seller Logos and Seller Names affixed to
products of the Business manufactured by Seller before the Closing or
manufactured by Buyer after the Closing for a period of time not to exceed six
(6) months from the Closing Date; provided that Buyer identifies itself in
predominant fashion as the manufacturer of such products; and (iii) for a period
of time not to exceed six (6) months from the Closing Date, to include in a less
conspicuous manner on products of Buyer substantially similar to those which
Seller marketed through the Business prior to the Closing Date, and in product
literature therefor, the legend "formerly made by Varian."
8.3.3 Buyer may use existing supplies of literature, packaging
and documentation of the Business which refer to or employ the Seller Logos and
Seller Names until such supplies are expended, but in no event beyond three
months following the Closing Date; provided that such supplies include a
statement that the Business is no longer affiliated with
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Seller or any of its Subsidiaries or affiliates and, with respect to products
referenced in such supplies, the legend "formerly made by Varian."
8.3.4 Any benefits which accrue to the Seller Logos and Seller
Names because of usage by Buyer (and any successor or transferee to the
Business) shall be for the exclusive benefit of Seller, and any proprietary
interest therein shall be owned solely by Seller.
9. EMPLOYMENT MATTERS
9.1 Employees. Prior to the Closing, Buyer shall offer employment to
all of the employees primarily dedicated to the Business (including, without
limitation, those employees engaged in sales and support service functions
primarily dedicated to the Business), effective at the Closing, at the salary
levels currently in place with Seller as of the Closing Date, and will provide
employee benefits to such employees in accordance with Buyer's current policies
and practices, except that Buyer shall (i) grant prior service credit under
Buyer's employee benefit plans, programs and policies to each such employee
based on the service date used by Seller in determining his or her service
credit under Seller's employee benefit plans, programs and policies, (ii) waive
any preexisting condition limitations under Buyer's employee benefit plans,
programs and policies which otherwise would be applicable to such employees, and
(iii) offer such employees the right to transfer accrued vacation and sick
leave. Notwithstanding the foregoing, Buyer shall have no liability for accrued
wages (including salaries, bonuses and commissions), severance pay, sick leave
or other benefits, or other Employee Plans of any type or nature on account of
Seller's employment or termination of such employees prior to the Closing Date,
except (x) under clause (iii) above, or (y) any other liability reflected on the
Closing Date Balance Sheet.
9.2 Employee Plans. Buyer is not assuming any of the Employee Plans of
Seller. Without limiting the foregoing, Buyer shall have no liability whatsoever
to employees of Seller (or to Seller) with respect to accrued or future benefits
under any such Employee Plans, whether or not any of such employees are offered
employment by or become employees of Buyer; provided, however, that Buyer shall
remain responsible for all liabilities reflected on the Closing Date Balance
Sheet. For the purposes of this Section, the term "Seller" includes Seller and
its Subsidiaries, any controlled group (within the meaning of Section 414(b) of
the Internal Revenue Code of 1986, as amended ("IRC")) of which Seller or any of
its Subsidiaries is a member, all trades or businesses under common control
(within the meaning of IRC Section 414(c)) of which Seller or any of its
Subsidiaries is a member and all affiliated service groups (within the meaning
of IRC Section 414(m)) of which Seller or any of its Subsidiaries is a member.
The term "Employee Plan" shall mean all present and prior (including terminated
and transferred) plans, programs, agreements, arrangements and methods of
contributions or compensation (including all amendments to and components of the
same, such as a trust with respect to a plan) providing any remuneration or
benefits, other than current cash compensation, to any current or former
employee of Seller or to any other person who provides services to Seller,
whether or not such plan or plans, programs, agreements, arrangements and
methods of contribution or compensation are subject to Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and whether or not such plan
or plans, programs, agreements, arrangements and methods of
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contribution or compensation are qualified under the IRC, including, without
limitation, pension, retirement, profit sharing, percentage compensation, stock
purchase, stock option, bonus and non-qualified deferred compensation plans,
disability plans, medical plans, dental plans, workers compensation, health
insurance, life insurance or other death benefits, incentive, severance plans,
vacation benefits and fringe benefits. The term "Employee Plan" also includes
any employee plan that is a multi-employer plan as defined in Section 3(37) of
ERISA. Notwithstanding the foregoing, the term "Employee Plan" shall not include
(and Buyer shall assume at the Closing) (x) any accrued vacation or sick leave
transferred to Buyer pursuant to Section 9.1 above, or (y) any amounts reflected
on the Closing Date Balance Sheet to the extent included in the Assumed
Liabilities.
10. HSR ACT
10.1 Filings Under HSR Act. As soon as practicable, but in no event
later than seven (7) days after the date hereof, each of Seller and Buyer shall
file with the Federal Trade Commission (the "FTC") and the Antitrust Division of
the Department of Justice (the "Antitrust Division") a premerger notification
form and any supplemental information (other than privileged information) which
may be requested in connection therewith pursuant to the Hart-Scott-Rodino
Anti-Trust Improvements Act of 1976, as amended (the "HSR Act"), which filings
and supplemental information will comply in all material respects with the
requirements of the HSR Act. Each of Seller and Buyer shall cooperate fully with
the other in connection with the preparation of such filings and shall use their
respective best efforts to respond to any requests for supplemental information
from the FTC or the Antitrust Division and to obtain early termination of any
waiting period applicable to the purchase and sale of the Assets under the HSR
Act. Any and all filing fees required to be paid in connection with the
premerger notification pursuant to the HSR Act shall be borne and paid by Buyer.
11. INDEMNITY.
11.1 Survival of Representations and Warranties. The representations
and warranties of Seller in Section 3 above and of Buyer in Section 4 above
shall survive for a period of one (1) year from the Closing. If written notice
of a claim has been given prior to the expiration of the applicable
representations and warranties by a party in whose favor such representations
and warranties have been made to the party that made such representations and
warranties, then the relevant representations and warranties shall survive as to
such claim until such claim has been finally resolved.
11.2 Seller's Indemnity. Seller shall indemnify, defend, protect and
hold harmless Buyer (and Buyer's Subsidiaries and their respective officers,
directors, shareholders, employees and agents) from and against any and all
losses, costs, expenses, liabilities, obligations, claims, demands, causes of
action, suits, settlements and judgments of every nature, including the costs
and expenses associated therewith and reasonable attorneys', consultants' and
witness fees incurred in connection therewith ("Buyer's Damages"), which arise
out of: (i) the breach of any representation or warranty made by Seller pursuant
to Section 3 of this Agreement or Section 15 of the Assignment of Lease
Agreement; (ii) the non-performance, partial or total, of any
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<PAGE> 33
covenant made by Seller pursuant to this Agreement or the Seller Closing
Documents; (iii) any Retained Liability; or (iv) Seller's hiring and employment
practices with respect to employment with Seller or Seller's Subsidiaries of, or
termination with Seller or Seller's Subsidiaries of, all employees of the
Business (except solely as provided in Section 9.1 above). Notwithstanding any
term or condition of this Section 11.2, any indemnity rights of Buyer with
respect to uncollectible Accounts Receivable shall be limited solely to breaches
by Seller of its obligations under Section 11.5 below.
11.3 Buyer's Indemnity. Buyer shall indemnify, defend, protect and hold
harmless Seller (and Seller's Subsidiaries and their respective officers,
directors, shareholders, employees and agents) from and against any and all
losses, costs, expenses, liabilities, obligations, claims, demands, causes of
action, suits, settlements and judgments of every nature, including the costs
and expenses associated therewith and reasonable attorneys', consultants' and
witness fees incurred in connection therewith ("Seller's Damages"; and when used
together with or in the alternative to Buyer's Damages, "Damages"), which arise
out of: (i) the breach by Buyer of any certification, representation or warranty
made by Buyer pursuant to this Agreement; (ii) the non-performance, partial or
total, of any covenant made by Buyer pursuant to this Agreement or the Buyer
Closing Documents; (iii) any Assumed Liability; or (iv) Buyer's hiring and
employment practices with respect to employment with Buyer of, or termination of
employment with Buyer of, the employees to be offered employment or hired by
Buyer for the Business.
11.4 Procedure for Indemnification -- Third Party Claims. Promptly
after receipt by an indemnified party under Section 11.2 or 11.3 of written
notice of a claim or the commencement of any proceeding against it, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure so to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party, except to the extent, the indemnifying party demonstrates that the
defense of such action is or has been prejudiced thereby. In case any such
proceeding shall be brought against an indemnified party and it shall give
notice to the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish (unless the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate) to assume the defense thereof with counsel which is not
reasonably satisfactory to such indemnified party and, after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to such
unindemnified party under such Section for any fees of such counsel or any other
expenses with respect to the defense of such proceeding, in each case,
subsequently incurred by such indemnified party in connection with the defense
thereof. If an indemnifying party assumes the defense of such proceeding, (a) no
compromise or settlement thereof may be effected by the indemnifying party
without the indemnified party's reasonable consent unless (i) there is no
finding or admission of any violation of law or any violation of the rights of
any Person and no effect on any other claims that may be made against the
indemnified party, and (ii) the sole relief provided is monetary damages that
are paid in full by the indemnifying party; and (b) the indemnifying party shall
have no liability with respect to any compromise or settlement thereof effected
without its
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consent. If notice is given to an indemnifying party of the commencement of any
proceeding and it does not, within fifteen (15) business days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense thereof, the indemnifying party shall be bound by
any determination made in such action or any compromise or settlement thereof
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a proceeding may adversely affect it or its affiliates, other
than as a result of monetary damages, such indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise or
settle such proceeding, but the indemnifying party shall not be bound by any
determination of a proceeding so defended or any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld).
11.5 Collection of Accounts Receivable. Seller covenants to Buyer that
the unpaid balance of all Accounts Receivable unpaid on the Closing Date will be
paid within one (1) year of the Closing Date, less the reserve for uncollectible
Accounts Receivable set forth in the Closing Date Balance Sheet, so long as
Buyer shall have used its commercially reasonable efforts to collect such
Accounts Receivable, including, without limitation, undertaking reasonable
collection actions against accounts delinquent more than 180 days. Within five
(5) business days after delivery to Seller of a schedule of any Accounts
Receivable existing at the Closing Date uncollected within such one-year period
in excess of such reserve, Seller shall remit to Buyer the amount of such unpaid
Accounts Receivable (less such reserve). After the one-year period expires,
Buyer shall, upon the written request of Seller, assign to Seller for
collection, and pay over to Seller any payments received by Buyer in respect of,
all of the scheduled Accounts Receivable of any given vendor, provided that the
aggregate balance of all Accounts Receivable so assigned does not exceed the
amount by which the total scheduled Accounts Receivable exceeds the reserve for
uncollectible Accounts Receivable. If more than one (1) invoice is outstanding
for any customer, the "first-in, first-out" principle shall be applied in
determining the invoice to which a payment relates, unless the payment by its
terms specifies or clearly indicates the invoice to which it relates.
11.6 Limitations on Indemnification.
11.6.1 No claim or claims may be made against an indemnifying party
for indemnification pursuant to clause (i) of either Section 11.2 or Section
11.3, as the case may be,
unless the aggregate Damages of the indemnified parties with respect to such
Sections shall exceed an aggregate amount equal to $3,000,000, in which case the
indemnifying party shall be obligated to the indemnified party for the full
amount of the Damage, including, without limitation, those Damages up to said
$3,000,000 amount.
11.6.2 In addition to the provisions and limitations as provided in
(i) Section 11.1 with respect to the period of survival of representations and
warranties, and (ii) Section 11.6.1 with respect to dollar amounts of Damages
for which indemnification for breaches of representations and warranties is not
available, no indemnifying party shall be liable for any Seller Damage or Buyer
Damage, as the case may be, (a) to the extent such Seller Damages (in the
aggregate) or Buyer Damages (in the aggregate) relate to breaches of
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<PAGE> 35
representations and warranties contained in Sections 3 and 4 (but not to any
other item subject to indemnification pursuant to Section 11.2 or 11.3 above),
as the case may be, and exceed an amount equal to $30,000,000 or (b) for which a
claim for indemnification relating to such a breach is not asserted hereunder
within one (1) year after the Closing Date.
11.6.3 In addition, the liability of any indemnifying party with
respect to any Damages shall be determined on a basis that is net of the amount
of any such Damages covered by insurance (less any deductibles).
11.6.4 Notwithstanding anything in this Agreement to the contrary,
Damages related to environmental liabilities shall be handled exclusively in the
Environmental Agreement.
11.6.5 Notwithstanding any term or condition of this Section 11.6, the
foregoing limitations shall not apply to (i) any claim arising as a result of
the fraud of a party hereto, or (ii) any breach by Buyer of its representation
pursuant to Section 4.4.
12. TERMINATION.
12.1 Mutual Agreement. This Agreement may be terminated at any time
prior to the Closing Date by the written agreement of Seller and Buyer.
12.2 Permanent Injunction. This Agreement shall be terminated upon the
entry of a permanent order by a governmental entity having jurisdiction over
Buyer, Seller or any of their respective Subsidiaries, affiliates or assets,
enjoining or restraining the transactions contemplated by this Agreement.
12.3 Termination by Buyer. This Agreement may be terminated by Buyer
if, on or before December 31, 1997, the conditions set forth in Section 5 of
this Agreement shall not have been met by Seller or waived by Buyer, provided
that, if on such date a preliminary injunction has been entered preventing the
Closing, such date shall automatically be extended until (i) such injunction
shall have been lifted, in which case the Closing shall thereupon take place as
soon as practicably possible, assuming that all other conditions to Closing are
satisfied, or (ii) a permanent injunction shall have been entered, in which case
this Agreement shall be terminated as provided in Section 12.2 above.
12.4 Termination by Seller. This Agreement may be terminated by Seller
if, on or before December 31, 1997, the conditions set forth in Section 6 of
this Agreement shall not have been met by Buyer or waived by Seller, provided
that, if on such date a preliminary injunction has been entered preventing the
Closing, such date shall automatically be extended until (i) such injunction
shall have been lifted, in which case the Closing shall thereupon take place as
soon as practicably possible, assuming that all other conditions to Closing are
satisfied, or (ii) a permanent injunction shall have been entered, in which case
this Agreement shall be terminated as provided in Section 12.2 above.
12.5 Confidentiality and Effect of Termination. In the event that this
Agreement is terminated, each of the parties shall return (without retaining
copies) all documents and papers
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containing confidential or proprietary information of the other party
(including, without limitation, technical information, customer lists, financial
data and any similar information developed by another party pursuant to this
Agreement or in contemplation of the transactions contemplated by this
Agreement), and shall neither use nor disclose any such information, except to
the extent that such information is available to the public, is required to be
disclosed by law or has otherwise been rightfully obtained. In the event of
termination of this Agreement pursuant to this Section 12, neither party shall
have any obligation to the other whatsoever with respect to this Agreement
(except for this Section 12.5, which obligations shall continue and subsist
beyond such termination), the transactions provided for herein or the expenses
either of them incurred in connection with or in contemplation of such
transactions. In the event this Agreement is terminated as permitted herein,
each party shall return to the other party (without retaining copies) all such
documents, information and reports.
13. MISCELLANEOUS.
13.1 Assignment. This Agreement shall be binding upon and inure to the
benefit of the successors and permitted assigns of the parties, except that no
party hereto may assign its rights or obligations hereunder without the prior
written consent of the other party; provided, however, that, without the consent
of either party, the parties may assign this Agreement, in whole or in part, and
any of its rights or obligations hereunder, to a wholly owned Subsidiary of such
party; and provided, further, that in no case shall such assignment release such
party from any obligation or liability under this Agreement. Any assignment in
contravention of this Section 13.1 shall be null and void.
13.2 Allocation of Purchase Price. No later than sixty (60) days after
the Closing Date, Buyer and Seller shall mutually agree upon the allocation of
the Purchase Price among the various items included in the Assets and the
Business being transferred by Seller to Buyer. Both of Buyer and Seller have
agreed that the allocation to be provided hereby shall be determined by the
appraisal report of an independent, mutually agreed upon appraiser, if the
parties cannot agree on the allocation after good faith negotiations, and that
Buyer and Seller shall each bear an equal portion of the costs of such
appraisal. Buyer and Seller shall file all tax returns and reports in a manner
consistent with the allocation provided for in this Section 13.2.
13.3 Prorations. All state and local real and personal property Taxes
relating to the Assets which properly apply to periods commencing prior to and
ending after the Closing Date shall be prorated as between Seller and Buyer of
the Closing Date. Seller shall receive a credit, at the Closing for the security
deposit, if any, held by the landlord under the Lease. Seller shall also receive
a credit for any fees paid in advance by Seller under the Contracts, which fees
represent prepayments for periods after the Closing Date. State and local real
and personal property Taxes relating to the Assets for the tax period in which
the Closing occurs shall be prorated between Buyer and Seller on the following
basis: Seller shall be responsible for the payment of all such Taxes for the
period up to the Closing Date; and Buyer shall be responsible for payment of all
such Taxes for the period from and after the Closing Date. All such Taxes
assessed on an annual basis shall be prorated on the assumption that an equal
amount of Tax applies to each day of the year, regardless of how installment
payments are billed or made. Any
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supplemental property Taxes or assessments which arise out of a revaluation of
an Asset, which revaluation would not have occurred except for the change in
ownership of the Asset, shall be borne by Buyer. Any payments of Taxes due from
one party to the other pursuant to this Section 13.3 shall be paid at the
Closing Date. If such Taxes and assessments are not available as of the Closing
Date, for purposes of apportionment between Buyer and Seller and payment
pursuant to this Section 13.3, the amount thereof shall be estimated on the
basis of the prior year's Taxes and assessments, and any incremental payment
shall be adjusted after receipt of the final Tax statements, but in any event
within fifteen (15) days after such statements are provided by one party to the
other. Buyer shall not be responsible for any other Tax (including but not
limited to any business, occupation, unemployment compensation, workers'
compensation, withholding or similar Tax) attributable to the operations of the
Business for any period prior to the Closing. Seller shall not be responsible
for any other Tax (including but not limited to any business, occupation,
unemployment compensation, workers' compensation, withholding or similar Tax)
attributable to the operations of the Business for any period from and after the
Closing. The total estimated prorations, as reasonably determined by Seller,
shall be paid by Buyer at the Closing, with final complete prorations to be
determined as soon as practicable after the Closing.
13.4 Confidentiality. Neither party shall issue a press release or
otherwise publicize the transactions contemplated by this Agreement or otherwise
disclose the nature or contents of this Agreement on or prior to the Closing
Date, except as otherwise required by applicable law (and any such press release
shall be mutually acceptable to Buyer and Seller), regulation, stock exchange
requirement or by the mutual consent of each of Buyer and Seller. No
information, documents or reports provided to or obtained by either party in
connection with this transaction shall be disclosed to any non-party except as
required by law or in carrying out the transactions contemplated hereby. All
provisions relating to confidentiality in this Agreement are in addition to and
shall not supersede or in any way nullify the effect of the Confidentiality
Agreement (the "Confidentiality Agreement"), dated February 28, 1997, executed
and delivered by Buyer and Seller in connection with the preliminary discussions
relating to this transaction.
13.5 Transfer Taxes. Any Taxes arising out of or incurred in
connection with the transactions contemplated by this Agreement shall be paid by
Buyer, whether or not such Taxes are assessed initially against Seller or
Seller's Subsidiaries.
13.6 Expenses. Except as otherwise expressly provided herein, each
party will pay its own costs and expenses, including legal and accounting
expenses, related to the transactions provided for herein, irrespective of when
incurred.
13.7 Further Assurances. It is the intention of the parties hereto that
all assets, rights, and tangible and intangible property constituting the Assets
be sold to Buyer. Accordingly, each party will from time to time prior to or
subsequent to the Closing Date, at the other party's reasonable request and
without further consideration, execute and deliver such other instruments of
conveyance, assignment and transfer and take such other actions as the other
party may reasonably request in order to cause all of the Assets to be
transferred to Buyer and otherwise to more effectively consummate the
transactions contemplated hereby. Without limiting the
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generality of the foregoing, Seller covenants and agrees to take any and all
actions as may be necessary to cause each applicable Subsidiary of Seller to
take all actions necessary on its part to give effect to the transfer of the
Assets to Buyer as provided in, or contemplated by, the terms of this Agreement
and the Seller Closing Documents.
13.8 Dispute Resolution. Any dispute, controversy or claim between the
parties relating to, or arising out of or in connection with, this Agreement (or
any subsequent agreements or amendments thereto), including as to its existence,
enforceability, validity, interpretation, performance, breach or damages,
including claims in tort, whether arising before or after the termination of
this Agreement, shall be settled only by binding arbitration pursuant to the
Commercial Arbitration Rules, as then amended and in effect, of the American
Arbitration Association (the "Rules"), subject to the following:
13.8.1 The arbitration shall take place in Palo Alto, California.
13.8.2 There shall be three arbitrators, who shall be selected under
the normal procedures prescribed in the Rules, except that one such arbitrator
shall be a certified public accountant and one (1) such arbitrator (who shall
chair the arbitration panel) shall be a member of the American Board of Trial
Advocates or the American College of Trial Lawyers.
13.8.3 Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.
13.8.4 At the arbitration hearing, each party may make written and
oral presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
13.8.5 The arbitrators' decision shall be in writing, shall be binding
and final and may be entered and enforced in any court of competent
jurisdiction.
13.8.6 No party shall be eligible to receive, and the arbitrators
shall not have the authority to award, exemplary or punitive damages.
13.8.7 Each party to the arbitration shall pay one-half of the fees
and expenses of the arbitrators and the American Arbitration Association.
13.8.8 The arbitrators shall not have the power to amend this
Agreement.
13.9 Notices. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given on the
date of service if served personally or by facsimile, or five (5) days after the
date of mailing if mailed, by first class mail, registered or certified, postage
prepaid. Notices shall be addressed as follows:
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To Seller at: Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: Chief Financial Officer
Fax: (415) 424-5754
with a copy to: Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: General Counsel
Fax: (415) 858-2018
To Buyer at: Novellus Systems, Inc.
3970 North First Street
San Jose, California 95134
Attention: Chief Financial Officer
Fax: (408) 943-2277
with a copy to: Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, California 94304
Attention: Michael C. Phillips, Esq.
Fax: (415) 494-0792
or to such other address as a party has designated by notice in writing to the
other party in the manner provided by this Section.
13.10 Entire Agreement and Modification. This Agreement constitutes and
contains the entire agreement of the parties and supersedes any and all prior
negotiations, correspondence, understandings and agreements (other than the
Confidentiality Agreement) between the parties respecting the subject matter
hereof. This Agreement may only be amended by written instrument signed by the
parties.
13.11 No Other Remedies. Any and all remedies herein expressly
conferred upon a party hereby are deemed exclusive of any other remedy conferred
hereby or by law or equity on such party. In particular, the remedies provided
by Section 11 for Damages shall be exclusive of any other rights or remedies
available to a party against the other party, either at law or in equity,
in relation to any breach, default or nonperformance of any representation,
warranty, covenant, agreement or undertaking made or entered into by such other
party pursuant to this Agreement.
13.11.1 No action for termination or rescission, or claiming
repudiation, of this Agreement or any agreement executed pursuant to this
Agreement may be brought or maintained by either party against the other from
and after the date hereof, no matter how severe, grave or fundamental any such
breach, default or nonperformance may be by one party, provided that the
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foregoing shall not apply if and to the extent such action is based on the fraud
of the other party. Accordingly, except as provided in the preceding sentence,
the parties hereby expressly waive and forego any and all rights they may posses
to bring any such action.
13.11.2 Notwithstanding any provision in this Agreement, Buyer
shall not be entitled to indemnification or any other remedy, at law or in
equity, as to a breach of Section 3.17.
13.11.3 With regard to Section 13.11 as well as Section 11,
Buyer and Seller each acknowledge that it has read and is familiar with, and
hereby waives the benefit of, the provisions of California Civil Code Section
1542, which is set forth below.
"A general release does not extend to claims which the
creditor does not know or suspect to exist in his favor at the
time of executing the release, which if known by him must have
materially affected his settlement with the debtor."
13.12 Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
13.13 Buyer's Brokers. Buyer shall be solely responsible for and shall
indemnify, defend, protect and hold harmless Seller with respect to any broker's
or finder's fee payable to any person or entity acting on behalf of Buyer in
connection with the transactions contemplated by this Agreement.
13.14 Severability. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
13.15 Headings. The headings appearing at the beginning of several
sections contained herein have been inserted for the convenience of the parties
and shall not be used to determine the construction or interpretation of this
Agreement.
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13.16 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but both of which when taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed as of the date first above set forth.
VARIAN ASSOCIATES, INC.
By: /s/ Robert A. Lemos
---------------------------------------------
Robert A. Lemos
Vice President, Finance and Chief
Financial Officer
NOVELLUS SYSTEMS, INC.
By: /s/ John A. Chenault
---------------------------------------------
John A. Chenault
Executive Vice President, Operations
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EXHIBIT 2.6.2(a)
BILL OF SALE
This Bill of Sale is made as of _______, 1997 (the "Closing Date"), by
and between Varian Associates, Inc., a Delaware corporation ("Seller"), and
Novellus Systems, Inc., a California corporation ("Buyer"). Capitalized terms
used without definitions herein shall have the same meanings ascribed to such
terms in the Asset Purchase Agreement by and between Buyer and Seller dated May
7, 1997 (the "Purchase Agreement").
1. Sale of Assets. In accordance with and subject to the terms and conditions
set forth in the Purchase Agreement, for good and valuable consideration, the
receipt of which is hereby acknowledged, Seller does hereby sell, convey,
assign, transfer and deliver (collectively, "sell") to Buyer all of Seller's
right, title and interest in and to the Assets.
2. Non-Contravention. To the extent that any Assets may not be sold to Buyer
without the consent of a third party, this Bill of Sale shall not constitute a
sale or attempted sale thereof. Such sale shall occur immediately after receipt
of the applicable consent.
3. Effect of Sale. Nothing in this Bill of Sale shall, or shall be deemed to,
modify or otherwise affect any provisions of the Purchase Agreement or affect
the rights of the parties under the Purchase Agreement. In the event of any
conflict between the provisions hereof and the provisions of the Purchase
Agreement, the provisions of the Purchase Agreement shall govern and control.
4. Execution in Counterparts. For the convenience of the parties, this Bill of
Sale may be executed in one or more counterparts, each of which shall be deemed
an original but all of which together shall constitute one and the same
instrument.
5. Amendment; Waiver. Any term or provision of this Bill of Sale may be amended
only by a writing signed by Seller and Buyer. The observance of any term or
provision of this Bill of Sale may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound by such waiver. No waiver by a party of any
breach of this Bill of Sale will be deemed to constitute a waiver of any other
breach or any succeeding breach.
6. Dispute Resolution. Any dispute, controversy or claim between the parties
relating to, arising out of or in connection with this Bill of Sale, including
as to its existence, enforceability, validity, interpretation, performance,
breach or damages, including claims in tort, shall be settled in accordance with
the procedures set forth in Section 13.8 of the Purchase Agreement.
7. Governing Law. This Bill of Sale shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
<PAGE> 43
IN WITNESS WHEREOF, Seller and Buyer have caused this Bill of Sale to
be executed on the date first written above.
VARIAN ASSOCIATES, INC. NOVELLUS SYSTEMS, INC.
By: By:
-------------------------------- ---------------------------
Title: Title:
------------------------ ---------------------
2
<PAGE> 44
EXHIBIT 2.6.2(b)
ASSIGNMENT OF TRADEMARKS
This Assignment of Trademarks (this "Assignment") is entered into as of
_______, 1997 (the "Closing Date"), by and between Varian Associates, Inc., a
Delaware corporation ("Assignor"), and Novellus Systems, Inc., a California
corporation ("Assignee").
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement, dated as of May 7, 1997 (the "Purchase Agreement"), providing for,
among other things, the sale by Assignor of the Assets to Assignee; and
WHEREAS, in conjunction with such sale, Assignor desires to sell,
convey, assign, transfer and deliver to Assignee all of Assignor's rights, title
and interest in and to the Trademarks which form part of the Assets.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants
contained herein and in the Purchase Agreement, the parties hereby agree as
follows:
1. Definitions. Capitalized terms used without definitions in the text of this
Assignment shall have the same meanings ascribed to such terms in the Purchase
Agreement.
"Trademarks" shall mean all trademarks, trademark applications, service
marks, service mark applications, trade and other names (either registered,
common law or registration applied for) owned by Assignor or its Subsidiaries
that are part of the Assets and that are listed on Schedule 2.1.(e) to the
Purchase Agreement.
2. Assignment. In accordance with and subject to the terms and conditions set
forth in the Purchase Agreement, for valuable consideration received, Assignor
hereby irrevocably sells, conveys, assigns, transfers and delivers to Assignee
all of Assignor's right, title and interest in the Trademarks and their
registration, together with the goodwill exclusively related to the Business.
3. Effect of Assignment. Nothing in this Assignment shall, or shall be deemed
to, modify or otherwise affect any provisions of the Purchase Agreement or
affect the rights of the parties under the Purchase Agreement. In the event of
any conflict between the provisions hereof and the provisions of the Purchase
Agreement, the provisions of the Purchase Agreement shall govern and control.
4. Execution in Counterparts. For the convenience of the parties, this
Assignment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
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5. Amendment; Waiver. Any term or provision of this Assignment may be amended
only by a writing signed by Assignor and Assignee. The observance of any term or
provision of this Assignment may be waived (either generally or in a particular
instance and either retroactively or prospectively) only by a writing signed by
the party to be bound by such waiver. No waiver by a party of any breach of this
Assignment will be deemed to constitute a waiver of any other breach or any
succeeding breach.
6. Dispute Resolution. Any dispute, controversy or claim between the parties
relating to, arising out of or in connection with this Assignment, including as
to its existence, enforceability, validity, interpretation, performance, breach
or damages, including claims in tort, shall be settled in accordance with the
procedures set forth in Section 13.8 of the Purchase Agreement.
7. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed on the date first written above.
VARIAN ASSOCIATES, INC. NOVELLUS SYSTEMS, INC.
By: By:
---------------------------------- ------------------------------
Title: Title:
------------------------- -----------------------
2
<PAGE> 46
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF _____________ )
On _______________________, 1997, before me, the undersigned notary public in
and for said County and State, personally appeared
_______________________________ [person signing on behalf of Varian Associates,
Inc.],
____ personally known to me [or]
____ proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity
and that, by his/her signature on the instrument, the entity upon behalf of
which the person acted executed the instrument.
WITNESS my hand and official seal.
--------------------------------
My commission expires on
--------------------------
3
<PAGE> 47
EXHIBIT 2.6.2(c)
ASSIGNMENT OF PATENTS
This Assignment of Patents (this "Assignment") is entered into as of
_______, 1997 (the "Closing Date"), by and between Varian Associates, Inc., a
Delaware corporation ("Assignor"), and Novellus Systems, Inc., a California
corporation ("Assignee").
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement, dated as of May 7, 1997 (the "Purchase Agreement"), providing for,
among other things, the sale by Seller of the Assets to Assignee; and
WHEREAS, in conjunction with such sale, Assignor desires to sell,
convey, assign, transfer and deliver to Assignee all of Assignor's rights, title
and interest in and to the Patents which form part of the Assets.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants
contained herein and in the Purchase Agreement, the parties hereby agree as
follows:
1. Definitions. Capitalized terms used without definitions in the text of
this Assignment shall have the same meanings ascribed to such terms in the
Purchase Agreement.
"Patents" shall mean all patents and patent applications owned by
Assignor or its Subsidiaries that are part of the Assets and that are listed on
Schedule 2.1.(e) to the Purchase Agreement.
2. Assignment. In accordance with and subject to the terms and conditions
set forth in the Purchase Agreement, for valuable consideration received,
Assignor hereby irrevocably sells, conveys, assigns, transfers and delivers to
Assignee all of Assignor's right, title and interest in the Patents and their
registration.
3. Effect of Assignment. Nothing in this Assignment shall, or shall be
deemed to, modify or otherwise affect any provisions of the Purchase Agreement
or affect the rights of the parties under the Purchase Agreement. In the event
of any conflict between the provisions hereof and the provisions of the Purchase
Agreement, the provisions of the Purchase Agreement shall govern and control.
4. Execution in Counterparts. For the convenience of the parties, this
Assignment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
5. Amendment; Waiver. Any term or provision of this Assignment may be
amended only by a writing signed by Assignor and Assignee. The observance of any
term or provision of this
1
<PAGE> 48
Assignment may be waived (either generally or in a particular instance and
either retroactively or prospectively) only by a writing signed by the party to
be bound by such waiver. No waiver by a party of any breach of this Assignment
will be deemed to constitute a waiver of any other breach or any succeeding
breach.
6. Dispute Resolution. Any dispute, controversy or claim between the
parties relating to, arising out of or in connection with this Assignment,
including as to its existence, enforceability, validity, interpretation,
performance, breach or damages, including claims in tort, shall be settled in
accordance with the procedures set forth in Section 13.8 of the Purchase
Agreement.
7. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed on the date first written above.
VARIAN ASSOCIATES, INC. NOVELLUS SYSTEMS, INC.
By: By:
---------------------------- ---------------------------
Title: Title:
-------------------- --------------------
2
<PAGE> 49
ACKNOWLEDGEMENT
STATE OF CALIFORNIA )
) ss.
COUNTY OF _____________ )
On _______________________, 1997, before me, the undersigned notary public in
and for said County and State, personally appeared
_______________________________ [person signing on behalf of Varian Associates,
Inc.],
____ personally known to me [or]
____ proved to me on the basis of satisfactory evidence
to be the person whose name is subscribed to the within instrument and
acknowledged to me that he/she executed the same in his/her authorized capacity
and that, by his/her signature on the instrument, the entity upon behalf of
which the person acted executed the instrument.
WITNESS my hand and official seal.
--------------------------------
My commission expires on
--------------------------
3
<PAGE> 50
EXHIBIT 2.6.2(d)
ASSIGNMENT OF LICENSES, CONTRACTS AND INTANGIBLES
This Assignment of Licenses, Contracts and Intangibles (this
"Assignment") is entered into as of _______, 1997 (the "Closing Date"), by and
between Varian Associates, Inc., a Delaware corporation ("Assignor"), and
Novellus Systems, Inc., a California corporation ("Assignee").
WHEREAS, Assignor and Assignee have entered into an Asset Purchase
Agreement, dated as of May 7, 1997 (the "Purchase Agreement"), providing for,
among other things, the sale by Assignor of the Assets to Assignee; and
WHEREAS, in conjunction with such sale, Assignor desires to sell,
convey, assign, transfer and deliver to Assignee all of Assignor's rights, title
and interest in and to the Intangible Personal Property and the Contracts which
form part of the Assets.
NOW, THEREFORE, in consideration of the foregoing and mutual covenants
contained herein and in the Purchase Agreement, the parties hereby agree as
follows:
1. Definitions. Capitalized terms used without definitions in the text of
this Assignment shall have the same meanings ascribed to such terms in the
Purchase Agreement.
2. Assignment. In accordance with and subject to the terms and conditions
set forth in the Purchase Agreement, for valuable consideration received,
Assignor hereby irrevocably sells, conveys, assigns, transfers and delivers to
Assignee Assignor's entire right, title and interest in the Intangible Personal
Property and the Contracts.
3. Non-Contravention. Certain parts of the Intangible Property and the
Contracts may require the consent of third parties to any assignment. Such
assignments to Assignee are made subject to the obtaining of such consents and
shall be effective as of the date of such consents. The execution of this
Assignment shall not be interpreted, and is not intended to be interpreted, as
any action taken by Assignor that would be contrary to the terms and conditions
of any contract requiring the consent of any third party to such assignment.
4. Effect of Assignment. Nothing in this Assignment shall, or shall be
deemed to, modify or otherwise affect any provisions of the Purchase Agreement
or affect the rights of the parties under the Purchase Agreement. In the event
of any conflict between the provisions hereof and the provisions of the Purchase
Agreement, the provisions of the Purchase Agreement shall govern and control.
1
<PAGE> 51
5. Execution in Counterparts. For the convenience of the parties, this
Assignment may be executed in one or more counterparts, each of which shall be
deemed an original but all of which together shall constitute one and the same
instrument.
6. Amendment; Waiver. Any term or provision of this Assignment may be
amended only by a writing signed by Assignor and Assignee. The observance of any
term or provision of this Assignment may be waived (either generally or in a
particular instance and either retroactively or prospectively) only by a writing
signed by the party to be bound by such waiver. No waiver by a party of any
breach of this Assignment will be deemed to constitute a waiver of any other
breach or any succeeding breach.
7. Dispute Resolution. Any dispute, controversy or claim between the
parties relating to, arising out of or in connection with this Assignment,
including as to its existence, enforceability, validity, interpretation,
performance, breach or damages, including claims in tort, shall be settled in
accordance with the procedures set forth in Section 13.8 of the Purchase
Agreement.
8. Governing Law. This Assignment shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
IN WITNESS WHEREOF, Assignor and Assignee have caused this Assignment
to be executed on the date first written above.
VARIAN ASSOCIATES, INC. NOVELLUS SYSTEMS, INC.
By: By:
---------------------------- ----------------------------
Title: Title:
-------------------- ---------------------
2
<PAGE> 52
Exhibit 2.6.2(e)
ASSUMPTION OF LIABILITIES AGREEMENT
THIS ASSUMPTION OF LIABILITIES AGREEMENT (this "Assumption Agreement"),
dated as of ____________, 1997, by and between Varian Associates, Inc., a
Delaware corporation ("Seller"), and Novellus Systems, Inc., a California
corporation ("Buyer").
RECITALS:
A. Buyer and Seller are parties to an Asset Purchase Agreement,
dated as of May 7, 1997 (the "Asset Purchase Agreement").
B. Pursuant to Section 2.5 of the Asset Purchase Agreement, Buyer has
agreed to assume from Seller and its Subsidiaries, as applicable, the Assumed
Liabilities (as defined in the Asset Purchase Agreement) as and to the extent
provided therein.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the respective
agreements herein contained, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
1. Defined Terms. Capitalized terms contained herein and not
otherwise defined herein shall have the respective meanings assigned to them in
the Asset Purchase Agreement.
2. Assumption of Liabilities. Buyer, without any further
responsibility or liability of or recourse to Seller or any of Seller's
Subsidiaries, stockholders, officers, directors, employees, agents, successors
or assigns, hereby absolutely and irrevocably assumes and agrees to pay, perform
and be liable and responsible for any and all of the Assumed Liabilities.
3. Effect of Assumption. Nothing in this Assumption Agreement
shall, or shall be deemed to modify or otherwise affect any provisions of the
Asset Purchase Agreement or affect the rights of the parties under the Asset
Purchase Agreement. In the event of any conflict between the provisions hereof
and the provisions of the Asset Purchase Agreement, the provisions of the Asset
Purchase Agreement shall govern and control.
4. Execution in Counterparts. For the convenience of the parties,
this Assumption Agreement may be executed in one or more counterparts, each of
which shall be deemed an original but all of which together shall constitute one
and the same instrument.
<PAGE> 53
5. Amendment; Waiver. Any term or provision of this Assumption
Agreement may be amended only by a writing signed by Seller and Buyer. The
observance of any term or provision of this Assumption Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively) only by a writing signed by the party to be bound by such waiver.
No waiver by a party of any breach of this Assumption Agreement will be deemed
to constitute a waiver of any other breach or any succeeding breach.
6. Dispute Resolution. Any dispute, controversy or claim between
the parties relating to, arising out of or in connection with this Assumption
Agreement, including as to its existence, enforceability, validity,
interpretation, performance, breach or damages, including claims in tort, shall
be settled in accordance with the procedures set forth in Section 13.8 of the
Asset Purchase Agreement.
7. Governing Law. This Assumption Agreement shall be governed by
and construed in accordance with the laws of the State of California applicable
to contracts entered into and wholly to be performed in the State of California
by California residents.
IN WITNESS WHEREOF, Buyer and Seller have caused this Assumption
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
VARIAN ASSOCIATES, INC.
By:_____________________________
Name:
Title:
NOVELLUS SYSTEMS, INC.
By:_____________________________
Name:
Title:
2
<PAGE> 54
Exhibit 2.6.2(f)
SECRETARY'S CERTIFICATE
OF
VARIAN ASSOCIATES, INC.
A Delaware Corporation
In connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, dated as of May 7, 1997 (the "Agreement"), by and
between Varian Associates, Inc., a Delaware corporation (the "Company"), and
Novellus Systems, Inc., a California corporation ("Buyer"), and pursuant to
Section 2.6.2(f) of the Agreement, the undersigned, being the duty elected,
qualified and acting Secretary of the Company, hereby certifies that:
1. Attached hereto as Exhibit A is a true, correct and complete
copy of certain resolutions duly adopted by the Executive Committee of the Board
of Directors of the Company at its May 2, 1997 meeting. Each of said resolutions
were duly adopted in accordance with the Restated Certificate of Incorporation
and By-laws of the Company. Such resolutions constitute the only resolutions of
the Board of Directors with respect to the matters referenced therein and have
not been modified, amended or rescinded and remain in full force and effect as
of the date hereof.
Executed as of _______, 1997.
_________________________________
Joseph B. Phair
Secretary
1, Arthur W. Homan, being the duly elected, qualified and acting
Assistant Secretary of Varian Associates, Inc., a Delaware corporation (the
"Company"), hereby certify that Joseph B. Phair is the duly elected, qualified
and acting Secretary of the Company and that his signature above is genuine.
Dated: __________, 1997
_________________________________
Arthur W. Homan
Assistant Secretary
<PAGE> 55
Exhibit 2.6.2(g)
VARIAN ASSOCIATES, INC.
Officer's Compliance Certificate
In connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, dated as of May 7, 1997 (the "Agreement"), by and
between Varian Associates, Inc., a Delaware corporation (the "Company"), and
Novellus Systems, Inc., a California corporation, and pursuant to Section
2.6.2(g) of the Agreement, the undersigned, being the duly elected, qualified
and acting Vice President, Finance and Chief Financial Officer of the Company,
hereby certifies, to the best of his knowledge, that all conditions to Closing
set forth in Section 5 of the Agreement have been satisfied or waived as of the
date hereof.
All capitalized terms used herein and not otherwise defined herein shall
have the respective meanings given to them in the Agreement.
Executed as of this ____ day of _______, 1997.
_________________________________
Robert A. Lemos
Vice President, Finance
and Chief Financial Officer
<PAGE> 56
Exhibit 2.6.2(h)
CONSENT
The Board of Trustees of the Leland Stanford Junior University, a body
having corporate powers under the laws of the State of California ("Lessor"),
hereby consents to the assignment of the lease dated as of January 1, 1961 (the
"Lease"), by and between Lessor and Varian Associates, Inc., a Delaware
corporation ("Assignor"), to Novellus Systems, Inc., a California corporation
("Assignee"), as set forth in the Assignment and Assumption of Lessee's Interest
in Lease (Units 8 and 9, Palo Alto) and Covenants, Conditions and Restrictions
on Leasehold Interests (Units 1-12, Palo Alto) dated as of May 7, 1997 (the
"Assignment"), which Assignment is to be effective as of the closing of the
transactions contemplated by the Asset Purchase Agreement, dated as of May 7,
1997, by and between Assignor and Assignee, and a copy of which Assignment is
attached hereto as Exhibit A, and further agrees to accept Assignee as Lessee
under the Lease.
Lessor hereby represents and warrants to Assignee, as of the date
hereof, that the copy of the Lease attached to the Assignment is a true,
complete and correct copy of the Lease and that the Lease is in full force and
effect and has not been amended, supplemented or modified in any material
manner; and that neither Lessor nor, to Lessor's knowledge, Assignor is in
material default (beyond any applicable cure or grace period).
Dated: ___________, 1997 LESSOR
THE BOARD OF TRUSTEES OF THE
LELAND STANFORD JUNIOR UNIVERSITY
By:________________________________
(Signature)
___________________________________
(Print Name)
___________________________________
(Print Title)
<PAGE> 57
EXHIBIT A
[Assignment and Assumption of Lessee's Interest in Lease]
<PAGE> 58
_______, 1997
EXHIBIT 2.6.2(i)
Novellus Systems, Inc.
3970 North First Street
San Jose, California 95134
Re: Varian Associates, Inc. - Sale of Thin Film Systems
Business
Ladies and Gentlemen:
DESCRIPTION OF REPRESENTATION
This opinion is furnished to you pursuant to Section 2.6.2(i) of
the Asset Purchase Agreement, dated as of May 7, 1997 (the "Agreement"), by
and between Varian Associates, Inc., a Delaware corporation ("Seller"), and
Novellus Systems, Inc., a California corporation ("Buyer"). I have acted as
counsel for Seller, and as such I have participated in and I am familiar
with the corporate proceedings of Seller relating to the sale of the Assets
in accordance with the terms of the Agreement. Capitalized terms used in
this opinion, unless specifically defined in this opinion, have the meanings
given to them in the Agreement.
MATERIALS EXAMINED
In this regard, I have examined executed originals or copies of
the following, copies of which have been delivered to you or your counsel:
(a) the Restated Certificate of Incorporation of Seller,
certified by the Secretary of State of the State of Delaware;
(b) the By-laws, as amended, of the Seller as now in
effect, certified by the Secretary of the Seller,
(c) resolutions of the Executive Committee of the Board
of Directors of Seller adopted on May 2, 1997;
(d) the Agreement;
(e) the Assignment of Lease Agreement;
(f) the Sublease;
<PAGE> 59
Novellus Systems, Inc.
__________________, 1997
Page 2
(g) the Shared Use Agreement,
(h) the Environmental Agreement;
(i) the Cross-License Agreement;
(j) the Supply Agreement;
(k) the Bill of Sale;
(l) the Assignment of Trademarks;
(m) the Assignment of Patents;
(n) the Assignment of licenses;
(o) the Assumption Agreement;
(p) an Officers' Certificate, an Assistant Secretary's
Certificate and Incumbency Certificate, each dated the date hereof, delivered by
Seller to me;
(q) the certificates, each dated the date hereof, delivered
by Seller to Buyer pursuant to Section 2.6.2 of the Agreement; and
(r) such other instruments, corporate records, certificates
and other documents as I have deemed necessary as a basis for the opinions
hereinafter expressed.
OPINIONS
Based upon such examination, having regard for legal
considerations which I deem relevant, and subject to the assumptions,
limitations, and qualifications below, I am of the following opinions:
1. Seller (i) is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of Delaware; (ii) has
all necessary corporate power to own and lease its properties, to carry on its
business as and where it is now being conducted; and (iii) is qualified to do
business in all jurisdictions in which the failure to so qualify would have a
Material Adverse Effect.
<PAGE> 60
Novellus Systems, Inc.
_____________, 1997
Page 3
2. Seller has all necessary corporate power and corporate authority
to execute and deliver the agreements referred to in subsections (d) through (n)
above (collectively, the "Transaction Agreements"). The execution and delivery
of the Transaction Agreements by Seller and the consummation of the transactions
contemplated thereby by Seller have been duly authorized by all necessary
corporate action on the part of Seller. The Transaction Agreements have been
duly executed and delivered by Seller and each of the Transaction Agreements is
a legal, valid and binding obligation of Seller, enforceable against Seller in
accordance with its terms.
3. To my knowledge, neither the execution and delivery of the
Transaction Agreements by Seller, nor the consummation of the transactions
contemplated thereby by Seller, will (i) conflict with or result in any breach
or violation of the terms of any decree, judgment, order, law or regulation of
any court or other governmental body now in effect applicable to Seller or any
of Seller's Subsidiaries; (ii) conflict with, or result in, with or without the
passage of time or the giving of notice (or both), any breach of any of the
terms, conditions and provisions of, or constitute a default under, or result in
the creation of any Lien upon any of the Assets pursuant to, any indenture,
mortgage, lease, agreement or other instrument to which Seller or any Subsidiary
of Seller is a party or by which Seller or any such Subsidiary or any of the
Assets are bound; or (iii) violate or conflict with any provision of the
Restated Certificate of Incorporation or By-laws, as amended, of Seller or any
provision of the Charter or Bylaws of any of Seller's Subsidiaries, as currently
in effect.
4. To my knowledge, none of Seller, Seller's Subsidiaries, or any
officer, director, shareholder, employee or agent of any of the foregoing, is a
party to any pending or threatened action, suit, proceeding or investigation, at
law or in equity or otherwise in, for or by any court or other governmental body
which would have a Material Adverse Effect. To my knowledge, neither Seller nor
any of Seller's Subsidiaries is subject to any decree, judgment, order, law or
regulation of any court or other governmental body which would have a Material
Adverse Effect, or which could prevent the transactions contemplated by the
Asset Purchase Agreement.
CERTAIN ASSUMPTIONS
With your permission I have assumed the following: (a) the authenticity
of original documents and the genuineness of all signatures; (b) the conformity
to the originals of all documents submitted to me as copies; (c) with respect to
factual matters therein, the truth, accuracy and completeness of the
information, representations and warranties contained in the records, documents,
instruments and certificates I have reviewed; (d) the due authorization,
execution and delivery by you and the binding effect thereof on you; (e) the
compliance by you
<PAGE> 61
Novellus Systems, Inc.
______________, 1997
Page 4
with any applicable requirements to file returns and pay taxes under the
California Franchise Tax Law; and (f) the absence of any evidence extrinsic to
the provisions of the written agreements between the parties that the parties
intended a meaning contrary to that expressed by those provisions.
CERTAIN LIMITATIONS AND QUALIFICATIONS
Whenever a statement herein is qualified by the phrase "to my knowledge"
or similar phrase, it is intended to indicate that, during the course of my
representation of the Seller in connection with the sale of the Business, no
information that would give me current actual knowledge of the inaccuracy of
such statement has come to my attention or the attention of those attorneys
presently in the Legal Department of Seller who have rendered legal services in
connection with the representation described in the first paragraph of this
opinion letter. However, I have not undertaken any independent investigation or
review to determine the accuracy of any such statement, and any limited inquiry
undertaken by the Legal Department during the preparation of this opinion letter
should not be regarded as such an investigation or review. No inference as to my
knowledge of any matters bearing on the accuracy of any such statement should be
drawn from the fact of my representation of Seller.
I express no opinion as to: (a) matters of law in jurisdictions other
than the State of California and the United States, except to the extent
necessary to render the opinions set forth with respect to Delaware corporate
law, or (b) the enforceability under California law of a choice of law provision
in the documents described herein. As you know, I am not licensed to practice
law in the State of Delaware and my opinions as to Delaware law are based solely
on my review of a standard compilation of the corporate statutes of Delaware.
Finally, I express no opinion as to any matters of municipal law or the laws of
any other local agencies or governmental or regulatory authorities within any
state.
My opinion that any document is valid, binding or enforceable against
Seller in accordance with its terms is qualified as to:
(a) limitations imposed by bankruptcy, insolvency fraudulent
conveyance, reorganization, arrangement, moratorium or other similar laws
relating to or affecting the rights of creditors generally;
(b) rights to indemnification and contribution which may be limited
by applicable law or equitable principles or otherwise unenforceable as against
public policy;
<PAGE> 62
Novellus Systems, Inc.
_____________, 1997
Page 5
(c) general principles of equity, including without limitation
concepts of materiality, reasonableness, good faith and fair dealing, and the
possible unavailability of specific performance or injunctive relief, regardless
of whether such enforceability is considered in a proceeding in equity or at
law;
(d) certain rights, remedies and waivers contained in the
Transaction Agreements which may be limited or rendered ineffective by
applicable California laws or judicial decisions applying such laws (which laws
and judicial decisions would not render the Transaction Agreements invalid or
unenforceable as a whole or in material part); and
(e) limitations on provisions requiring the payment of attorneys'
fees, except to the extent that a court determines such fees to be reasonable.
I express no opinion as to compliance with the notification, filing and
waiting period requirements of the HSR Act.
USE OF OPINION
This opinion letter is solely for the benefit of you in connection with
the transaction covered by the first paragraph of this letter and may not be
relied upon or used by, circulated, quoted, or referred to, nor may copies
hereof be delivered to, any other person without my prior written approval. I
disclaim any obligation to update this opinion letter for events occurring or
coming to my attention after the date hereof.
Very truly yours,
<PAGE> 63
EXHIBIT 2.6.3(b)
SECRETARY'S CERTIFICATE
OF
NOVELLUS SYSTEMS, INC.
A California Corporation
In connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, dated as of May 7, 1997 (the "Agreement"), by and
between Novellus Systems, Inc., a California corporation (the "Company"), and
Varian Associates, Inc., a Delaware corporation ("Seller"), and pursuant to
Section 2.6.3(b) of the Agreement, the undersigned, being the duly elected,
qualified and acting Secretary of the Company, hereby certifies that:
Attached hereto as Exhibit A is a true, correct and complete copy of
certain resolutions duly adopted by the Board of Directors of the Company at its
May 7, 1997 meeting. Each of said resolutions were duly adopted in accordance
with the Restated Certificate of Incorporation and By-laws of the Company. Such
resolutions constitute the only resolutions of the Board of Directors with
respect to the matters referenced therein and have not been modified, amended or
rescinded and remain in full force and effect as of the date hereof.
Executed as of ____________, 1997.
-------------------------------
Robert H. Smith
Secretary
I, John Chenault, being the duly elected, qualified and acting
Executive Vice President, Operations of Novellus Systems, Inc., a California
corporation (the "Company"), hereby certify that Robert H. Smith is the duly
elected, qualified and acting Secretary of the Company and that his signature
above is genuine.
Dated: ______________, 1997
-----------------------------------
Richard S. Hill
Chief Executive Officer, Operations
<PAGE> 64
EXHIBIT 2.6.3(c)
NOVELLUS SYSTEMS, INC.
OFFICER'S COMPLIANCE CERTIFICATE
In connection with the consummation of the transactions contemplated by
the Asset Purchase Agreement, dated as of May 7, 1997 (the "Agreement"), by and
between Novellus Systems, Inc., a California corporation (the "Company"), and
Varian Associates, Inc., a Delaware corporation ("Seller"), and pursuant to
Section 2.6.3(c) of the Agreement, the undersigned, being the duly elected,
qualified and acting Executive Vice President, Chief Financial officer and
Secretary of the Company, hereby certifies, to the best of his knowledge, that
all conditions to Closing set forth in Section 6 of the Agreement have been
satisfied or waived as of the date hereof.
All capitalized terms used herein and not otherwise defined herein
shall have the respective meanings given to them in the Agreement.
Executed as of this ______ day of __________, 1997.
-------------------------------------
Robert H. Smith
Executive Vice President,
Chief Financial Officer and Secretary
<PAGE> 65
EXHIBIT 2.6.3(d)
[Date]
Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Mesdames and Gentlemen:
We have acted as counsel for Novellus Systems, Inc. (the "Company") in
connection with the transaction contemplated by the Asset Purchase Agreement,
dated as of May 7, 1997, by and between you and the Company (the "Agreement").
This opinion is furnished to you pursuant to Section 2.6.3(d) of the Agreement.
All capitalized terms used herein and not otherwise defined shall have the
meanings assigned to them in the Agreement.
We have examined originals or copies of the following documents (the
"Documents"; the Documents referred to in items (i) through (viii) below being
referred to, collectively, as the "Transaction Documents"):
(i) The Agreement;
(ii) The Assignment of Lease Agreement, dated May 7, 1997;
(iii) The Sublease, dated May 7, 1997;
(iv) The Shared Use Agreement, dated May 7, 1997;
(v) The Environmental Agreement, dated May 7, 1997;
(vi) The Cross-License Agreement, dated May 7, 1997;
(vii) The Supply Agreement, dated May 7, 1997;
(viii) The Assumption Agreement, dated _______, 1997;
(ix) The Bill of Sale, dated _______, 1997;
(x) The Assignment of Trademarks, dated _______, 1997;
(xi) The Assignment of Patents, dated _______, 1997; and
<PAGE> 66
Varian Associates, Inc.
[Date]
Page Two
(xii) The Assignment of Licenses, dated _______, 1997.
In addition, we have examined such records, documents, certificates of
public officials and of the Company, made such inquiries of officials of the
Company, and considered such questions of law as we have deemed necessary for
the purpose of rendering the opinions set forth herein, including the following:
(xiii) Certified resolutions of the Board of Directors of the
Company adopted at a meeting held on May 7, 1997; and
(xiv) A certificate of Richard S. Hill, Chief Executive
Officer of the Company, and Robert H. Smith, Secretary of the Company, dated
_______, 1997.
We have assumed the genuineness of all signatures and the authenticity
of all items submitted to us as originals and the conformity with originals of
all items submitted to us as copies. In making our examination of the Documents,
we have assumed that each party to one or more of the Documents, other than the
Company, has the power and authority to execute and deliver, and to perform and
observe the provisions of, the Documents, and has duly authorized, executed and
delivered such Documents, and that such Documents constitute the legal, valid
and binding obligations of such party.
With respect to certain matters of fact (including capacity), our
opinions are based on the representations in the certificate of Richard S. Hill,
Chief Executive Officer of the Company, and Robert H. Smith, Executive Vice
President and Chief Financial Officer of the Company, in their individual
capacities as well as in their capacities as officers of the Company, to the
extent addressed in such certificate. A copy of such certificate is attached
hereto. Although we have made no independent investigation as to whether such
certificate is accurate or complete, we have no actual knowledge that such
certificate is inaccurate or incomplete in any material respect.
Our opinion in paragraph (a) below as to the qualification and good
standing of the Company is based solely upon certificates of public officials in
the states named in that paragraph. We have made no independent investigation as
to whether those certificates are accurate or complete, but we have no knowledge
of any such inaccuracy or incompleteness.
The opinions hereinafter expressed are subject to the following further
qualifications and exceptions:
(1) The effect of bankruptcy, insolvency, reorganization, arrangement,
moratorium or other similar laws relating to or affecting the rights of
creditors generally,
<PAGE> 67
Varian Associates, Inc.
[Date]
Page Three
including, without limitation, laws relating to fraudulent transfers or
conveyances, preferences and equitable subordination.
(2) Limitations imposed by general principles of equity upon the
availability of equitable remedies or the enforcement of provisions of the
Documents; and the effect of judicial decisions which have held that certain
provisions are unenforceable where their enforcement would violate the implied
covenant of good faith and fair dealing, or would be commercially unreasonable.
(3) We express no opinion as to the effect on the opinions expressed
herein of the legal or regulatory status or the nature of the business of
Seller's Subsidiaries or any party to the Documents (other than the Company).
(4) The enforceability of provisions of the Documents providing for
indemnification to the extent such indemnification is against public policy.
(5) The enforceability of provisions of the Documents providing for
arbitration of disputes to the extent that arbitration of a particular dispute
would be against public policy.
(6) The enforceability of a requirement that provisions of the
Documents may only be modified in writing to the extent that an oral agreement
has been executed modifying provisions of the Documents.
(7) The effect of judicial decisions which may permit the introduction
of extrinsic evidence to modify the terms or the interpretation of the
Documents.
(8) The enforceability of provisions of the Documents providing that
rights or remedies are not exclusive, that every right or remedy is cumulative,
or that the election of a particular remedy or remedies does not preclude
recourse to one or more remedies.
We call your attention to the arbitration provision of the Agreement
and to the existence of differences between the arbitral and judicial processes.
We have based our opinion upon an assessment of legal authorities which would be
applicable in judicial proceedings.
Based upon and subject to the foregoing, we are of the opinion that:
(a) The Company is a corporation duly organized, validly existing and
in good standing under the laws of the State of California, is duly qualified in
each state in which failure to qualify would have a Material Adverse Effect and
has all necessary corporate power to own and lease its properties and to conduct
its business as presently conducted.
<PAGE> 68
Varian Associates, Inc.
[Date]
Page Four
(b) The Company has all necessary corporate power and authority to
enter into, and to perform its obligations under, the Transaction Documents.
(c) The execution and delivery of the Transaction Documents by the
Company and the consummation by the Company of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of the Company. The Transaction Documents have been duly executed and delivered
by the Company, and constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their respective terms.
(d) To our knowledge, neither the execution and delivery of the
Transaction Agreements by the Company, nor the consummation by the Company of
the transactions contemplated thereby, will (i) conflict with or result in any
breach or violation of law, or of any of the terms of any decree, judgment,
order, or regulation of any court or other governmental body, now in effect
applicable to the Company; (ii) conflict with, or result in, with or without the
passage of time or the giving of notice (or both), any breach of any of the
terms, conditions and provisions of, or constitute a default under, any
indenture, mortgage, lease, agreement or other instrument to which the Company
is a party or by which the Company is bound; or (iii) violate or conflict with
any provision of the Articles of Incorporation or Bylaws, as amended, of the
Company, as currently in effect.
(e) To our knowledge, the Company is not subject to any decree,
judgment, order, law or regulation of any court or other governmental body which
could prevent the transactions contemplated by the Asset Purchase Agreement.
We express no opinion as to matters governed by any laws other than the
substantive laws of the State of California (without reference to its
choice-of-law rules) and federal laws of the United States, which are in effect
on the date hereof.
This opinion is solely for your benefit and may not be relied upon by,
nor may copies be delivered to, any other person without our prior written
consent.
Very truly yours,
Morrison & Foerster LLP
<PAGE> 69
NOVELLUS SYSTEMS, INC.
OPINION CERTIFICATE
In connection with the opinion letter of Morrison & Foerster LLP to be
issued pursuant to Section 2.6.3(d) of the Asset Purchase Agreement (the
"Agreement") dated as of May 7, 1997, by and between Novellus Systems, Inc., a
California corporation (the "Company"), and Varian Associates, Inc. ("Varian"),
the undersigned, Richard S. Hill and Robert H. Smith, hereby certify as follows:
1. On the date hereof, Richard S. Hill is the duly elected and
qualified Chief Executive Officer of the Company and Robert H. Smith is the duly
elected and qualified Executive Vice President, Chief Financial Officer and
Secretary of the Company, and as such each is familiar with the matters set
forth herein and each is authorized on behalf of the Company to execute and
perform any documents related to the acquisition of Varian's business of, among
other things, the development, manufacture, and sale of products for physical
vapor deposition and chemical vapor deposition of thin films (the
"Acquisition"), including without limitation, the Agreement and all related
documents (collectively, the "Documents").
2. All statements, representations and warranties of the Company
set forth in the Documentation and all exhibits and schedules thereto, and all
certificates and documentation delivered by the Company and its officers
pursuant thereto, including, without limitation, this Certificate, are true,
correct and complete, and you are hereby expressly authorized to rely thereon.
3. On the date hereof, the Officers of the Company had full legal
power, capacity and authority to execute and deliver the Documents and to
consummate the transactions contemplated thereby.
4. There are no pending or threatened proceedings (a) for the
liquidation or dissolution of the Company, (b) threatening its existence, or (c)
under state or federal bankruptcy laws.
5. [The Company owns, leases or has other interest in real property
or tangible personal property located in the State of California, the State of
Arizona, the State of New York, the State of Oregon, the State of Texas, and the
Commonwealth of Massachusetts. The Company has employees or carries on
significant activities in the State of California, the State of Arizona, the
State of New York, the State of Oregon, the State of Texas, and the Commonwealth
of Massachusetts. The Company is presently in the process of qua1ifying to do
business in the State of Florida, the State of Vermont and the Commonwealth of
Virginia.]
6. The undersigned have each reviewed the Opinion Letter, confirmed
the truth, accuracy and completeness of all statements made therein and are
unaware of any facts or information that would cast doubt on the validity of any
matters stated within the Opinion Letter, or the correctness thereof.
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7. There are no suits, actions, arbitrations or legal
administrative or other proceedings or governmental investigations pending or
threatened against the Company or any of its officers, directors, or assets.
8. Attached hereto as Exhibit A is a true and correct copy of
resolutions adopted by the Board of Directors of the Company on May __, 1997.
Such resolutions have not been altered, amended, rescinded or revoked, and are
in full force and effect.
9. Attached hereto as Exhibit B is the Amended and Restated
Articles of Incorporation of the Company and all amendments thereto. Such
Restated Articles are in full force and effect on the date of this Certificate
and have not been amended.
10. Attached hereto as Exhibit C are the Bylaws of the Company and
all amendments thereto. Such Bylaws are in full force and effect on the date of
this Certificate and have not been amended.
11. The undersigned has authorized Morrison & Foerster LLP to render
the opinions requested of them in connection with the Acquisition and
understands that in so doing it might be construed to waive privileges with
respect to subject matter of opinion.
Capitalized terms not otherwise defined herein shall have the meanings
given them in the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Opinion
Certificate as of __________ 1997.
___________________________________
Richard S. Hill
___________________________________
Robert H. Smith
2
<PAGE> 71
Pursuant to Item 601(b)(2) of Regulation S-K, the following schedules to this
Asset Purchase Agreement have been omitted. Such schedules will be submitted to
the Securities and Exchange Commission upon request.
Schedule 2.1(e): Patents, trademarks and trademark applications
A listing of the patents, trademarks and trademark applications sold by
Varian to the Registrant as part of the transferred business.
Schedule 3.5: Balance sheets for the transferred business dated as of December
27, 1996, and as of March 28, 1997
<PAGE> 1
EXHIBIT 2.2
FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT
This FIRST AMENDMENT TO ASSET PURCHASE AGREEMENT (this "Amendment") is
made as of June 20, 1997, between VARIAN ASSOCIATES, INC., a Delaware
corporation ("Seller"), and NOVELLUS SYSTEMS, INC., a California corporation
("Buyer").
RECITALS
A. Seller and Buyer are parties to an Asset Purchase Agreement,
dated as of May 7, 1997 (the "Agreement").
B. Seller has received a copy of a complaint filed on June 13, 1997
(as the same may be replaced, amended or refiled from time to time, the
"Complaint"), in which Applied Materials, Inc., a Delaware corporation
("Applied"), has alleged and may in the future allege various claims (the
"Claim") against Seller with respect to certain patents (as specified therein).
Seller has also received a letter, dated June 6, 1997, from Applied threatening
a patent infringement suit against Seller as to certain patents (as specified
therein) (the "Threat"). The litigation of the Claim (including any appeals
therefrom) is referred to herein as the "Litigation."
C. In connection with the foregoing, Seller and Buyer desire to amend
the Agreement pursuant to Section 13. 10 of the Agreement as set forth below.
AGREEMENT
In consideration of the foregoing recitals and the mutual promises made
herein, the parties hereto hereby agree that the Agreement shall be amended as
follows:
1. Closing. For purposes of the Agreement, (a) the term "Purchase
Price" shall mean One Hundred Forty-Nine Million Dollars ($149,000,000), and (b)
the terms "Closing" and "Closing Date" shall each mean the close of business on
June 13, 1997. Notwithstanding the foregoing clause (b), Buyer and Seller shall
exchange the Buyer Closing Deliveries and the Seller Closing Deliveries at the
office of Morrison & Foerster LLP, 755 Page Mill Road, Palo Alto, California at
8:00 a.m. on June 20, 1997.
2. Opinion of General Counsel. Subject to the next sentence, the
condition set forth in Section 5.3 of the Agreement shall be deemed satisfied
notwithstanding that the opinion of Seller's General Counsel furnished to Buyer
at the Closing pursuant to Sections 5.3 and 2.6.2(i) of the Agreement expresses
no opinion as to the effect of the Complaint, Threat, Claim or Litigation,
provided that such opinion is otherwise in the form required by the Agreement.
Notwithstanding the foregoing, the agreement of the parties hereto set forth in
the previous sentence shall be limited solely and specifically to the
satisfaction of the condition set forth in Sections 5.3 and 2.6.2(i) of the
Agreement, and nothing in the previous sentence shall (a) limit, impair or
otherwise affect, in any matter whatsoever, any representation, warranty,
covenant or obligation (other than solely as provided in the first sentence of
this Section 2) of Seller set forth
1
<PAGE> 2
in the Agreement, including, without limitation, any such representation,
warranty, covenant or obligation (or any breach thereof by Seller) as the same
relates to the Complaint, Threat or Litigation, or (b) constitute or be deemed
to constitute a waiver by Buyer of any of its rights or remedies under the
Agreement, at law or in equity (including, without limitation, any claim based
on fraud), with respect to the breach of any representation, warranty, covenant
or obligation (other than as provided in the first sentence of this Section 2)
of Seller under the Agreement, including, without limitation, any of such rights
or remedies arising out of the Complaint, Threat or Litigation, all of which
rights and remedies are specifically reserved by Buyer,
notwithstanding the execution of this Amendment or any documents executed by
Buyer and Seller in connection with or with respect to the Complaint, Threat or
Litigation.
3. Assets Purchased. Section 2.1 of the Agreement is hereby amended
to add the following as Section 2.1(j):
"(j) Infringement Claims. All claims, damages (including, without
limitation, past damages), choses-in-action, rights in action, rights
to collect or receive royalties, and other rights, accruing with
respect to facts and circumstances first occurring prior to the
Closing, held by Seller or its Subsidiaries, based on any infringement
of any patents or patent applications included in the TFS Intellectual
Property (collectively, the "Infringement Claims")."
4. Asset Not Purchased. Section 2.2 of the Agreement is hereby
amended to add thereto, immediately following the phrase "any claims or rights
against third parties" set forth in Section 2.2(f), the following:
", except for the Infringement Claims,"
5. Modifications to Schedule 2.1(e). Seller and Buyer agree that
Schedule 2.1(e) to the Acquisition Agreement shall be amended to (a) add the
following patent to such Schedule: U.S. patents numbers 4522845 and 4761218 (and
foreign counterparts thereof); and (b) delete the following patent from such
Schedule: U.S. patent number 4671204 (and foreign counterparts thereof).
6. Obligation to Transfer Certain Patents. Following the Closing,
Seller agrees to transfer to Buyer the following patents (and any corresponding
foreign patents or any divisions, continuations or extensions thereof): U.S.
Patent No. 5314597, titled "Sputtering Apparatus with a Magnet Array Having a
Symmetry for a Specified Target Erosion Profile" and U.S. Patent No. 5252194,
titled "Rotating Sputtering Apparatus for Selected Erosion" (the "Additional
Post- Closing Patents"). Following the Closing, Buyer and Seller shall negotiate
in good faith as to the present value, as of the Closing, of any royalties
agreed by licensees of Seller as to the Additional Post-Closing Patents as of
the Closing to be paid after the Closing with respect to the Additional
Post-Closing Patents ("Existing Royalty Obligations"). In the event that Buyer
and Seller shall agree as to such present value, Seller shall transfer and
assign the Additional Post-Closing Patents to Buyer by its execution and
delivery of a form of Assignment of Patents in substantially the form of Exhibit
2.6.2(c) to the Acquisition Agreement upon Seller's receipt of
2
<PAGE> 3
payment by wire transfer from Buyer of the agreed dollar amount of such present
value. In the absence of such agreement within sixty (60) days of the Closing,
Buyer shall have the right at any time thereafter to require Seller to so
transfer and assign the Additional Post-Closing Patents against Buyer's written
agreement, in form and substance reasonably satisfactory to Seller, to pay and
remit to Seller all payments received after the date of such assignment with
respect to the Existing Royalty Obligations within thirty (30) days of Buyer's
receipt thereof. Upon any such transfer and assignment, the Additional
Post-Closing Patents shall become TFC Intellectual Property for purposes of the
Acquisition Agreement and the Cross-License Agreement and cease to be Retained
Intellectual Property for purposes of the Cross-License Agreement.
7. Dispute Resolution. Any dispute, controversy or claim between the
parties relating to, or arising out of or in connection with, this Amendment (or
any subsequent agreement or amendments thereto), including as to its existence,
enforceability, validity, interpretation, performance, breach or damages,
including claims in tort, whether arising before or after the termination of
this Amendment, shall be resolved exclusively as set forth in Section 13.8 of
the Agreement.
8. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
9. Interpretation. Capitalized terms contained in this Amendment
and not defined in this Amendment shall have the meanings assigned to them in
the Agreement,
10. Severability. If any provision of this Amendment is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Amendment shall be deemed valid and
enforceable to the fullest extent possible.
11. Entire Agreement. This Amendment is hereby made supplemental to
and a part of the Agreement and, except as expressly amended by this Amendment,
the Agreement is in all respects ratified and confirmed and all terms,
conditions and provisions of the Agreement shall remain in full force and
effect. This Amendment contains the entire understanding and agreement between
the parties hereto as to the subject matter of this Amendment and supersedes any
and all prior negotiations, correspondence, understandings or agreements between
the parties respecting the subject matter of this Amendment.
12. Counterparts. This Amendment may be executed in counterparts,
each of which shall be deemed to be an original but both of which when taken
together shall constitute one and the same instrument.
3
<PAGE> 4
IN WITNESS WHEREOF, the parties have executed this Amendment as of the date
first set forth above.
VARIAN ASSOCIATES, INC., NOVELLUS SYSTEMS, INC.,
a Delaware corporation a California corporation
By: /s/ Richard A. Aurelio By: /s/ Robert H. Smith
-------------------------------- -----------------------------------
Name: Richard A. Aurelio Name: Robert H. Smith
Title: Executive Vice President Title: Executive Vice President
and Chief Financial Officer
4
<PAGE> 1
Exhibit 2.3
ASSIGNMENT AND ASSUMPTION OF
LESSEE'S INTEREST IN LEASE (Units 8 and 9, Palo Alto)
AND COVENANTS, CONDITIONS AND RESTRICTIONS
ON LEASEHOLD INTERESTS (Units 1-12, Palo Alto)
This ASSIGNMENT AND ASSUMPTION OF LESSEE'S INTEREST IN LEASE AND
COVENANTS, CONDITIONS AND RESTRICTIONS ON LEASEHOLD INTERESTS (this
"Agreement"), dated for reference purposes only as of May 7, 1997, is entered
into by and between VARIAN ASSOCIATES, INC., a Delaware corporation
("Assignor"), and NOVELLUS SYSTEMS, INC., a California corporation
("Assignee"), and shall be effective as of the Closing Date (as defined in
Section 2.6.1. of the Asset Purchase Agreement dated as of May 7, 1997 (the
"Asset Purchase Agreement"), by and between Assignor and Assignee). If the
Asset Purchase Agreement shall terminate pursuant to Section 12 thereof, this
Agreement shall terminate concurrently with the termination of the Asset
Purchase Agreement. Capitalized terms used herein and not otherwise defined
herein shall have the respective meanings set forth in the Asset Purchase
Agreement and the Environmental Agreement dated as of May 7, 1997 (the
"Environmental Agreement"), between Assignor and Assignee.
RECITALS
WHEREAS, Assignor is the current lessee under that certain Lease from
the Board of Trustees of The Leland Stanford Junior University ("Lessor"), as
lessor, dated January 1, 1961, as amended by that certain Amendment to Lease
and Agreement Adding Additional Land to Lease dated as of September 25, 1984,
copies of which are attached hereto as Exhibit A and incorporated herein by
this reference (the "Lease"), pursuant to which Assignor leases from Lessor
certain real property described therein and located in Palo Alto, California,
which is commonly referred to as Units 8 and 9 and is more particularly
identified in the Lease (the "Premises");
WHEREAS, Assignor is the current sublessor under that certain Sublease
to Communications & Power Industries, Inc., a Delaware corporation, as
Sublessee ("Sublessee"), dated August 10, 1995, a copy of which is attached
hereto as Exhibit B and incorporated herein by this reference (the "Sublease"),
pursuant to which Sublessee leases from Assignor that portion of the Premises
commonly referred to as Unit 8 for non-exclusive ingress, egress and parking
purposes; and
WHEREAS, Assignor desires to assign to Assignee, and Assignee desires
to assume from Assignor, all of Assignor's rights, title, interests, privileges
and obligations as a lessee under the Lease, including, but not limited to, its
rights and obligations as sublessor under the Sublease, on the terms and
conditions set forth herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual covenants and promises
set forth herein and other good and valuable consideration, the receipt and
sufficiency of which consideration are hereby acknowledged, the parties hereto
agree as follows:
<PAGE> 2
1. Assignment. Assignor does hereby sell, assign, transfer and
set over to Assignee (i) all of Assignor's rights, title, interests, privileges
and benefits as lessee in, to, and under the Lease, including, but not limited
to, Assignor's rights as sublessor under the Sublease, and (ii) all of
Assignor's rights, title, interests, privileges and benefits in and to the
Premises.
2. Acceptance. Assignee hereby accepts the within assignment and,
in addition, does hereby covenant and agree, for the benefit of Assignor and
Lessor, to faithfully observe, keep, perform and fulfill all of the terms,
covenants, conditions and obligations required to be observed, performed and
fulfilled by the lessee under the Lease accruing from and after the Closing
Date, including but not limited to, such of the obligations required to be
observed, performed and fulfilled by the sublessor under the Sublease.
3. Consent. This Agreement shall not be effective until the
consent of Lessor required under Section 12(a) of the Lease is obtained.
4. Environmental.
a. Use of Hazardous Materials. Assignee shall not engage
in any activity in, on or about the Premises (or permit any of its agents,
employees, invitees or licensees to engage in any activity in, on or about the
Premises) which involves the use or handling of Hazardous Materials except in
compliance with Environmental Laws. Notwithstanding anything to the contrary
contained herein, in no event shall Assignee, its agents or employees introduce,
in any manner, any Hazardous Materials in, on, under or about the Premises
through the plumbing, HVAC and/or sewer systems servicing any portion of the
Premises except in compliance with Environmental Laws. From and after the
Closing Date, Assignee shall be solely responsible for providing any notice
required by Environmental Laws of the generation, possession, manufacture,
storage, use, transportation, handling, treatment, release, deposit and/or
disposal, on or after the Closing Date, of any Hazardous Materials on, under or
about the Premises, including, without limitation, all notices required by
California Health and Safety Code Sections 25359.6 and 25249-5 et seq.
Assignee shall provide to Assignor copies of the Hazardous Material
Business Plan and Hazardous Material inventories submitted annually to the local
administering agency. In addition, Assignee shall provide to Assignor copies of
all changes and revisions that require additional approval from the
administering agency.
b. Duty to Inform Assignor. If Assignee knows that
Hazardous Materials have been released or are threatened to be released by
Assignee (or any of its agents, employees, invitees or licensees) in, on, under
or about the Premises in violation of Environmental Laws, other than as
previously consented to or known by Assignor, Assignee shall as soon as possible
(but in any event within twenty-four (24) hours) give written notice of such
fact to Assignor. Notice shall be given immediately if the release or threatened
release (i) is likely to come in contact with soil or groundwater, (ii) is more
than one pound by weight, or (iii) cannot be cleaned up within 15 minutes.
Assignee shall also as soon as possible (but in any event within twenty-four
(24) hours) give Assignor a copy of any statement, report, notice, claim,
initial action or proceeding given to, or received from, any governmental
authority or private party concerning the release or threatened release. Except
as provided in the Environmental Agreement, Assignee
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<PAGE> 3
acknowledges that it, and not Assignor, is in charge of the Premises for
purposes of all reporting requirements arising on or after the Closing Date
under any Environmental Laws.
The reporting shall include at a minimum:
(1) The exact location of the release or threatened release;
(2) The name of the person reporting the release or the threatened
release;
(3) The Hazardous Material involved in the release or threatened
release;
(4) An estimate of the quantity of Hazardous Materials involved;
and
(5) If known, the potential health hazards presented by the
Hazardous Material involved in the release or threatened
release.
c. Requirements for Transfer: Storage. Assignee shall cause
all transportation of Hazardous Materials from the Premises to be performed in
accordance with applicable Environmental Laws. Assignee shall meet the following
requirements for any transfer of Hazardous Materials and waste over, or storage
of Hazardous Materials and waste on, the Premises.
(1) Only personnel who have been trained to respond to Hazardous
Material spills and who have been trained in Hazardous Material management
principles shall transfer Hazardous Materials.
(2) Hazardous Materials and waste must not be stored in any outdoor
areas of the Premises.
d. Compliance with Laws. Assignee shall, at its own
expense, procure, maintain in effect and comply with all conditions of any and
all permits, licenses and other governmental and regulatory approvals required
for Assignee's use of the Premises and shall otherwise comply with all
applicable Environmental Laws.
5. Assignee Indemnity. Except for matters subject to
indemnification pursuant to the Environmental Agreement, the parties'
indemnification obligations for which are set forth in the Environmental
Agreement, Assignee covenants and agrees to indemnify, protect, defend, and hold
Assignor harmless from and against any and all liabilities, obligations, claims,
damages, loss, cost and expense (including, without limitation, reasonable
attorneys' fees) arising from the nonobservance, nonperformance, or
nonfulfillment by Assignee of any of the terms, covenants, conditions or
obligations to be observed, performed or fulfilled by Assignee, as lessee under
the Lease or as sublessor under the Sublease, on or after the date of this
Agreement.
6. Assignor Indemnity. Except for matters subject to
indemnification pursuant to the Environmental Agreement, the parties'
indemnification obligations for which are set forth in the Environmental
Agreement, Assignor covenants and agrees to indemnify, protect, defend, and hold
Assignee harmless from and against any and all liabilities, obligations, claims,
damages, loss
3
<PAGE> 4
cost and expense (including, without limitation, reasonable attorneys' fees)
arising from the nonobservance, nonperformance, or nonfulfillment by Assignor of
any of the terms, covenants, conditions or obligations to be observed, performed
or fulfilled by Assignor, as lessee under the Lease or as sublessor under the
Sublease, prior to the date of this Agreement.
7. Attorneys' Fees. In the event legal action is commenced to
enforce or interpret any provision of or right under this Agreement, the
prevailing party shall be entitled to recover its costs and expenses incurred,
including reasonable attorneys' fees, from the party not prevailing. However,
costs and expenses, including attorneys' fees, incurred in arbitration shall be
provided by the terms of Section 13.8 of the Asset Purchase Agreement.
8. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective legal representatives, successors and
assigns of the parties hereto. The words "Assignor" and "Assignee," wherever
used herein shall include the persons and entities named herein or in the Lease
or Sublease and designated as such and their respective heirs, legal
representatives, successors and assigns.
9. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of California applicable to contracts
entered into and wholly performed in the State of California by California
residents.
10. ARBITRATION OF DISPUTES. Any dispute, controversy or claim
between the parties relating to, arising out of, or in connection with this
Agreement (or any subsequent agreements or amendments thereto), including as to
its existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, whether arising before or after the
termination of this Agreement, shall be settled in accordance with Section 13.8
of the Asset Purchase Agreement.
"NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR
JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN
THE 'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE, YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND UNDERSTAND THE FOREGOING
AND AGREE
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<PAGE> 5
TO SUBMIT DISPUTES ARISING OUT OF THE MATTERS INCLUDED IN THE INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISION TO NEUTRAL ARBITRATION."
[SIG]
Assignor:_______________________________
[SIG]
Assignee:_______________________________
11. Environmental Agreement. The assignment set forth in this
Agreement is explicitly made subject to all of the rights of Assignor in and
under the Environmental Agreement, which rights are reserved unto Assignor and
shall continue notwithstanding any early termination of the Lease.
12. Covenants, Conditions, and Restrictions. (a) Assignor and
Assignee acknowledge that (i) the Premises and (ii) certain contiguous property
in which Assignor or other parties hold a leasehold interest, as more
particularly described on Exhibit C attached hereto and incorporated herein by
this reference (the "Contiguous Property"), may be treated by the City of Palo
Alto, California (the "City") as one unit for purposes of determining compliance
with the City's zoning and land use ordinances and regulations. Accordingly,
from time to time, if either of Assignee or Assignor intends to undertake
construction (i) of a new building with a gross square footage greater than five
percent (5%) of the gross square footage of the existing buildings or (ii)
which will increase by more than ten percent (10%) the gross square footage of
any existing building, located on the Premises or the Contiguous Property,
respectively, prior to contacting the City regarding such construction such
party shall notify the other parties, in writing, and consult with the other
parties regarding the potential impact of the proposed construction. Nothing
contained in this Subsection (a) shall create any obligation on the part of
Assignor or Assignee to request or obtain the consent of the other parties in
connection with any such construction.
(b) In the event that all or a substantial portion of the
improvements located on both the Premises and the Contiguous Property are
substantially destroyed by casualty and the City's zoning and land use
ordinances and regulations permit there to be rebuilt less than the total number
of gross square feet of improvements existing immediately before such casualty,
Assignee agrees to bear its pro rata share of such reduction, in accordance with
the gross square footage of improvements located on the Premises and the
Contiguous Property immediately before such casualty.
The covenants, conditions, and restrictions set forth in this Section shall run
with the land and benefit and be binding upon the Premises and the respective
successors and assigns of the parties hereto,
13. Agreement to be Recorded: Notice of Sublease. Assignor and
Assignee shall, upon request of the other, execute, acknowledge and deliver a
short form memorandum of this Agreement (and any amendment hereto or
consolidation hereof), in form suitable for recording.
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14. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be a valid and binding original, but all of
which together shall constitute one and the same instrument. The signature page
and acknowledgment of any counterpart may be removed therefrom and attached to
any other counterpart to evidence execution thereof by all of the parties hereto
without affecting the validity thereof.
15. Entire Agreement. Miscellaneous. This Agreement, together with
the Asset Purchase Agreement and the Environmental Agreement, expresses the full
and complete understanding of the parties with respect to the subject matter
hereof and supersedes all prior or contemporaneous proposals, agreements,
representations and understandings, whether written or oral, with respect to the
subject matter. This Agreement may not be amended or modified except in writing
signed by each of the parties to the Agreement. This Agreement shall be
construed as to its fair meaning and not strictly for or against either party.
The headings hereof are descriptive only and not to be construed in interpreting
the provisions hereof.
16. Representations. Assignor hereby represents and warrants to
Assignee, as of the date hereof, that (i) the copy of the Lease attached hereto
as Exhibit A and the copy of the Sublease attached hereto as Exhibit B are true,
complete and correct copies of the Lease and the Sublease, respectively; (ii)
the Lease and the Sublease are in full force and effect and have not been
amended, supplemented or modified in any material manner; (iii) neither Assignor
nor, to Assignor's knowledge (as such term is defined in the Asset Purchase
Agreement), Lessor is in material default (beyond any applicable cure or grace
period) under any terms of the Lease; and (iv) neither Assignor nor, to
Assignor's knowledge (as such term is defined in the Asset Purchase Agreement),
Sublessee is in material default (beyond any applicable cure or grace period)
under any terms of the Sublease.
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IN WITNESS WHEREOF. the parties hereto have executed and entered into
this Agreement as of the date first above written.
Assignor:
VARIAN ASSOCIATES
By: Robert A. Lemos
--------------------------------------
Name: Robert A. Lemos
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Title: Vice President, Finance and
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Chief Financial Officer
Assignee:
NOVELLUS SYSTEMS, INC.
By: John Chenault
---------------------------------------
Name: John Chenault
--------------------------------------
Title: Executive Vice President, Operations
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Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibits to this
Assignment and Assumption of Lessee's Interest in Lease (Units 8 and 9, Palo
Alto) and Covenants, Conditions and Restrictions on Leasehold Interests (Units
1-12, Palo Alto) have been omitted. Such exhibits will be submitted to the
Securities and Exchange Commission upon request.
Exhibit A: A copy of the assigned Lease.
Exhibit B: A copy of a Sublease, pursuant to which portions of the parking
subject to the Lease are subleased, on a nonexclusive basis, to a third-party.
Exhibit C: Certain contiguous property
<PAGE> 1
EXHIBIT 2.4
SUBLEASE
(PORTION OF UNIT 9, PALO ALTO)
ARTICLE I
1.1 REFERENCE INFORMATION. References in this Sublease to any of the
following shall have the respective meanings set forth below:
"Assignment" means that certain Assignment and Assumption of Lessee's
Interest in Lease (Units 8 and 9, Palo Alto) and Covenants, Conditions and
Restrictions on Leasehold Interests (Units 1-12, Palo Alto) dated as of May 7,
1997, by and between Sublessee and Sublessor, each as defined below, a copy of
which is attached hereto as Exhibit A and incorporated herein by this reference.
"Date of this Sublease" means May 7, 1997.
"Effective Date" means the Closing Date, as defined in Section 2.6.1.
of the Asset Purchase Agreement dated as of May 7, 1997 (the "Asset Purchase
Agreement"), by and between Sublessee and Sublessor. If the Asset Purchase
Agreement shall terminate pursuant to Section 12 thereof, this Agreement shall
terminate concurrently with the termination of the Asset Purchase Agreement.
"Expiration Date" means the date six (6) months after the Effective
Date or the last day of any Extended Term (as hereinafter defined).
"Master Lease" means that certain Lease by and between The Board of
Trustees of The Leland Stanford Junior University ("Stanford"), as lessor, and
Sublessee, as lessee, dated January 1, 1961, as amended by that certain
Amendment to Lease and Agreement Adding Additional Land to Lease dated as of
September 25, 1984, for the lease of real property and improvements, copies of
which are attached hereto as Exhibit B and incorporated herein by this reference
together with such rules, regulations, and guidelines as Stanford may adopt
from time to time.
"Property" means the real property and improvements leased to
Sublessee under the Master Lease, which lease has been assigned to Sublessor
pursuant to the Assignment.
"Options to Extend" means two (2) six-month options to extend the term
of this Sublease on the same terms and conditions as the Initial Term, as
defined in Section 2.2 below.
"Permitted Uses" means such uses as are suitable to the Subleased
Premises.
"Sublease" means this Sublease, as amended, modified, restated, or
replaced from time to time.
"Sublessee" means Varian Associates, Inc., a Delaware corporation.
<PAGE> 2
"Subleased Premises" means the Hazardous Materials Storage Area located
in the south corner of the Property, as more particularly identified on the plan
attached hereto as Exhibit C.
"Sublessor" means Novellus Systems, Inc., a California corporation.
"Term" means the term of this Sublease, as extended or terminated
pursuant to the provisions of Article II below.
Certain other capitalized terms are defined through the Sublease, and
have the respective meaning set forth herein.
1.2 EXHIBITS. The following Exhibits are attached to and incorporated
in this Sublease:
EXHIBIT A: Assignment
EXHIBIT B: Master Lease
EXHIBIT C: Plan of the Property
ARTICLE II
SUBLEASED PREMISES AND TERM
2.1 SUBLEASED PREMISES. Sublessor hereby subleases the Subleased
Premises to Sublessee and Sublessee hereby subleases the Subleased Premises from
Sublessor, subject to (i) any and all existing encumbrances and other matters of
record, including the Master Lease and (ii) the terms and provisions of this
Sublease. Sublessee shall have the right of full and unrestricted ingress to and
egress from the Subleased Premises, subject to the terms of Article IV
(Non-Exclusive Uses).
2.2 TERM. The initial term of this Sublease shall begin on the
Effective Date and end on the Expiration Date (the "Initial Term"), unless
sooner terminated as hereinafter provided. The Term of this Sublease shall be
subject to extension beyond the Initial Term as provided in Section 2.3 below.
2.3 EXTENSION. If no Event of Default (as hereinafter defined) shall
have occurred and be continuing at the time of such exercise, Sublessee shall
have two (2) options to extend the Term of the Sublease, each of which gives
Sublessor the right to extend the Term for an additional six (6) months (each,
an "Extended Term"), which options shall be exercisable by written notice to
Sublessor not less than one (1) month prior to the expiration of the
then-current term, During any Extended Term, all of the terms and conditions of
this Sublease shall continue in full force and effect.
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2.4 EARLY TERMINATION OF SUBLEASE. Sublessee shall have the right to
terminate this Sublease at any time by providing thirty (30) days prior written
notice to Sublessor of its intention to terminate the Sublease, subject to the
yield up terms in Section 12.8.
ARTICLE III
CONDITION OF SUBLEASED PREMISES
3.1 CONDITION OF SUBLEASED PREMISES. Sublessee agrees to accept the
Subleased Premises in its present "AS IS" condition. Sublessor shall have no
obligation to perform any work or construction with respect to the Subleased
Premises. If Sublessee shall desire to perform any work or construction, the
same shall be done only in accordance with this Sublease.
3.2 NO REPRESENTATIONS OR WARRANTIES. Neither Sublessor nor Sublessor's
agent(s), if any, have made any representations or warranties to Sublessee or
Sublessee's agent(s), if any, with respect to the Subleased Premises or this
Sublease except as expressly set forth in this Sublease, and no rights,
easements or licenses are or shall be acquired by Sublessee by implication or
otherwise unless expressly set forth in this Sublease.
ARTICLE IV
NON-EXCLUSIVE USES
4.1 RIGHT OF ACCESS. Sublessor hereby grants Sublessee, for the benefit
of Sublessee and its agents, employees, consultants, contractors and
subcontractors, a non-exclusive right of access through the Property (other than
Building 6), for their use of the Subleased Premises and for the purpose of
transporting Hazardous Materials (as defined in the Asset Purchase Agreement)
to and from the Subleased Premises, subject to (i) all rights of Sublessor
retained herein, (ii) the terms of Article IX (Hazardous Materials) and (iii)
any and all existing encumbrances and other matters of record, including the
Master Lease.
ARTICLE V
RENT
5.1 NO RENT PAYABLE. No rent shall be payable under this Sublease.
ARTICLE VI
REAL ESTATE AND OTHER TAXES
6.1 REAL ESTATE TAXES. Sublessor shall pay all real property taxes and
general and special assessments levied or assessed against the Property during
the Term (the "Real Estate Taxes").
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6.2 PERSONAL PROPERTY TAXES. Sublessee shall pay before delinquency all
taxes, assessments, licenses, fees and other charges ("Taxes") that are levied
or assessed against Sublessee's personal property installed or located in or on
the Subleased Premises that become payable during the Term. Upon Sublessor's
demand, Sublessee shall furnish Sublessor with satisfactory evidence of these
payments.
If any Taxes on Sublessee's personal property are levied against
Sublessor or Sublessor's property, or if the assessed value of Sublessor's
property is increased by the inclusion of a value placed on Sublessee's personal
property, Sublessee, on demand, shall immediately reimburse Sublessor the sum of
the Taxes levied against Sublessor on account of Sublessee's personal property,
or the proportion of the Taxes resulting from the inclusion of Sublessee's
personal property in Sublessor's assessment. Sublessor shall have the right to
pay such Taxes without incurring any liability to Sublessee and without
necessity of contesting their validity, but will assign all rights Sublessor may
have to contest these Taxes to Sublessee upon Sublessee's written demand
therefor.
ARTICLE VII
INSURANCE
7.1 SUBLESSEE'S INSURANCE. Sublessee shall at all times during the Term
of the Sublease maintain, at its sole cost, insurance coverage against loss or
damage by fire and such other risks as are from time to time included in a
standard "All Risk" policy (excluding flood and earthquake insurance) covering
the Subleased Premises. Sublessee and its insurer waive the right of subrogation
or recovery for insurance actually carried or required to be carried hereunder
against Sublessor except for the gross negligent acts or omissions of Sublessor
or its agents, employees or invitees.
Sublessee shall procure at its sole cost and expense and keep in effect
from the date of the Sublease and at all times during the Term commercial
general liability insurance covering its use, occupancy and maintenance of the
Subleased Premises. Such policy shall include contractual liability insurance
applying to Sublessee's indemnity obligations under this Sublease, but shall not
provide coverage for environmental liability or asbestos exposure. Such coverage
shall have a minimum combined single limit of liability of at least Two Million
Dollars ($2,000,000) per occurrence.
Sublessee's general liability policy shall be endorsed to name
Sublessor as an additional insured (but only with respect to Sublessor's
interest in the Subleased Premises), shall provide that such coverage shall be
primary and that any insurance maintained by Sublessor shall be excess insurance
only and shall not be called upon to contribute to Sublessee's insurance
policies. Sublessee waives the right of recovery against the Sublessor for loss
or damage within any deductible with respect to any insured claim.
Sublessee shall maintain workers' compensation insurance and all other
legally required insurance coverage in at least the minimum amount mandated by
statute and employers
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liability insurance with a minimum combined single limit of liability of at
least Five Hundred Thousand Dollars ($500,000) per occurrence Such insurance can
be provided under a qualified consent to self-insure. Such policy (or qualified
self-insurance) shall waive the right of subrogation or recovery against
Sublessor.
Prior to the commencement of this Sublease, Sublessee shall deliver to
Sublessor certificates evidencing the existence and amount of such insurance. No
such policies shall be cancelable or subject to reduction of coverage limits or
other material modification except after thirty (30) days prior written notice
to Sublessor. Sublessee shall not do or permit to be done anything on or about
the Subleased Premises which shall invalidate any of the insurance policies
required to be carried hereunder or make any such insurance unobtainable.
ARTICLE VIII
UTILITIES; MAINTENANCE EXPENSES;
FIRE ALARMS AND SPRINKLER SYSTEMS
8.1 UTILITIES. Sublessor shall provide, at its expense, electricity,
water, sewer, refuse and storm drain services and any similar or replacement
utilities as may currently be provided (collectively, "Utilities") for the
Subleased Premises, as more particularly described in Section 10.1. Sublessor
shall not be liable for any interruption or failure in the supply of any such
utilities to the Subleased Premises.
8.2 FIRE ALARMS AND SPRINKLER SYSTEMS. Sublessee shall, at its sole
expense, maintain the fire alarms and sprinkler systems for the Subleased
Premises, if any, and any fire extinguishers that presently are located in the
Subleased Premises.
ARTICLE IX
HAZARDOUS MATERIALS
9.1 USE OF HAZARDOUS MATERIALS. Sublessee shall not engage in any
activity in, on or about the Property (or permit any of its agents, employees,
invitees or licensees to engage in any activity in, on or about the Property)
which involves the use or handling of Hazardous Materials except in compliance
with Environmental Laws (as defined in the Environmental Agreement dated as of
May _, 1997 (the "Environmental Agreement") between Sublessor and Sublessee).
Notwithstanding anything to the contrary contained herein, in no event shall
Sublessee, its agents or employees introduce, in any manner, any Hazardous
Materials in, on, under or about the Property through the plumbing, HVAC and/or
sewer systems servicing any portion of the Property except in compliance with
Environmental Laws. From and after the Effective Date, Sublessee shall be solely
responsible for providing any notice required by Environmental Laws of the
generation, possession, manufacture, storage, use, transportation, handling,
treatment, release, deposit and/or disposal, on or after the Effective Date, of
any
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Hazardous Materials on, under or about the Subleased Premises, including,
without limitation, all notices required by California Health and Safety Code
Sections 25359.6 and 25249-5 et seq.
Sublessee shall provide to Sublessor copies of the Hazardous Material
Business Plan and Hazardous Material inventories submitted annually to the local
administering agency. In addition, Sublessee shall provide to Sublessor copies
of all changes and revisions that require additional approval from the
administering agency.
9.2 DUTY TO INFORM SUBLESSOR. If Sublessee knows that Hazardous
Materials have been released or are threatened to be released in, on, under or
about the Property in violation of Environmental Laws, other than as previously
consented to or known by Sublessor, Sublessee shall as soon as possible (but in
any event within twenty-four (24) hours) give written notice of such fact to
Sublessor. Notice shall be given immediately if Sublessee reasonably believes
that the release or threatened release (i) is likely to come in contact with
soil or groundwater, (ii) is more than one pound by weight or (iii) cannot be
cleaned up within 15 minutes. Sublessee shall also as soon as possible (but in
any event within twenty-four (24) hours) give Sublessor a copy of any statement,
report, notice, claim, initial action or proceeding given to, or received from,
any governmental authority or private party concerning the release or threatened
release. Except as provided in the Environmental Agreement, Sublessee
acknowledges that it, and not Sublessor, is in charge of the Subleased Premises
for purposes of all reporting requirements arising on or after the Effective
Date under any Environmental Laws.
The reporting shall include at a minimum:
a. The exact location of the release or threatened release;
b. The name of the person reporting the release or the threatened
release;
C. The Hazardous Material involved in the release or threatened
release;
d. An estimate of the quantity of Hazardous Materials involved;
and
e. If known, the potential health hazards presented by the
Hazardous Material involved in the release or threatened
release.
9.3 REQUIREMENTS FOR TRANSFER; STORAGE. Sublessee shall cause all
transportation of Hazardous Materials to and from the Subleased Premises to be
performed in accordance with applicable Environmental Laws. Sublessee shall meet
the following requirements for any transfer of Hazardous Materials and waste
over, or storage of Hazardous Materials and waste on, the Subleased Premises.
(a) Only personnel who have been trained to respond to Hazardous
Material spills and who have been trained in Hazardous Material management
principles shall transfer Hazardous Materials over the Property.
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(b) Hazardous Materials and waste must not be stored in any
outdoor areas of the Premises.
9.4 INDEMNIFICATION. Sublessee shall indemnify, defend, protect and
hold harmless Sublessor (and Sublessor's Subsidiaries, and their respective
officers, directors, shareholders, employees, and agents) ("Sublessee
Indemnified Parties") from and against any and all losses, costs, expenses,
liabilities, obligations, claims, demands, causes of action, suits, settlements
and judgements of every nature, including the costs and expenses associated
therewith and reasonable attorneys', consultants' and witness fees incurred
arising from (a) injury to or death of any person, or damage to or loss of
property, occurring in the Subleased Premises or connected with the use,
condition or occupancy thereof (unless such injury, death, damage, or loss is
caused by the gross negligence or willful misconduct of Sublessor or its
servants or agents), (b) violation of this Sublease by Sublessee or (c) the
negligence, gross negligence or willful misconduct of Sublessee or its agents,
contractors, licensees, sublessees or invitees in connection with the use or
occupancy of the Subleased Premises. The amount of any such losses suffered or
incurred by any Sublessee Indemnified Party shall be reduced by the amount of
any insurance proceeds or other cash receipts paid to such Sublessee Indemnified
Party as a reimbursement with respect to such losses (and no right of
subrogation shall accrue to any insurer hereunder, except to the extent that
such waiver of subrogation would prejudice any applicable insurance coverage),
including any indemnification received by the Sublessee Indemnified Party from
an unrelated party with respect to such losses. The foregoing indemnity shall
include Environmental Claims related to the use and occupancy of the Subleased
Premises and arising from (i) any violation or alleged violation, existing after
the Effective Date, of any Environmental Law, Environmental Permit or
Governmental Order (each as defined in the Environmental Agreement) as a result
of any activities after the Effective Date at the Subleased Premises, (ii) any
release of Hazardous Materials, after the Effective Date, to the soils,
groundwater, surface water or air on, under, about or emanating from any of the
Subleased Premises as a result of any activities after the Effective Date at the
Subleased Premises, (iii) any disposal, transportation, or arranging for
disposal after the Effective Date by Sublessee of Hazardous Material generated
at the Subleased Premises, or (iv) any breach of Sublessee's obligations under
this Article IX; provided such indemnity shall not include any Environmental
Claims related to Sublessee's actions taken pursuant to the Environmental
Agreement or covered by any indemnity set forth therein.
9.5 COMPLIANCE WITH LAWS. Sublessee shall, at its own expense, procure,
maintain in effect and comply with all conditions of any and all permits,
licenses and other governmental and regulatory approvals required for
Sublessee's use of the Subleased Premises and shall otherwise comply with all
applicable Environmental Laws.
ARTICLE X
SUBLESSOR'S COVENANTS
10.1 BASIC UTILITIES. Subject to Section 8.1, Sublessor shall furnish
Sublessee during the Term the following Utilities:
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(a) Hot and cold water and sewer plumbing at those points of
supply provided in the Subleased Premises.
(b) Natural gas service at those points of supply provided in
the Subleased Premises.
(e) Electrical power at those electrical facilities provided
in the Subleased Premises.
Except in the case of an emergency, Sublessor shall not cease providing
Utilities to Sublessee or shut down any Utilities to the Subleased Premises
without Sublessee's prior written consent.
10.2 INDEMNITY. Sublessor shall defend, with counsel of its reasonable
choice, all actions against Sublessee, any partner, trustee, stockholder,
officer, director, employee or beneficiary of Sublessee, holders of mortgages
now or hereafter secured by the Subleased Premises (collectively, "Sublessee's
Lenders") and any other party having an interest in the Subleased Premises
(collectively, "Sublessor Indemnified Parties") with respect to, and shall pay,
protect, indemnify and hold harmless, to the extent permitted by law, all
Sublessor Indemnified Parties from and against, any and all losses, damages,
claims, costs and expenses, interest, awards, judgments, settlements and
penalties (including reasonable legal costs and expenses) of any nature arising
from the gross negligence or willful misconduct of Sublessor or its agents,
contractors, licensees, sublessees or invitees. The amount of any such losses
suffered or incurred by any Sublessor Indemnified Party shall be reduced by the
amount of any insurance proceeds or other cash receipts paid to such Sublessor
Indemnified Party as a reimbursement with respect to such losses (and no right
of subrogation shall accrue to any insurer hereunder, except to the extent that
such waiver of subrogation would prejudice any applicable insurance coverage),
including any indemnification received by the Sublessor Indemnified Party from
an unrelated party with respect to such losses.
ARTICLE XI
SUBLESSEE'S COVENANTS
11.1 USE. Sublessee shall use the Subleased Premises only for the
Permitted Uses and shall from time to time procure all licenses and permits
necessary for and arising from or relating to Sublessee's use and occupancy at
Sublessee's sole expense. In no event may Sublessee's use of the Subleased
Premises unreasonably interfere with the use of the Property by Sublessor and/or
other occupants of the Property.
11.2 SUBLESSEE'S COMPLIANCE WITH LAW. Sublessee shall, at Sublessee's
sole cost and expense, fully, diligently and in a timely manner, materially
comply with all laws, rules, regulations, ordinances, orders, directives,
covenants, easements and restrictions of record and permits relating in any
manner to the Subleased Premises now in effect or which may hereafter come into
effect (collectively, "Applicable Law"), (whether or not reflecting a change in
Applicable Law or policy from any previously existing Applicable Law or policy).
Sublessee
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shall, within five (5) days after receipt of Sublessor's written request,
provide Sublessor with copies of all documents and information, including, but
not limited to, permits, registrations, manifests, applications, reports and
certificates, evidencing Sublessee's compliance with any Applicable Law
specified by Sublessor, and shall immediately upon receipt notify Sublessor in
writing (with copies of any documents involved) of any threatened or actual
claim, notice, citation, warning, complaint or report pertaining to or involving
failure by Sublessee or the Subleased Premises to comply with any Applicable
Law.
11.3 INSPECTION; COMPLIANCE. Sublessor, its agents, and/or any Under
shall have the right to enter the Subleased Premises at any time during normal
business hours, provided that twenty-four (24) hours prior written notice is
given and except in the case of an emergency, for the purpose of inspecting the
condition of the Subleased Premises and for verifying compliance by Sublessee,
with this Sublease and all Applicable Law, and to employ experts and/or
consultants in connection therewith. The costs and expenses of any such
inspections shall be paid by the party requesting same.
11.4 SUBLESSEE'S WORK. Sublessee shall not make any new installations,
alterations, additions or improvements (collectively, the "Improvements") in or
to the Subleased Premises requiring a building permit, including, without
limitation, any apertures in the walls, partitions, ceilings or floors, without
on each occasion obtaining the prior written consent of Sublessor, which may be
withheld in Sublessor's reasonable discretion; provided, however, that
Sublessor's withholding of such consent shall be deemed to be reasonable if any
such Improvement would (i) materially adversely affect or disrupt Sublessor's
business operations, (ii) exceed electrical power or other utility capacities
for the Subleased Premises (except to the extent Sublessee pays all costs and
expenses associated with increasing electrical power or other utility capacities
to adequate levels) or (iii) increase Sublessor's costs and expenses (except to
the extent Sublessee pays such increased costs and expenses). Any such work
approved by Sublessor shall be performed only in accordance with plans and
specifications therefor approved by Sublessor. Plans and specifications
pertaining to any proposed Improvements for which Sublessor's approval is
required must be submitted to Sublessor for approval, along with the name of the
contractor to perform such work, at least fifteen (15) days prior to the
proposed commencement of construction of the Improvements and Sublessor shall
have fifteen (15) days thereafter within which to notify Sublessee in writing
whether Sublessor consents to the proposed work; Sublessor's failure to provide
Sublessee with such written notice within such fifteen (15) day period shall
constitute such consent. Sublessee shall, procure at Sublessee's sole expense
all necessary permits and licenses before undertaking any work on the Subleased
Premises and shall perform all such work in a good and workmanlike manner
employing materials of good quality and so as to conform. with all applicable
zoning, building, fire, health and other codes, regulations, ordinances and laws
and with all applicable insurance requirements. Sublessee shall keep the
Subleased Premises at all times free of liens for labor and materials. If any
such lien is filed, Sublessor may, but shall not be required to, obtain a bond
or other security interest sufficient to remove all such liens and Sublessee
shall pay to Sublessor upon demand the amounts expended by Sublessor in causing
such removal.
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11.5 SUBLESSOR'S RIGHT TO ENTER. In addition to Sublessor's other
rights and remedies under this Sublease and applicable law, Sublessee shall
permit Sublessor and its agents to enter into the Subleased Premises at
reasonable times and upon reasonable notice to examine the Subleased Premises
and show the Subleased Premises to prospective purchasers, Lenders and (during
the last twelve (12) months of the then current term) tenants and to keep
affixed in suitable places notices of availability of the Subleased Premises.
11.6 PERSONAL PROPERTY AT SUBLESSEE'S RISK. All furnishings, fixtures,
equipment, effects and property of every kind of Sublessee and of all persons
claiming by, through or under Sublessee which may be on the Subleased Premises,
shall be at the sole risk and hazard of Sublessee and if the whole or any part
thereof shall be destroyed or damaged by fire, water or otherwise, or by the
leakage or bursting of water pipes, steam pipes, or other pipes, by theft or
from any other cause, no part of said loss or damage shall be charged to or to
be borne by Sublessor, except that Sublessor shall in no event be indemnified or
held harmless or exonerated from any liability to Sublessee for any injury,
loss, damage or liability not covered by Sublessee's insurance to the extent
such indemnification, or holding harmless, or exoneration is prohibited by law.
Sublessee shall insure Sublessee's personal property.
11.7 YIELD UP. At the expiration of the Term or earlier termination of
this Sublease, Sublessee (i) shall surrender all keys to the Subleased Premises,
(ii) may remove such installations, improvements, fixtures and personal property
from the Subleased Premises as it may desire and (iii) shall yield up the
Subleased Premises, including all other installations and improvements made by
Sublessee. Any property not removed shall be deemed abandoned may be removed and
disposed of by Sublessor in such manner as Sublessor shall determine.
11.8 ASSIGNMENT AND SUBLETTING. Sublessee shall not assign, sublease
(which term shall be deemed to include the granting of concessions and licenses
and the like) or transfer this Sublease or all or any part of the Subleased
Premises, or suffer or permit this Sublease or the leasehold estate hereby
created or any other rights arising under this Sublease to be assigned, sublet,
or transferred, in whole or in part, whether voluntarily, involuntarily or by
operation of law, or permit the occupancy of the Subleased Premises by anyone
other than Sublessee. Any attempted assignment, sublease, or transfer, except
with prior written approval thereof from Sublessor (which approval may be
withheld in Sublessor's reasonable discretion), shall be void. No assignment,
transfer, mortgage, grant of security interest, sublease or other encumbrance,
whether or not approved, and no indulgence granted by Sublessor to any assignee
or sublessee, shall in any way impair the continuing primary liability (which
after an assignment shall be joint and several with the assignee) of Sublessee
hereunder, and no approval in a particular instance shall be deemed to be a
waiver of the obligation to obtain Sublessor's approval in any other case.
Subject to the terms and conditions of this Sublease, including,
without limitation, Section 14.16, Sublessee may assign, sublease, or transfer
this Sublease, in its entirety, concurrently with the sale of all of Sublessee's
business operation located on the Subleased Premises. Notwithstanding anything
contained herein to the contrary, Sublessor's consent to any assignment or
sublease shall be conditioned upon the consent thereto from any and all Lenders.
10
<PAGE> 11
ARTICLE XII
[RESERVED]
ARTICLE XIII
DEFAULT
13.1 EVENTS OF DEFAULT AND REMEDIES. If any one or more of the
following events (each, an "Event of Default") shall occur:
(a) if Sublessee shall fail to observe or perform any other
term, covenant, condition or warranty of this Sublease, other than as
specified in subsections (c) through (g) below, and such failure is not
cured by Sublessee within a period of thirty (30) days after receipt by
Sublessee of notice thereof from Sublessor, unless such failure cannot
with due diligence be cured within a period of thirty (30) days, in
which case such failure shall not be deemed to continue if Sublessee
proceeds promptly and with due diligence to cure the failure and
thereafter diligently pursues such cure to completion; or
(b) if a petition is filed by Sublessee seeking appointment of
a receiver of Sublessee (or of the whole or substantially all of its
property), or for liquidation, or for reorganization or an arrangement
or any other relief under any provision of the federal bankruptcy laws
or any other applicable law or statute of United States of America or
any state thereof as then in force and effect; or
(c) if an involuntary petition seeking the relief described in
Section 13.1(b) is filed against Sublessee and such involuntary
petition is not dismissed within sixty (60) days thereafter,
then, and in any of such cases, with or without further notice or demand, and
without limiting Sublessor in the exercise of any right or remedy which
Sublessor may have by reason of such Event of Default, Sublessor and the agents
and servants of Sublessor lawfully may terminate Sublessee's right to possession
of the Subleased Premises by any lawful means, in which case this Sublease and
the term hereof shall terminate and Sublessee shall immediately surrender
possession of the Subleased Premises to Sublessor.
The expiration or termination of this Sublease and/or the
termination of Sublessee's right to Possession shall not relieve Sublessee from
liability under any indemnity provisions of this Sublease as to matters
occurring or accruing during the Term hereof or by reason of Sublessee's
occupancy of the Subleased Premises.
13.2 REMEDIES CUMULATIVE. Except as otherwise expressly provided
herein, any and all rights and remedies which Sublessor or Sublessee may have
under this Sublease and at law and equity shall be cumulative and shall not be
deemed inconsistent with each other, and any two or more of such rights and
remedies may be exercised at the same time to the greatest extent permitted by
law.
11
<PAGE> 12
13.3 EFFECT OF WAIVERS OF DEFAULT. Any consent or permission by
Sublessor or Sublessee to any act or omission that otherwise would be a breach
of any covenant or condition herein, or any waiver by Sublessor or Sublessee of
the breach of any covenant or condition herein, shall not in any way be held or
construed (unless expressly so declared in writing) to operate so as to impair
the continuing obligation of any covenant or condition herein, or otherwise
operate to permit the same or similar acts or omissions except as to the
specific instance. The failure of Sublessor or Sublessee to seek redress for
violation of, or to insist upon the strict performance of, any covenant or
condition of this Sublease shall not be deemed a waiver of such violation nor
prevent a subsequent act, which would have originally constituted a violation,
from having all the force and effect of an original violation.
ARTICLE XIV
MISCELLANEOUS PROVISIONS
14.1 NOTICES FROM ONE PARTY TO THE OTHER. All notices and other
communications given or made pursuant hereto shall be in writing and shall be
deemed to have been duly given or made as of the date delivered or mailed if
delivered personally or mailed by registered or certified mail (postage prepaid,
return receipt requested), or sent by facsimile transmission, (confirmation
received) to the parties at the following addresses and facsimile transmission
numbers (or at such other address or number for a party as shall be specified by
like notice), except that notices after the giving of which there is a
designated period within which to perform an act and notices of changes of
address or number shall be effective only upon receipt:
if to Sublessor:
Novellus Systems, Inc.
3970 North First Street
San Jose, CA 95134
Attention: Robert Smith
Fax: (408) 943-2277
with a copy to:
Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attention: Michael C. Phillips, Esq.
Fax: (415) 494-0792
12
<PAGE> 13
if to Sublessee:
Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: Chief Financial Officer
Telecopy No.: (415) 424-5754
Telephone No.: (415) 424-5320
with a copy to:
Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attention: General Counsel
Telecopy No.: (415) 858-2018
Telephone No.: (415) 424-5352
14.2 QUIET ENJOYMENT. Sublessor agrees that upon Sublessee's performing
and observing the terms, covenants, conditions and provisions on its part to be
performed and observed, Sublessee shall and may peaceably and quietly have, hold
and enjoy the Subleased Premises during the term without any manner of hindrance
or molestation from Sublessor or anyone claiming under Sublessor, subject,
however, to the terms of this Sublease.
14.3 SUBLEASE TO BE RECORDED: NOTICE OF SUBLEASE. Sublessor and
Sublessee shall, upon request by the other, execute, acknowledge and deliver a
short form memorandum of this Sublease (and any amendment hereto or
consolidation hereof), in form suitable for recording.
14.4 BIND AND INURE: LIMITATION OF SUBLESSOR'S LIABILITY. The
obligations of this Sublease shall run with the land, and this Sublease shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. No owner of the leasehold title to the Subleased
Premises shall be liable under this Sublease except for breaches of Sublessor's
obligations occurring while such party is the owner of the leasehold title to
the Subleased Premises. No individual partner, trustee, stockholder, officer,
director, employee or beneficiary of Sublessor shall be personally liable under
this Sublease and Sublessee shall look solely to Sublessor for the satisfaction
of the remedies of Sublessee.
14.5 ACTS OF GOD. Excepting only the obligation of Sublessor or
Sublessee to pay any monetary amount due hereunder, in any case where either
party hereto is required to do any act, delays caused by or resulting from acts
of God, war, civil commotion, fire, flood or other casualty, labor difficulties,
shortages of labor, materials or equipment, government regulations, unusually
severe weather, or other causes beyond such party's reasonable control (other
than financial inability) shall not be counted in determining the time during
which such action shall be taken or completed, whether such time be designated
by a fixed date, a fixed time or a "reasonable time", and such time shall be
deemed to be extended by the period of such delay.
13
<PAGE> 14
14.6 SUBLESSOR'S DEFAULT. Sublessor shall not be deemed to be in
default in the performance of any of its obligations hereunder unless it shall
fail to perform such obligations and unless within thirty (30) days after
written notice from Sublessee to Sublessor specifying such default Sublessor has
not commenced diligently to correct the default so specified or has not
thereafter diligently pursued such correction to completion.
14.7 BROKERAGE. Sublessor and Sublessee each warrants and represents to
the other that it has had no dealings with any broker or agent in connection
with this Sublease and covenants to defend with counsel approved by the other,
hold harmless and indemnify the other from and against any and all cost, expense
or liability for any compensation, commissions and charges claimed by any broker
or agent and the costs incurred by the other in connection with the enforcement
of this indemnification agreement. The aforesaid indemnification agreement shall
survive the expiration or earlier termination of this Sublease.
14.8 APPLICABLE LAW; AMENDMENTS. This Sublease shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly performed in the State of California by
California residents. No supplement, modification or amendment of this Sublease
shall be binding unless executed in writing by authorized representatives of the
parties hereto.
14.9 CORPORATE AUTHORITY. Each individual executing this Sublease on
behalf of its respective corporation represents and warrants that such
corporation is validly formed, duly authorized and existing, qualified to do
business in the state of California, has the full right and legal authority to
enter into this Sublease, and that such individual is duly authorized to execute
and deliver this Sublease in accordance with such corporation's bylaws and/or a
Board of Directors' resolution, and that this Sublease is binding upon the
parties in accordance with all the terms and conditions therein.
14.10 HEADINGS, EXHIBITS. The subject headings of the Articles and
Sections of this Sublease are included for purposes of convenience of reference
only, and shall not affect the construction or interpretation of this Sublease.
All Exhibits referred to herein are a part of this Sublease.
14.11 SEVERABILITY. If any one or more of the provisions, or a portion
of any such provision, of this Sublease shall be deemed to be contrary to law,
invalid, illegal or unenforceable in any respect by any governmental agency or
court of law having competent jurisdiction over the subject matter and the
parties hereto, the remaining provisions shall be severable and enforceable in
accordance with their terms. It is the express intent of the parties that in the
event that any term, provision or portion of this Sublease is deemed contrary to
law, invalid, illegal or unenforceable, the parties shall make whatever
reasonable adjustments in their arrangements, if any are required, as may be
mutually fair in light of their original intent as reflected in this Sublease.
14.12 TIME OF ESSENCE. Time is of the essence in regard to all
obligations provided for in the Sublease.
14
<PAGE> 15
14.13 GRANTS AND EASEMENTS. During the Term, Sublessor reserves to
itself the right, from time to time, to grant any easements, rights,
restrictions and dedications (collectively, "Grants"), as it may deem necessary
or as may be required by law and to cause the recording of any instruments
evidencing such Grants, provided that such Grants do not unreasonably interfere
with the use of the Subleased Promises by Sublessee. Sublessee agrees to fully
cooperate in effecting any such Grants which will not unreasonably interfere
with Sublessee's use of the Subleased Premises. Sublessee shall sign any
agreements with respect to such Grants as may be reasonably requested by
Sublessor and Sublessee's failure to do so shall constitute a material breach of
this Sublease.
14.14 ARBITRATION OF DISPUTES. Any dispute, controversy or claim
between the parties relating to, arising out of, or in connection with this
Sublease (or any subsequent agreements or amendments thereto), including as to
its existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, whether arising before or after the
termination of this Sublease, shall be settled in accordance with Section 14.8
of the Asset Purchase Agreement; excluding, however, Sublessor's right to pursue
its remedies (collectively, "Provisional Remedies") under Section 1161 et seq.
of the California Code of Civil Procedure (as any of the same may be amended,
modified, restated, or replaced from time to time), or Section 1951, et seq of
the California Civil Code (as any of the same may be amended, modified,
restated, or replaced from time to time), if Master Lessor is concurrently
pursuing any Provisional Remedy against Sublessor under the Master Lease on a
related matter.
"NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR JURY
TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL RIGHTS
TO DISCOVERY AND APPEAL UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO ARBITRATION
AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE UNDER THE
AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT TO THIS
ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND UNDERSTAND THE FOREGOING
AND AGREE TO SUBMIT DISPUTES ARISING OUT THE MATTERS INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISION TO NEUTRAL ARBITRATION".
SUBLESSOR: [SIG]
----------------
SUBLESSEE: [SIG]
----------------
14.15 MASTER LEASE. It is agreed that this Sublease is subject to the
terms of the Master Lease, and Sublessee covenants and agrees that it shall not
violate any term or provision of or
15
<PAGE> 16
cause a default under the Master Lease; provided that Sublessee shall not be
deemed to have assumed any obligations under the Master Lease.
14.16 COMMERCIAL REASONABLENESS. The parties hereto agree to act in a
commercially reasonable manner in enforcing their respective rights and remedies
hereunder, and, unless otherwise specified herein, not to unreasonably delay or
withhold any consent requested by the other party pursuant to the terms hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Sublease
as of the Date of this Sublease.
Sublessor:
NOVELLUS SYSTEMS, INC.
By: [SIG]
-----------------------------------------
Name: John Chenault
---------------------------------------
Title: Executive Vice President, Operations
--------------------------------------
Sublessee:
VARIAN ASSOCIATES, INC.
By: [SIG]
-----------------------------------------
Name: Robert A. Lemos
---------------------------------------
Title: Vice President, Finance and Chief
--------------------------------------
Financial Officer
16
<PAGE> 17
Pursuant to Item 601 (b)(2) of Regulation S-K, the following exhibits to this
Sublease (Portion of Unit 9, Palo Alto) have been omitted. Such exhibits will be
submitted to the Securities and Exchange Commission upon request.
Exhibit A: See Exhibit 2.3 of Form 8-K.
Exhibit B: A copy of the senior lease.
Exhibit C: Property plan.
<PAGE> 1
EXHIBIT 2.5
SHARED USE AGREEMENT
This Shared Use Agreement (this "Agreement"), dated for reference
purposes only as of May 7, 1997, is entered into by and between VARIAN
ASSOCIATES, INC., a Delaware corporation ("Seller"), acting on behalf of itself
and its subsidiaries, and NOVELLUS SYSTEMS, INC., a California corporation
("Buyer"), acting on behalf of itself and its subsidiaries, and shall be
effective as of the Closing Date (as defined in Section 2.6.1. of the Asset
Purchase Agreement dated as of May 7, 1997 (the "Asset Purchase Agreement"), by
and between Seller and Buyer). If the Asset Purchase Agreement shall terminate
pursuant to Section 12 thereof, this Agreement shall terminate concurrently
with the termination of the Asset Purchase Agreement. Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings set
forth in the Asset Purchase Agreement.
WITNESSETH
A. Pursuant to the Asset Purchase Agreement, Seller has agreed to sell
the Assets and the Business to Buyer.
B. The Assets may include the use of certain space (collectively, the
"TFS Space"), which is located in space leased or owned by Seller or its
subsidiaries (collectively, the "Seller Offices").
C. Seller and Buyer desire that Buyer should have the right to
continue to use the TFS Space in accordance with the terms and conditions of
this Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree
as follows:
1. Right to Use. (a) Subject to the receipt by Seller of the TFS
Payments (as defined below) as and when due, Seller hereby agrees that during
the period from the Closing Date until Seller ceases leasing or owning any TFS
Space (except as provided below with respect to TFS Space located in Building
4a or Building 7 in Palo Alto, California (the "Palo Alto Property"))(in each
instance, the "Use Period"), Buyer shall have the right to continue using such
TFS Space to the same extent and for the same purposes that the Business used
such TFS Space as of the Closing Date. Provided, however, that, after the
Closing Date, Buyer shall be responsible for compliance with all Environmental
Laws applicable to its operations in such TFS Space and Seller shall have no
obligation to accept, treat or otherwise handle any Hazardous
Materials generated or used by Buyer. On or before the Closing Date, Seller
shall deliver to Buyer a schedule specifying the locations and square footage
of the TFS Space.
(b) Notwithstanding that Seller may continue to lease or own the
Palo Alto Property for a shorter or longer period, Buyer's right to continue to
use the Palo Alto Property shall be not less than 12 months and shall terminate
not later than 12 months after the Closing Date (the "End Date"); provided,
however, that Buyer shall have the right to continue to use the TFS Space in
Building 7 for 12 months beyond the End Date if, prior to the End Date, Buyer
completes
<PAGE> 2
the construction, at Buyer's expense, of a separate entrance to the TFS Space
in Building 7 that is reasonably acceptable to Seller and sufficient for the
use of the TFS Space in Building 7.
2. Payments. Buyer hereby agrees to pay to Seller, at such
location or locations as Seller may from time to time designate in writing, on
the first day of each calendar month during the Use Period an amount calculated
on the same basis as costs were allocated to the Business as of the Closing
Date or based upon the percentage of the square feet in each Seller Office
occupied by the TFS Space located therein (the "TFS Payments"), whichever is
greater; provided that (i) the TFS Payment due the first month after the
Closing Date shall include a payment prorated based on the number of days
(including the Closing Date) remaining in the month from and including the
Closing Date, and (ii) the last TFS Payment due shall be prorated based on the
number of days remaining in the last month of the Use Period. On or before the
Closing Date, Seller shall deliver to Buyer a schedule specifying the estimated
monthly TFS Payments calculated in accordance with the above.
3. No Obligation to Continue Use. Seller shall have no
obligation to continue leasing, occupying, owning, or using any or all of the
Seller Offices. Subject to Section 4 below, Seller may elect, in its sole
discretion, to terminate its lease of, or ownership of, or cease occupying or
using, any Seller Office at any time, whether or not Seller's occupancy
agreement or lease with respect to any Seller Office has terminated or any
option periods or renewal or other rights remain with respect to any Seller
Office. Buyer may, from time to time, vacate any or all of the TFS Space upon
thirty (30) days prior written notice to Seller, and shall thereafter have no
obligation to pay TFS Payments with respect to such vacated TFS Space. Buyer
shall have no right to re-occupy any TFS Space that it has vacated.
4. Right of First Refusal. In the event Seller elects to
discontinue leasing or occupying any Seller Office, Seller shall give Buyer
notice of such election concurrently with any notice that Seller delivers to
the owner of such Seller Office. Buyer shall have a right of first refusal
with respect to obtaining an assignment of the lease, sublease or occupancy
agreement to Buyer, to the extent such assignment is permitted under the lease,
sublease or occupancy agreement, and applicable law, provided that Buyer shall
not be required to pay any amounts to Seller, as consideration or otherwise,
for such assignment, subject to the condition that Seller shall be released
from all then unaccrued obligations under the lease, sublease or occupancy
agreement. In the event Seller elects to sell a Seller Office owned by Seller,
Seller shall give forty-five (45) days notice to Buyer of such election, which
shall include the terms offered to prospective purchasers of the Seller Office.
Buyer shall have a right of first refusal to purchase the Seller Office on the
same terms as offered to a prospective purchaser, to the extent such purchase
by Buyer is permitted under applicable law, and provided that Buyer notifies
Seller of such intent, in writing, within such forty-five (45) day period.
Notwithstanding the foregoing, the rights of first refusal granted to Buyer in
this Section 4 shall be subject to any other rights of first refusal previously
granted by Seller. The provisions of this Section 4 shall not apply to the
Palo Alto Property.
5. Further Assurances. Each party hereto agrees to cooperate
fully with the other and to execute such further instruments, documents, and
agreements, to give such further written assurances as may be reasonably
requested by the other to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement, including, without limitation, to obtain any
necessary or appropriate
2
<PAGE> 3
consents from landlords or property owners of any Seller Office or TFS Space,
or to execute separate subleases or new leases with respect to any TFS Space if
required by law or contractual obligation or if beneficial (for both parties)
for tax and accounting purposes.
6. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the respective heirs, legal representatives, successors
and assigns of the parties hereto. The words "Seller" and "Buyer," wherever
used herein, shall include the persons and entities named herein and designated
as such and their respective heirs, legal representatives, successors, and
assigns.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into by and wholly performed in the State of California by
California residents.
8. ARBITRATION OF DISPUTES. Any dispute, controversy, or claim
between the parties relating to, arising out of, or in connection with this
Agreement (or any subsequent agreements or amendments thereto), including as to
its existence, enforceability, validity, interpretation, performance, breach or
damages, including claims in tort, whether arising before or after the
termination of this Agreement, shall be settled in accordance with Section 13.8
of the Asset Purchase Agreement.
"NOTICE: BY INITIALING IN THE SPACE BELOW YOU ARE AGREEING TO HAVE ANY DISPUTE
ARISING OUT OF THE MATTERS INCLUDED IN THE 'ARBITRATION OF DISPUTES' PROVISION
DECIDED BY NEUTRAL ARBITRATION AS PROVIDED BY CALIFORNIA LAW AND YOU ARE GIVING
UP ANY RIGHTS YOU MIGHT POSSESS TO HAVE THE DISPUTE LITIGATED IN A COURT OR
JURY TRIAL. BY INITIALING IN THE SPACE BELOW YOU ARE GIVING UP YOUR JUDICIAL
RIGHTS TO DISCOVERY AND APPEAL. UNLESS THOSE RIGHTS ARE SPECIFICALLY INCLUDED
IN THE 'ARBITRATION OF DISPUTES' PROVISION. IF YOU REFUSE TO SUBMIT TO
ARBITRATION AFTER AGREEING TO THIS PROVISION, YOU MAY BE COMPELLED TO ARBITRATE
UNDER THE AUTHORITY OF THE CALIFORNIA CODE OF CIVIL PROCEDURE. YOUR AGREEMENT
TO THIS ARBITRATION PROVISION IS VOLUNTARY." "WE HAVE READ AND UNDERSTAND THE
FOREGOING AND AGREE TO SUBMIT DISPUTES ARISING OUT THE MATTERS INCLUDED IN THE
'ARBITRATION OF DISPUTES' PROVISIONS TO NEUTRAL ARBITRATION".
Seller [SIG]
-----------------------
Buyer: [SIG]
-----------------------
9. Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be a valid and binding original, but all of
which together shall constitute one and the same instrument. The signature page
and acknowledgment of any counterpart may be removed therefrom and attached to
any other counterpart to evidence execution thereof by all of the parties
hereto without affecting the validity thereof.
3
<PAGE> 4
10. Attorney's Fees. If any action is brought to enforce or interpret
the provisions of this Agreement, the prevailing party in such action shall be
awarded its attorneys' fees and costs incurred. "Prevailing party" shall be as
defined in California statutory law.
11. Entire Agreement, Miscellaneous. This Agreement expresses the
full and complete understanding of the parties with respect to the subject
matter hereof and supersedes all prior or contemporaneous proposals, agreements,
representations and understandings, whether written or oral, with respect to the
subject matter. This Agreement may not be amended or modified except in writing
signed by each of the parties to the Agreement. This Agreement shall be
construed as to its fair meaning and not strictly for or against either party.
The headings hereof are descriptive only and not to be construed in interpreting
the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed and entered into
this Agreement as of the date first above written.
Seller:
VARIAN ASSOCIATES, INC.
By: /s/ [SIG]
-----------------------------
name: Robert A. Lemos
Title: Vice President, Finance and
Chief Financial Officer
Buyer:
NOVELLUS SYSTEMS, INC.
By: /s/ [SIG]
------------------------------
Name: John Chenault
Title: Executive Vice President,
Operations
4
<PAGE> 1
Exhibit 2.6
ENVIRONMENTAL AGREEMENT
THIS ENVIRONMENTAL AGREEMENT, dated as of May 7, 1997, by and between
Varian Associates, Inc., a Delaware corporation ("Seller"), and Novellus
Systems, Inc., a California corporation ("Buyer"), shall be effective as of the
Closing Date (as defined in the Asset Purchase Agreement ("Asset Purchase
Agreement"), dated as May 7, 1997, by and between Seller and Buyer) (the
"Effective Date"). If the Asset Purchase Agreement shall terminate pursuant to
Section 12 thereof, this Agreement shall terminate concurrently with the
termination of the Asset Purchase Agreement.
RECITALS
A. In accordance with the terms and conditions of the Assignment
Agreement dated as of the Closing Date, by and between Seller and Buyer, Buyer
will be the assignee of Seller's leasehold interest in the real property
commonly referred to as Unit 8 and Unit 9 in Palo Alto, California
(collectively, the "Former Seller Properties").
B. Seller is willing to be responsible for certain Environmental Claims
(as defined below) relating to the Former Seller Properties. The parties
recognize that their mutual cooperation is necessary to accomplish the Seller
Response Work (defined below) to be performed at the Former Seller Properties.
Accordingly, under Sections 26.2 and 26.3 of the Asset Purchase Agreement, the
parties agreed to execute and deliver to each other, among other agreements,
this Environmental Agreement.
TERMS OF THE ENVIRONMENTAL AGREEMENT
In consideration of the Recitals stated above and the mutual agreement
and consideration set out below and in the Asset Purchase Agreement, the parties
agree as follows;
ARTICLE I
DEFINITIONS
1. DEFINITIONS. Each of the capitalized defined terms in this Environmental
Agreement shall have the following meanings or, if undefined in this
Environmental Agreement, the meanings assigned to such terms in the Asset
Purchase Agreement.
"Action" means any claim, action, suit, audit, assessment or
arbitration, or any proceeding or investigation, by or before any Governmental
Authority.
"Environmental Claims" means any and all Actions, claims, demands,
demand letters, liens, notices of non-compliance or violation, consent orders or
consent agreements (collectively, "Claims") including (i) any and all Claims by
Governmental Authorities for enforcement, cleanup, removal, treatment, response,
remedial or other actions or damages pursuant to any applicable Environmental
Laws, and (ii) any and all Claims by any third person seeking damages,
contribution,
<PAGE> 2
indemnification, cost recovery, compensation or injunctive relief resulting from
or arising from alleged injury or threat of injury to public health or safety or
the environment.
"Environmental Laws" means all laws, regulations, ordinances, codes,
policies, Governmental Orders and consent decrees, and any judicial and
administrative interpretations thereof, of Governmental Authorities, relating to
pollution or protection of the environment, natural resources and public health
and safety, including those relating to emissions, discharges, Releases or
threatened Releases of Hazardous Material into the environment (including
ambient air, surface water, groundwater or land), or otherwise relating to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Material. When used with respect to Buyer
Indemnified Environmental Claims, Environmental Laws shall refer to
Environmental Laws in effect as of the Effective Date or enacted or amended
thereafter. Except as expressly provided elsewhere in this Agreement, when used
with respect to Seller Indemnified Environmental Claims, Environmental Laws
shall refer only to those Environmental Laws as amended and in effect on the
Effective Date.
"Environmental Permits" means a permits, approvals, identification
numbers, licenses and other authorizations required under any applicable
Environmental Laws.
"Governmental Authority" means any federal or national, state,
municipal or local government, governmental authority, regulatory or
administrative agency, governmental commission, department, board, bureau,
agency or instrumentality, political subdivision, court, tribunal, official
arbitrator or arbitral body, in each case whether domestic or foreign.
"Governmental Order" means any order, writ, rule, judgment, injunction,
decree, stipulation, determination or award entered by or with any Governmental
Authority.
"Release" means any release (as defined under any Environmental Laws)
of any Hazardous Material.
"Seller Response Work" shall refer to all response actions (as defined
under any Environmental Laws) and similar activities to be performed by Seller
at any of the Former Seller Properties that (a) is required of Seller as part of
any Seller Indemnified Environmental Claim or (b) that Seller otherwise elects
to perform.
ARTICLE II
INDEMNIFICATIONS
2. INDEMNIFICATION BY SELLER. Except as otherwise limited by this
Article II, Seller shall indemnify, defend, protect and hold harmless Buyer (and
Buyers Subsidiaries, and their respective officers, directors, shareholders,
employees and agents) from and against any and all losses, costs, expenses.
liabilities, obligations, claims, demands, causes of action, suits, settlements
and judgments of every nature, including the costs and expenses associated
therewith and reasonable attorneys', consultants' and witness fees incurred
("Buyer's Damages") resulting from any Environmental Claims arising from (a) any
violation, or any alleged violation, before the Effective Date, of any
Environmental Law, Environmental Permit or Governmental Order as a result of
Seller's
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activities before the Effective Date at the Former Seller Properties, (b) the
presence, Release or threatened Release before the Effective Date, of any
Hazardous Material in the soils, groundwater, surface water or air on, under,
about or emanating from any of the Former Seller Properties, including to the
extent that such Hazardous Material remains and/or migrates (except to the
extent indemnified by Buyer in Section 3) after the Effective Date, (c) any
disposal, transportation, or arranging for disposal prior to the Effective Date
of Hazardous Material generated by Seller prior to the Effective Date (any such
Environmental Claim referred to in this Section 2 is referred to elsewhere
herein as "Seller Indemnified Environmental Claims").
3. INDEMNIFICATION BY BUYER. Except as otherwise limited by this
Article II, Buyer shall indemnify, defend, protect and hold harmless Seller (and
Seller's Subsidiaries, and their respective officers, directors, shareholders,
employees and agents) from and against any and all losses, costs, expenses,
liabilities, obligations, claims, demands, causes of action, suits, settlements
and judgments of every nature, including the costs and expenses associated
therewith and reasonable attorneys', consultants' and witness fees incurred
("Seller's Damages") resulting from or related to Environmental Claims arising
from (a) any violation or alleged violation, existing after the Effective Date,
of any Environmental Law, Environmental Permit or Governmental Order as a result
of any activities after the Effective Date at the Former Seller Properties,
except to the extent caused by Seller's acts after the Effective Date, (b) any
Release of Hazardous Materials, after the Effective Date, to the soils,
groundwater, surface water or air on, under, about or emanating from any of the
Former Seller Properties, except to the extent caused by Seller's acts after the
Effective Date, (c) any disposal, transportation, or arranging for disposal
after the Effective Date by Buyer of Hazardous Material generated at the Former
Seller Properties, except to the extent caused by Seller's acts after the
Effective Date, and (d) any movement after the Effective Date of any Hazardous
Material present before the Effective Date or the exacerbation of any existing
environmental condition, but only to the extent that either results from Buyer's
or Buyer's agent's active negligent conduct (any such Environmental Claim
referred to in this Section 3 is referred to elsewhere herein as a "Buyer
Indemnified Environmental Claims").
4. LIMITATIONS ON INDEMNIFICATION. (a) Notwithstanding any other
provision of this Agreement, as between Buyer (and Buyer's Subsidiaries, and
their respective officers, directors, shareholders, employees and agents) and
Seller, Seller's' obligations to Buyer (and Buyer's Subsidiaries, and their
respective officers, directors, shareholders, employees and agents) with respect
to Seller Indemnified Environmental Claims, whether at law, in equity, pursuant
to this Agreement or otherwise, shall not include the following matters, for
which Buyer hereby forever relieves, releases and discharges the Seller (and
Seller's Subsidiaries, and their respective officers, directors, shareholders,
employees and agents) and their successors and assigns from any and all
liabilities, actions, Buyer's Damages, future claims and causes of action
arising therefrom or related thereto: (i) any liability for or arising from
asbestos, radon, lead paint or other building or construction materials that are
lawfully present, or any lawfully used or stored Hazardous Material in, inside
or on the improvements (including structures or equipment) located on the Former
Seller Properties (except that this subsection shall not apply to any personal
injury action relating to exposure to such substances prior to Effective Date);
(ii) any liability for diminution in property value of any of the Former Seller
Properties (including lost profits and lost rent) caused by the presence of
Hazardous Material in the soils, groundwater, surface water or air on, under,
about or emanating from any of the properties owned, leased, used, possessed or
operated by Seller or any of its subsidiaries; (iii) any liability for
consequential damages (including lost profits and lost rent) relating to the
presence of
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Hazardous Material in the soils, groundwater, or surface water on, under, about
or emanating from any of the Former Seller Properties; or (iv) the performance
of any Response Action (as defined in CERCLA, 42 U.S.C. Section 9601(25)),
except as required by this Environmental Agreement or by any Governmental
Orders.
(b) Notwithstanding any other provision of this Agreement, as
between Seller (and Seller's Subsidiaries, and their respective officers,
directors, shareholders, employees and agents) and Buyer, Buyer's obligations to
Seller (and Seller's Subsidiaries, and their respective officers, directors,
shareholders, employees and agents) with respect to Buyer Indemnified
Environmental Claims, whether at law, in equity, pursuant to this Agreement or
otherwise, shall not include the following matters, for which Seller hereby
forever relieves, releases and discharges the Buyer (and Buyer's Subsidiaries,
and their respective officers, directors, shareholders, employees and agents)
and their successors and assigns from any and all liabilities, actions, Seller's
Damages, future claims and causes of action arising therefrom or related
thereto: any liability for consequential damages (including lost profits and
lost rent) relating to the presence of Hazardous Material in the soils,
groundwater, or surface water on, under, about or emanating from any of the
Former Seller Properties, which Hazardous Materials were released after the
Effective Date.
ARTICLE III
EASEMENT GRANT AND ACCESS
5. EASEMENT GRANT. Subject to all the terms of this Agreement, Buyer
hereby grants a nonexclusive easement to the agents, employees, consultants,
contractors, and subcontractors of Seller who are reasonably necessary to carry
out Seller Response Work to enter upon and use the Former Seller Properties to
carry out Seller Response Work. This nonexclusive easement will remain in effect
for so long as any Seller Response Work remains to be performed. In the event
that the parties believe that such work has been completed but the need or
desire by Seller to perform additional Seller Response Work arises at a later
date, the nonexclusive easement shall automatically revive and be in full force
and effect within one week after notice is received by Buyer with respect to
such matter.
6. ACCESS. (a) Subject to the terms of this Agreement, Seller shall
provide Buyer with at least forty-eight (48) hours notice of any entry of Seller
onto the Former Seller Properties, unless shorter notice is required to comply
with applicable Environmental Laws or due to an emergency. Buyer shall provide
mutually agreeable, convenient and appropriate locations, and reasonable access
to such locations, for Seller and its agents, consultants, contractors and
subcontractors to place, maintain and store items necessary and appropriate for
Seller Response Work under this Environmental Agreement. Entry shall be
permitted during normal business hours, or at other times as is mutually
agreeable. The parties agree that Seller shall have the right to use the
locations presently used for installations made as part of any Seller Response
Work and/or locations of Seller Response Work indicated on all work plans
approved or not otherwise expressly objected to by Buyer. With respect to such
locations, Buyer shall have the right to require Seller to relocate any items
located there, provided that such relocation (unless otherwise required of
Seller by applicable law) shall be (i) subject to prior approval by any
Governmental Authority having jurisdiction over such matters (the "Relevant
Agency"), to the extent such approval is required (such approval to be sought by
Seller following reasonable notice by Buyer to Seller) and (ii) at Buyer's
expense (including the costs of seeking approval by the Relevant Agency).
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(b) In the event that Buyer reasonably determines that a portion of
Seller's performance of the Seller Response Work is creating an imminent and
substantial endangerment to human health or the environment, or is likely to
cause substantial interference with Buyer's operations, Buyer shall have the
right to suspend immediately such portion of Seller Response Work under this
Environmental Agreement. In the event that Seller requests that it be allowed to
resume such work and Buyer does not agree within three (3) days, Buyer shall be
required to go to dispute resolution as described in Section 13.8 of the Asset
Purchase Agreement in order to continue the suspension of such work. Buyer shall
proceed with all diligence to obtain an order continuing the suspension. In the
event such an order is denied or Buyer does not proceed diligently to obtain
such an order, Seller's rights to perform such work under the Environmental
Agreement shall automatically revive. In the event that performance of such work
was not creating an imminent and substantial endangerment to human health or the
environment or is not likely to cause substantial interference with Buyer's
operations, Seller shall have the right to seek through dispute resolution any
and all damages associated with such suspension (subject to any limitations on
such damages in Section 4).
ARTICLE IV
PERFORMANCE OF SELLER RESPONSE WORK
7. SITE COORDINATORS. Buyer and Seller shall each designate an
individual to act as a Site Coordinator. The Site Coordinators shall be
responsible and have authority for coordinating the activities of their
respective companies during any Seller Response Work. Buyer's Site Coordinator
or any other representative of Buyer shall have the right to be present during
any Seller Response Work.
8. DESCRIPTION OF WORK PERMITTED. Seller shall conduct Seller Response
Work hereunder in accordance with various written work plans, except for such
work that is of an emergency nature. Such work shall be deemed to include
routine monitoring, repairs, supply and maintenance of those system that are
specified in the work plans. Seller shall also have the right, subject to the
notice provisions of Section 6, above, to take groundwater samples from, make
groundwater elevation measurements in, and perform other tests in or in
connection with existing wells on the Former Seller Properties from time to time
in its discretion, whether or not such work is covered by a written work plan.
Except as is otherwise required by a Governmental Authority with jurisdiction
over such matters, Buyer shall have the right to prohibit the performance of any
Seller Response Work that is not in accordance with an approved work plan and
that would unreasonably interfere with Buyer's operations. Seller agrees to use
reasonable efforts to schedule the work at a time reasonably convenient to
Buyer.
9. WORK PLAN REVIEW. Seller shall provide a work plan for each portion
of the Seller Response Work to Buyer for Buyer's review as follows: (i) for any
work plan that Seller is required to submit for approval to the Relevant Agency,
such plan shall be provided to Buyer no later than the time such plan is
submitted to the Relevant Agency, and (ii) for work plans that Seller is not
required to submit for approval to any Relevant Agency, such plan shall be
provided to Buyer at least two weeks prior to the performance of the work
provided for in such plan. Buyer shall have the right to review such work plans
and shall approve each such plan unless the location or other physical aspect
(e.g., noise) of the Seller Response Work unreasonably interferes with the
present or future operation of the Business. Buyer's review shall be conducted,
and approval or questions or objections given to Seller, as quickly as possible
so as not to delay any Seller Response Work, but in no event
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shall Buyer's time to comment on and approve a work plan exceed fifteen (15)
working days. Where Buyer fails to reply within fifteen (15) working days, such
work plan shall be deemed approved. Approval of such work plan shall not be
unreasonably witheld by Buyer. Any fine or penalty assessed against Seller for a
delay in Seller Response Work under this Environmental Agreement, of which Buyer
received prior notice, shall be the responsibility of Buyer to the extent caused
by Buyer's unreasonable withholding of its approval of the applicable work plan.
Buyer shall also have the right to comment to Seller with respect to any issue
raised by the work plan for which approval of the Buyer is not required, but
with no obligation on the part of Seller to agree with, or conform such work
plan to, such comments.
10. OTHER INFORMATION. Seller will provide to Buyer copies of (i) all
data (i.e., scientific measurements of chemical concentrations, water levels,
etc.) generated by Seller at the Former Seller Properties for the Seller
Response Work, and (ii) third party claims received by Seller regarding Seller
Response Work, and (iii) government agency violation notices, site audits,
approvals and disapprovals of reports received by Seller for the Seller Response
Work. Seller will provide Buyer with access to copies of reports and
correspondence submitted to or received from Relevant Agencies with respect to
environmental conditions at the Former Seller Properties or the status of the
Seller Response Work. Seller shall have exclusive control of and sole discretion
as to all recordkeeping, notifications, investigations, cleanup, removal,
treatment or remediation related to Seller Indemnified Environmental Claims,
including as to the work plans developed and implemented, the methods employed,
the consultants and other agents retained and the optimal periods for
discharging such responsibility.
11. PROTECTION OF UTILITIES. All work to be performed during any Seller
Response Work shall be performed in a manner to prevent unreasonable disruption
in or interference with any utility service to the operations conducted at the
Former Seller Properties. Seller will undertake all reasonable efforts to locate
underground utilities shown on plans, drawings or specifications requested by
and provided to Seller by Buyer or other information in its possession prior to
the commencement of drilling.
12. MAINTENANCE, RESTORATION OF FORMER SELLER PROPERTIES. Seller, its
employees, agents, consultants, contractors, and subcontractors will adequately
maintain all areas utilized in connection with the work contemplated under this
Environmental Agreement during their period of use and will, thereafter, close,
to the extent required by any Environmental Laws or Environmental Permits, all
wells, tanks and sumps and other similar equipment at the Former Seller
Properties that were installed by Seller during the course of the performance of
Seller Response Work. Seller further agrees that, in Seller's performance of
Seller Response Work, Seller will avoid causing damage to the Former Seller
Properties, and upon completion of the Seller Response Work, Seller will restore
any property that Seller, its employees, agents, consultants, contractors, and
subcontractors have damaged to substantially the same condition as it existed
prior to the commencement of such Seller Response Work.
13. WASTE MATERIALS GENERATED DURING SELLER RESPONSE WORK. Waste
materials required to be removed by Seller from the Former Seller Properties
shall be handled and disposed of by Seller in accordance with all Environmental
Laws. Seller will list itself as the generator of waste on both the hazardous
waste manifest and any waste profile for use by the disposal facility. Seller
will
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also list Buyer and/or other parties as is required by Environmental Laws or
Permits, but shall not do so without providing Buyer with at least one week
notice prior to such listing.
14. SECURITY PROVISIONS. All employees, agents, consultants,
contractors, or subcontractors employed by Seller who perform work on the Former
Seller Properties will comply with Buyer's reasonable security provisions, as
well as reasonable requests of Buyer's security personnel.
15. LIENS. Seller shall keep the Former Seller Properties free from any
and all mechanics, materialmen and other liens arising out of any work or labor
done, services performed or materials used or furnished for or in connection
with any Seller Response Work performed by or on behalf of Seller hereunder. In
the event that Seller does not within thirty (30) business days following the
imposition of any such lien, cause the same to be released of record, Buyer
shall have the right, but not the obligation, to cause the same to be released
by such reasonable means as Buyer shall deem proper, including payment of the
claim giving rise to such lien. All out of pocket costs, and expenses reasonably
incurred by Buyer for such purpose (including attorneys' reasonable fees), shall
be payable by Seller within forty-five (45) days of a demand therefor.
16. POSTING OF NOTICES. Buyer and Seller each shall have the right at
all times, subject to the reasonable approval of Buyer or Seller, as the case
may be, to post and keep posted on the Former Seller Properties any notices
permitted or required by law, or which they shall reasonably deem proper for the
protection of their interests.
17. INSURANCE. (a) Seller shall at all times throughout the performance
of any Seller Response Work maintain commercial general liability insurance
covering such work. Such policy shall include contractual liability insurance
applying to Seller's indemnity obligations under this agreement. Such coverage
shall have a minimum combined single limit of liability of a least Two Million
Dollars ($2,000,000) per occurrence. Seller's general ability policy shall be
endorsed to name Buyer as an additional insured (but only with respect to
Buyer's interest in the Former Seller Properties), shall provide that such
coverage shall be primary and that any insurance maintained by Buyer shall be
excess insurance only and shall not be called upon to contribute to Seller's
insurance policies. Seller waives the right of recovery against the Buyer for
loss or damage within any deductible with respect to any insured claim. Seller
shall deliver to Buyer certificates evidencing the existence and amount of such
insurance. No such policies shall be cancelable or subject to reduction of
coverage limits or other material modification except after thirty (30) days
prior written notice to Buyer.
(b) Buyer shall at all times throughout the period in which this
agreement remains in effect, maintain commercial general liability insurance
covering Buyer's indemnity obligations under this agreement in commercially
reasonable amounts. Buyer's general liability policy shall be endorsed to name
Seller as an additional insured (but only with respect to Seller's interest in
the Former Seller Properties), shall provide that such coverage shall be primary
and that any insurance maintained by Seller shall be excess insurance only and
shall not be called upon to contribute to Buyer's insurance policies. Buyer
waives the right of recovery against Seller for loss or damage within any
deductible with respect to any insured claim. Buyer shall deliver to Seller
certificates evidencing the existence and amount of such insurance. No such
policies shall be cancelable or subject to reduction of coverage limits or other
material modification except after thirty (30) days prior written notice to
Seller.
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ARTICLE V
ADDITIONAL RESPONSIBILITIES OF BUYER
18. ADDITIONAL RESPONSIBILITIES OF BUYER. With respect to any required
or proposed Seller Response Work performed by Seller hereunder, Buyer agrees as
follows:
(a) MAINTENANCE OF FILES, ETC. Buyer shall use commercially
reasonable efforts to maintain all files and documentation at Buyer relating to
(i) Hazardous Materials on or at the Former Seller Properties, (ii) building and
site plans, drawings and specifications, (iii) plans, drawings and
specifications relating to the location and nature of underground utilities, and
(iv) any Seller Response Work conducted by or required of Buyer on the Former
Seller Properties, and shall make available or provide to Seller upon request
copies of such files and documentation, except for privileged documents. Any
copying of documents shall be paid for by Seller at Buyer's internal cost.
(b) RELOCATION OF INSTALLATIONS. In the event that Buyer
determines to improve, repair or modify any of the Former Seller Properties
(including redeveloping any of the Former Seller Properties, remodeling
buildings, razing buildings, erecting new structures or changing land uses) and
Buyer requests that Seller, or Seller otherwise is required as a result of such
determination to, move, modify or replace wells, piping, treatment systems,
monitoring systems and other equipment and instrument previously installed by
Seller in connection with Environmental Claims, Seller shall have exclusive
control of and sole discretion as to the taking of such actions, and shall take
such actions within a reasonable time following approval by appropriate
Governmental Authorities, provided that (i) Buyer shall reimburse Seller for the
reasonable expenses and costs Seller bears as a result of taking such actions,
(ii) Seller will require that the contractor retained by Seller and approved by
Buyer (which approval shall not be unreasonably withheld) to perform such work
agree to be directly liable to Buyer to the extent (and as if) Buyer bad hired
the contractor directly, and (iii) Seller shall not be liable to Buyer for, and
Buyer hereby releases Seller from any liability that Seller otherwise would have
had with respect to the performance of such work, and shall indemnify Seller
from all Buyer's Damages incurred by Buyer in connection with such actions.
(c) BUYER COOPERATION. Buyer agrees to cooperate with and
assist Seller in undertaking any of the activities covered by this Environmental
Agreement so as to accomplish the Seller Response Work in a cost effective and
reasonable manner. Buyer shall provide Seller with reasonable written notice of
any construction at or alterations to the Former Seller Properties which may
adversely affect such Seller Response Work. In the event that Seller requests
Buyer's cooperation or assistance with the implementation of such activities,
such cooperation or assistance shall be at Seller's sole cost and expense,
except with respect to incidental costs and expenses, which shall be borne by
Buyer. Among other things, Buyer will allow Seller, its agents, contractors
and/or subcontractors to move any temporary structures, equipment, refuse or
other materials from surface areas as Seller or its contractors deem reasonably
necessary to implement such activities. Buyer agrees not to damage any
structures or systems installed or implemented as part of Seller's cleanup,
removal, treatment or remediation activities related to Seller Indemnified
Claims. Buyer shall cooperate with governmental agencies to the extent
reasonably necessary for Seller to perform the Seller Response Work.
(d) UTILITY SERVICES. Buyer shall provide reasonable access to
Seller for such utility services (electricity, water, sewer, etc.) as Seller may
reasonably require to conduct Seller
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Response Work. Seller shall pay all reasonable costs for connection to such
utilities, and Buyer may charge Seller its direct cost for such utility services
utilized by Seller (the amount thereof for metered utilities to be determined
either by prior agreement or by metering, or if by neither of the foregoing then
by reasonable allocation).
(e) USE OF PROPERTIES AND GROUNDWATER. Notwithstanding any
other provision of this Agreement to the contrary, Buyer shall:
(i) not extract or use in any way the groundwater at the Former
Seller Properties at any time, except as required by any Governmental Authority
or as allowed by Seller; and
(ii) require any successors or assigns to Buyer's interest in
the Former Seller Properties to abide by the covenants in this Section 18; and
(iii) if permitted by law and the Master Lease (as defined in
the Sublease for Portion of Unit 9, Palo Alto, between Seller and Buyer), record
against the Former Seller Properties with appropriate Governmental Authorities
such deed restrictions as are reasonably requested by Seller in furtherance of
this Section 18.
(f) USE OF TREATED GROUNDWATER. Buyer shall utilize for
landscaping and other reasonable and appropriate uses (not including human
consumption), to the, extent requested by Seller, treated groundwater which may
result from Seller Response Work, to the extent but only if such use meets the
requirements of applicable Environmental Laws or Environmental Permits and is
acceptable to Relevant Agencies. Seller shall be responsible for the costs
reasonably necessary to add such pipes and to make such modifications to
existing piping. The manner and locations of such additional pipes and
modifications to existing piping shall be reasonable and appropriate to
accommodate such uses and shall be subject to the mutual agreement of the
parties, not to be unreasonably withheld by either party.
(g) NOTICE OF RELEASES. If Buyer knows that Hazardous Materials
have been released or are threatened to be released in, on, under or about the
Property in violation of Environmental Laws, other than as previously consented
to or known by Seller, Buyer shall as soon as possible (but in any event within
twenty-four (24) hours) give written notice of such fact to Seller. Notice shall
be given immediately if Buyer reasonably believes the Release or threatened
Release (i) is likely to come in contact with sod or groundwater, (ii) is more
than one pound by weight or (iii) cannot be cleaned up within 15 minutes. Buyer
shall also as soon as possible (but in any event within twenty-four (24) hours)
give Seller a copy of any statement, report. notice. claim, initial action or
proceeding given to, or received from, any Governmental Authority or private
party concerning the Release or threatened Release. Buyer acknowledges that it,
and not Seller, is in charge of the Former Seller Properties for purposes of all
reporting requirements arising on or after the Effective Date under any
Environmental Laws.
The reporting shall include at a minimum:
a. The exact location of the Release or threatened Release;
b. The name of the person reporting the Release or the
threatened Release;
C. The Hazardous Material involved in the Release or threatened
Release;
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d. An estimate of the quantity of Hazardous Materials involved;
and
e. if known, the potential health hazards presented by the
Hazardous Material involved in the Release or threatened
Release.
(h) PERFORMANCE OF TESTING. Buyer shall provide reasonable
advance written notice to Seller, which notice shall not be less than ten (10)
working days (unless a shorter period is necessitated by legal or regulatory
requirements, in which case notice shall be provided as much in advance as is
reasonably practical), before performing or causing to be performed any
Hazardous Material testing of the soils, groundwater or surface waters at or
near the Former Seller Properties, including installation of soil borings or
monitoring wells or testing of soils, groundwater or surface waters. Buyer shall
promptly furnish Seller with a copy of all test results.
(i) INSPECTION. For so long as Seller is performing, intends
to perform or may in the future be required to perform any Seller Response Work
at any of the Former Seller Properties, Seller shall have the right to enter
such Former Seller Properties during Buyer's business hours, upon forty-eight
(48) hours notice, for the purpose of inspecting the condition of the property
and for verifying compliance with all applicable laws, including the employment
of experts and consultants in connection therewith.
19. SELLER'S ACCESS INDEMNITY. Seller shall indemnify, defend, protect
and hold harmless Buyer (and Buyer's Subsidiaries, and their respective
officers, directors, shareholders, employees and agents) from and against any
all losses, costs, expenses, liabilities, obligations, claims, demands, causes
of action, suits, settlements and judgments of every nature, including the costs
and expenses associated therewith and reasonable attorneys', consultants' and
witness fees incurred ("Buyer's Damages") suffered or incurred by them arising
out of or resulting directly or indirectly from any breach by Seller of any
obligation of Seller set forth in Article IV or V or by any unlawful, negligent,
wrongful or otherwise tortious act or omission of Seller or its agents,
employees, consultants, contractors, or subcontractors in performing any Seller
Response Work.
20. BUYER'S ACCESS INDEMNITY. Buyer shall indemnify, defend, protect
and hold harmless Seller (and Seller's Subsidiaries, and their respective
officers, directors, shareholders, employees and agents) from and against any
all losses, costs, expenses, liabilities, obligations, claims, demands, causes
of action, suits, settlements and judgments of every nature, including the costs
and expenses associated therewith and reasonable attorneys', consultants' and
witness fees incurred ("Seller's Damages") suffered or incurred by them arising
out of or resulting directly or indirectly from any breach of this Environmental
Agreement by Buyer.
ARTICLE VI
GENERAL PROVISIONS
21. PROCEDURE FOR INDEMNIFICATION-THIRD PARTY CLAIMS. Promptly after
receipt by an indemnified party under Section 2 or 3 or 19 or 20 of written
notice of a claim or the commencement of any proceeding against it, such
indemnified party shall, if a claim in respect thereof is to be made against an
indemnifying party under such Section, give written notice to the indemnifying
party of the commencement thereof, but the failure to notify the indemnifying
party shall not relieve it of any liability that it may have to any indemnified
party except to the extent the indemnifying party
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demonstrates that the defense of such action is prejudiced thereby. In case any
such proceeding shall be brought against an indemnified party and it shall give
notice to the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it shall
wish (unless the indemnifying party is also a party to such proceeding and the
indemnified party determines in good faith that joint representation would be
inappropriate) to assume the defense thereof without counsel reasonably
satisfactory to such indemnified party and, after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party shall not be liable to such unindemnified party
under such Section for any fees of other counsel or any other expenses with
respect to the defense of such proceeding, in each case, subsequently incurred
by such indemnified party in connection with the defense thereof. If an
indemnifying party assumes the defense of such proceeding, (a) no compromise or
settlement thereof may be affected by the indemnifying party without the
indemnified party's reasonable consent unless (i) there is not finding or
admission of any violation of law or any violation of the rights of any Person
and no effect on any other claims that may be made against the indemnified
party, and (ii) the sole relief provided is monetary damages that are paid in
full by the indemnifying party, and (b) the indemnifying party shall have no
liability with respect to any compromise or settlement thereof effected without
its consent. If notice is given to an indemnifying party of the commencement of
any proceeding and it does not, within fifteen (15) business days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense thereof, the indemnifying party shall be bound by
any determination made in such action or any compromise or settlement thereof
effected by the indemnified party. Notwithstanding the foregoing, if an
indemnified party determines in good faith that there is a reasonable
probability that a proceeding may adversely affect it or its affiliates, other
than as a result of monetary damages, such indemnified party may, by notice to
the indemnifying party, assume the exclusive right to defend, compromise or
settle such proceeding, but the indemnifying party shall not be bound by an
determination of a proceeding so defended or any compromise or settlement
thereof effected without its consent (which shall not be unreasonably withheld).
22. NOTICES. Any notice or other communication required or permitted
hereunder shall be in writing and shall be deemed to have been duly given on the
date of service if served personally or by facsimile, or five (5) days after the
date of mailing if mailed, by first class mail, registered or certified, postage
prepaid. Notices shall be addressed as follows:
To Seller at: Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attn: Chief Financial Officer
Telecopy No.: (415) 424-5754
Telephone No.: (415) 424-5230
with a copy to: Varian Associates, Inc.
3050 Hansen Way
Palo Alto, California 94304-1000
Attn: General Counsel
Telecopy No.: (415) 858-2018
Telephone No.: (415) 424-5352
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To Buyer at: Novellus Systems, Inc.
3970 North First St.
San Jose, CA 95134
Attn: Robert Smith
Fax: (408) 943-2277
with a copy to: Morrison & Foerster LLP
755 Page Mill Road
Palo Alto, CA 94304
Attn: Michael C. Phillips, Esq.
Fax: (415) 494-0792
or to such other address as a party has designated by notice in writing to the
other party in the manner provided by this Section.
23. INTERPRETATION. When a reference is made in this Environmental
Agreement to Sections, subsections, Schedules or Exhibits, such reference shall
be to a Section, subsection, Schedule or Exhibit to this Environmental Agreement
unless otherwise indicated. The words "include," "includes" and "including" when
used herein shall be deemed in each case to be followed by the words "without
limitation." The headings appearing at the beginning of several sections
contained herein have been inserted for the convenience of the parties and shall
not be used to determine the construction of interpretation of this Agreement.
24. SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reasons, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the fullest extent possible.
25. SUCCESSORS AND PERMITTED ASSIGNS. This Environmental Agreement
shall be binding upon and shall inure to the benefit of the parties to this
Environmental Agreement and their successors and permitted assigns; provided,
however, that this Environmental Agreement may not be assigned by Seller without
Buyer's express written consent, which shall not be unreasonably withheld,
provided that Seller shall remain liable for the full and proper performance of
its obligations hereunder. Notwithstanding the foregoing, Seller may assign this
Agreement in whole or in part and any of its rights or obligations hereunder to
a wholly owned Subsidiary of Seller, provided that Seller shall remain liable
for the full and proper performance of its obligations hereunder. Buyer shall
have the right to assign this Environmental Agreement and the rights and
obligations under this Environmental Agreement to a third party in connection
with an assignment of all of its interests in and to one or more of the Former
Seller Properties, or to any person acquiring a distinct line or division of the
Business, provided that Buyer shall remain liable for the full and proper
performance of their obligations hereunder. Buyer shall further require any
party to whom Buyer subleases any of the Former Seller Properties to enter into
and be bound by this Environmental Agreement or a similar access agreement
acceptable to Seller.
26. PARTIES. This Environmental Agreement is for the sole benefit of
the parties hereto and their permitted assigns and nothing herein expressed or
implied shall give or be construed
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<PAGE> 13
to give to any Person, other than the parties hereto and such assigns, any legal
or equitable rights hereunder.
27. MODIFICATIONS, WAIVER. This Agreement constitutes and contains the
entire agreement of the parties and supersedes any and all prior negotiations,
correspondence, understandings and agreements between the parties respecting the
subject matter hereof. This Agreement may only be amended by written instrument
signed by the parties. No waiver of any of the provisions of this Environmental
Agreement shall constitute or imply a subsequent waiver of the same or any other
provision hereof, whether or not similar, nor shall any waiver constitute a
continuing waiver, unless otherwise agreed in writing.
28. NO OTHER REMEDIES. (i) The provisions of Sections 19 and 20
exclusively govern the matters specifically described therein; notwithstanding
the foregoing, the provisions of Article II exclusively govern the matters
specifically described therein. Any and all remedies herein expressly conferred
upon a party hereby are deemed exclusive of any other remedy conferred hereby or
by law or equity on such party. In particular, the remedies provided by Article
II and Sections 19 and 20 shall be exclusive of any other rights or remedies
available to a party against the other party, either at law or in equity, in
relation to any breach, default or nonperformance of any representation,
warranty, covenant, agreement or undertaking made or entered into by such other
party pursuant to this Environmental Agreement, any agreement executed pursuant
to this Environmental Agreement or the transactions contemplated hereby.
(ii) No action for termination or rescission, or claiming
repudiation, of this Environmental Agreement or any agreement executed pursuant
to this Environmental Agreement may be brought or maintained by either party
against the other following the Effective Date no matter how severe, grave or
fundamental any such breach, default or nonperformance may be by one party.
Accordingly, the parties hereby expressly waive and forego any and all rights
they may possess to bring any such Action.
(iii) Notwithstanding any other provision in this Environmental
Agreement, Seller shall have no liability to Buyer for any consequential damages
suffered or incurred by any Buyer (or any of Buyer's Subsidiaries, or their
respective officers, directors, shareholders, employees and agents) (including
consequential damages that may relate to Buyer Losses) that arise from or relate
to any actions taken (or not taken) by any Seller (or any of Seller's
Subsidiaries, or their respective officers, directors, shareholders, employees
and agents) under or pursuant to this Environmental Agreement, other than
Buyer's Damages arising from Seller's failure to perform such work (a) in
compliance with all applicable laws, including Environmental Laws, Environmental
Permits and Governmental Orders, or (b) in a manner to avoid causing the
unreasonable interference with the Buyer's conduct of the Business.
(iv) With regard to this Section 28 as well as Section 4, Buyer
and Seller each acknowledge that it has read and is familiar with, and hereby
waives the benefit of, the provisions of California Civil Code section 1542,
which is set forth below:
"A general release does not extend to claims which the creditor
does not know or suspect to exist in his favor at the time of
executing the
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release, which if known by him must have materially affected his
settlement with the debtor."
29. MUTUAL DRAFTING. This Environmental Agreement is the joint product
of Buyer and Seller and each provision hereof has been subject to the mutual
consultation, negotiation and agreement of Buyer and Seller and shall not be
construed for or against any party hereto.
30. GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California applicable to contracts
entered into and wholly to be performed in the State of California by California
residents.
31. DISPUTE RESOLUTION. Any dispute, controversy or claim between the
parties relating to, arising out of or in connection with this Agreement (or any
subsequent agreements or amendments thereto), including as to its existence,
enforceability, validity, interpretation performance, breach or damages,
including claims in tort, whether arising before or after the termination of
this Agreement, shall be settled only by binding arbitration pursuant to the
Commercial Arbitration Rules, as then amended and in effect, of the American
Arbitration Association (the "Rules"), subject to the following:
(a) The arbitration shall take place in Palo Alto, California.
(b) There shall be three arbitrators, who shall be selected under the
normal procedures prescribed in the Rules, except that one such arbitrator shall
be a certified public accountant and one arbitrator (who shall chair the
arbitration panel) shall be a member of the American Board of Trial Advocates or
the American College of Trial Lawyers.
(c) Subject to legal privileges, each party shall be entitled to
discovery in accordance with the Federal Rules of Civil Procedure.
(d) At the arbitration hearing, each party may make written and oral
presentations to the arbitrator, present testimony and written evidence and
examine witnesses.
(e) The arbitrators' decision shall be in writing, shall be binding and
final and may be entered and enforced in any court of competent jurisdiction.
(f) No party shall be eligible to receive, and the arbitrators shall
not have the authority to award, exemplary or punitive damages.
(g) Each party to the arbitration shall pay one-half of the fees and
expenses of the arbitrators and the American Arbitration Association.
(h) The arbitrators shall not have the power to amend this Agreement.
32. COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but both of which when taken together
shall constitute one and the same instrument
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33. ENTIRE AGREEMENT. This Environmental Agreement, together with all
Exhibits hereto, and the documents and instruments and other agreements among
the parties delivered pursuant hereto, constitute the entire agreement and
supersede all prior agreements and undertakings, both written and oral, other
than the Confidentiality Agreement and the Asset Purchase Agreement, among
Seller and Buyer with respect to the Subject matter hereof and are not intended
to confer upon any other Person any rights or remedies hereunder, except as
otherwise expressly provided herein.
34. RECORDATION OF ENVIRONMENTAL AGREEMENT OR MEMORANDUM. This
Environmental Agreement, or a short form memorandum summarizing this
Environmental Agreement, may be recorded by Seller, in its sole discretion. Upon
termination of this Environmental Agreement, Seller shall, within a reasonable
time, execute and record a termination notice canceling and removing the effect
of such recordation for each such recording.
35. TIME PERIODS. All time periods referred to herein are in calendar
days unless otherwise indicated.
36. INDEPENDENT PARTIES. Nothing in this Environmental Agreement shall
be construed to create a relationship of employer and employee, partnership,
principal and agent, joint venture or similar arrangement between Buyer and
Seller, nor shall either party have responsibility for compliance by the other
with applicable laws, regulations, or orders of governmental agencies, or for
any other acts, errors or omissions of the other.
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IN WITNESS WHEREOF, Seller and Buyer have caused this Environmental
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
VARIAN ASSOCIATES, INC.
By: Robert A. Lemos
--------------------------------------
Print Name: Robert A. Lemos
------------------------------
Print Title: Vice President, Finance and
-----------------------------
Chief Financial Officer
NOVELLUS SYSTEMS, INC.
By: John Chenault
--------------------------------------
Print Name: John Chenault
------------------------------
Print Tide: Executive Vice President,
------------------------------
Operations
------------------------------
<PAGE> 1
Exhibit 2.7
CROSS-LICENSE AGREEMENT
BETWEEN
VARIAN ASSOCIATES, INC.
("VARIAN")
AND
NOVELLUS SYSTEMS, INC.
("NOVELLUS")
<PAGE> 2
<TABLE>
<CAPTION>
TABLE OF CONTENTS
<S> <C>
RECITALS.............................................................. Page 1
1 Definitions.................................................. Page 2
2 License Grants............................................... Page 3
2.1 Varian To Novellus................................... Page 3
2.2 Novellus To Varian................................... Page 3
3 Ownership, Transfer of Know How.............................. Page 4
4 Enforcement of Rights........................................ Page 4
5 Confidentiality.............................................. Page 5
6 Term and Termination......................................... Page 5
7 Assignment of License........................................ Page 6
8 Extent of Certain Obligations................................ Page 6
9 Miscellaneous Provisions..................................... Page 6
9.1 Notices.............................................. Page 6
9.2 Section 365(n) of the U.S. Bankruptcy Code........... Page 7
9.3 Interpretation....................................... Page 7
9.4 Severability......................................... Page 7
9.5 No Third-Party Beneficiaries......................... Page 8
9.6 Amendment............................................ Page 8
9.7 Further Assurances................................... Page 8
9.8 Mutual Drafting...................................... Page 8
9.9 Governing Law........................................ Page 8
9.10 Dispute Resolution................................... Page 8
9.11 Counterparts......................................... Page 8
9.12 Entire Agreement..................................... Page 8
</TABLE>
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<PAGE> 3
CROSS-LICENSE AGREEMENT BETWEEN VARIAN AND NOVELLUS
CROSS-LICENSE AGREEMENT (together with Exhibit A hereto, the "Cross
License Agreement") dated as of May 7, 1997, by and between Varian Associates,
Inc., a Delaware corporation ("Varian"), and Novellus Systems, Inc., a
California corporation ("Novellus"). This Cross License Agreement shall be
effective as of the Closing Date of the Asset Purchase Agreement referenced
below (the "Effective Date").
RECITALS
A. Varian, directly and indirectly through various foreign and domestic
affiliates of Varian, is engaged in the business of developing, manufacturing
and distributing PVD and CVD thin film deposition equipment, through its Thin
Film System Business ("TFS") (at times herein referred to as the "TFS
Business");
B. Varian, directly and indirectly through various foreign and domestic
affiliates of Varian, is also engaged in the business of developing,
manufacturing and distributing ion implant equipment through its Ion Implant
System Business ("IIS") (at times herein referred to as the "IIS Business");
C. Pursuant to the Asset Purchase Agreement, dated as of May 7, 1997
(the "Asset Purchase Agreement"), by and between Varian and Novellus, Varian has
agreed to sell and cause to be transferred to Novellus, and Novellus has agreed
to purchase and accept the transfer from Varian and Varian's affiliates, certain
of the assets and properties used primarily in the TFS Business.
D. Varian desires to retain ownership of certain intellectual property
rights involved in the development, manufacture, testing and sale of the
products of both the TFS Business and the IIS Business, and is willing to grant
Novellus a license under these intellectual property rights.
E. Varian desires to retain ownership of certain intellectual property
rights previously licensed to others and subject to payment of royalties to
Varian, involved in the development, manufacture, testing and sale of the
products of the TFS Business, and is willing to grant Novellus a license under
these intellectual property rights.
F. Varian desires to receive, and Novellus, is willing to grant, a
license under the intellectual property transferred to Novellus pursuant to the
terms of the Asset Purchase Agreement.
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<PAGE> 4
G. Novellas desires to receive, and Varian is willing to grant, a
license under Varian intellectual property which was not transferred to Novellas
pursuant to the terms of the Asset Purchase Agreement.
THEREFORE, in consideration of these premises and the respective
representations, warranties and agreements contained herein, the parties agree
as follows:
1 DEFINITIONS
1.1 "TFS Intellectual Property" has the same meaning as TFS Intellectual
Property as defined in the Asset Purchase Agreement.
1.2 "TFS Products" means the products or components thereof manufactured by
the TFS Business as a current part of its business operation as of the
Effective Date, and products currently in development by the TFS
Business and derivative products thereof and improvement products
thereof.
1.3 "IIS Products" means the products or components thereof manufactured by
the IIS Business as a current part of its business operation as of the
Effective Date, and products currently in development by the IIS
Business and derivative products thereof and improvement products
thereof.
1.4 "Products of Varian" means products or components sold by Varian
businesses as of the Effective Date, and products currently in
development by Varian businesses and derivatives thereof and
improvements thereof.
1.5 "Retained Intellectual Property" means (i) those patents listed on
Exhibit A to this Cross License Agreement; (ii) patent applications and
invention disclosures set forth in a letter, dated the date hereof,
concurrently delivered by Varian to Novellas; and (iii) intellectual
property, other than patents and patent applications, owned or
controlled by Varian as of the Effective Date of this Cross License
Agreement, and used in the TFS Business as of the Effective Date and
which constitutes Excluded Assets as provided in Section 2.2 of the
Asset Purchase Agreement.
1.6 "Term" means the period starting with the Effective Date and continuing
until the termination or expiration of this Cross License Agreement, as
provided in Section 6.1.
1.7 "Varian Field of Use" means: products other than TFS Products.
1.8 "Novellus Field of Use" means: PVD and CVD thin film deposition
products.
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1.9 "Novellus Licensed Products" means any semiconductor manufacturing
equipment in the equipment in the Novellus Field of Use that are
developed, manufactured, sold or used by Novellus and its Subsidiaries
and shall include without limitation, the TFS Products.
1.10 "Subsidiary" means, with respect to a specified company, an entity
controlled, directly or indirectly by such company, including. without
limitation, by such company's beneficial ownership of 50% or more of
such entity's outstanding voting stock or other equity interests.
2 LICENSE GRANTS
2.1 VARIAN TO NOVELLUS: Varian hereby grants to Novellus, upon the terms
and conditions herein specified, a royalty free, nonexclusive,
irrevocable, world wide, perpetual license under the Retained
Intellectual Property to make, have made, use and sell Novellus
Licensed Products.
2.1.1 Subject to Section 2.4.1 of the Asset Purchase Agreement, Varian grants
to Novellus a sublicense, without the right to grant Anther
sublicenses, of all sublicensable rights granted to Varian in licenses
from third parties that are Excluded Assets, but which relate to the
ownership or use of the TFS Intellectual Property and the Retained
Intellectual Property, that are required to permit Novellus to conduct
business in the Novellus Field of Use.
2.1.2 Novellus shall not have the right to grant sublicenses to third parties
under the Retained Intellectual Property, except with Varian's prior
written permission.
2.2 NOVELLUS TO VARIAN: Novellus hereby grants to Varian, upon the term and
conditions herein specified, a royalty free nonexclusive, irrevocable,
world wide, perpetual license under the TFS Intellectual Property to
make, have made, use and sell Products of Varian outside the Novellus
Field of Use.
2.2.1 Subject to Section 2.4.1 of the Asset Purchase Agreement, Novellus
grants to Varian a sublicense, without the right to grant further
sublicenses, of all sublicensable rights granted to Varian in licenses
from third parties that arc Assets transferred to Novellus, but which
relate to the ownership or use of the Retained Intellectual Property
and are required to permit Varian to conduct business in the Varian
Field of Use.
2.2.2 Varian shall not have the right to grant sublicenses to third parties
under the TFS Intellectual Property, except with Novellus's prior
written permission.
2.3 SUBSIDIARIES. The license rights granted hereunder to each of Varian
and Novellus shall extend to and may be exercised by Subsidiaries of
either party. References herein to a party in this Section 2 and
Section 5 below shall be deemed to refer to such party and each of its
Subsidiaries. Each party shall be liable and responsible for full
compliance with this Cross License Agreement by each of its
Subsidiaries.
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2.4 FUTURE NOVELLUS PRODUCTS. Upon request by Novellus, Varian shall grant
Novellus a nonexclusive, royalty bearing license under the Retained
Intellectual Property to make, have made, use and sell semiconductor
manufacturing equipment outside the Novellus Field of Use, but Varian
shall not be required to grant any license to make, have made, use and
sell IIS Products. The royalty for such a license shall be a reasonable
royalty, provided that the royalty rate shall be no higher than the
lowest royalty rate in any license granted by Varian to another party
under the same intellectual property rights for the same or
substantially similar equipment for which Novellus requests a license.
2.5 FUTURE VARIAN PRODUCTS. Upon request by Varian, Novellus shall grant
Varian a nonexclusive, royalty bearing license under the TFS
Intellectual Property to make, have made, use and sell semiconductor
manufacturing equipment, other than IIS Products, in the Novellus Field
of Use, but Novellus shall not be required to grant any license to
make, have made, use and sell TFS Products. The royalty for such a
license shall be a reasonable royalty, provided that the royalty rate
shall be no higher than the lowest royalty rate in any license granted
by Novellus to another party under the same intellectual property
rights for the same or substantially similar equipment for which Varian
requests a license.
3 OWNERSHIP, TRANSFER OF KNOW HOW
3.1 Varian shall retain ownership of the Retained Intellectual Property
subject to the licenses granted in Section 2 of this Cross License
Agreement. This Cross License Agreement shall not transfer any
ownership rights to Novellus in the Retained Intellectual Property, and
shall not transfer any ownership rights to Varian in the TFS
Intellectual Property.
3.2 The licenses granted hereunder shall not extend to any improvements,
enhancements, modifications or inventions developed or created by a
party after the Effective Date, and the party developing or creating
such improvements, enhancements or inventions after the Effective Date
shall be the sole and exclusive owner thereof.
4 ENFORCEMENT OF RIGHTS
4.1 Varian may, at its sole option and expense, take action against any
infringement or misappropriation of the Retained Intellectual Property.
Any recovery by Varian as a result of such action shall belong
exclusively to Varian.
4.2 Novellus may, at its sole option and expense, take action against any
infringement or misappropriation of the TFS Intellectual Property. Any
recovery by Novellus as a result of such action shall belong
exclusively to Novellus.
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5 CONFIDENTIALITY
5.1 Novellus shall throughout the Term of this Cross License Agreement hold
all confidential information relating to Retained Intellectual Property
received from Varian in confidence, and shall preserve such
confidential information against any disclosure to third parties except
as otherwise expressly provided herein, using the same degree of care
it exercises with its own proprietary information of a like nature;
provided, however, that confidentiality shall not apply to information
which is or becomes published or publicly known through no fault of
Novellus; or which is rightfully received by Novellas from a third
party without an obligation of secrecy; and, provided, further, that
Novellus shall not be obliged to keep in confidence any information
that is inherently disclosed by the sale of Products of Varian or of
Novellus Licensed Products.
5.2 Varian shall throughout the Term of this Cross License Agreement hold
all confidential information relating to TFS Intellectual Property in
confidence, and shall preserve such confidential information against
any disclosure to third parties, except as otherwise expressly provided
herein, using the same degree of care it exercises with its own
proprietary information of a like nature; provided, however, that
confidentiality shall not apply to any information which is or becomes
published or publicly known through no fault of Varian; or which is
rightfully received by Varian from a third party without an obligation
of secrecy; and, provided, further, that Varian shall not be obliged to
keep in confidence any such information that is inherently disclosed by
the sale of Novellus Licensed Products or of Products of Varian.
5.3 Notwithstanding the foregoing, Varian shall have the right to disclose
the confidential information relating to the TFS Intellectual Property
and Novellus shall have the right to disclose the confidential
information relating to the Retained Intellectual Property as is
reasonably required in the exercise of its license rights hereunder
provided the recipient of such information agrees in writing to be
bound by confidentiality provisions no less restrictive than this
Section 5 with respect to any such confidential information so
disclosed.
6 TERM AND TERMINATION
6.1 The Term of this Cross License Agreement shall begin on the Effective
Date, and shall continue until the expiration of the last to expire
patent included in the TFS Intellectual Property or in the Retained
Intellectual Property, provided, however, that if the Asset Purchase
Agreement shall terminate pursuant to Section 12 thereof, this Cross
License Agreement shall terminate concurrently with the termination of
the Asset Purchase Agreement.
6.2 Upon the expiration of this Cross License Agreement, the field of use
restriction shall be removed from the license of any remaining
intellectual property rights, and both parties shall have the right to
make, use or sell products in any field of use.
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<PAGE> 8
7 ASSIGNMENT OF LICENSE
7.1 Novellus may assign its rights and obligations under this Cross License
Agreement to a successor in ownership of all or substantially all the
assets of the TFS Business or sublicense its rights and obligations
under this Cross License Agreement to a successor in ownership of
substantially all the assets relating to a TFS Product, on the
condition that such successor shall assume the performance of all the
terms and conditions of this Cross License Agreement to be performed by
Novellus as if the successor were named herein in the place of
Novellus.
7.2 Varian may assign its rights and obligations under this Cross License
Agreement to a successor in ownership of all or substantially all the
assets of the IIS Business or sublicense its rights and obligations
under this Cross License Agreement to a successor in ownership of
substantially all the assets relating to a Varian product, on the
condition that such successor shall assume the performance of all the
terms and conditions of this Cross License Agreement to be performed by
Varian as if the successor were named herein in the place of Varian.
8 EXTENT OF CERTAIN OBLIGATIONS
8.1 Nothing in this Cross License Agreement shall be construed as
conferring upon Varian or Novellus any license or any other right
unless expressly granted by the terms of this Cross License Agreement.
8.2 Varian represents that it has the full right and power to enter into
this Cross License Agreement and to perform its obligations pursuant to
the terms hereof, Novellus represents that it has the Ml right and
power to enter into this Cross License Agreement and to perform its
obligations pursuant to the terms hereof, provided that Novellus shall
have no responsibility for any breach of the foregoing representation
that is primarily the result of a breach by Varian of any term or
condition of the Asset Purchase Agreement.
9 MISCELLANEOUS PROVISIONS
9.1 NOTICES. All notices and other communications given or made pursuant
hereto shall be in writing and shall be deemed to have been duty given
or made as of the, date delivered or mailed if delivered personally or
mailed by registered or certified mail (postage prepaid, return receipt
requested), or sent by facsimile transmission (confirmation received)
to the parties at the following addresses and facsimile transmission
numbers (or at such other address or number for a party as shall be
specified by like notice), except that notices after the giving of
which there is a designated period within which to perform an act and
notices of changes of address or number shall be effective only upon
receipt:
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<TABLE>
<CAPTION>
<S> <C>
IF TO VARIAN: with a copy to:
Varian Associates, Inc. Varian Associates, Inc.
3050 Hansen Way 3050 Hansen Way
Palo Alto, California 94304-1000 Palo Alto, California 94304-1000
Attention: Chief Financial Officer Attention: General Counsel
Telecopy No.: (415) 424-5754 Telecopy No.: (415) 858-2018
Telephone No.: (415) 424-5320 Telephone No.: (415) 424-5352
IF TO NOVELLUS: with a copy to:
Novellus Systems, Inc. Morrison & Foerster LLP
3970 North First Street 755 Page Mill Road
San Jose, CA 95134 Palo Alto, CA 94304
Attention: Chief Financial Officer Attention: Michael C. Phillips, Esq.
Telecopy No.: (408) 858-2018 Telecopy No.: (415) 494-0792
Telephone No.: (408) 943-9700 Telephone No. (415) 813-5600
</TABLE>
9.2 SECTION 365(n) OF THE U.S. BANKRUPTCY CODE. All rights and licenses
granted pursuant to this Agreement by a licensor to a licensee are, and
shall otherwise be deemed to be, for purposes of Section 365(n) of the
U.S. Bankruptcy Code, licenses of rights to "intellectual property" as
defined under Section 101 of the Bankruptcy Code. The parties agree
that a licensee, as a licensee of such rights under this Agreement,
shall remain and may fully exercise all of its rights and elections
under the Bankruptcy Code. The parties further agree that, in the event
of a commencement of a bankruptcy proceeding by or against a licensor
under the Bankruptcy Code, the licensee shall be entitled to a complete
duplicate of any such intellectual property and all embodiments of such
intellectual property, and same, if not already in its possession shall
be promptly delivered to the licensee upon the licensee's written
request (i) upon any such commencement of a bankruptcy proceeding,
unless the licensor elects to continue to perform all of its
obligations under this Agreement, or (ii) if not delivered under (I)
above, upon the rejection of this Agreement by or on behalf of the
licensor
9.3 INTERPRETATION. When a reference is made, in this Cross License
Agreement to paragraphs or Exhibits, such reference shall be to a
paragraph or Exhibit to this Cross License Agreement unless otherwise
indicated. The words "include," "includes" and "including" when used
herein shall be deemed in each case to be followed by the words
"without limitation." The table of contents and the headings contained
in this Cross License Agreement are for reference purposes only and
shall not affect in any way the meaning or interpretation of this Cross
License Agreement.
9.4 SEVERABILITY. If any term or other provision of this Cross License
Agreement is invalid, illegal or incapable of being enforced by any
rule of law or public policy, all other conditions and provisions of
this Cross License Agreement shall nevertheless remain in full force
and effect so long as the economic or legal substance of the
transactions
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contemplated hereby is not affected in any manner adverse to any Party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Cross License Agreement so as to
effect the original intent of the parties as closely as possible in an
acceptable manner to the end that transactions contemplated hereby are
fulfilled to the greatest extent possible.
9.5 NO THIRD-PARTY BENEFICIARIES. This Cross License Agreement is for the
sole benefit of the parties hereto and their permitted assigns and
nothing herein expressed or implied shall give or be construed to give
to any Person, other than the parties hereto and such assigns, any
legal or equitable rights hereunder.
9.6 AMENDMENT. This Cross License Agreement may not be amended or modified
except by an instrument in writing signed by Varian and Novellus.
9.7 FURTHER ASSURANCES. Each party agrees to cooperate fully with the other
parties and to execute such further instruments, documents and
agreements and to give such further written assurances as may be
reasonably requested by any other party to evidence and reflect the
transactions described herein and contemplated hereby and to carry into
effect the intents and purposes of this Cross License Agreement.
9.8 MUTUAL DRAFTING. This Cross License Agreement is the joint product of
Novellus and Varian and each provision hereof has been subject to the
mutual consultation, negotiation and agreement of Novellus and Varian
and shall not be construed for or against any party hereto.
9.9 GOVERNING LAW. This Cross License Agreement shall be governed by, and
construed in accordance with, the laws of the State of California
(without giving effect to its choice of law principles).
9.10 DISPUTE RESOLUTION. Any dispute, controversy or claim between the
parties relating to, arising out of or in connection with this Cross
License Agreement (or any subsequent agreements or amendments thereto).
including as to its existence, enforceability, validity,
interpretation, performance, breach or damages, including claims in
tort, whether arising before or after the termination of this Cross
License Agreement, shall be settled in accordance with the procedures
set forth in Section 13.8 of the Asset Purchase Agreement.
9.11 COUNTERPARTS. This Cross License Agreement may be executed in one or
more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and the
same agreement.
9.12 ENTIRE AGREEMENT. This Cross License Agreement, together with Exhibits
hereto, and the documents and instruments and other agreements among
the parties delivered pursuant
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hereto, constitute the entire agreement and supersede all prior
agreements and undertakings, both written and oral, other than the
Asset Purchase Agreement and the Confidentiality Agreement dated
February 28, 1997, between Varian and Novellus with respect to the
subject matter hereof and are not intended to confer upon any other
person or entity any rights or remedies hereunder, except as otherwise
expressly provided herein. This Cross License Agreement is subject to
the terms of those agreements, including the noncompete covenant in
Section 7.6 of the Asset Purchase Agreement.
IN WITNESS WHEREOF, Varian and Novellus have caused this Cross License
Agreement to be executed as of the date first written above by their respective
officers thereunto duly authorized.
VARIAN ASSOCIATES, INC.,
a Delaware corporation
By____________________________________
Name:
Title:
NOVELLUS SYSTEMS, INC.
a California corporation
By____________________________________
Name:
Title:
Page 9
<PAGE> 12
Pursuant to Item 601(b)(2) of Regulation S-K, the following exhibit to this
Cross-License Agreement Between Varian Associates, Inc. and Novellus Systems,
Inc. has been omitted. Such exhibit will be submitted to the Securities and
Exchange Commission upon request.
Exhibit A: A list of the patents, pursuant to which the Registrant is granted by
Varian a nonexclusive license pursuant to the terms of the Cross-License
Agreement.
<PAGE> 1
EXHIBIT 2.8
PARTS SUPPLY AGREEMENT
BY AND BETWEEN
VARIAN ASSOCIATES, INC.
("SELLER")
AND
NOVELLUS SYSTEMS, INC.
("BUYER")
This PARTS SUPPLY AGREEMENT ("Parts Agreement") is entered into this
7th day of May 1997 to be effective as of the Closing Date (as defined in the
Asset Purchase Agreement referred to below) ("Effective Date") by Varian
Associates, Inc. ("Varian"), a Delaware corporation, 3050 Hansen Way, Palo Alto,
CA 94304 ("Seller") and Novellus Systems, Inc., a California corporation, 390 N.
First Street, San Jose, CA 95134 ("Buyer").
WHEREAS Seller and Buyer are concurrently herewith entering into that
certain ASSET PURCHASE AGREEMENT dated May 7, 1997 ("Agreement") pursuant to
which Buyer is acquiring Seller's Business as further defined in the Agreement
("Business"); and
WHEREAS Seller currently manufactures and transfers from Seller's
operations other than the Business via intercompany transfer certain parts,
components and subassemblies currently used in the Business for the
manufacturing of products and sales to customers of the Business and currently
purchases from Seller's third party outside vendors ("Vendors") certain parts,
components and subassemblies currently used in the Business for the
manufacturing of products and sales to customers of the Business (collectively
referred to herein as "Seller Supplied Parts").
NOW THEREFORE, in consideration of the mutual covenants, agreements and
representations herein, Seller agrees to supply any and all of Buyer's
requirements for Seller Supplied Parts, all on the terms and conditions set
forth herein.
1. APPLICABILITY
During the Term (as defined below), the terms and conditions of this Parts
Agreement shall apply exclusively to all sales of Seller Supplied Parts by
Seller to Buyer and shall govern over any and all conflicting terms and
conditions in or on any specific Buyer purchase order ("Purchase Order") or
other Buyer documentation, preprinted or otherwise, and any such Buyer terms and
conditions are hereby excluded. During the Term, this Parts Agreement shall
become a part of each quotation issued by Seller to Buyer ("Quotation") and each
Purchase Order issued by Buyer to Seller for Seller Supplied Parts whether or
not referenced on such Quotation or Purchase Order.
2. TERM
The term of this Parts Agreement ("Term") shall be a period of three (3) years
from the Closing Date of the Agreement ("Closing Date"). The parties may use
this Parts Agreement on individual orders beyond the Term on a case by case
basis. If the Agreement shall terminate pursuant to Section 12 thereof, this
Parts Agreement shall terminate concurrently with the termination of the
Agreement.
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<PAGE> 2
3. NONEXCLUSIVITY
Purchases of Seller Supplied Parts shall be nonexclusive, meaning that Buyer may
purchase Seller Supplied Parts, or any parts or components competitive in
function or use therewith, from others at any time, and Seller may sell Seller
Supplied Parts, or any parts or components competitive in function or use
therewith, to others at any time, provided, however, that Seller shall not sell
to third parties any Seller Supplied Parts that are based on the Business's
unique or proprietary designs.
4. PRICES
4.1 SELLER SUPPLIED PARTS MANUFACTURED BY SELLER
With respect to Seller Supplied Parts manufactured by Seller or any affiliate of
Seller for use in whole or in part for sales to customers of the Business,
Seller shall, during the Term, continue to manufacture such Seller Supplied
Parts, or have such Seller Supplied Parts manufactured by others, and in either
case shall sell the same to Buyer at cost plus twenty percent (20%).
4.2 VENDOR SUPPLY ARRANGEMENTS
With respect to Seller Supplied Parts currently purchased from Seller's Vendors
via supply contracts, purchase orders and any other purchase arrangements, of
Seller with Vendors ("Vendor Supply Arrangements") existing on or before the
Closing Date and/or developed thereafter that are not otherwise assigned to
Buyer under the Agreement, Seller shall, during the Term, continue to purchase
such Seller Supplied Parts and sell the same to Buyer at not mom than the
discounted prices paid by Seller. Such prices shall apply as between Seller and
Buyer whether the applicable Vendor Supply Arrangement is for Seller Supplied
Parts to be used only in the Business, or may be used in part in the Business,
so that Buyer shall benefit from the pricing available to Seller under any
Vendor Supply Arrangements not otherwise assigned to Buyer that include Seller
Supplied Parts.
5. PURCHASE QUANTITY FORECASTS AND COMMITMENTS
In order to provide Seller with the assurances it requires in order for Seller
to procure in a cost effective manner, components and materials, or finished
Seller Supplied Parts from its Vendors, Buyer shall transmit to Seller a rolling
twelve (12) mouth forecast of its requirements for Seller Supplied Parts to be
purchased directly by Buyer from Seller hereunder, commencing within thirty (30)
days of the Closing Date and at monthly intervals thereafter throughout the
Term. Any forecasts of Buyer's anticipated purchases of Seller Supplied Parts
submitted to Seller shall be good faith estimates for informational purposes
only and shall not be binding upon Buyer. Authorization by Buyer for Seller to
manufacture and/or purchase and deliver Seller Supplied Parts, and the purchase
quantities thereof, shall be accomplished by means of Buyer's Purchase Orders
which shall be firm and binding on Buyer. Buyer shall be responsible for and
shall reimburse Seller for any expenditures or commitments made by Seller in
response to any such authorizations by Buyer.
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<PAGE> 3
6. STANDARD TERMS AND CONDITIONS
All purchases by Buyer from Seller's Vacuum Products Business shall be in
accordance with, and shall be deemed to incorporate, Varian Instruments Terms
and Conditions of Sale, INS 040694, attached hereto as Exhibit A. All purchases
by Buyer from Seller's Ion Implant System Business shall be in accordance with,
and shall be deemed to incorporate, Varian Semiconductor Equipment Business
Terms and Conditions of Sale, SEB 100294, attached hereto as Exhibit B. All
purchases by Buyer from Seller's Tempe Electronics Center shall be in accordance
with, and shall be deemed to incorporate, the standard Purchase Agreement for
all Products Manufactured by Varian Tempe Electronics Center, attached hereto as
Exhibit C. In the event of any conflict between the terms and conditions set
forth in Exhibits A, B or C on the one hand, and the terms and conditions set
forth in the body of this Parts Agreement on the other hand, the latter shall
govern.
7. MISCELLANEOUS PROVISIONS
This Agreement, including the attached Exhibits, constitutes the entire
agreement of the parties hereto with respect to the sale of Products by Varian
to Buyer and supersedes all prior representations, warranties, agreements, and
understandings, of any kind, written and oral, of the parties hereto. It may not
be modified or amended except by written amendment specifically referencing this
Agreement signed by the authorized representatives of the parties. All notices
shall be given in writing and be personally delivered or sent by postage prepaid
mail, or express delivery company, addressed to the parties at their addresses
first mentioned above or as otherwise designated to the other by notice as
herein required. In the event of any conflict between the provisions of this
Parts Agreement and the Agreement, the terms and conditions of this Parts
Agreement shall govern.
IN WITNESS WHEREOF, the parties hereto have caused this Parts Agreement
to be executed as of the date first written above by their respective officers
thereunto duly authorized.
Varian Associates, Inc, ("Seller") Novellus Systems, Inc. ("Buyer")
By /s/ [SIG] By /s/ [SIG]
------------------------------- -------------------------------
Robert A. Lemos John Chenault
Title Vice President, Finance and Title Executive Vice
---------------------------- ----------------------------
Chief Financial officer President, Operations
Date May 7, 1997 Date May 7, 1997
----------------------------- -----------------------------
Exhibit A Varian Instruments Terms and Conditions of Sale
Exhibit B Varian Semiconductor Equipment Business Terms and Conditions
of Sale
Exhibit C Standard Purchase Agreement for all Products Manufactured by
Varian Tempe Electronics Center
3
<PAGE> 4
Exhibit A
VARIAN INSTRUMENTS
Chromatography Systems, Optical Spectroscopy, Sample Preparation
Products and Vacuum Products
("Varian")
TERMS AND CONDITIONS OF SALE
1. APPLICABLE TERMS AND CONDITIONS
All Varian Products and services (including Varian-produced hardware, firmware
and software) are furnished only on the terms and conditions stated herein and
on the face of the applicable Varian quotation to the exclusion of any Buyer
terms and conditions in any specific order documentation, preprinted or
otherwise, except as to indentification and quantity of Products. Varian's
performance of any contract is expressly conditional on Buyer's agreement to
Varian's terms and conditions of sale, and in the absence of such agreement
shall be for Buyer's convenience only, shall not create any contractual
obligation and shall not be construed as acceptance by Varian of Buyer's term
and conditions printed or stated in its orders. Buyer's acceptance of any
Product or service shall be deemed acceptance of Varian's terms and conditions
below.
2. ORDERS, QUOTATIONS AND PRICES
Varian's prices, quotations and contracts for Products and services are subject
to the following, unless otherwise stated in Varian's quotation or other writing
signed by an authorized representative of Varian. In case of a conflict between
the terms and conditions stated herein and those appearing on the face hereof,
the latter shall control.
(a) All purchase orders shall be subject to written acceptance by Varian
only at its plant or distribution center from which the Products are
shipped or at Varian's principal office in Palo Alto, California.
Varian's acceptance of any purchase order is expressly conditioned
upon compliance with all applicable codes and regulations affecting
Products.
(b) UNLESS OTHERWISE SPECIFIED IN WRITING, ALL QUOTATIONS ARE FIRM FOR, AND
EXPIRE, THIRTY (30) DAYS AFTER ITS DATE AND CONSTITUTE OFFERS, provided
that, budgetary quotations and estimates, and quotations to non-U.S.
customers, are solicitations for offers to purchase, are for
preliminary information only and shall neither constitute offers, firm
pricing, nor impose any responsibility or liability upon Varian.
(c) All prices quoted are for Products and services only. Varian's prices
exclude and Buyer shall be responsible for all ordinary and necessary
charges incidental to the sale incurred by Varian and billed by Varian
to Buyer, including but not limited to charges for taxes (including,
without limitation, any sales tax, use tax or similar tax), license
fees, customs fees, duties and other related charge. The total price to
Buyer shall be adjusted to include costs of transportation, special
packing and insurance incurred by Varian in accordance with agreed
shipping and risk terms as referred to below.
(d) Clerical and typographical errors are subject to correction.
(e) Prices quoted are for Products only and do not include technical data,
proprietary rights of any kind, patent rights, qualification,
environmental or other than Varian's standard tests, and other than
Varian's normal domestic commercial packaging, unless expressly agreed
to in writing by Varian. All published prices are subject to change
without notice.
(f) Published weights and dimensions are approximate only. Manuals,
programs, listings, drawings, or other documentation required hereunder
must be referenced specifically and will be the latest applicable
version.
3. TERMS OF PAYMENT
UNLESS CREDIT IS GRANTED, PAYMENT IS DUE UPON DELIVERY. The price of each
Product is based upon the payment schedule set forth in Varian's Quotation. Any
alternative payment schedule and resulting price change must be approved in
writing by Varian. All payments for Products released and shipped on approved
credit
1
<PAGE> 5
accounts shall be due in full thirty (30) days from date of invoice unless
otherwise provided. Buyer's failure to comply with the above shall be regarded
as a fundamental breach of contract. Past due balances shall be subject to a
service charge up to the maximum amount permitted by applicable law. Varian may
cancel or delay delivery of Products in the event of arrearage in Buyer's
account. Varian may waive any default without waiving my prior or subsequent
default.
Varian shall retain a purchase money security interest in all Products, and the
proceeds thereof, until Buyer has made payment in full in accordance with the
terms hereof. Buyer shall cooperate fully with Varian to execute such documents
and accomplish such filings and/or recordings as Varian may deem necessary for
the protection of its interests in the Products furnished to Buyer.
4. TRANSPORTATION AND RISK OF LOSS
Except as otherwise provided herein, or in accordance with expressly agreed
Incoterms 1990, all shipments are FOB Varian's plant with all transportation and
insurance at the expense of Buyer, and risk of loss or damage to Products shall
pass upon delivery to the transportation company. For Products shipped FOB
destination within the United States, risk of loss or damage shall pass to Buyer
upon arrival of the transportation company at Buyer's dock. For Products
shipped outside the United States and its possessions, title and risk of loss or
damage shall pass from Varian to Buyer when Products arrive at the country of
destination, notwithstanding any shipment terms to the contrary. Unless
otherwise expressly agreed in writing, Varian may insure to full value of
Products shipped at Buyer's expense or declare full value to the transportation
company at time of shipment. Buyer shall inspect all Products upon receipt and
file all claims with the transportation company when them is evidence of
damage, concealed or external.
5. PERFORMANCE
Neither party shall be liable for any delay in delivery or other performance
hereunder which is due to unforeseen circumstances, or to causes beyond its
control, including, without limitation, strike, lockout, riot, war, fire, act of
God, accident, failure or breakdown of components necessary to order completion;
supplier, subcontractor or Buyer caused delays; inability to obtain or
substantial rises in the prices of labor, materials or manufacturing facilities;
curtailment of or failure to obtain sufficient electrical or other energy
supplies, technical difficulties; or compliance with any governmental law,
regulation, or order, including but not limited to U.S. Export Administration
Regulations. Provided any such delay is neither material nor indefinite,
performance shall be deemed suspended during and extended for such time as it is
so delayed, and thereafter the other party shall accept performance hereunder.
Delay in performance shall not be considered material or indefinite unless it
exceeds or is reasonably estimated to exceed six (6) months. Varian may
substitute remanufactured parts and components when, in its opinion,
substitution is appropriate. All substituted items meet the same quality
standards as other materials and are covered by the same warranty.
6. ACCEPTANCE
The furnishing of a Product by Varian to the Buyer shall constitute acceptance
of that Product by Buyer, unless notice of defect or nonconformity is received
by Varian in writing within thirty (30) days of receipt of the Product at
Buyer's designated receiving address; provided that, for Products for which
Varian agrees in writing to perform acceptance testing after installation, the
completion of Varian's applicable acceptance tests, or execution of Varian's
acceptance form by Buyer, shall constitute acceptance of the Product by Buyer.
Notwithstanding the above, any use of a Product by Buyer, its agents, employees,
contractors or licensees, for any purpose after its receipt, shall constitute
acceptance of the Product by Buyer. Varian may repair or, at its option, replace
defective or nonconforming parts after receipt of notice of defect or
nonconformity.
7. ASSIGNMENT AND TERMINATIONS
No order accepted by Varian may be terminated, cancelled, modified or assigned
by Buyer except by mutual agreement in writing. Any attempt to do so without
Varian's written consent shall be void. In any such event, with or without
Varian's consent, for any order accepted by Varian and terminated or cancelled
by Buyer prior to delivery, Buyer agrees to pay Varian a charge of not less than
fifteen percent (15%) of the order value to cover costs of processing and order
handling; for any order terminated or cancelled by Buyer after delivery, Buyer
agrees to pay Varian an additional charge determined solely by Varian to cover
lost profits as determined in accordance with the Uniform Commercial Code or
other applicable law.
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<PAGE> 6
8. PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS
Varian shall, at its own expense, defend or settle any claim that the design or
manufacture of any Product furnished in Varian's commercial line of Products, or
manufactured to specifications set by Varian, constitutes infringement of any
patents or other intellectual property rights of the United States, Canada,
Japan, the European Community country in which the Buyer takes delivery of the
Product or in another country where Buyer takes delivery of the Product if
Varian agrees in writing to include such a country; provided Buyer informs
Varian immediately and supports Varian if requested. If the Product is held to
constitute an infringement and its use is enjoined as a result of any lawsuit or
proceeding, Varian shall, at its own expense and sole option, either procure a
license to protect Buyer against the claim, modify or replace the Product with a
noninfringing product, or accept return of the Product and refund its purchase
price, less reasonable depreciation. Varian EXPRESSLY EXCLUDES from liability
and Buyer shall hold Varian harmless from: any other claims, liabilities,
expenses, costs and damages resulting from claimed infringement of patents,
trademarks, copyrights or any other intellectual property riots; any Buyer
expenses of defense and any claims settled by Buyer without Varian's prior
written consent; any claims arising from a use or combination of the Product
with any other equipment, processes, programming applications, apparatus or
materials not furnished by Varian under this contract; any claims based on items
made with the Product furnished by Varian under this contract; or any claims
arising out of compliance by Varian with Buyer's designs, specifications or
instructions. The foregoing states Varian's entire liability for any claim based
upon or related to any alleged infringement of any patent or other intellectual
property rights and is subject to the DAMAGES AND LIABILITY provisions herein.
9. WARRANTY
Varian warrants each standard Product sold by it to be free from defects in
material and workmanship for the periods and in accordance with the terms and
conditions stated below. The warranty period for any Products, parts or
accessories sold hereunder is limited to the period specified by Varian on the
face of Varian's quotation, or as otherwise specified on a "Varian Warranty"
furnished by Varian to Buyer in writing which is incorporated herein by this
reference, or as otherwise mutually agreed upon in writing. If no period of time
is stated, then such warranty is limited to ninety (90) days.
The warranty period begins upon Buyer's acceptance of the Products, parts or
accessories as provided in the ACCEPTANCE provisions herein. For some Products,
the warranty period begins upon completion of installation where installation is
paid for by Buyer or included in the purchase price. However, if Buyer schedules
or delays installation more than thirty (30) days after delivery, then the
warranty period starts on the 31st day from date of shipment. In all other cases
the warranty period begins on the date of shipment from Varian to the original
Buyer.
Software and firmware ("Software") furnished by Varian in or for use with
Varian's Products is warranted only to be free of defects in materials which
cause failure to execute programming instructions and is not warranted against
interruptions or errors in operations. Software warranty shall be for a period
of ninety (90) days from the date of system acceptance and is subject to the
terms and conditions of any applicable Varian license agreement including any
warranty provisions. Varian makes no warranty that the operation of any software
or firmware will be uninterrupted or error free.
The sole and exclusive remedy under warranty shall be replacement of defective
parts, or at Varian's option, repair of instrument malfunctions which in the
sole opinion of Varian are due or traceable to defects in original materials or
workmanship, provided that, Varian may, as an alternative, elect to refund an
equitable portion of The purchase price of the Product Replacement or repair
under warranty does not extend the original warranty period.
If installation is delayed due to Buyer's inability to provide adequate
facilities or utilities, or due to its failure to comply with Varian's
reasonable pre-installation instructions, Varian will charge Buyer for labor and
other expenses involved in making multiple or follow-up installation service
calls.
This warranty does not cover Buyer-supplied software, equipment warranted by
another manufacturer, or replacement of expendable, consumable or limited life
items.
This warranty shall be void in the event of accident, abuse alteration, misuse,
neglect, breakage, improper operation
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<PAGE> 7
or maintenance, unauthorized or improper modification or tampering, use in an
unsuitable physical environment, use with a marginal power supply, or use with
other inadequate facilities or utilities. Reasonable care must be used to avoid
hazards. Varian expressly disclaims responsibility for loss or damage caused by
use of its products other than in accordance with published operating
procedures.
If a Product is returned to Varian for replacement, repair or credit, Buyer
shall prepay the cost of shipping and be responsible for loss or damage in
transit. Varian will return Products to Buyer prepaid and insured and will bill
Buyer for shipping costs. Buyer shall file claims for loss or damage in
transmit.
THIS LIMITED WARRANTY IS EXPRESSLY IN LIEU OF AND EXCLUDES ALL OTHER EXPRESS OR
IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE, USE, OR APPLICATION.
10. DAMAGES AND LIABILITY
VARIAN'S TOTAL LIABILITY IN DAMAGES OR OTHERWISE SHALL NOT EXCEED THE PAYMENT,
IF ANY, RECEIVED BY VARIAN FOR THE UNIT OF PRODUCT OR SERVICE FURNISHED OR TO
BE FURNISHED, AS THE CASE MAY BE, RESULTING IN THE LOSS OR DAMAGE CLAIMED. IN
NO EVENTS SHALL BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR
SPECIAL LOSS OR DAMAGES OF ANY KIND, SUCH AS BUT NOT LIMITED TO LOST BUSINESS
REVENUE, LOST PROFITS OR COSTS OF DOWNTIME RESULTING FROM VARIAN'S PRODUCTS OR
SERVICES, HOWEVER, CAUSED, WHETHER BASED ON CONTRACT, TORT (INCLUDING
NEGLIGENCE) OR ANY OTHER LEGAL THEORY. Liability to third parties for bodily
injury, including death, resulting from Varian's performance or Products shall
be determined in accordance with applicable law and shall not be affected by
the liability limitations stated above in this paragraph.
11. INDEMNITIES
Notwithstanding any fault or neglect attributable to Varian, Varian shall have
no responsibility whatsoever for, and Buyer shall indemnify, defend and hold
Varian harmless from, any and all damage or injury to persons or property which
may arise from or related to: (1) any use, operation or service of any Product
contrary to any written warning or instruction given by Varian with respect to
such Product, including but not limited to unauthorized use and/or modification
of any equipment, components, software or accessories by any user, or (2) any
liability of Buyer with respect to OSHA, toxic substances, air quality, water
quality, hazardous waste, Superfund or other environmental liability, including
but not limited to fines, penalties, cleanup costs or tort, related to the use,
operation or service of any Product, or (3) the design, manufacture, purchase,
sale, installation, replacement, service, use, misuse and/or reuse of any
product supplied by Varian as a convenience to Buyer that is not manufactured by
Varian and is not offered by Varian in its standard published catalog of
Products.
12. DISPUTES/ARBITRATION
All disputes, controversies or claims of any kind arising from or in any way
related to this contract, its breach, its termination, its invalidity, or the
Products, including the jurisdiction of the arbitral panel, shall be settled by
final and binding arbitration. For sales to U.S. customers, arbitration shall
be in Palo Alto, California under the rules and procedures of the American
Arbitration Association ("AAA") and shall be governed by the commercial law of
the state from which the Product is shipped. If the sale is international,
arbitration shall be conducted under the AAA's International Arbitration Rules
and the commercial laws of the UN Convention on contracts for the International
Sale of Goods (CISG). If the sale is between entities within another country,
the commercial law of that country and the Jurisdiction provisions of Varian's
standard terms and conditions of sale for that country shall apply. The
arbitral tribunal shall not award punitive damages. The arbitral tribunal award
shall be final and binding, shall be the sole and exclusive remedy regarding
any and all claims and counterclaims presented, and may not be reviewed by or
appealed to any court except for enforcement. No claims, regardless of form,
arising out of, or in any way connected with this contract, the Products or
services furnished by Varian, may be brought by Buyer more than one (1) year
after the cause of action has accrued or performance under this contract has
been completed or terminated, whichever is earlier.
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<PAGE> 8
EXHIBIT B
VARIAN ASSOCIATES, INC.
SEMICONDUCTOR EQUIPMENT BUSINESS
("VARIAN")
TERMS AND CONDITIONS OF SALE
Ion Implant Systems, Gloucester, MA/Thin Film Systems/Customer Support,
Palo Alto, CA
1. APPLICABLE TERMS AND CONDITIONS
All Varian Products, including Varian-produced hardware, firmware and software
("Products") and services are furnished only on the terms and conditions stated
herein and on the face of the applicable Varian quotation and exclude any Buyer
terms and conditions in any specific order documentation, preprinted or
otherwise, except as to identification and quantity of Products. Varian's
performance of any contract is expressly conditional on Buyer's agreement to
Varian's terms and conditions of sale, and in the absence of such agreement
shall be for Buyer's convenience only, shall not create any contractual
obligation and shall not be construed as acceptance by Varian of Buyer's terms
and conditions printed or stated in its orders. Buyer's acceptance of any
Product or service shall be deemed acceptance of Varian's terms and conditions
below.
2. ORDERS, QUOTATIONS AND PRICES
Varian's prices, quotations and contracts for Products and services are subject
to the following, unless otherwise stated in Varian's quotation or other
writing signed by an authorized representative of Varian. In case of a conflict
between the terms and conditions stated herein and those appearing on the face
hereof, the latter shall control:
(a) All purchase orders shall be subject to written acceptance by Varian
only at its plant or distribution center from which the Products are
shipped or at Varian's principal office in Palo Alto, California.
(b) UNLESS OTHERWISE SPECIFIED IN WRITING, ALL QUOTATIONS ARE FIRM FOR, AND
EXPIRE, THIRTY (30) DAYS AFTER ITS DATE AND CONSTITUTE OFFERS, provided
that, budgetary quotations and estimates, and quotations to non-U.S.
customers, are solicitations for offers to purchase, are for preliminary
information only and shall neither constitute offers, firm pricing, nor
impose any responsibility or liability upon Varian.
(c) All prices quoted are for Products and services only. Varian's prices
exclude and Buyer shall be responsible for all ordinary and necessary
charges incidental to the sale incurred by Varian and billed by Varian
to Buyer, including but not limited to charges for taxes (including,
without limitation, any sales tax, use tax or similar tax), license
fees, customs fees, duties and other related charges. The total price to
Buyer shall be adjusted to include costs of transportation, special
packing and insurance incurred by Varian in accordance with agreed
shipping and risk terms as referred to below.
(d) Clerical and typographical errors are subject to correction.
(e) Prices quoted are for Products only and do not include installation,
technical data, proprietary information, patent rights, qualification,
environmental or other than Varian's standard tests, and other than
Varian's normal domestic commercial packaging, unless expressly agreed
to in writing by Varian. All published prices are subject to change
without notice.
(f) Published weights and dimensions are approximate only. Manuals,
programs, listings, drawings, or other documentation required hereunder
must be referenced specifically and will be the latest applicable
version.
3. TERMS OF PAYMENT
UNLESS CREDIT IS GRANTED, PAYMENT IS DUE UPON DELIVERY. All payments for
Products released and shipped on approved credit accounts shall be due in full
thirty (30) days from date of invoice unless otherwise provided. Buyer's
failure to comply with the above shall be regarded as a fundamental breach of
contract. Varian may cancel or delay delivery of Products in the event of an
arrearage in Buyer's account. Varian shall retain a purchase money security
interest in all Products, and the proceeds thereof, until Buyer has made
payment in full in accordance with the terms hereof. Buyer shall cooperate
fully with Varian to execute such documents and accomplish such filings and/or
recordings as Varian may deem necessary for the protection of its interests in
the Products furnished to Buyer.
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<PAGE> 9
4. TRANSPORTATION AND RISK OF LOSS
Except as otherwise provided herein, or in accordance with expressly agreed
Incoterms 1990, all shipments are FCA Varian's plant with all transportation and
insurance at the expense of Buyer, and risk of loss or damage to Products shall
pass upon delivery to the transportation company. For Products shipped FCA
destination within the United States, risk of loss or damage shall pass to
Buyer upon arrival of the transportation company at Buyer's dock. For Products
shipped OUTSIDE the United States and its possessions, title and risk of loss
or damage shall pass from Varian to Buyer when Products arrive at the country
of destination, notwithstanding any shipment terms to the contrary. Unless
otherwise expressly agreed in writing, Varian may insure to full value of
Products shipped at Buyer's expense or declare full value to the
transportation company at time of shipment. Buyer shall inspect all Products
upon receipt and file all claims with the transportation company when there is
evidence of damage, concealed or external. Products shipped to storage shall be
governed by a separate Storage Agreement.
5. PERFORMANCE
Neither party shall be liable for any delay in delivery or other performance
hereunder which is due to unforeseen circumstances, or to causes beyond its
control, including, without limitation, strike, lockout, riot, war, fire, act
of God, accident, Buyer caused delays, inability to obtain or substantial rises
in the prices of labor, materials or manufacturing facilities, curtailment of
or inability to obtain sufficient electrical or other energy supplies, or
compliance with any governmental law, regulation, or order, including but not
limited to U.S. Export Administration Regulations. Provided any such delay is
neither material nor indefinite, performance shall be deemed suspended during
and extended for such time as it is so delayed, and thereafter the other party
shall accept performance hereunder. Delay in performance shall not be
considered material or indefinite unless it exceeds or is reasonably estimated
to exceed six (6) months. Varian may substitute remanufactured parts and
components when, in its opinion, substitution is appropriate. All substituted
items will meet the same quality standards as other materials and are covered
by the same warranty.
6. ACCEPTANCE
The furnishing of a Product by Varian to the Buyer shall constitute acceptance
of that Product by Buyer, unless notice of defect or nonconformity is received
by Varian in writing within thirty (30) days of receipt of the Product at
Buyer's designated receiving address; provided that, for Products for which
Varian agrees in writing to perform acceptance testing after installation, the
completion of Varian's applicable acceptance tests, or execution of Varian's
acceptance form by Buyer, shall constitute acceptance of the Product by Buyer.
Notwithstanding the above, any use of a Product by Buyer, its agents,
employees, contractors or licensees, for any purpose after its receipt, shall
constitute acceptance of the Product by Buyer. Varian may repair or, at its
option, replace defective or nonconforming parts after receipt of notice of
defect or nonconformity.
7. PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS
Varian shall, at its own expense, settle or defend any proceeding or claim
against Buyer alleging that the design or manufacture of any Product furnished
in Varian's commercial line of Products or manufactured to Varian
specifications infringes any patents or other intellectual property rights of
the United States, Canada, Japan or the European Union country in which the
Buyer takes delivery of the Product. Varian shall pay all costs, damages and
attorney's fees that a court finally awards as a result of such proceeding or
claim. To qualify for such defense or payment, Buyer shall (a) give Varian
prompt written notice of any such claim or proceeding, and (b) allow or obtain
for Varian the right to control the defense of such claim or proceeding and all
related settlement negotiations.
If the Varian Product is held to be infringing and its use is enjoined as a
result of any lawsuit or proceeding, Varian shall, at its own expenses and sole
option, either:
(a) Procure a license to protect Buyer against the claim; or
(b) Replace the infringing Product or part thereof with a
non-infringing product or part or modify it to be
non-infringing; or
(c) If all such remedies are infeasible or commercially
unreasonable, accept return of the infringing Product and
refund its purchase price, less reasonable depreciation.
Varian shall have no liability for:
(1) Buyer's own expense of defending such claims; or
(2) Settlements paid by Buyer without Varian's prior written
consent; or
(3) Claims arising from a use or combination of Varian Products
with other equipment or processes not furnished by Varian,
or from modifications made by Buyer or by a third party on
behalf of Buyer; or
(4) Claims based on items made with the Products; or
(5) Claims arising because of Varian's compliance with Buyer's
designs, specifications or instructions for the Product
furnished by Varian.
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<PAGE> 10
This section states Varian's entire liability for any claim based upon or
related to any alleged infringement of patents or other intellectual property
rights, and Varian's obligations hereunder are subject to the DAMAGES AND
LIABILITY provisions herein.
8. WARRANTY
Varian warrants products manufactured and sold by Varian ("Products") and
firmware and software media furnished by Varian in or for use with Products
("Software") to be free from defects in material and workmanship and to comply
with operational features of published Varian specifications at the time of
sale. Warranty for services provided by Varian in connection with Products
("Services") shall be as stated in Varian terms and conditions of service for
specific Products.
WARRANTY PERIODS -- PRODUCTS, PARTS AND SERVICES: Varian's warranty for
Products shall extend for a period of twelve (12) months from the date of
system acceptance (as provided in the ACCEPTANCE provisions herein). Where
Varian provides installation and on-site acceptance testing of Products, the
warranty period shall be twelve (12) months from date of acceptance but in no
event more than fifteen (15) months from date of shipment of the Products from
Varian. Warranty for non-consumable parts, components, accessories, system
retrofits and upgrades, purchased separately from original orders for Products
shall extend for a period of ninety (90) days from the date of shipment.
Warranty for Services including training shall extend for a period of ninety
(90) days from the date Services were provided, or as otherwise stated in Varian
terms and conditions for Services.
SOFTWARE WARRANTY AND PERIOD: Software and firmware ("Software") furnished by
Varian in or for use with Varian's Products is warranted only to be free of
defects in materials which cause failure to execute programming instructions and
is not warranted against interruptions or errors in operation. Software warranty
shall be for a period of ninety (90) days from the date of system acceptance and
is subject to the terms and conditions of any applicable Varian license
agreement including any warranty provisions. Varian makes no warranty that the
operation of any software or firmware will be uninterrupted or error free.
WARRANTY REMEDIES: Buyer's sole and exclusive remedy under warranty shall be
repair or at Varian's option replacement of defective Products, parts,
accessories or Software. If in Varian's opinion such repair or replacement is
not feasible, or if such remedy fails of its essential purpose, Varian may
refund or credit a portion of any sum paid by buyer for the Product, Software
or Service. In-warranty repair or replacement parts are warranted only for the
unexpired portion of the original warranty period.
Varian's warranties shall not apply to the extent that malfunction is caused in
Varian's reasonable opinion by (1) accident, abuse, alteration, misuse or
neglect, (2) failure to use Products under normal operating conditions or
environment, or within Varian specified ratings, or according to any operating
instructions provided by Varian, (3) lack of routine care or maintenance as
indicated in any Varian operating or maintenance instructions, (4) failure to
use or take any proper precautions under the circumstances, (5) user
modification of any Product or Software, or (6) latent defects discovered after
expiration of the applicable warranty period. This warranty does not cover
Buyer-supplied software, equipment warranted by another manufacturer, or
replacement of expendable, consumable or limited life items.
Warranties given by other suppliers of equipment, accessories, components or
computer software not owned by Varian but incorporated by Varian on or into
Products are passed on to Buyer and shall apply only to the equipment,
accessories, components or computer software of which they are a part. Varian
shall have no liability under warranties provided by other suppliers, nor shall
Varian have any liability for failure of other suppliers to perform under their
warranty. Varian's liability under warranty shall be determined solely by
Varian's warranty, including all its exclusions and limitations.
RETURN PROCEDURES AND OBLIGATIONS: Prior to returning any Product or Part to
Varian, Buyer must obtain authorization from the nearest Varian Customer
Support Center and instructions as to how and where it should be shipped. Buyer
must identify the Product or Part by type and serial number and provide a brief
description of the circumstances giving rise to the return. Varian will then
assign a Return Material Authorization ("RMA") number to assist in processing.
Products or Parts returned for examination must be sent prepaid. Buyer and its
shipping agency shall be responsible for all damages resulting from improper
packing or handling, and for loss in transit, notwithstanding any defect or
nonconformity in the Product. Varian will return Products or Parts prepaid and
insured and will bill Buyer for shipping costs. Buyer shall file claims for
loss or damage in transit.
THIS LIMITED WARRANTY IS EXPRESSLY IN LIEU OF AND EXCLUDES ALL OTHER EXPRESS OR
IMPLIED WARRANTIES INCLUDING BUY NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE, USE, OR APPLICATION. Statements made
by any person, including representatives of Varian, which are inconsistent or
in conflict with the terms of these warranties shall not be binding upon Varian
unless reduced to writing and approved by an officer of Varian.
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<PAGE> 11
9. DAMAGES AND LIABILITY
VARIAN'S TOTAL LIABILITY IN DAMAGES OR OTHERWISE SHALL NOT EXCEED THE PAYMENT,
IF ANY, RECEIVED BY VARIAN FOR THE UNIT OF PRODUCT OR SERVICE FURNISHED OR TO
BE FURNISHED, AS THE CASE MAY BE, RESULTING IN THE LOSS OR DAMAGE CLAIMED. IN
NO EVENT SHALL VARIAN BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT,
PUNITIVE OR SPECIAL LOSS OR DAMAGES OF ANY KIND, SUCH AS BUT NOT LIMITED TO
LOST BUSINESS REVENUE, LOST PROFITS OR COSTS OF DOWNTIME RESULTING FROM
VARIAN'S PRODUCTS OR SERVICES, HOWEVER CAUSED, WHETHER BASED ON CONTRACT, TORT
(INCLUDING NEGLIGENCE) OR ANY OTHER LEGAL THEORY. Liability to third parties
for bodily injury, including death, resulting from Varian's performance or
Products shall be determined in accordance with applicable law and shall not be
affected by the liability limitations stated above in this paragraph.
10. COMPUTER SOFTWARE
Computer Software provided by Varian with the Products remains the property of
Varian or Varian's licensors. Unless otherwise provided in a Software license
agreement between Varian and Buyer, in which case said agreement shall prevail
over any contrary terms and conditions herein, Varian grants Buyer a
non-exclusive right to use such Software only in machine readable form and
only in combination with other Products with which such Software is provided.
No computer Software provided by Varian shall be copied in whole or in part by
Buyer, and Buyer agrees not to provide or disclose any such Software, or any
portion of such Software, to any third party. This license shall terminate when
Buyer discontinues use of the Software or Products with which such Software is
provided, and upon such termination all Software media and materials shall be
returned to Varian by Buyer.
11. COMPLIANCE WITH LAWS
Varian's Products are manufactured in accordance with the generally accepted
engineering standards of Varian's industry. Wherever practical, Varian has
utilized standard UL listed electrical components. Varian will provide
reasonable assistance to Buyer in Buyer's effort to comply with any applicable
Federal, State or local laws or regulations in effect on the date of shipment,
including but not limited to OSHA. Varian agrees to bear the cost of safety
modifications determined in its sole discretion to be necessary for its
Products.
12. ASSIGNMENTS AND TERMINATIONS
No order accepted by Varian may be terminated, cancelled, modified, rescheduled
or assigned by Buyer except by mutual agreement in writing. Any attempt to do
so without Varian's written consent shall be void from the outset. In any such
event, with or without Varian's consent, Buyer agrees to pay Varian charges of
not less than the amounts determined as specified on the face of Varian's
applicable Quotation, and if no charge is so specified, Buyer shall pay Varian
a termination, cancellation, or rescheduling charge as determined solely by
Varian to cover reasonable costs of processing, order handling, retesting and
repackaging, and lost profits.
13. DISPUTES/ARBITRATION
All disputes, controversies or claims of any kind arising from or in any way
related to this contract, its breach, its termination, its invalidity, or the
Products, including the jurisdiction of the arbitral panel, shall be settled by
final and binding arbitration. For sales to U.S. customers, arbitration shall be
in Palo Alto, California under the rules and procedures of the American
Arbitration Association ("AAA") and shall be governed by the commercial law of
the state from which the Product is shipped. If the sale is international,
arbitration shall be conducted under the AAA's International Arbitration Rules
and the commercial laws of the UN Convention on contracts for the International
Sale of Goods (CISG). If the sale is between entities within another country,
the commercial law of that country and the Jurisdiction provisions of Varian's
standard terms and conditions of sale for that country shall apply. The arbitral
tribunal shall not award punitive damages. The arbitral tribunal award shall be
final and binding, shall be the sole and exclusive remedy regarding any and all
claims and counterclaims presented, and may not be reviewed by or appealed to
any court except for enforcement. No claims, regardless of form, arising out of,
or in any way connected with this contract, the Products or services furnished
by Varian, may be brought by Buyer more than one (1) year after the cause of
action has accrued or performance under this contract has been completed or
terminated, whichever is earlier.
14. ENTIRE AGREEMENT
These terms and conditions of sale, Varian Specifications and related documents
expressly agreed to in writing by the parties contain the entire agreement of
the parties with respect to the subject matter hereof, and supercede all prior
understandings, representations and warranties, written and oral. If any part
of these terms and conditions are held void or unenforceable, such part will be
treated as severable, leaving valid the remainder of the terms and conditions.
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<PAGE> 12
Exhibit C
PURCHASE AGREEMENT
FOR
ALL PRODUCTS MANUFACTURED BY
VARIAN TEMPE ELECTRONICS CENTER
("VTEC")
FOR
NOVELLUS SYSTEMS, INC.
("CUSTOMER")
<PAGE> 13
VARIAN TEMPE ELECTRONICS CENTER
PURCHASE AGREEMENT
FOR
NOVELLUS SYSTEMS, INC.
("CUSTOMER")
1. GENERAL
1.1 PARTIES. This Purchase Agreement ("Purchase Agreement"), is by and between
Varian Tempe Electronics Center, 615 South River Drive, Tempe, Arizona 85281
("VTEC") and "CUSTOMER FULL", a "CUSTOMER STATE" registered company, located at
"CUSTOMER ADDRESS" ("CUSTOMER").
1.2 PURPOSE. The purpose of this Purchase Agreement is to establish the terms
and conditions under which VTEC agrees to assemble for CUSTOMER a line of
products, (herein "Product(s) or "unit(s)" according to the drawings,
specifications, and bills of material supplied by CUSTOMER and accepted by VTEC
("Terms and Conditions of Sale").
1.3 APPLICABILITY. All VTEC Products and services are famished only on the Terms
and Conditions stated herein and on the face of the applicable VTEC Quotation to
the exclusion of any CUSTOMER terms and conditions in any specific order
documentation, preprinted or otherwise, except as to identification and quantity
of Products. VTEC's performance of any contract is expressly made conditional on
CUSTOMER's agreement to the Terms and Conditions of Sale of this Purchase
Agreement, and in the absence of such agreement shall be for CUSTOMER's
convenience only, shall not create any contractual obligation and shall not be
construed as acceptance by VTEC of CUSTOMER's terms and conditions printed or
stated in its orders. CUSTOMER's acceptance of any Product or service shall be
deemed acceptance of the Terms and Conditions of Sale hereinbelow.
1.4 EFFECTIVE DATE. The Effective Date of this Purchase Agreement shall be "the
Closing Date" of the Agreement with which the Parts Agreement is concurrent.
2. PRICES
2.1 PER UNIT PRICES. The price per unit ("Per Unit Price") shall be VTEC's cost
as calculated pursuant to Section 4.1 of the Parts Agreement to which this is an
exhibit.
2.2 PER UNIT PRICE CHANGES. In the event of significant unanticipated cost
changes for reasons outside VTEC's control, VTEC may change firm or agreed
prices as follows: VTEC will present the cost change information to CUSTOMER for
review and consideration. Any changes to previously agreed pricing will be
negotiated with CUSTOMER, and VTEC's acceptance of CUSTOMER purchase orders
which contain price changes will confirm the changed prices. In addition, VTEC
may change prices if CUSTOMER requests changes to the drawings, specifications,
or bills of material, resulting in Engineering Change Order (ECO). CUSTOMER
signatures on VTEC generated ECO implementation documentation will constitute
CUSTOMER acceptance of new pricing.
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<PAGE> 14
2.3 NRE CHARGES. In addition to Per Unit Prices, VTEC Will charge CUSTOMER for
the costs of reimbursable nonrecurring engineering (NRE) charges related to
assembly of units for CUSTOMER. VTEC shall quote NRE charges to CUSTOMER on or
with quotations for the associated Products. Issuance of Purchase Order by
CUSTOMER for such Products will confirm acceptance of NRE Charges.
2.4 VTEC COST INFORMATION. VTEC shall not be required to provide cost breakdown
information with its quotations for Products; provided, however, in the event
VTEC provides such data, it shall be used only for engineering the Products to
be assembled by VTEC for CUSTOMER. Any such information supplied by VTEC shall
be considered the confidential information of VTEC subject to the obligations
not to use or disclose the same as provided in any nondisclosure agreement that
may be entered into by the parties with respect to this Purchase Agreement.
2.5 TAXES. All taxes or charges, other than those based upon net income, imposed
by any taxing authority upon the manufacture, sale, shipment, or use of the
units which VTEC is obligated to pay or collect shall be the responsibility of
CUSTOMER and if not paid directly by CUSTOMER shall be added to the purchase
price paid by CUSTOMER to VTEC. CUSTOMER will notify VTEC in writing via
purchase order or advise of any units that arc not intended for resale; so that
applicable sales and/or use taxes may be applied. If CUSTOMER does not provide
such notice, CUSTOMER will accrue and pay appropriate authorities directly.
3. DELIVERY
The forecasting, scheduling and delivery of Products will be handled in the
following manner in order to enhance the ability of CUSTOMER and VTEC to
optimize asset flow. In order to provide this flexibility in VTEC's normal mode
of operation, commitment to material flow in the VTEC "pipeline" will be
governed by forecasts provided by CUSTOMER, and not outstanding Purchase Orders
which will be limited in scope and duration in order to optimize the needed
flexibility. The actual implementation of Purchase Order activity will change
from time to time as the parties may agree, including but not limited to the
possible use of "blanket" purchase orders, use of Electronic Data Interchange
(EDI), etc.
3.1 FORECAST FIND COMMITMENT
CUSTOMER will provide VTEC with a monthly rolling forecast as required by
Section 5 of the Parts Agreement of which this is an exhibit in monthly periods
by Product, subject to the flexibility parameters specified in Section 3.3
below, if any. Changes to forecasts during the first one hundred twenty (120)
days (4 monthly periods) of a rolling forecast commitment will be limited to the
changes permitted by the flexibility parameters listed in Section 3.3 of this
Purchase Agreement CUSTOMER will be liable for the material commitments made by
VTEC for the first one hundred twenty (120) days at the forecast and flexibility
parameters desired by CUSTOMER and agreed to by VTEC as specified in section 3.3
below, in cases of Product cancellation and/or ECO changes to individual parts.
VTEC commits to make every reasonable effort to utilize such material elsewhere,
return it to suppliers, or limit cancellation charges on all material in this
one hundred twenty (120) day period. CUSTOMER will be
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<PAGE> 15
liable for a longer period for CUSTOMER specific parts which require a longer
time frame. VTEC Will apprise CUSTOMER of these parts no less than quarterly.
3.2 DELIVERY SCHEDULES
(1) CUSTOMER will deliver to VTEC Purchase Order(s) releases consistent with
forecasts furnished according to Section 3.1. The vehicle for releases will
change from time to time as technology changes occur. Terms and conditions of
sale for all such releases will be controlled by the terms and conditions of
this Purchase Agreement. CUSTOMER commits to providing the necessary information
for delivery no later than thirty (30) days prior to scheduled delivery date.
(2) Schedules for delivery must remain consistent with the forecast provided and
the flexibility parameters detailed in Section 3.3 below. Any requests for
delivery outside these parameters must be agreed to by VTEC in writing. In the
event of Engineering Product holds, delivery will be rescheduled per agreement.
Unless otherwise specifically agreed by VTEC in writing CUSTOMER's liability for
the flow of material for Products on hold will continue to accrue per Section
3.1.
3.3 SCHEDULE FLEXIBILITY CHANGE PARAMETERS
To compensate for changes in demand, VTEC and CUSTOMER agree to the following
flexibility parameters within which VTEC will maintain resource commitments for
which CUSTOMER will remain liable. Changes may be made to CUSTOMER forecasts and
outstanding "releases" (Purchase Orders, etc.) as follows:
<TABLE>
<CAPTION>
Schedule for delivery
-------------------------------------------------------------------------------
0-4 weeks 5-9 weeks 10-13 weeks 13-16 weeks 17-->
<S> <C> <C> <C> <C> <C>
Flexibility Parameters + 0% +20% +40% + 50% +100%
(maximum and minimum) - 0% -20% - 40% --50% --100%
for forecast + orders
Maximum material liability 100% 100% 100% 100%
</TABLE>
Note: These guidelines are for normal business transactions. All requests for
change will be reviewed when requested.
3.4 OBSOLESCENCE
On a quarterly basis, material Obsolescence will be evaluated for the
"CUSTOMER" and all material declared obsolete will be billed to the CUSTOMER at
current cost plus 20%. Obsolescence is defined as material procured for "the
CUSTOMER" for which their are no supporting orders or forecast by the "CUSTOMER"
requiring that material.
All efforts will be utilized to minimize this obsolescence but
consideration must be given for the minimum buy and form factor requirements
that will cause excessive levels of some material.
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<PAGE> 16
4. TEST
As a condition of VTEC performing testing of Products hereunder, CUSTOMER will
provide VTEC with both applicable and required board-level and completed unit
test hardware, software and procedures, and associated training of VTEC
personnel. VTEC shall conduct testing at its factory in accordance with final
test requirements as set forth in the appropriate Test Plans and requirements as
specified by CUSTOMER and accepted by VTEC. If the test fixtures are developed
by VTEC, CUSTOMER shall reimburse the agreed amount to VTEC. VTEC holds such
tooling, fixtures, and programs in trust for CUSTOMER and shall reimburse
CUSTOMER for loss or damage other than normal wear and tear. All such property
of CUSTOMER shall be returned within five (5) business days after the
termination of the Purchase Agreement or upon the request of CUSTOMER.
5. ACCEPTANCE
CUSTOMER shall have thirty (30) days from the date of shipment of each unit
within which to reject each unit. Reasons for rejection will be limited to
violation of agreed upon workmanship standards and/or failure of mutually agreed
CUSTOMER supplied tests. CUSTOMER shall notify VTEC of any nonconformity; such
notice shall be received by VTEC in writing within said thirty (30) day period
and shall specify the nature of the claimed nonconformity. Failure by CUSTOMER
to provide such notice within said time period shall constitute acceptance by
CUSTOMER of each unit Damage to a unit, or any portion thereof, resulting from
shipment shall not constitute cause for rejection under this Section.
Notwithstanding the foregoing, any use of a unit by CUSTOMER, its agents,
employees, contractors or licensees, for any purpose other than acceptance
testing upon deliver thereof, shall constitute acceptance of that unit by
CUSTOMER. After acceptance, CUSTOMER's sole and exclusive rights and remedies
regarding any claimed nonconformity shall be as provided in Section 9 below,
entitled "Warranty", and CUSTOMER shall not, after acceptance, attempt to revoke
acceptance of, or reject said shipment or any portion thereof.
6. CHANGES
Either CUSTOMER or VTEC may, by mutual written agreement, make changes within
the scope of this Purchase Agreement. If any such change shall cause either
increase or decrease in VTEC's cost or period of performance, VTEC may suspend
performance hereunder without being in default until a mutually acceptable
adjustment in prices is agreed to in writing. CUSTOMER shall be responsible for
all material cost due to Engineering Change Orders that create obsolete parts.
7. TERMS OF PAYMENT
Unless credit is granted, payment shall be due according to agreed progress
payments schedule on an attached Appendix, or CUSTOMER shall post an irrevocable
letter of credit from a bank or other financial institution acceptable to VTEC
for the estimated value of 4 months of planned production at the sales price for
that 4 month period. This letter will secure accounts receivable, work in
process (WIP), raw inventory, and VTEC purchase commitments not yet realized for
CUSTOMER's Products. This letter of credit shall be executable in full at any
time that accounts receivable for invoiced Products in any amount exceed 60
days, unless CUSTOMER has exercised its right of rejection under Section 5 for
the overdue amount. If exercised, all Products and related materials secured by
this letter of credit shall become the property of CUSTOMER and will be
delivered to CUSTOMER within thirty (30) days
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<PAGE> 17
after VTEC's receipt of full payment therefor.
VTEC will invoice CUSTOMER for units of Products as shipped. VTEC will invoice
CUSTOMER for all non-recurring costs as incurred. All payments shall be due in
full thirty (30) days from date of invoice, except with respect to Products
CUSTOMER has returned to VTEC as allowed under Section 5. Past due balances
shall be subject to a service charge of 1.5% per month. Partial shipments will
be billed as made and payments are subject to the above terms. VTEC may delay
delivery of Products if CUSTOMER fails to make prompt payment.
8. TRANSPORTATION AND RISK OF LOSS
Except as otherwise expressly provided in this Purchase Agreement or in a
shipping term mutually agreed to in writing and attached hereto as an Appendix,
a transportation shall be at the expense of CUSTOMER, and all shipments are FOB
VTEC's plant. Either CUSTOMER or VTEC, subject to approval by CUSTOMER, will
select the transportation company. VTEC will prepay and add shipping and
insurance costs. Risk of loss and/or damage shall pass from VTEC to CUSTOMER
upon delivery of the units by VTEC to the transportation company at VTEC's
plant. Confiscation, destruction, or damage to units shall not release, reduce
or in any way affect the liability of CUSTOMER. Notwithstanding any defect or
nonconformity or any other matter, such risk of loss shall remain with CUSTOMER
until the units are returned at CUSTOMER's expense to such place as VTEC may
designate in writing. CUSTOMER shall inspect all units upon receipt and shall
file a claims with the transportation company when there is evidence of shipping
damage, either concealed or external.
9. WARRANTY
VTEC warrants that at the time of shipment Products manufactured by VTEC shall
be free from defects in material and workmanship and shall be in substantial
compliance with operational features of specifications agreed to in writing by
VTEC. VTEC's warranty shall begin upon acceptance by CUSTOMER (as provided in
the ACCEPTANCE provisions herein), and shall continue for a period of thirty
(30) days from the date of manufacture, subject to the conditions below. If no
period of time is stated, then VTEC's warranty is limited to thirty (30) days
from the date the Product is received by CUSTOMER.
Repair or rework, or at VTEC's option, replacement of defective Products or
parts shall be the sole and exclusive remedy under warranty. If in VTEC's
opinion such repair or replacement is not feasible, or if such remedy fails of
its essential purpose, VTEC may refund or credit an equitable portion of any
sums paid by Buyer for the Product or Service. In-warranty repair or replacement
parts are warranted only for the unexpired portion of the original warranty
period.
All warranty repair, rework, or replacement of units under warranty shall be
limited to unit malfunctions which are determined by VTEC to be due and
traceable to defects in either materials or workmanship furnished by VTEC. The
standard of workmanship for units is that they shall meet the VTEC Quality
Assurance manual standards. VTEC's warranties shall not apply to the extent that
malfunction is caused in VTEC's reasonable opinion by (1) accident, abuse,
alteration, misuse or neglect, (2) failure to use Products under normal
operating conditions or environment, or within VTEC specified ratings, or
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<PAGE> 18
according to any operating instructions provided by VTEC, (3) lack of routine
care or maintenance as indicated in any VTEC operating or maintenance
instructions, (4) failure to use or take any proper precautions under the
circumstances, (5) user modification of any Product, or (6) latent defects
discovered after expiration of the applicable warranty period.
Units being returned to VTEC for warranty service shall be shipped by mutually
agreeable means. Freight costs shall be prepaid by CUSTOMER and refunded by VTEC
for valid warranty returns. Shipment costs for return to CUSTOMER of such units
repaired by VTEC under provisions of this Warranty shall be borne by VTEC.
CUSTOMER shall contact VTEC prior to any warranty return and VTEC shall issue a
Return Authorization to CUSTOMER authorizing all such warranty returns. VTEC
shall not accept any return of units for warranty service without having issued
such Return Authorization to CUSTOMER. VTEC will return repaired items within
fourteen (14) days of receipt.
THIS LIMITED WARRANTY IS EXPRESSLY IN LIEU OF AND EXCLUDES ALL OTHER EXPRESS OR
IMPLIED WARRANTIES INCLUDING BUT NOT LIMITED TO WARRANTIES OF MERCHANTABILITY
AND OF FITNESS FOR A PARTICULAR PURPOSE, USE, OR APPLICATION.
VTEC shall perform out of warranty repair of field returned units for
Engineering Change updating if so requested by CUSTOMER. The charge for such
updating shall be based on material cost and labor rate calculated at VTEC's
warranty labor rate, which shall be agreed upon by the parties.
10. DAMAGES AND LIABILITY
VTEC'S TOTAL LIABILITY IN DAMAGES OR OTHERWISE SHALL NOT EXCEED THE PAYMENT, IF
ANY, RECEIVED BY VTEC FOR THE UNIT OF PRODUCT OR SERVICE FURNISHED OR TO BE
FURNISHED, AS THE CASE MAY BE, RESULTING IN THE LOSS OR DAMAGE CLAIMED. IN NO
EVENT SHALL VTEC BE LIABLE FOR INCIDENTAL, CONSEQUENTIAL, INDIRECT, PUNITIVE OR
SPECIAL LOSS OR DAMAGES OF ANY KIND, SUCH AS BUT NOT LIMITED TO LOST BUSINESS
REVENUE, LOST PROFITS OR COSTS OF DOWNTIME RESULTING FROM VTEC'S PRODUCTS OR
SERVICES HOWEVER CAUSED, WHETHER BASED ON CONTRACT, TORT (INCLUDING NEGLIGENCE)
OR ANY OTHER LEGAL THEORY. This limitation applies whether the damages or other
relief are sought based on breach of warranty, breach of contract, negligence,
strict liability in tort, or otherwise of anyone, under this Purchase Agreement
or any nondisclosure or confidentiality agreement, or any other legal or
equitable theory of applicable law. This limitation does not apply to direct
damages caused by breach of a material obligation under this Purchase Agreement
or claims for personal injury by a third party.
11. PATENTS AND OTHER INTELLECTUAL PROPERTY RIGHTS
CUSTOMER shall indemnify, defend and hold VTEC harmless from and against any
expense, loss, costs, damages, or liability resulting form claimed infringement
of patents, trademarks, copyrights, or other intellectual property rights with
respect to units, including, but not limited to, claims:
a. arising from a use of or a combination of units with other
equipment, processes, programming applications, or materials
not furnished by VTEC hereunder;
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<PAGE> 19
b. based on items made with the units furnished by VTEC
hereunder; and/or
C. arising out of compliance by VTEC with Customer's designs,
specifications or instructions.
VTEC shall notify CUSTOMER in writing of any such claim within sixty (60) days
of its receipt.
THE FOREGOING STATES VTEC's ENTIRE LIABILITY FOR ANY CLAIM BASED UPON OR RELATED
TO ANY ALLEGED INFRINGEMENT OF ANY PATENT OR OTHER INTELLECTUAL PROPERTY RIGHTS.
12. TERMINATION FOR CONVENIENCE
Subject to the initial three (3) year term of the Parts Agreement of which this
is an exhibit, either CUSTOMER or VTEC may thereafter terminate this Purchase
Agreement at any time, for any reason of its own choosing, provided that the
party initiating termination gives at least one hundred and twenty (120) days
advance written notice to the other party specifying the effective date of
termination, after which date neither party shall have any further liability or
obligation to the other, except as expressly provided herein, subject to any
limitations stated herein.
12.1 TERMINATION BY CUSTOMER
In the event of termination by CUSTOMER under this provision, CUSTOMER shall
reimburse VTEC for any unrecovered costs incurred by VTEC in the discharge of
its obligations under this Purchase Agreement, which shall consist of the
following specific items:
a. Any unpaid balance due for conforming units ordered by
CUSTOMER and delivered to CUSTOMER prior to VTEC receipt of
CUSTOMER's termination notice, and
b. The full purchase price for units forecasted by CUSTOMER and
scheduled by CUSTOMER for delivery within one hundred twenty
(120) days after the date on which VTEC received CUSTOMER's
termination notice.
C. For units forecasted by CUSTOMER and/or orders accepted by
VTEC, should CUSTOMER wish to waive their manufacture and
payment of the full purchase price under b. above, CUSTOMER
shall purchase the material for which VTEC has made
commitments (and for which CUSTOMER is liable) for Products
scheduled for delivery in this one hundred twenty (120) day
period, CUSTOMER's purchase obligations under this option will
include:
(1) Any material which VTEC has received for manufacture
of the units. Such material purchased by CUSTOMER
shall be at supplier invoiced cost plus 20%; and
(2) Any unique material not returnable by VTEC bought for
CUSTOMER Products
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per non-cancelable, non-returnable contractual terms.
The usage period of this material may exceed one
hundred twenty (120) days. This category will
contain programmed parts, and special devices etc.,
with minimum lot buys. Such material purchased by
CUSTOMER shall be at supplier invoiced cost plus 20%;
and
(3) Any cancellation charges incurred by VTEC for
material not yet received, but committed to by VTEC
for Products previously scheduled for delivery to
CUSTOMER in this one hundred twenty (120) day period.
Upon payment by CUSTOMER to VTEC of all amounts set forth in this provision for
termination by CUSTOMER, VTEC shall deliver to CUSTOMER all material held and
not returned to VTEC's vendors.
12.2 TERMINATION BY VTEC
In the event of termination by VTEC under this Section 12, CUSTOMER shall have
no obligation to purchase any Product or inventory, except Products or inventory
and material for which VTEC has made commitments pursuant to confirmed P.O.'s
within the one hundred twenty (120) day period prior to the effective date of
termination. CUSTOMER shall, however, have the option to purchase at VTEC's cost
any partial or completed inventory held by VTEC, but not material or parts
ordered and not yet shipped to VTEC for the production of units.
13. TERMINATION FOR CAUSE
Either VTEC or CUSTOMER may terminate this Purchase Agreement at any time if the
other party is in material breach of any of the provisions herein. In the event
of termination under this provision, the defaulting party shall have thirty (30)
days from the date of receipt of written notice from the party initiating
termination in which to remedy the default. Should the defaulting party fail to
remedy the breach, termination shall become effective without further notice at
the end of said thirty (30) day period. Either VTEC or CUSTOMER may initiate
termination under this provision for any one or more of the following:
a. the other party petitions for reorganization under the
Bankruptcy Act,
b. the other party is adjudicated as bankrupt,
c. a receiver is appointed for the other party's business,
d. the other party makes an assignment for the benefit of its
creditors,
e. the other party fails to perform or observe any material
obligation under this Purchase Agreement, or
f. VTEC may terminate if it becomes necessary to exercise the
letter of credit.
Termination by either party under this provision shall be without prejudice to
any other remedy either party may have under applicable law, subject to the
limitations stated in this Purchase Agreement.
14. PERFORMANCE
Neither party to this Purchase Agreement shall be liable for any delay in
delivery or other performance
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hereunder which is due to unforeseen circumstances, or to causes beyond its
control including, without limitation, strike, lockout, riot, war, fire, act of
God, or compliance with any governmental law, regulation, or order, including
but not limited to U.S. Export Administration Regulations. Provided any such
delay is neither material nor indefinite, performance shall be deemed suspended
during and extended for such time as it is so delayed, and thereafter the other
party shall accept performance hereunder. In the event such contingencies last
more than one hundred and twenty (120) days after either party provides written
notice of such inability to perform, either party may immediately terminate this
Purchase Agreement upon a written notice subject to the terms of Section 12.
TERMINATION FOR CONVENIENCE.
15. DISPUTES/ARBITRATION AND APPLICABLE LAW
All disputes, controversies or claims of any kind arising from or in any way
related to this Purchase Agreement, its breach, its termination, its invalidity,
or the Products, including the jurisdiction of the arbitral panel, shall be
settled by final and binding arbitration in Palo Alto, California under the
Rules of the American Arbitration Association (AAA). The arbitral tribunal shall
not award punitive damages. The arbitral award shall be final and binding, shall
be the sole and exclusive remedy regarding any claims and counterclaims
presented, and may not be reviewed by or appealed to any court except for
enforcement. VTEC shall, however, have the exclusive right to bring legal action
against CUSTOMER for failure to pay for Products or services furnished or other
causes. This Purchase Agreement shall be governed by and construed according to
the laws of the State of California without reference to its rules of conflicts
of law. No claims, regardless of form arising out of, or in any way connected
with this contract, the Products or services furnished by VTEC, may be brought
by CUSTOMER more than one (1) year after the cause of action has accrued or
performance under this contract has been completed or terminated, whichever is
earlier.
16. NOTICE
Any notice, demand, request or other instrument which may be or is required to
be given under this Purchase Agreement shall be delivered in person or sent by
Certified Mail, postage prepaid, and shall be sent to the addresses listed below
for the respective parties or to such other address as either party may
designate by written notice.
Mr. C. W. Rudd (company officer)
VP & General Manager (title)
Varian Tempe Electronic Center CUSTOMER
615 S. River Drive (company address 1)
Tempe, Arizona 85281 (company address 2)
17. CONFIDENTIAL INFORMATION
The confidential information of either party shall be governed by the
nondisclosure or confidentiality agreement attached hereto, if any, applicable
solely to this Purchase Agreement.
18. ASSIGNMENT
Neither VTEC nor CUSTOMER shall have the right to assign its rights or
obligations under this Purchase Agreement without the written consent of the
other party. Neither party shall unreasonably
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withhold such consent. Any prohibited assignment shall automatically be null and
void.
19. RIGHTS OF SUCCESSOR
A successor in interest by merger, operation of law, assignment, purchase, or
otherwise of the entire business of either party shall acquire all interests and
obligations of such party thereunder.
20. ENTIRE AGREEMENT
This Purchase Agreement, including only modifications or additions agreed to in
writing and incorporated herein by reference and including Appendices attached
hereto, together with the Parts Agreement of which this is an exhibit, are the
entire and sole understanding of the parties with respect to the subject matter
hereof, and supersede all prior understandings, representations and warranties,
written and oral. No representations or agreements modifying or supplementing
the terms of the Purchase Agreement shall be valid unless expressed in writing
and signed by person authorized to sign agreements on behalf of both parties. If
any part of these terms and conditions are held void or unenforceable, such part
will be treated as severable, leaving valid the remainder of the terms and
conditions.
AGREED AS ABOVE PROVIDED:
Signed: Signed:
- ------------------------------- -------------------------------
Mr. C. W. Rudd (company officer)
VP & General Manager (title)
Varian Tempe Electronic Center CUSTOMER
615 S. River Drive (company address 1)
Tempe, Arizona 85281 (company address 2)
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