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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): September 1, 1999
SubMicron Systems Corporation
(Exact name of registrant as specified in its charter)
Delaware 0-19507 13-3607944
(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
6330 Hedgewood Drive, #150
Allentown, Pennsylvania 18106
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (610) 391-9200
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ITEM 3. BANKRUPTCY OR RECEIVERSHIP.
On September 1, 1999, SubMicron Systems Corporation, a
Delaware corporation (the "Company"), and three of its direct or indirect
subsidiaries, SubMicron Systems, Inc., a Pennsylvania corporation, SubMicron Wet
Process Stations, Inc., a California corporation, and SubMicron Systems Holdings
I, Inc., a California corporation (such subsidiaries, together with the Company,
the "SubMicron Companies"), filed voluntary petitions for relief under Chapter
11 of the United States Bankruptcy Code with the United States Bankruptcy Court
for the District of Delaware, Wilmington, Delaware. The Court agreed to provide
for the joint administration of the cases under case number 99-2959.
The filings were in connection with the contemplated sale of
substantially all of the assets of the SubMicron Companies. On August 31, 1999,
the SubMicron Companies entered into an asset purchase agreement with Akrion,
LLC, a Delaware limited liability company ("Akrion"), pursuant to which the
SubMicron Companies would sell substantially all of their assets to Akrion
pursuant to Section 363 of the Bankruptcy Code. Part of the assets to be sold
would be the capital stock of the Company's Asian subsidiaries, including its
Singaporean subsidiary, Akrion (S) Pte Ltd. The proposed sale of substantially
all of the SubMicron Companies' assets will be for a total consideration of
approximately $55.5 million in a combination of cash, the assignment back to
SubMicron of in excess of $40 million of the Company's debt and the assumption
of specified liabilities. The total consideration of the transaction will not
provide sufficient value to support payment by the SubMicron Companies to
unsecured creditors or the SubMicron stockholders. The consummation of the sale
is subject to customary terms and conditions set forth in the agreement as well
as bankruptcy court and regulatory approval. Accordingly, there can be no
assurance that the transaction will be completed.
As part of the voluntary filings, the SubMicron Companies
filed a motion for an order granting authority to sell their assets to Akrion
pursuant to Section 363 of the Bankruptcy Code, establishing bidding procedures
and setting a hearing date of on the sale of the assets.
Also as part of the voluntary filing with the Court, the
SubMicron Companies submitted Stipulations and Orders relating to
debtor-in-possession post-petition financing ("DIP Financing") from Greyrock
Capital, a division of Banc of America Commercial Finance Corporation, and The
KB Mezzanine Fund II, L.P. The Court approved the DIP Financing arrangements on
an interim basis on September 1, 1999.
Pursuant to Sections 1107 and 1108 of the Bankruptcy Code, the
SubMicron Companies, as debtors and debtors-in-possession, will continue to
manage and operate their assets and businesses in the ordinary course of
business, pending the closing of the sale of assets pursuant to Section 363 of
the Bankruptcy Code.
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ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS.
(c) Exhibits
99.1 Asset Purchase Agreement by and among SubMicron Systems
Corporation and certain of its Subsidiaries and Akrion LLC, dated as of August
31, 1999.
99.2 Press Release of SubMicron Systems Corporation dated
September 1, 1999.
SIGNATURE
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 thereunto duly authorized.
Dated: September 2, 1999 SUBMICRON SYSTEMS CORPORATION
By: /s/ Robert P. Tetu
----------------------
Name: Robert P. Tetu
Title: Chief Operating Officer
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EXHIBIT 99.1
ASSET PURCHASE AGREEMENT
BY AND AMONG
SUBMICRON SYSTEMS CORPORATION
AND CERTAIN OF ITS SUBSIDIARIES NAMED HEREIN,
AS SELLERS,
AND
AKRION LLC,
AS PURCHASER
DATED AS OF AUGUST 31, 1999
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TABLE OF CONTENTS
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1. PURCHASE AND SALE OF ASSETS......................................................................2
1.1 Purchase and Sale...................................................................2
1.2 Excluded Assets.....................................................................4
1.3 Purchase Price......................................................................4
1.4 Payment of Purchase Price...........................................................6
1.5 Assumption of Certain Liabilities...................................................6
1.6 Obligations Not Assumed.............................................................7
1.7 Closing.............................................................................9
1.8 Transactions and Documents Delivered at Closing.....................................9
1.9 Intercompany Accounts..............................................................10
2. ADDITIONAL AGREEMENTS...........................................................................10
2.1 Purchaser's Access and Inspection..................................................10
2.2 Confidentiality....................................................................11
2.3 Cooperation; Post-Closing Access...................................................11
2.4 Expenses...........................................................................13
2.5 Payment of Taxes...................................................................13
2.6 Publicity..........................................................................14
2.7 Submission For Bankruptcy Court Approval...........................................14
2.8 Covenant Against Competition.......................................................15
2.9 Transferred Employees; Severance...................................................16
2.10 Employee Pension Plans and Other Liabilities.......................................19
2.11 Right to Hire......................................................................19
2.12 Benefits for Transferred Employees.................................................19
2.13 Regulatory Compliance..............................................................20
2.14 Consents; Assignments..............................................................21
2.15 Release of Liens...................................................................22
2.16 Supplemental Disclosure............................................................22
2.17 Overbid Provisions.................................................................23
2.18 Allocation of Purchase Price.......................................................26
2.19 Collection of Receivables..........................................................26
2.20 Tax Certificates...................................................................26
2.21 Intercreditor Agreement............................................................27
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3. REPRESENTATIONS AND WARRANTIES OF THE SUBMICRON GROUP...........................................27
3.1 Disclosure Schedules...............................................................27
3.2 Organization and Compliance........................................................27
3.3 Enforceability of Agreement........................................................28
3.4 No Inconsistent Obligations........................................................28
3.5 Consents...........................................................................29
3.6 Possession of Franchises, Licenses, Etc............................................29
3.7 Title to Properties................................................................30
3.8 Receivables........................................................................30
3.9 Personal Property; Inventory.......................................................31
3.10 Real Property......................................................................31
3.11 Authority to Conduct Business and Intellectual Property Rights.....................33
3.12 Material Contracts.................................................................35
3.13 Contingencies......................................................................36
3.14 Taxes..............................................................................36
3.15 Employment and Labor Matters.......................................................37
3.16 Employee Benefit Matters...........................................................41
3.17 Environmental Matters..............................................................43
3.18 Assets.............................................................................47
3.19 Customers and Suppliers............................................................47
3.20 SEC Reports; Financial Statements..................................................48
3.21 Absence of Undisclosed Liabilities.................................................49
3.22 Absence of Adverse and Other Changes...............................................49
3.23 Insurance..........................................................................50
3.24 Full Disclosure....................................................................50
3.25 Brokers............................................................................51
3.26 Affiliate Relations................................................................51
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.....................................................51
4.1 Organization.......................................................................51
4.2 Authorization; No Inconsistent Agreements..........................................51
4.3 Consents...........................................................................52
4.4 Brokers............................................................................52
5. CONDUCT OF SELLERS' BUSINESS PENDING CLOSING....................................................52
5.1 Business in Ordinary Course........................................................52
5.2 No Material Changes................................................................54
5.3 Compensation of Employees..........................................................54
5.4 General Prohibitions...............................................................55
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6. CONDITIONS TO OBLIGATIONS OF PURCHASER..........................................................55
6.1 Proceedings and Documents Satisfactory.............................................55
6.2 Representations and Warranties.....................................................55
6.3 Compliance with Agreements and Conditions..........................................55
6.4 Certificates of Sellers............................................................56
6.5 Resolutions........................................................................56
6.6 Required Consents and Assigned Contracts...........................................56
6.7 No Inconsistent Requirements.......................................................56
6.8 Permits............................................................................56
6.9 Material Customer Loss.............................................................56
6.10 Release of Liens...................................................................56
6.11 Hart-Scott-Rodino..................................................................56
6.12 Ancillary Documents................................................................57
6.13 Bankruptcy Court Orders............................................................57
6.14 Change of Corporate Name...........................................................57
6.15 Claim Consideration................................................................58
6.16 Disregard Entity...................................................................58
6.17 Retention Agreements...............................................................58
6.18 Equinox DIP Financing..............................................................58
7. CONDITIONS TO OBLIGATIONS OF SELLERS............................................................59
7.1 Representations and Warranties.....................................................59
7.2 Compliance with Agreements and Conditions..........................................59
7.3 Certificate of Purchaser...........................................................59
7.4 Resolutions........................................................................59
7.5 No Inconsistent Requirements.......................................................59
7.6 Hart-Scott-Rodino..................................................................59
7.7 Bankruptcy Court Orders............................................................59
7.8 Claim Consideration................................................................60
8. INDEMNITIES.....................................................................................60
8.1 Indemnification of Purchaser.......................................................60
8.2 Indemnification of Sellers.........................................................61
8.3 Defense of Claims..................................................................62
8.4 Adjustment to Purchase Price.......................................................63
8.5 Limitation on Indemnification......................................................63
8.6 Purchaser's Knowledge..............................................................64
9. SURVIVAL OF REPRESENTATIONS.....................................................................64
9.1 Survival...........................................................................64
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10. TERMINATION.....................................................................................65
10.1 Termination........................................................................65
10.2 Effect of Termination..............................................................67
10.3 Termination Payment................................................................67
11. MISCELLANEOUS...................................................................................68
11.1 Notices............................................................................68
11.2 Counterparts.......................................................................69
11.3 Entire Agreement...................................................................69
11.4 Governing Law......................................................................69
11.5 Partial Invalidity and Severability................................................69
11.6 Headings...........................................................................70
11.7 Time of Performance................................................................70
11.8 Submission to Jurisdiction.........................................................70
11.9 Enforceability; Successors and Assigns.............................................70
11.10 Waiver, Extension..................................................................70
11.11 Remedies, No Waiver................................................................70
11.12 No Third-Party Rights..............................................................71
11.13 Miscellaneous......................................................................71
12. INDEX OF DEFINITIONS............................................................................72
LISTING OF APPENDICES...........................................................................................L-1
LISTING OF EXHIBITS.............................................................................................L-2
LISTING OF DISCLOSURE SCHEDULES.................................................................................L-3
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ASSET PURCHASE AGREEMENT
ASSET PURCHASE AGREEMENT, dated as of August 31, 1999 (this
"Agreement"), by and among SubMicron Systems Corporation (the "Company"), on
behalf of itself and the Akrion Entities (as defined in Section 1.1(l) below),
and its subsidiaries, SubMicron Systems, Inc. ("Systems"), SubMicron Wet Process
Stations, Inc. ("Wet Process Stations"), and SubMicron Systems Holdings I, Inc.
(the "Domestic Subsidiaries," together with the Akrion Entities) the
"Subsidiaries," and the Domestic Subsidiaries together with the Company,
"Sellers"), and Akrion LLC ("Purchaser").
W I T N E S S E T H:
WHEREAS, the SubMicron Group (as defined in Section 11.13
below) is engaged in the business of designing, developing, manufacturing,
selling, distributing, and marketing advanced wet surface preparation and
cleaning equipment used in the manufacture of microelectronic devices and the
production of raw silicon wafers (the "Manufacturing Business"); and
WHEREAS, Sellers intend to file voluntary petitions for
reorganization relief (the "Petitions," and the date such Petitions are filed,
the "Petition Date") under Chapter 11 of Title 11 of the United States Code, 11
U.S.C. Sections. 101-1330, as amended (the "Bankruptcy Code"), in the United
States Bankruptcy Court for the District of Delaware (the "Bankruptcy Court");
and
WHEREAS, Purchaser desires to purchase and assume from
Sellers, and Sellers desire to sell, convey, assign, and transfer to Purchaser,
substantially all of the assets and properties of Sellers, including the assets
and properties relating to the Manufacturing Business, together with only those
obligations and liabilities set forth in Section 1.5 (and, as set forth in
Section 1.6, no other obligations or liabilities of Sellers), all in the manner
and subject to the terms and conditions set forth herein and in accordance with
sections 105, 363, and 365 of the Bankruptcy Code;
NOW, THEREFORE, for and in consideration of the foregoing and
the respective representations, warranties, and agreements herein contained, the
parties hereto, intending to be legally bound, agree as follows:
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1. PURCHASE AND SALE OF ASSETS.
1.1 PURCHASE AND SALE. On the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as defined in Section 1.7 below)
Sellers shall sell, assign, transfer, convey, and deliver to Purchaser, and
Purchaser shall purchase and accept from Sellers, Sellers' rights, title, and
interests in and to substantially all of the assets, properties, and rights of
Sellers, including, without limitation, all of Sellers' assets, properties, and
rights related to the Manufacturing Business (except as otherwise set forth in
this Agreement, including, without limitation, Sections 1.2, 1.6, 1.9, 2.4, 2.5,
2.9, 2.10, and 2.12), wherever located, whether tangible or intangible, as the
same shall exist on the Closing Date (such rights, title, and interests in and
to all such assets, properties, and rights, being collectively referred to
herein as the "Transferred Assets"), free and clear of all Liens (as defined in
Section 3.7 below), other than Permitted Encumbrances (as defined in Section 3.7
below). The Transferred Assets shall include, without limitation, all of
Sellers' rights, title, and interests in and to the assets, properties, and
rights described in clauses (a) through (l) below (but shall specifically
exclude those assets, properties, and rights set forth in this Agreement,
including, without limitation, Sections 1.2 and 1.6 below):
(a) all of Sellers' real property and the structures,
improvements, buildings, and fixtures located thereon, and all of Sellers'
interests in real property, including, without limitation, all leaseholds,
easements, rights of way, licenses and other interests in real property,
described in Appendix 1.1(a) attached hereto (collectively, the "Real
Property");
(b) all of Sellers' machinery, equipment, spare parts,
computers, tools, vehicles, furniture, office equipment (including
telecommunication equipment and any associated phone numbers) and other tangible
personal property and any warranties or service contracts associated therewith,
including, without limitation, all of such assets described and identified in
Appendix 1.1(b) attached hereto, with only such additions and deletions as may
occur in the ordinary course of the Manufacturing Business in accordance with
Section 5 below between the date hereof and the Closing Date (collectively, the
"Personal Property");
(c) all of Sellers' inventories of raw materials,
work-in-process and finished goods or products used, useable or otherwise
saleable in the ordinary course of the Manufacturing Business in existence as
of the Closing (the "Inventories");
(d) all of Sellers' notes receivable, accounts receivable
(including, without limitation, advances to Transferred Employees and
deposits-receivables), security or collateral therefor, and insurance proceeds
related to the Manufacturing Business or the Transferred Assets (the
"Receivables");
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(e) all of Sellers' information of any nature (whether
confidential, proprietary or otherwise), including information relating to the
Manufacturing Business, including, without limitation: (i) trade secrets,
technical information, inventions, formulae, show-how, know-how, designs,
processes, patents, confidential or proprietary business information, industrial
designs (including design patents), patent applications, patent disclosures, and
copyrights, and all improvements thereof and all registrations and pending
applications thereof (as applicable), (ii) all data, files, books, records, data
processing records, employment and personnel records (or copies thereof), credit
records, financial records, accounting records, litigation records, tax returns
(or copies thereof), advertising and marketing data, brochures, materials and
records, customer lists, order information, computer software, technical manuals
and documentation made or used in connection with any of the foregoing, and
licenses or rights with respect to the foregoing, and (iii) all of Sellers'
other information and intangible property rights relating to the Manufacturing
Business and the Transferred Assets;
(f) all of Sellers' trademarks, service marks, logos, designs,
and trade names of any nature, including those used or useable in the
Manufacturing Business (including, without limitation, Sellers' corporate
name), all registrations and pending applications therefor in the United States
Patent and Trademark Office, any state of the United States, or any other
governmental entity, and all goodwill symbolized thereby and associated
therewith;
(g) all of Sellers' right, title, and interest under any Open
Purchase Orders (as defined in Section 1.2 below), contracts, arrangements,
leases, licenses, and agreements which relate to, or are used in the
Manufacturing Business (which will be assumed by Sellers and assigned to
Purchaser pursuant to the Sale Order) (together with the agreements referred to
in Section 1.1(h) below, collectively, the "Assigned Contracts");
(h) all of Sellers' right, title, and interest under any Open
Purchase Orders, contracts, arrangements, leases, licenses, and agreements
relating to, or used in, the Manufacturing Business which are entered into
after the date hereof in the ordinary course of the Manufacturing Business at
prices and on terms consistent with the prior operating practices of Sellers
(which will be assumed by Sellers and assigned to Purchaser pursuant to the Sale
Order); provided, however, that Sellers must promptly disclose to Purchaser any
such Open Purchase Order, contract, arrangement, lease, license, or agreement
which is described in Sections 3.12(i)-(x) hereof;
(i) all rights, choses in action, and claims against third
parties, whether known or unknown, matured or unmatured, accrued or contingent,
which relate to, or arise from, the conduct of the Manufacturing Business;
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(j) all deposits, refunds-receivables, prepaids, and other
assets of similar nature related to, or arising from the conduct of, the
Manufacturing Business (the "Prepaids");
(k) all of Sellers' right, title, and interest in and to all
Permits (as defined in Section 3.6 below), including, without limitation,
certificates of occupancy necessary for or related to the Manufacturing
Business; and
(l) all of Sellers' right, title, and interest in the capital
stock of Akrion (S) Pte Ltd., Akrion Korea Ltd., and Taiwan Akrion Co., Ltd.
(the "Akrion Entities") and any of the items listed in this Section 1.1 with
respect to the Akrion Entities.
1.2 EXCLUDED ASSETS. Notwithstanding anything in this Agreement to the
contrary, the Transferred Assets do not and shall not include: (i) cash or
securities, (ii) the capital stock of any affiliate or subsidiary of the Company
(other than the capital stock of the Akrion Entities), (iii) corporate minute
books and stock books (other than corporate minute books and stock books for the
Akrion Entities), (iv) all of Sellers' claims, demands, and causes of action
arising under Chapter 5 of the Bankruptcy Code, (v) insurance proceeds not
related to the Transferred Assets or the Manufacturing Business, (vi) refunds
for Taxes relating to periods ending on or prior to the Closing, (vii) any
warranty, service or maintenance agreements or obligations relating to goods or
services sold or rendered by the SubMicron Group prior to the Closing Date
(other than with respect to purchase orders pursuant to which the SubMicron
Group remains entitled to any payments thereunder from any customer (the "Open
Purchase Orders")), (viii) any Closed Purchase Orders (as defined in Section
1.6(b)), and (ix) the items identified in Appendix 1.2 (collectively, the
"Excluded Assets"). Purchaser and the SubMicron Group agree that, at any time
prior to the Sale Hearing, upon reasonable notice to Sellers, Purchaser may
alter, amend or modify (including, but not limited to, making additions and
deletions to) Appendix 1.2 hereto (i) to reflect any information which Purchaser
becomes aware of between the date hereof and the Closing with respect to any
assets or liabilities of the SubMicron Group existing as of the date hereof, and
(ii) to add to, or delete from, Appendix 1.2 hereto any items identified therein
with a value not to exceed $150,000 in the aggregate (except as otherwise
provided in (i) of this sentence); provided, however, that any contract that has
been assumed or rejected by Sellers cannot subsequently be removed or added from
Appendix 1.2, as the case may be.
1.3 PURCHASE PRICE. The purchase price payable by Purchaser to the
Company on behalf of Sellers for the Transferred Assets (the "Purchase Price")
shall be equal to:
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(a) subject to Section 1.3(f) below, the sum of (i)
$5,500,000, (ii) the amount of the Greyrock Debt (as defined in Section 1.4(b)
below), (iii) the amount of any indebtedness owed to Greyrock (as defined in
Section 1.4(b) below) pursuant to the Greyrock DIP Financing (as defined in
Section 1.4(b) below), and (iv) $850,000 in respect of administrative expenses
incurred by Sellers in Sellers' Chapter 11 Cases (as defined in Section 2.7(a)),
in immediately available funds (the "Cash Consideration"); plus
(b) the assignment to the Company of all of the Equinox
Parties' (as defined in Section 6.15 below) right, title and interest in, and
claims relating to or arising out of (the "Claim Consideration") the Company's
Series 1999 12% Senior Subordinated Convertible Notes due February 1, 2002 (the
"Series 1999 Notes"), the Series B 12% Senior Subordinated Notes due February 1,
2002 (the "Series B Notes"), and 12% Senior Subordinated Notes due February 1,
2002 (the "12% Notes," together with the Series 1999 Notes and the Series B
Notes, the "Senior Subordinated Notes"); plus
(c) the assumption of the Assumed Liabilities (as defined in
Section 1.5 below); plus
(d) the assignment to the Company of the Individual Holders'
(as defined below) right, title and interest in, and any claims relating to or
arising out of, the Series B Notes (the "Intercreditor Consideration"), but only
if the Equinox Parties, at Purchaser's direction, exercise their rights under
the Intercreditor Agreement (as defined in Section 6.15 below), and as a result
thereof the Intercreditor Consideration is assigned to Purchaser (as determined
by Purchaser in its sole and absolute discretion) pursuant to the terms of the
Contribution Agreements (as defined in Section 6.15). For purposes of this
Agreement, "Individual Holders" shall mean the holders of the Series B Notes
other than the Equinox Parties; plus
(e) the assignment to the Company of all of the Equinox
Parties' right, title and interest in, and claims relating to or arising out of,
any debtor-in-possession financing provided by the Equinox Parties to the
Company from the date hereof until the Closing (the "Equinox DIP Financing
Consideration").
(f) Notwithstanding the provisions of Section 1.3(a) above, in
the event that the Bankruptcy Court's Sale Order shall fail to approve the
provisions of Section 1.4(b)(i) below, the Cash Consideration payable by
Purchaser shall be reduced by the amount set forth in Section 1.3(a)(i) above.
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1.4 PAYMENT OF PURCHASE PRICE.
(a) At the Closing (as defined in Section 1.7 below), (i)
Purchaser shall pay to the Company, on behalf of Sellers, in immediately
available funds, the Cash Consideration, and (ii) Purchaser shall assign to the
Company the Claim Consideration, the Equinox DIP Financing Consideration and,
subject to the provisions of Section 1.3(d), the Intercreditor Consideration;
(b) At the Closing, immediately following payment of the
Purchase Price, the Company, on behalf of Sellers, shall (i) pay the sum of
$5,500,000 in immediately available funds to the holders of the Series 1999
Notes, in full satisfaction, settlement, release, and discharge of any and all
claims against Sellers arising out of, or relating to, the Series 1999 Notes (to
be divided among such holders on a pro rata basis based on the principal amount
of each such holder's interest in the Series 1999 Notes), (ii) repay, in
immediately available funds, any and all principal and accrued but unpaid
interest relating to, or arising out of, any indebtedness owed to Greyrock
Capital ("Greyrock") pursuant to that certain Loan and Security Agreement, dated
November 25, 1997, as amended, by and among Greyrock, Systems, and Wet Process
Stations (the "Greyrock Debt"), and (iii) repay, in immediately available funds,
any and all principal and accrued but unpaid interest relating to or arising out
of any indebtedness owed to Greyrock pursuant to any debtor-in-possession
financing provided by Greyrock to the Company from the Petition Date until the
Closing (the "Greyrock DIP Financing").
1.5 ASSUMPTION OF CERTAIN LIABILITIES.
(a) Purchaser agrees to assume on the Closing Date, and to pay
or perform in accordance with their terms, only the following obligations and
liabilities of Sellers relating to the Manufacturing Business or the Transferred
Assets, as and when the same become due or are required to be performed or
discharged (collectively, the "Assumed Liabilities"):
(i) the trade payables set forth on Schedule 1.5(a),
and any trade payables incurred by Sellers after the date set forth on
Schedule 1.5(a) (but prior to the Closing Date), but only to the extent
such trade payables related to the Transferred Assets are incurred in
the ordinary course of the Manufacturing Business consistent with past
practice on commercially reason able terms (the "Trade Payables");
provided, however, that trade payables with respect to (i) any legal,
accounting, professional, consulting, software consulting, management,
outplacement, advisory, or similar services provided to
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Sellers, or (ii) the Excluded Assets, shall not be deemed to be "Trade
Payables" for purposes of this Agreement;
(ii) obligations, arising from and after the Closing
Date (as defined in Section 1.7 below), to perform under and to pay
when due amounts owing under the Assigned Contracts and the Real
Property; provided that, except as provided in Section 1.5(a)(iv)
below, Purchaser will not assume any obligation or liability resulting
from or arising out of any default, breach, misfeasance, malfeasance,
or nonfeasance by Sellers prior to the Closing Date under or with
respect to any of such Assigned Contracts or Real Property;
(iii) (x) those accrued liabilities of the
Manufacturing Business in existence as of the Closing incurred in the
ordinary course of business consistent with past practice related
solely to any accrued vacation leave, accrued vacation pay, accrued
holiday leave, accrued holiday pay, accrued sick leave, and accrued
sick pay, of the Transferred Employees (the "Assumed Accrued
Benefits"), and (y) obligations arising from and after the Closing Date
relating to the Transferred Employees, but only to the extent specified
in Sections 2.9, 2.10, and 2.12 below; and
(iv) obligations to satisfy the conditions of section
365(b)(1)(A)-(C) of the Bankruptcy Code to the extent necessary to
permit the assumption by Sellers and assignment to Purchaser of the
Assigned Contracts and the Real Property.
(b) Nothing contained in this Section 1.5 or in any instrument
of assumption executed by Purchaser at the Closing shall be deemed to release or
relieve Sellers from their representations, warranties, covenants, and
agreements contained in this Agreement, including, without limitation, the
obligations of Sellers to indemnify Purchaser in accordance with the provisions
of Section 8 below.
1.6 OBLIGATIONS NOT ASSUMED.
(a) Except for the Assumed Liabilities, Purchaser shall not
assume, and Sellers shall indemnify and hold harmless Purchaser from and against
any Losses (as defined in Section 8.1 below) relating to or arising out of, any
obligation or liability of Sellers of any kind, whether fixed, contingent, known
or unknown, and whether existing as of the Closing or arising thereafter.
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(b) Notwithstanding anything contained in this Agreement to
the contrary, Purchaser shall not assume, and Sellers shall indemnify and hold
harmless Purchaser from any Losses relating to or arising out of (i) any
liability of the SubMicron Group for Taxes (as defined in Section 3.14 below),
including, but not limited to, any liability for Taxes of the Manufacturing
Business or attributable to the Transferred Assets, except, solely in the case
of the Akrion Entities, only for such Taxes arising out of or relating to
periods ending on or prior to the Closing Date; (ii) any liabilities,
obligations, or costs of the SubMicron Group for the unpaid Taxes of any person
as a transferee or successor, by contract or otherwise, except, solely in the
case of the Akrion Entities only for such Taxes arising out of or relating to
periods ending on or prior to the Closing Date; (iii) any obligation of the
SubMicron Group to indemnify any person by reason of the fact that such person
was a director, officer, employee, representative or agent of the SubMicron
Group or any other entity, except, solely with respect to the Akrion Entities,
only for periods ending on or prior to the Closing Date; (iv) any indebtedness
of Sellers, other than that indebtedness of Sellers specified in Section 1.5(a);
(v) any liabilities, obligations, or costs of the SubMicron Group relating to
(A) any employees of Sellers who do not become Transferred Employees, (B) except
as provided in Section 1.5(a)(iii), any liabilities, obligations, or costs that
arise or accrue with respect to the Transferred Employees prior to the Closing
Date, or (C) any liabilities, obligations, or costs that arise or accrue with
respect to the Transferred Employees on or after the Closing Date except those
liabilities, obligations, or costs with respect to Transferred Employees
specifically set forth in Sections 1.5(a), 2.9, 2.10 and 2.12 hereof; (vi)
except as provided in Section 1.5(a), any liabilities, obligations, or costs
relating to or arising out of the SubMicron Group's conduct of the Manufacturing
Business and use of the Transferred Assets on or prior to the Closing Date;
(vii) any liabilities, obligations, or costs relating to or arising under any
warranty, service, or maintenance agreements or obligations relating to goods or
services sold or rendered by the SubMicron Group's or its Affiliates prior to
the Closing Date (other than with respect to Open Purchase Orders); (viii) any
liabilities or obligations arising out of any Closed Purchase Orders; and (ix)
any liabilities, obligations, or costs relating to or arising out of the
Excluded Assets. For purposes of this Agreement, "Closed Purchase Orders" shall
mean any purchase orders of the SubMicron Group with respect to periods prior to
the Closing pursuant to which the SubMicron Group is not entitled to any
payments thereunder from any customer.
(c) Notwithstanding any other provision of this Agreement, the
obligations and liabilities of Sellers pursuant to this Section 1.6 shall
survive the Closing and the transactions contemplated by this Agreement, and
Sellers shall pay, satisfy, and perform all of their obligations and liabilities
relating thereto, including those obligations and liabilities set forth in this
Section 1.6.
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1.7 CLOSING. The consummation of the transactions contemplated by this
Agreement (the "Closing") shall take place at the offices of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, New York 10022, at 10:00
a.m. local time, on the first business day after the date on which all
conditions contained in Sections 6 and 7 have been satisfied or waived, or at
such other date, time, and place as shall be fixed by agreement among the
parties (the "Closing Date").
1.8 TRANSACTIONS AND DOCUMENTS DELIVERED AT CLOSING.
(a) At the Closing:
(i) Sellers shall deliver to Purchaser (A) a duly
executed General Assignment and Bill of Sale, in substantially the form
attached hereto as Exhibit A, and such other duly executed instruments
of conveyance, transfer, and assignment as may be required to transfer
to Purchaser the Transferred Assets owned by such Seller (collectively,
and together with that certain Assumption Agreement referred to below,
the "Ancillary Documents"), and (B) such other duly executed documents
and certificates as may be required to be delivered by the SubMicron
Group pursuant to the terms of this Agreement, in form and substance
reasonably acceptable to Sellers and Purchaser; and
(ii) Purchaser shall deliver to Sellers (A) the Cash
Consideration by wire transfer of immediately available funds to an
account or accounts designated by Sellers, (B) the Claim Consideration,
the Equinox DIP Financing Consideration, and, subject to the provisions
of Section 1.3(d), the Intercreditor Consideration, by an Assignment of
Claims in a form reasonably acceptable to Purchaser and Sellers, (C) an
Assumption Agreement substantially in the form attached hereto as
Exhibit B to effectuate the assumption by Purchaser of the Assumed
Liabilities, and (D) such other duly executed documents and
certificates as may be required to be delivered by Purchaser pursuant
to the terms of this Agreement, in form and substance reasonably
acceptable to Sellers and Purchaser.
(b) All deliveries, payments and other transactions and
documents relating to the Closing shall be interdependent and none shall be
effective unless and until all are effective (except to the extent that the
party entitled to the benefit thereof has waived satisfaction or performance
thereof as a condition precedent to Closing).
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(c) Each party hereto shall, at the request of any other party
at any time, whether on or after the Closing Date, and without further
consideration, execute and deliver such deeds, assignments, transfers,
assumptions, conveyances, powers of attorney, receipts, acknowledgments,
acceptances, and assurances as may be reasonably necessary to procure for the
party so requesting, and its successors and assigns, or for aiding and assisting
in collecting and reducing to possession, any and all of the Transferred Assets
or the Assumed Liabilities, or otherwise to satisfy and perform the obligations
of the parties hereunder.
1.9 INTERCOMPANY ACCOUNTS. Immediately prior to the Closing, the
SubMicron Group shall use its best efforts to cause all Intercompany Accounts of
the SubMicron Group to be cancelled without further payment. For purposes of
this Agreement, "Intercompany Accounts" shall mean those accounts maintained by
the SubMicron Group and its direct or indirect subsidiaries in accordance with
their customary historical practices in the ordinary course of business in which
there are reflected or recorded the amounts owed by any member of the SubMicron
Group to a subsidiary of that member of the SubMicron Group, or by a subsidiary
of any member of the SubMicron Group to that member of the SubMicron Group,
attributable to intercompany transactions, including, without limitation,
charges for data processing, payroll, employee benefits services, and loans and
advances, as generally described in, and consistent with (but not necessarily in
the amounts set forth in), the unaudited consolidated balance sheet (including
the related notes and schedules) of the Company as of June 30, 1999 (the "June
1999 Balance Sheet").
2. ADDITIONAL AGREEMENTS.
2.1 PURCHASER'S ACCESS AND INSPECTION. From and after the date hereof
until the Closing, the SubMicron Group shall provide Purchaser and its
representatives, and Purchaser's financing sources and their representatives,
full access during normal business hours to the Transferred Assets and the books
and records of the SubMicron Group relating to the Manufacturing Business and
the Transferred Assets for the purpose of making such investigation as
Purchaser and Purchaser's financing sources may reasonably desire, including,
without limitation, creation of surveys and environmental studies (including
both phase I and phase II studies, at Purchaser's cost) of the SubMicron Group's
real property, and the SubMicron Group shall furnish Purchaser and Purchaser's
financing sources such information concerning the Manufacturing Business and the
Transferred Assets as Purchaser may reasonably request. The SubMicron Group
shall assist Purchaser and Purchaser's financing sources in making such
investigation, including, without limitation, by providing Purchaser and
Purchaser's financing sources with written authorizations to governmental
authorities and third parties to enable Purchaser and Purchaser's financing
sources to make such investigations and causing their counsel, accountants,
engineers, consultants and other non-employee representatives, manag-
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ers, and executive officers to be reasonably available to Purchaser and
Purchaser's financing sources for such purposes. No investigation made
heretofore or hereafter by Purchaser and Purchaser's financing sources shall
limit or affect the representations, warranties, covenants, and indemnities of
Sellers hereunder, each of which shall survive any such investigation.
2.2 CONFIDENTIALITY. Sellers and Purchaser, on their own behalves and
on behalf of their representatives (including any financing sources and their
representatives), agree that they will hold any non-public information with
respect to the Manufacturing Business, the Transferred Assets, the Assumed
Liabilities, this Agreement, and the Ancillary Documents in confidence, using
the same safeguards to protect such confidential information as such party has
established to protect its own confidential information; provided that, Sellers'
obligation shall survive the Closing indefinitely. In the event that the
transactions contemplated hereby are not consummated, then Purchaser shall
return to the SubMicron Group and the SubMicron Group shall return to Purchaser
all documents and other written information furnished to the other and shall
otherwise comply with the terms of the confidentiality agreement, dated as of
April 30, 1999, by and between Sunrise Capital Partners, L.P. and Equinox
Investment Partners, L.L.C., on behalf of the Company (the "Confidentiality
Agreement"), as if Purchaser were a party to the Confidentiality Agreement.
This Section 2.2 shall not apply to:
(a) any information which was known to a party prior to its
disclosure by the other party;
(b) any information which was in the public domain prior to
the disclosure thereof by the relevant party hereto;
(c) any information which comes into the public domain through
no fault of the party bound by this Section 2.2;
(d) any information which is disclosed by a third party (which
term shall not include the counsel, accountants, financing sources, and other
non-employee representatives of any party hereto) having a fiduciary obligation
to make such disclosure; or
(e) information which is required to be disclosed by order of
any court or other tribunal of competent jurisdiction.
2.3 COOPERATION; POST-CLOSING ACCESS.
(a) The parties hereto shall cooperate fully with each other
and with their respective counsel, accountants, and other representatives in
connection with any steps
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required to be taken as part of their respective obligations under this
Agreement, and all parties shall use their best efforts to take or cause to be
taken all action, to do or cause to be done, and to assist and cooperate with
the other parties hereto in doing, all things necessary, proper, or advisable
under applicable laws and regulations to consummate the transactions
contemplated hereby and to fulfill their obligations hereunder, including,
without limitation, causing to be fulfilled at the earliest practical date the
conditions precedent to the obligations of the parties to consummate the
transactions contemplated hereby. Without the prior written consent of the other
parties, except as otherwise provided herein, no party hereto may take any
intentional action that would cause the conditions precedent to the obligations
of the parties hereto to effect the transactions contemplated hereby not to be
fulfilled, including, without limitation, taking or causing to be taken any
action that would cause the representations and warranties made by such party
herein not to be true, correct, and complete as of the Closing; provided,
however, that Purchaser acknowledges Sellers' obligations set forth in Section
2.17. From and after the Closing, each of Purchaser and Sellers shall provide
the other with such assistance as may reasonably be requested by any of them in
connection with the preparation of any Tax Return (as defined in Section 3.14
below), any audit or other examination by any taxing authority, or any judicial
or administrative proceedings relating to liability for Taxes (as defined in
Section 3.14 below), and each will retain and provide the requesting party with
any records or information that may be relevant to such Tax Return, audit or
examination, proceedings, or determination.
(b) From and after the Closing, until the earliest of (i) two
(2) years following the Closing, (ii) consummation of Sellers' plan or plans of
reorganization or liquidation, (iii) entry of an order converting Sellers' cases
under Chapter 11 of the Bankruptcy Code to cases under Chapter 7 of the
Bankruptcy Code, (iv) entry of a final decree closing Sellers' cases under
Chapter 11 of the Bankruptcy Code, or (v) the appointment of a trustee,
examiner, responsible officer or similar person for the estate of any of Sellers
(the first such event to occur, the "Bankruptcy Closing Event"), Sellers agree
that upon reasonable request and as required to respond to court order,
subpoena, inquiry, investigation, audit, or any other proceeding of any
government authority, they will provide to Purchaser reasonable access to
information from the books and records in their possession not otherwise
conveyed to Purchaser pursuant to Section 1.1. Sellers agree to preserve such
records in their possession until the Bankruptcy Closing Event and thereafter
to convey such records to Purchaser. In addition, from and after the Closing,
Purchaser shall provide Sellers, and Sellers shall provide Purchaser, access at
reasonable times and upon reasonable prior notice to such books and records
acquired by Purchaser, and (in the case of books and records retained by Sellers
to books and records retained by Sellers) as are necessary for Sellers' or
Purchaser's tax, regulatory, reporting, accounting, legal, or other purposes.
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(c) Until the Bankruptcy Closing Event, Sellers agree to
provide to Purchaser and Purchaser's accountants, underwriters, and other
advisors, including financing sources, such financial and other information
retained by Sellers relating to the Manufacturing Business (including, as may be
applicable, requesting Sellers' accountants to provide copies of their work
papers, representation, and comfort letters as are customary), and such access
to management, accounting, and legal personnel of Sellers, as Purchaser may
reasonably request and as may reasonably be required in order to facilitate
Purchaser's preparation of one or more offering memoranda or registration
statements pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), (and/or blue sky filings) relating to any offering of equity or debt
securities of Purchaser or any of its Affiliates or other sales of such
securities.
2.4 EXPENSES. Except as otherwise provided in Section 10.3 below, all
expenses incurred by Purchaser in connection with the authorization,
preparation, execution, and performance of this Agreement, including, without
limitation, all fees and expenses of agents, representatives, counsel, and
accountants for Purchaser, shall be paid by Sunrise Capital Partners, L.P. All
expenses incurred by the SubMicron Group in connection with the authorization,
preparation, execution, and performance of this Agreement, including, without
limitation, all fees and expenses of agents, representatives, counsel, and
accountants for the SubMicron Group, shall be paid by Sellers.
2.5 PAYMENT OF TAXES.
(a) Sellers shall be responsible for the payment of all sales,
use, excise, transfer, value added, and similar taxes and fees, including,
without limitation, any land transfer taxes or bulk sales taxes, imposed by any
governmental authority in any jurisdiction or country in connection with the
sale of the Transferred Assets contemplated herein ("Transfer Taxes"). Sellers
shall prepare and timely file all Tax Returns required to be filed in respect of
Transfer Taxes (including without limitation, all notices required to be given
with respect to bulk sales taxes).
(b) Except as otherwise provided in this Section 2.5, (i)
Sellers shall be responsible for the payment of all Taxes (as defined in Section
3.14(a) below) relating to the Manufacturing Business and the Transferred Assets
with respect to taxable periods that end on or before the Closing Date; (ii)
Purchaser shall be responsible for the payment of all Taxes relating to the
Manufacturing Business and the Transferred Assets with respect to taxable
periods that begin after the Closing Date; and (iii) for all taxable periods
which include (but do not end on) the Closing Date, Sellers shall be responsible
for the payment of Taxes which are attributable to such taxable periods up to
and including the Closing Date and Purchaser shall be responsible for the
payment of Taxes which accrue after the Closing Date to the end of such
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<PAGE> 19
taxable periods; provided, however, that taxes on real property shall be
prorated and apportioned in accordance with section 164(d) of the Code (as
defined in Section 3.16 (b)). The party which has the primary obligation to do
so under applicable law shall file any Tax Return that is required to be filed
in respect to Taxes described in this Section 2.5(b), and that party shall pay
the Taxes shown on such Tax Return and notify the other party in writing of the
other party's share of Taxes for which it is responsible, if any, of the Taxes
shown on such Tax Return and how such Taxes and share were calculated, which the
other party shall reimburse by wire transfer of immediately available funds no
later than ten days after receipt of such notice.
(c) For purposes of Taxes based upon or measured by net income
("Income Taxes"), the Company shall include the net income attributable to the
Manufacturing Business and the Transferred Assets in its income through the
Closing Date and shall file the appropriate Tax Return, and Purchaser shall
include the net income relating to the Manufacturing Business and the
Transferred Assets in its net income from and after the Closing Date. Sellers
shall be responsible for the payment of all Income Taxes imposed on Sellers as a
result of the transfer of the Manufacturing Business and the Transferred Assets
to Purchaser.
2.6 PUBLICITY. From the date hereof until the Closing Date, all press
releases and other public announcements respecting the subject matter hereof
shall be made only with the mutual agreement of the parties hereto, except as
otherwise required by law or an order of the Bankruptcy Court.
2.7 SUBMISSION FOR BANKRUPTCY COURT APPROVAL.
(a) On the Petition Date, or as soon thereafter as practicable
(and in any event within three (3) business days following the date of this
Agreement), Sellers shall file with the Bankruptcy Court a motion, supporting
papers, notices, and a proposed procedures order, all in form and substance
satisfactory to Purchaser (in its sole and absolute discretion), seeking the
Bankruptcy Court's approval of the terms of Sections 2.17 and 10.3 of this
Agreement (including, without limitation, the Termination Payment), and
observance and performance of such terms by Sellers and Purchaser during the
pendency of Sellers' case under Chapter 11 of the Bankruptcy Code (the "Chapter
11 Cases") (the "Procedures Order"). The parties hereto shall use their
respective best efforts to obtain the entry of the Procedures Order within five
(5) Business Days of the Petition Date.
(b) On the Petition Date, or as soon thereafter as practicable
(and in any event within three (3) Business Days following the date of this
Agreement), Sellers shall file with the Bankruptcy Court a motion, supporting
papers, notices, and a form of sale order, all
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<PAGE> 20
in form and substance satisfactory to Purchaser (in its sole and absolute
discretion), seeking the Bankruptcy Court's approval of this Agreement, Sellers'
performance under this Agreement, assumption and assignment of the Assumed
Contracts and Assumed Liabilities, and Sellers' retention of the Excluded Assets
(the "Sale Order"). Subject to the provisions of the Procedures Order, Sellers
shall use their best efforts to obtain entry of the Sale Order not later than
October 4, 1999.
(c) Sellers shall provide Purchaser with copies of all
motions, applications, and supporting papers prepared by Sellers (including
forms of orders and notices to interested parties) relating to Purchaser or the
transactions contemplated by this Agreement prior to the filing thereof in the
Chapter 11 Cases.
(d) Sellers shall give appropriate notice, and provide
appropriate opportunity for hearing, to all parties entitled thereto, of all
motions, orders, hearings, or other proceedings relating to this Agreement or
the transactions contemplated hereby. The parties acknowledge that they shall
be subject to and bound by the Procedures Order with respect to such notice and
opportunity to be heard.
2.8 COVENANT AGAINST COMPETITION.
(a) In order to induce Purchaser to enter into this Agreement
and purchase the Transferred Assets and assume the Assumed Liabilities as
provided herein, and in consideration thereof, Sellers hereby agree that, for a
period of three (3) years after the Closing Date, Sellers shall not, and shall
use their reasonable efforts to cause their affiliates (as such term is defined
in Rule 405 of the Securities Act, "Affiliates"), either directly or indirectly,
not to:
(i) own, control, manage, finance, or otherwise
participate in the ownership, control, or management of a business
engaged in the design, manufacture, distribution, marketing, or sale of
wet surface preparation and cleaning equipment used in the manufacture
of microelectronic devices or the production of raw silicon wafers (the
"Products");
(ii) solicit, call upon, or attempt to solicit the
patronage of any customer to whom the Manufacturing Business sold or
provided any Products during the eighteen (18) month period prior to
the Closing Date, for the purpose of obtaining the patronage of any
such customer for the purchase of the Products; or
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(iii) solicit or induce, or in any manner attempt to
solicit or induce, any person employed by Purchaser or the
Manufacturing Business to leave such employment, whether or not such
employment is pursuant to a written contract.
(b) The parties hereto agree that the provisions of this
Section 2.8 are reasonable and valid under the circumstances and all defenses to
the strict enforcement thereby by Purchaser are hereby waived by Sellers. In
addition to the provisions of Section 11.5 hereof, the parties hereto further
agree that if in the opinion of a court of competent jurisdiction such
restrictions are held to be excessively broad as to duration, geographic scope,
activity, or subject, such provisions shall be construed by limiting and
reducing them in order that such provisions be enforceable to the maximum extent
permitted by applicable law.
2.9 TRANSFERRED EMPLOYEES; SEVERANCE.
(a) (i) Except for those employees set forth on Appendix
2.9(a) (which Appendix will be provided by Purchaser to Sellers at least
twenty-four (24) hours prior to the Closing), Purchaser shall offer employment
with Purchaser, conditional upon the Closing, to the active employees of the
Manufacturing Business. Prior to the Closing, letters will be distributed to
such active employees inviting them to apply for consideration for employment
and said letters will generally describe wages, benefits, and other terms and
conditions offered by Purchaser.
(ii) For purposes of the prior sentence, as used
herein, the term "active employee" shall mean employees of the
Manufacturing Business other than: (x) those in receipt of long term
disability benefits or absent on long term disability leave of absence
as of the Closing Date, and (y) those in receipt of short term
disability benefits or absent on short term disability leave of
absence, other than those on maternity, pregnancy, parental, family, or
medical leave or similar absence, as of the Closing Date, who do not
return to work within seventy-five (75) days of the Closing Date.
(iii) Active employees of the Manufacturing Business
to whom Purchaser offers employment and who accept Purchaser's offer of
employment are hereinafter referred to collectively as "Transferred
Employees," and individually as a "Transferred Employee."
(iv) The Transferred Employees shall become employees
of Purchaser immediately following the Closing. Nothing in this
Agreement is
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intended to, nor does it, confer any rights and privileges upon any
person not a party to this Agreement.
(b) (i) Sellers shall be solely responsible for all Losses,
and shall indemnify and hold harmless Purchaser from all Losses, arising from or
relating to any inquiries, investigations, claims, demands, complaints,
applications, grievances, arbitrations, lawsuits, or actions of any kind or any
other proceedings (whether by any person or any governmental entity) (a "Claim"
or "Claims") by or on behalf of persons who at or prior to the Closing are or
were employees of the SubMicron Group in the Manufacturing Business, whether
such Losses are asserted or incurred before or after the Closing Date, in
respect of:
(A) except as provided in Section 1.5(a)(iii), any matter
regarding wages, salaries, bonuses, commissions, hours of
work, vacations or vacation pay, holidays or holiday pay, sick
leave, personal days, pension or other employee benefits,
worker's compensation, income tax withholdings, employment or
unemployment insurance, employer health tax, human rights, pay
equity, occupational health and safety, employment standards,
employment equity, or arising under any Employment Laws
provision generally (collectively, a "Labor Relations
Matter"), relating to periods expiring on or prior to the
Closing;
(B) any strike, cessation of work, refusal to work or to continue
to work by employees in combination or in concert, or in
accordance with a common understanding, or a slow-down or
other concerted activity on the part of employees designed to
restrict or limit output, or any lock-out, closing of place of
employment, suspension of work or refusal by the SubMicron
Group to continue to employ any employees, or any other
disturbance or dispute involving employees (collectively, a
"Labor Disturbance") which occurs on or prior to the Closing;
(C) severance pay, accrued vacation pay, accrued sick leave and
accrued personal days and any other similar obligations
(collectively, "Termination Costs") relating to the
termination of any employee's employment, any break in
service, or any other event entitling someone to payment for
such benefits (a "Termination") in any case arising from a
Termination on or prior to the Closing; and
(D) except for agreements and arrangements made by Purchaser with
any Transferred Employees on or after the Closing Date,
severance, retention, termina-
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tion, indemnity, and payments in lieu of notice and related
payments (including continuation of benefits), payable to any
Transferred Employee arising by reason of any termination or
constructive termination from and after the Closing (including
any of the foregoing, based upon any Transferred Employee's
service prior to and after the Closing pursuant to any
arrangement entered into by Sellers).
(ii) Without limiting the generality of the
foregoing, Sellers covenant and agree that:
(A) in the event that Purchaser incurs any Losses with respect to
any Claims relating to any Employment Law or is required to
reinstate any current or former employee who made or filed
such a Claim relating to periods at or prior to the Closing,
Sellers shall reimburse Purchaser for all Losses associated
with such Claims and the resolution thereof, whether by
settlement or adjudication, of same; provided, however, that
the foregoing shall not apply to any Claims relating to the
Assumed Accrued Benefits; and
(B) in the event that Purchaser incurs any Losses of any kind in
connection with any Labor Disturbance or Labor Relations
Matter relating to periods at or prior to the Closing
regarding any current or former employees of the SubMicron
Group, Sellers shall reimburse Purchaser for all Losses of any
kind associated with such Labor Disturbance or Labor Relations
Matter relating to periods at or prior to the Closing and the
resolution of same, whether by settlement or adjudication;
provided, however, that the foregoing shall not apply to any
Claims relating to the Assumed Accrued Benefits.
(c) Purchaser covenants and agrees that, subject to the
Closing, it shall be responsible for:
(i) all liabilities, obligations, or costs in respect
of each Transferred Employee to the extent such liabilities,
obligations, or costs arise after the Closing Date and relate to
Purchaser's conduct with respect to any Labor Relations Matter;
(ii) except as set forth in Section 2.9(b)(i)(C)
above, all Termination Costs which are incurred after the Closing in
respect of any Transferred Employee; and
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(iii) liabilities, obligations, or costs in respect
of the Assumed Accrued Benefits.
2.10 EMPLOYEE PENSION PLANS AND OTHER LIABILITIES.
(a) Purchaser will permit the Transferred Employees to
participate in any pension plan that may be established by Purchaser and made
available to the employees of Purchaser. Purchaser will treat service by any
Transferred Employee with the SubMicron Group before the Closing as service with
Purchaser only for purposes of eligibility and vesting in such pension plan;
provided, that such crediting of service does not result in the duplication of
benefits. Except as required by applicable law or in Section 1.5(a)(iii),
Purchaser shall not be required to recognize the Transferred Employees' prior
service with the SubMicron Group for any other purpose or benefit, or under any
other plan established by Purchaser.
(b) No assets or liabilities with respect to Transferred
Employees shall be transferred, as a result of this Agreement, from any of the
Plans applicable to employees in the Manufacturing Business to any plan
established by Purchaser, and Sellers shall retain all obligations to fund or
otherwise provide benefits accrued by Transferred Employees under such Plans for
periods on or prior to the Closing, except for the Assumed Accrued Benefits.
(c) Except as otherwise provided in this Agreement, Sellers
shall retain, and Purchaser shall not assume, any liabilities and obligations of
Sellers relating to employee benefits. Without limiting the foregoing, except
for the Assumed Accrued Benefits, Sellers shall retain, and Purchaser shall not
assume, obligations and liabilities with respect to any Plans listed on Schedule
3.16(a) and any agreements, arrangements, or contracts listed on Schedule
3.15(d) relating to the Transferred Employees, or with respect to any other
employee benefit plans, programs, or arrangements for any other present, former,
or retired employees of Sellers, including without limitation, liabilities and
obligations for retiree benefits.
2.11 RIGHT TO HIRE. Nothing in this Agreement shall impair Purchaser's
right to hire employees other than the Transferred Employees.
2.12 BENEFITS FOR TRANSFERRED EMPLOYEES.
(a) After the Closing, each Transferred Employee shall become
a participant in such employee benefit plans or arrangements as may be provided
by Purchaser (such plans, programs, and arrangements, the "Purchaser Plans").
Except as otherwise provided in this Agreement, Sellers shall remain fully
responsible for providing benefits under any of their Plans, including benefits
with respect to all claims incurred or arising out of events or
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<PAGE> 25
circumstances occurring on or before the Closing. Without limiting the
generality of the foregoing, with respect to any disability benefits, Sellers
shall remain responsible for payment and shall indemnify Purchaser for (i) any
and all benefits (regardless of whether payment is required to be made after the
Closing) for (A) any individual other than a Transferred Employee who is in
receipt of such benefits as of the Closing and (B) any individual other than a
Transferred Employee who becomes disabled prior to the Closing and who remains
disabled for the length of any qualifying disability period, and (ii) any Losses
incurred by Purchaser arising out of Purchaser's not employing any employee who
is in receipt of long term disability benefits or absent on long term disability
leave of absence as of the Closing Date, or any employee in receipt of short
term disability benefits or on short term disability leave of absence, other
than those on pregnancy, maternity, parental, or family responsibility leave of
absence, as of the Closing Date, who does not return to work within seventy-five
(75) days of the Closing Date.
(b) Notwithstanding anything contained herein, Purchaser shall
not be obligated to provide retiree health or other benefits to any retired
employee of Sellers.
2.13 REGULATORY COMPLIANCE.
(a) Immediately following the date of this Agreement, the
parties hereto shall make all necessary filings, including, without limitation,
applicable antitrust laws, including, without limitation, under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR Act")
and applicable state and federal laws of the United States and foreign laws, in
order to facilitate prompt consummation of the transactions contemplated hereby
and by the Ancillary Documents. In addition, the SubMicron Group and Purchaser
will use their best efforts (including, without limitation, payment of any
required fees), and will cooperate fully with each other to (i) comply as
promptly as practicable with all govern mental requirements applicable to the
transactions contemplated by this Agreement and the Ancillary Documents and (ii)
issue all requisite notices and obtain promptly all approvals, permits, orders,
or other consents of any applicable governmental authorities necessary for the
consummation of the transactions contemplated by this Agreement and the
Ancillary Documents. Each of the parties hereto will furnish to the other party
such necessary information and reasonable assistance as such other party may
reasonably request in connection with the foregoing and to deal with the
inquiries made by all governmental authorities in connection therewith.
(b) The SubMicron Group and Purchaser agree to coordinate and
cooperate fully with each other in exchanging such information and providing
such assistance as the other may reasonably request in connection with the
foregoing regulatory approvals and
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consents. The SubMicron Group and Purchaser agree to respond promptly to, and
comply fully with, any governmental request for information. The SubMicron Group
and Purchaser will provide each other with copies of all correspondence,
filings, or communications (or memoranda setting forth the substance thereof)
between the SubMicron Group or Purchaser, as the case may be, or any of their
representatives, on the one hand, and any governmental agency or authority or
members of their respective staffs, on the other hand, with respect to this
Agreement and the transactions contemplated hereby.
2.14 CONSENTS; ASSIGNMENTS. The SubMicron Group and Purchaser will use
their respective best efforts to obtain any consent, approval, or amendment
required to novate and/or assign all agreements, leases, licenses, and other
rights of any nature whatsoever relating to the Transferred Assets; provided,
however, that except for filing and other administrative charges or as required
by Section 1.5(a)(iv), Purchaser shall not be obligated to pay any consideration
therefor to the third party from whom such consents, approvals, and amendments
are requested. In the event and to the extent that Purchaser and the SubMicron
Group are unable to obtain any such required consent, approval or amendment, or
if any attempted assignment would be ineffective or would adversely affect the
rights of the SubMicron Group with respect to any Transferred Asset so that
Purchaser would not in fact receive all the rights with respect to such
Transferred Asset, the SubMicron Group and Purchaser will cooperate (to the
extent permitted by law or the terms of any applicable agreement) in a mutually
agreeable arrangement under which Purchaser would, to the extent possible,
obtain the benefits and assume the obligations with respect to such Transferred
Asset in accordance with this Agreement, including sub-contracting,
sub-licensing, or sub-leasing to Purchaser, or under which the SubMicron Group
would enforce for the benefit of Purchaser, with Purchaser assuming the
SubMicron Group's obligations, any and all rights of the SubMicron Group against
a third party thereto. Sellers shall, without further consideration therefor,
pay and remit to Purchaser promptly all monies, rights, and other considerations
received in respect of Purchaser's performance of such obligations. Following
the Closing, Sellers shall use their best efforts to obtain those Required
Consents (as defined in Section 3.5 below) with respect to any Transferred
Assets which are not assigned to Purchaser pursuant to the Sale Order. If and
when any such consent shall be obtained or such agreement, lease, license, or
other right shall otherwise become assignable or able to be novated, Sellers
shall promptly assign and novate all its rights and obligations thereunder to
Purchaser without payment of further consideration and Purchaser shall, without
the payment of any further consideration therefor, assume such rights and
obligations. The foregoing will not limit the right of Purchaser to require
Sellers to assign any contract to it or constitute a waiver to any condition
precedent to Closing.
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2.15 RELEASE OF LIENS.
(a) The parties acknowledge and agree that (i) the sale and
transfer of the Transferred Assets shall be a sale under section 363(b) of the
Bankruptcy Code, free and clear of all Liens (except for Permitted
Encumbrances), with all such Liens attaching to the proceeds of such sale
pursuant to section 363(f) of the Bankruptcy Code, and (ii) that the Sale Order
shall provide that upon the consummation of the sale transaction contemplated by
this Agreement, the Transferred Assets shall have been transferred to the
Purchaser free and clear of all Liens (other than Permitted Encumbrances).
Notwithstanding the foregoing, the SubMicron Group shall use its best efforts to
cause the Transferred Assets to be released, as of the Closing, from all Liens
(other than Permitted Encumbrances) guaranties and guaranty obligations,
including filing and recording appropriate documentation evidencing such
releases. Sellers agree to indemnify Purchaser, their Affiliates and any of
their successors or assigns for any Losses incurred by Purchaser, their
Affiliates and any of their successors or assigns arising out of any such Liens
(other than Permitted Encumbrances (as defined in Section 3.7 below)),
guaranties, or guaranty obligations, if any.
(b) Prior to the Closing, the SubMicron Group shall use its
best efforts to provide evidence satisfactory to Purchaser that the requirements
of this Section 2.15 have been satisfied.
2.16 SUPPLEMENTAL DISCLOSURE. At all times prior to and including the
Closing Date, the SubMicron Group shall promptly provide Purchaser with written
notification of any event, occurrence, or other information of any kind
whatsoever which in any material way affects the continued truth, correctness,
or completeness of any representation or warranty made by the SubMicron Group in
this Agreement, the Disclosure Schedules (as defined in Section 3.1 below), the
Appendices hereto or the Exhibits hereto, or would cause any of the conditions
to any party's obligations to consummate the transactions contemplated by this
Agreement not to be fulfilled ("Schedule Updates"), including, without
limitation, any Material Customer Loss (as defined in Section 3.22 below). All
such written notifications shall specifically identify any and all of the
representations or warranties affected by the event, occurrence, or information
that necessitated the giving of such notice. Notwithstanding the foregoing, the
Schedule Updates shall not be given effect for the purposes of (i) determining
the accuracy of the representations and warranties contained in this Agreement,
(ii) determining the satisfaction of the conditions precedent to the obligations
of Purchaser contained in Section 6 of this Agreement, or (iii) determining
Purchaser's ability to seek indemnification from Sellers pursuant to the terms
of this Agreement.
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2.17 OVERBID PROVISIONS.
Purchaser and Sellers acknowledge that under the Bankruptcy
Code, Sellers must take reasonable steps to demonstrate that they have sought to
obtain the highest and best price for the Transferred Assets, including, but not
limited to, giving notice of the transactions contemplated by this Agreement to
creditors and other interested parties as ordered by the Bankruptcy Court,
providing information about the Manufacturing Business to responsible bidders
subject to appropriate confidentiality agreements, entertaining higher and
better offers from responsible bidders, and, if necessary, conducting an
auction. To facilitate the foregoing, Sellers shall, pursuant to Section 2.7(a)
of this Agreement, seek entry of a Procedures Order providing for bidding
provisions and procedures substantially similar to the following:
(a) Sellers shall give notice of the transactions contemplated
by this Agreement to such persons and in such manner as the Bankruptcy Court
shall direct.
(b) Unless this Agreement has been terminated in accordance
with its terms, Sellers shall not, and shall not authorize or permit any
Affiliate, officer, director, employee, representative (including, but not
limited to, any investment banker, financial advisor, attorney, or accountant),
or agent of Sellers, directly or indirectly, to (i) solicit, initiate, or
encourage any inquiries or proposals from any person other than Sellers,
Purchaser or any of their Affiliates (a "Third Party") that constitute, or would
reasonably be expected to lead to, or (ii) engage in negotiations or discussions
concerning, or enter into any understandings or agreements with any Third Party
with respect to, an Overbid (as defined below); provided, however, that if the
Board of Directors of the Company determines in good faith that it is necessary
to do so to comply with their fiduciary duties under corporate law or the
Bankruptcy Code, Sellers may, in response to an unsolicited proposal for
submitting a Qualified Overbid, (x) furnish non-public information (other than
trade secrets or proprietary information) with respect to Sellers to any Third
Party who first has (1) executed a confidentiality agreement in form and
substance reasonably acceptable to Sellers and Purchaser and (2) delivered to
Sellers its current financial statements and such other information as Sellers
shall reasonably require, which demonstrate, to Sellers' reasonable
satisfaction, the financial capability of such Third Party to consummate the
transactions contemplated by the Overbid, and (y) participate in negotiations or
discussion concerning such Overbid.
(c) Sellers shall immediately notify Purchaser orally and in
writing of all inquiries, proposals, or requests for information received from
and Third Party, and the material terms and conditions of such inquiry, proposal
or request, and the identity of the person making such inquiry, proposal, or
request. Sellers shall keep Purchaser fully informed of the status and details
(including amendments or proposed amendments) of any such inquiry,
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proposal, or request. Upon request by Purchaser, Sellers will identify and
furnish to Purchaser all information provided in response to any such inquiry,
proposal, or request.
(d) Sellers shall consider as higher and better offers
("Overbids") only those proposals that meet the following requirements:
(i) Overbid Deadline. All Overbids must be submitted
in writing to, and received by, Sellers and their counsel (Cozen and
O'Connor) and Purchaser and its counsel (Skadden, Arps, Slate, Meagher
& Flom LLP) not later than 4:00 p.m. on the fifth (5th) business day
prior to the date set for the hearing (the "Sale Hearing") to approve
the transactions contemplated by this Agreement.
(ii) Overbid Requirements. Except as otherwise
provided in the Procedures Order, all Overbids (A) shall be in all
cash, (B) shall consist of an agreement in the form of this Agreement,
marked to show changes thereto, that is on terms and conditions no less
favorable to Sellers than the terms and conditions contained in this
Agreement, including but not limited to, price and time of Closing, and
(C) must satisfy the following requirements (such Overbid, a "Qualified
Overbid"):
(1) the initial Overbid must be at least
$1,000,000 higher than the value of the consideration provided
by Purchaser pursuant to this Agreement (which the parties
hereto and their respective Affiliates acknowledge to be equal
to the sum of (i) the Cash Consideration, (ii) the face value
of the Senior Subordinated Notes, and (iii) the Assumed
Liabilities, for a total approximate value of $55,507,587),
with successive bids (a "Subsequent Overbid") thereafter
exceeding one another by minimum increments of at least
$200,000. For purposes of evaluating the value of each
Subsequent Overbid, the value shall be the net consideration
payable to Sellers after giving effect to any Termination
Payment that may be payable to Purchaser under this Agreement;
(2) except as otherwise provided in Section
2.17(d)(iii) below, all Overbids shall be accompanied by a
deposit held and applied in accordance with the provisions of
Section 2.17(d)(iii);
(3) the Overbid shall provide for the
purchase of not less than all of the assets that Purchaser
proposes to purchase pursuant to
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this Agreement and shall not be conditional on the outcome of
any unperformed due diligence by the bidder, the receipt of
equity or debt financing, or the approval of any Board of
Directors, shareholder, or other corporate approval, as of the
date of the auction described in Section 2.17(e) below;
(4) the bidder shall provide evidence
reasonably satisfactory to Sellers demonstrating that the
bidder has the financial ability to close and consummate an
acquisition of Sellers' assets on or prior to the Closing
Date.
(iii) Deposit Requirement: All Overbids, other than
any Subsequent Overbids by Purchaser, shall be accompanied by a deposit
of $1,000,000 (the "Deposit"). All bidders submitting an Overbid or
Subsequent Overbid (other than Purchaser) shall pay the Deposit by wire
transfer to an escrow agent designated by Sellers. Purchaser's offer
and all other timely submitted Qualified Bids shall remain open and
irrevocable through the conclusion of the Sale Hearing, at which
Sellers shall seek the approval of the Bankruptcy Court of the highest
and best offer submitted for the assets (the "Successful Bid"), as
well as the second highest offer (the "Alternate Bid"). Within three
(3) business days after conclusion of the Sale Hearing, the Deposit,
together with interest accrued thereon, shall be returned to any bidder
whose bid is not the Successful Bid or the Alternate Bid. The Deposit,
if any, submitted by the party making the Successful Bid (the
"Successful Bidder"), together with interest thereon, shall be applied
against the payment of the Purchase Price upon consummation of the sale
to the Successful Bidder. The Deposit submitted by the holder of the
Alternate Bid, together with the interest thereon, shall be (x)
returned to such holder within three (3) business days after
consummation of the sale of the Transferred Assets to the Successful
Bidder, or (y) applied against the payment of the purchase price upon
consummation of the sale to the holder of the Alternate Bid. If the
Successful Bidder or the holder of the Alternate Bid, to the extent
applicable, fails to consummate the purchase of the Transferred Assets
due to such party's breach of its purchase agreement with Sellers, then
Sellers shall retain the Deposit, if any, of such Successful Bidder, or
Alternate Bid, as the case may be, as liquidated damages.
(e) If Sellers receive at least one timely Qualified Overbid
for the Transferred Assets, then Sellers shall conduct an auction (the
"Auction") of the Transferred Assets on the business day immediately prior to
the Sale Hearing at Cozen and O'Connor's offices in
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Wilmington, Delaware. Only Purchaser and each entity that has timely submitted a
Qualified Overbid shall be permitted to participate in the Auction. At the
Auction, bidding shall begin with the highest Qualified Overbid and continue in
minimum increments with consideration having a fair market value of at least
$200,000 higher than the previous bid. The Auction shall continue in one or more
rounds of bidding and shall conclude after each participating bidder has had the
opportunity to submit an additional Subsequent Overbid with full knowledge and
written confirmation of the then existing highest bid, signed by Sellers'
counsel and identifying the party making the then highest bid. For the purpose
of evaluating the value of the consideration provided by each Subsequent Overbid
(including any Subsequent Overbid by Purchaser), the value shall be the net
consideration payable to Sellers, after giving effect to any Termination Payment
that may be payable to Purchaser under this Agreement. At the conclusion of the
bidding, Sellers shall announce their determination as to the Successful Bidder
submitting the Successful Bid, which, together with the Alternate Bid, shall be
submitted to the Bankruptcy Court for approval at the Sale Hearing. Purchaser
shall be deemed parties in interest with standing to appear and be heard in
connection with any motion, hearing, or other proceeding relating to this
Agreement or any Overbid.
2.18 ALLOCATION OF PURCHASE PRICE. As soon as practicable after the
Closing Date, Purchaser shall, in good faith, allocate the Purchase Price among
the Transferred Assets on an asset per asset basis in accordance with their fair
market values. Purchaser and Sellers shall use the amounts allocated pursuant to
the preceding sentence for purposes of filing all Tax Returns (as defined in
Section 3.14 below), including amended Tax Returns, and shall not take any
position inconsistent therewith on any Tax Return (including amended Tax
Returns) or for any other Tax or non-Tax purpose. Sellers and Purchaser each
agree to prepare and file IRS Form 8594 in a timely manner in accordance with
the rules set forth in section 1060 of the Code and the applicable Treasury
Regulations.
2.19 COLLECTION OF RECEIVABLES. Following the Closing, to the extent
Sellers receive payment with respect to any Receivable, the amount of such
payment in respect of such Receivable shall be promptly remitted by Sellers to
Purchaser. In addition, Sellers shall use commercially reasonable efforts not to
impair the collectibility or collection of any of the Receivables, and to
provide commercially reasonable assistance to Purchaser in connection with such
collection, if reasonably requested by Purchaser.
2.20 TAX CERTIFICATES. Prior to and following the Closing, upon receipt
of the written request of Purchaser, Sellers shall use their best efforts to
obtain from each state in which the SubMicron Group may be liable for Taxes
relating to periods prior to the Closing Date tax certificates from the
appropriate state tax authority stating that no Taxes are due to such state for
which Purchaser could have liability to withhold or pay Taxes with respect to
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(i) any unpaid Taxes of the SubMicron Group or (ii) the transfer of the
Transferred Assets to Purchaser.
2.21 INTERCREDITOR AGREEMENT. Prior to and following the Closing,
Sellers shall not amend, modify, alter, repeal, waive or terminate the
Intercreditor Agreement without the prior written consent of Purchaser, which
shall not be unreasonably withheld.
3. REPRESENTATIONS AND WARRANTIES OF THE SUBMICRON GROUP.
To induce Purchaser to enter into this Agreement and to purchase the
Transferred Assets, the members of the SubMicron Group hereby, jointly and
severally, represent, warrant, and covenant to Purchaser as of the date hereof
and as of the Closing Date (with effect as of immediately prior to the Closing)
as follows:
3.1 DISCLOSURE SCHEDULES. The SubMicron Group has delivered to
Purchaser schedules 1.5(a) through 3.26 to this Agreement (the"Disclosure
Schedules") containing certain information regarding Sellers and the Transferred
Assets as indicated in various places in this Agreement. Unless otherwise
indicated, all capitalized terms used in such Disclosure Schedules have the same
meanings as in this Agreement.
3.2 ORGANIZATION AND COMPLIANCE.
(a) The Company is a corporation duly incorporated, validly
existing, and in good standing under the laws of the State of Delaware with its
principal office and place of business at 6330 Hedgewood Drive, #150 Allentown,
Pennsylvania 18106. Each of the Subsidiaries is a corporation duly incorporated
or organized, validly existing, and in good standing under the laws of its
jurisdiction of incorporation or organization and, except as set forth in
Schedule 3.2(a), there are no indirect or direct subsidiaries of the SubMicron
Group other than the Subsidiaries. The Company, directly or indirectly, has
right, title, and interest in all of the capital stock of each of the
Subsidiaries. Each member of the SubMicron Group has all requisite corporate
power and authority and is entitled to own or lease the Transferred Assets and
to carry on the Manufacturing Business as and in all places where such business
is now conducted and such properties are owned or leased. Each member of the
SubMicron Group is duly licensed, qualified, or authorized to do business as a
foreign corporation in each jurisdiction in which the character of the property
owned by it or the nature of the business transacted by it makes such license,
qualification, or domestication necessary in order to avoid a material
forfeiture or liability. Schedule 3.2(a) hereto lists all locations where any
Transferred Assets are located, or where the SubMicron Group conducts business
or has an office or place of business or maintains any inventory. Each member of
the SubMicron Group has
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previously made available to Purchaser a complete and correct copy of its
articles of incorporation, bylaws, or similar organizational documents. The
SubMicron Group has delivered to Purchaser an organization chart for the Company
and its direct and indirect subsidiaries which is true and correct as of the
date hereof, and is attached hereto in Schedule 3.2(a).
(b) Except as set forth in Schedule 3.2(b), the SubMicron
Group and the Manufacturing Business (i) are not subject to any applicable
order, writ, judgment, injunction, or decree of any governmental authority,
domestic or foreign, and (ii) are not being, and have not been, conducted in
violation of any applicable order, writ, judgment, injunction, decree, statute,
ordinance, rule, or regulation of any governmental authority, domestic or
foreign, except where such violation does not and will not have a Material
Adverse Effect.
3.3 ENFORCEABILITY OF AGREEMENT. Subject only to entry of the Sale
Order, each member of the SubMicron Group has the full corporate power and
corporate authority to enter into and execute this Agreement and the Ancillary
Documents and to carry out the transactions contemplated hereby in accordance
with their terms. There are no outstanding contracts, demands, commitments, or
other agreements or arrangements under which the SubMicron Group is or may
become obligated to sell, transfer, or assign any of the Transferred Assets or
the Manufacturing Business, other than the Procedures Order and the sale of
products by the SubMicron Group in the ordinary course of business, consistent
with past practice. Subject only to entry of the Sale Order, this Agreement and
the Ancillary Documents and all transactions required hereunder or thereunder
to be performed by the SubMicron Group has been duly and validly authorized and
approved by all necessary corporate or other action. Subject only to entry of
the Sale Order, this Agreement and the Ancillary Documents have been duly and
validly executed and delivered on behalf of each member of the SubMicron Group
by their respective duly authorized officers. This Agreement, and the Ancillary
Documents constitute valid and legally binding obligations of the SubMicron
Group, enforceable in accordance with their terms (in all cases, subject to
applicable bankruptcy, insolvency, and similar laws affecting creditors' rights
generally and subject, as to enforceability, to general principles of equity
(whether applied in a proceeding in equity or at law)).
3.4 NO INCONSISTENT OBLIGATIONS. Except for the Required Consents (as
defined in Section 3.5) or as otherwise disclosed in Schedule 3.4, and subject
to the entry of the Procedures Order and Sale Order, neither the execution and
delivery of this Agreement or the Ancillary Documents nor the consummation of
the transactions contemplated hereby or thereby will (a) result in a violation
or breach of, or constitute a default under (whether by notice or lapse of time
or both) or give rise to any right of amendment, cancellation, or acceleration,
or to any obligation to prepay, or to a loss of any benefit to which the
SubMicron Group is entitled under (i) the articles of incorporation or bylaws
(or similar organizational
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documents) of the SubMicron Group or (ii) any term or provision of (A) any
indenture, note, mortgage, bond, security agreement, loan agreement, guaranty,
pledge, or other instrument, contract, agreement, lease, or commitment, (B) any
writ, order, judgment, decree, law, rule, regulation, or ordinance, license,
permit, or approval, (C) any applicable ruling or order of any administrative or
governmental body, (D) any other commitment or restriction, in each case to
which any member of the SubMicron Group is a party or by which any of the
Transferred Assets is subject or bound; or (b) result in the creation of any
claim, lien, charge, or encumbrance on any of the Transferred Assets, except in
the case of clauses (a)(ii)(A), (B), (C), and (D), for violations, breaches,
defaults, terminations, cancellations, accelerations, obligations, or loss of
benefits that are stayed, excused or unenforceable as a result of Sellers'
filing of the Petitions.
3.5 CONSENTS. Except as set forth in Schedule 3.5, and subject to the
entry of the Sale Order, other than any approval required under the HSR Act, the
execution and delivery of this Agreement and the Ancillary Documents by the
SubMicron Group and the consummation of the transactions contemplated by this
Agreement and the Ancillary Documents do not require the consent, approval,
license, permit, waiver, authorization, or action of, or any filing with or
notice to, (a) any public, governmental or judicial authority (foreign or
domestic), or (b) any person, firm, or other entity pursuant to or under any
indenture, note, mortgage, bond, security agreement, loan agreement, guaranty,
pledge, or other instrument, contract, agreement, lease, or commitment to which
the SubMicron Group is a party or by which any of the Transferred Assets is
subject or bound. For purposes of this Agreement, "Required Consents" shall mean
those items set forth on Schedule 3.5, other than those items on Schedule 3.5
which are not Transferred Assets.
3.6 POSSESSION OF FRANCHISES, LICENSES, ETC. Except as set forth in
Schedule 3.6, the Transferred Assets include all permits, certificates of
approval, licenses, registrations, franchises, approvals, exemptions, and other
authorizations required to own, lease, operate, or otherwise hold the
Transferred Assets and operate the Manufacturing Business, including, but not
limited to, permits, certificates of approval, licenses, registrations,
franchises, approvals, exemptions, and other authorizations required pursuant to
applicable Environmental Laws (as defined in Section 3.17(d)(i) below)
("Permits"), and except where the failure of such Permits to be so included
would not reasonably be expected to have a Material Adverse Effect. All such
Permits are set forth on Schedule 3.6 and, except to the extent set forth on
such schedule, neither the SubMicron Group nor, to the knowledge of the
SubMicron Group after reasonable inquiry, any prior owners, lessees, licensees,
or other occupants have received any notice from any governmental body (domestic
or foreign), revoking, canceling, rescinding, modifying, restricting, or
refusing to renew any Permit. There are no facts relating to the SubMicron
Group, the Transferred Assets, the Manufacturing Business, or, to the knowledge
of the
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SubMicron Group, any prior owners, lessees, licensees or other occupants, that
would result in the revocation, cancellation, recession, or non-renewal of any
of the Permits under applicable law. Except as set forth in Schedule 3.6, no
Permit requires the consent of any person in connection with the transactions
contemplated by this Agreement or the Ancillary Documents.
3.7 TITLE TO PROPERTIES.
(a) The SubMicron Group has, and upon consummation of the
transactions contemplated by this Agreement at the Closing, Purchaser will have,
good and marketable, valid, and insurable fee (or leasehold, as the case may be)
title to all of the Transferred Assets, real and personal, moveable and
immovable, tangible, and intangible, free and clear of any and all claims,
liens, charges, defects in title, restrictions, reservations and agreements,
consents, options, conflicts, mortgages, pledges, security interests,
guarantees, hypothecations, assessments, encroachments, easements, rights of
way, and encumbrances of any kind or character ("Liens"), except (a) as
disclosed in Schedule 3.7, (b) liens for real estate or ad valorem Taxes which
are not past due, and (c) easements for the erection and maintenance of public
utilities exclusively serving the properties that, with respect to each of the
items set forth in clauses (a) through (c) of this Section 3.7, neither (i)
interfere with the use or operation of the Manufacturing Business or the Real
Property nor (ii) render title to the Real Property unmarketable or uninsurable
(collectively, the "Permitted Encumbrances").
(b) If at Closing there shall exist on any of the Real
Property a Lien of a specified or readily ascertainable dollar amount on the
SubMicron Group's interest (other than a Lien constituting a Permitted
Encumbrance), the SubMicron Group shall be required to remove the same by
payment or bonding, or causing the title company to insure over the same or
otherwise.
3.8 RECEIVABLES. All of the accounts receivable of the SubMicron Group
are the result of bona fide transactions in the ordinary course of business and,
to the knowledge of the SubMicron Group after reasonable inquiry, except to the
extent specifically reserved for on the June 1999 Balance Sheet, are valid and
collectible obligations of the respective makers thereof and were not and are
not subject to any offset or counterclaim. The accounts receivable are reflected
on the June 1999 Balance Sheet in accordance with U.S. generally accepted
accounting principles ("U.S. GAAP") applied on a basis consistent with past
practice. Since the date of the June 1999 Balance Sheet, there have not been any
material write-offs as uncollectible of any accounts receivable of the SubMicron
Group, except for write-offs in the ordinary course of business and consistent
with past practice.
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3.9 PERSONAL PROPERTY; INVENTORY.
(a) Except as set forth in Schedule 3.9(a), all of the
machinery, equipment, vehicles, and other tangible personal property which
constitute Personal Property and a part of the Transferred Assets, or which are
leased by the SubMicron Group pursuant to an Assigned Contract, are (i) in the
exclusive possession and control of the SubMicron Group, (ii) located at the
places specified in Schedule 3.9(a), (iii) in compliance with the material terms
and conditions of all Assigned Contracts relating thereto, (iv) in good
operating condition and repair for assets of their type, usage, and age, free
from any material defects (both patent and latent), and are usable in the
ordinary course of business, except for ordinary wear and tear, and (v) are
operated in all material respects in conformity with all applicable laws, rules,
regulations, and ordinances, including, without limitation, all applicable
building and zoning laws, ordinances, and regulations.
(b) Except as set forth on Schedule 3.9(b), (i) all
Inventories are of a quality and quantity usable and salable in the ordinary
course of business and consistent with past practice, and (ii) all current
materials on hand and work-in-process materially meet applicable internal and
customer specifications.
3.10 REAL PROPERTY.
(a) The SubMicron Group owns, or has the right to occupy and
use, all the Real Property, including the Real Property which is owned by the
SubMicron Group and constitutes part of the Transferred Assets (the "Owned Real
Property"), and the Real Property leased to Sellers pursuant to an Assigned
Contract (the "Leased Real Property").
(b) The SubMicron Group has good and marketable, valid, and
insurable title in fee simple to all the Owned Real Property, if any, and to all
buildings, structures, and other improvements thereon and all fixtures thereto.
(c) All agreements included within the Assigned Contracts
which relate to or provide leases, easements, rights of way, licenses, and other
non-ownership interests in Real Property (collectively, the "Realty Use Rights")
are valid and in full force and effect in accordance with their terms. The
SubMicron Group has furnished Purchaser with copies of all Realty Use Rights,
all of which are identified on Schedule 3.10(c). All copies of the Realty Use
Rights furnished to Purchaser are true, correct, and complete and include any
and all modifications thereof. There is not under any Realty Use Right (i)
except in relation to the Petitions, any default (or, to the knowledge of the
SubMicron Group, any claimed default) by the SubMicron Group, or any event of
default or event which with notice or lapse of time, or
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both, would constitute a default by the SubMicron Group which remains uncured or
(ii) to the knowledge of the SubMicron Group, any existing default by any other
party to any Realty Use Right, or any event of default or event which with
notice or lapse of time, or both, would constitute a default by any other party
to any Realty Use Right.
(d) The SubMicron Group is lawfully in possession of all
Leased Real Property for the purposes set forth in the Realty Use Rights with
respect thereto; and all conditions precedent to the obligation of the SubMicron
Group to take possession and continue to occupy all Leased Real Property have
been fulfilled.
(e) All of the Real Property is free from any use or occupancy
restrictions that has or could reasonably be expected to have a Material Adverse
Effect, except those imposed by applicable zoning laws, ordinances, and
regulations, and from all special taxes or assessments and as provided in the
Realty Use Rights. No assessment for public improvement or otherwise which is
due from any member of the SubMicron Group and remains unpaid has been made
against the Real Property other than the Permitted Encumbrances and the
SubMicron Group is not aware of any currently proposed or pending assessment for
public improvements or otherwise. No options have been granted to others to
purchase, lease, or otherwise acquire any interest in the SubMicron Group's
interest in the Real Property.
(f) To the knowledge of the SubMicron Group after reasonable
inquiry, the present use of and buildings, structures, and improvements on the
Real Property are in conformity with all applicable laws, rules, regulations,
and ordinances, including, without limitation, all applicable zoning laws,
ordinances, regulations and with all registered restrictions of record, except
where the failure to be in such conformity does not have, or could not be
reasonably expected to have, a Material Adverse Effect, and the SubMicron Group
has no knowledge of any proposed change therein that would affect any of the
Real Property or its use and the SubMicron Group has not received any notice of
violation thereof. To the knowledge of the SubMicron Group after reasonable
inquiry, there exists no conflict or dispute with any regulatory authority or
other person relating to any Real Property or the activities thereon. To the
knowledge of the SubMicron Group after reasonable inquiry, all buildings,
structures, and improvements on the Real Property are located within the lot
lines (and within the mandatory set-backs from such lot lines established by
zoning ordinance or otherwise) and not over areas subject to easements or rights
of way.
(g) The SubMicron Group has not caused any work or
improvements to be performed upon or made to any of the Real Property for which
there remains outstanding any payment obligation that would or might serve as
the basis for any Lien in favor of the person or entity which performed the
work.
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(h) To the knowledge of the SubMicron Group after reasonable
inquiry, all requisite certificates of occupancy and other permits or approvals
required with respect to the buildings, structures, and improvements on any of
the Real Property, and the occupancy and use thereof have been obtained and are
currently in effect. There are no expropriation or condemnation proceedings
pending against the Real Property and, to the SubMicron Group's knowledge, there
are no expropriation or condemnation proceedings threatened or proposed against
the Real Property.
(i) The SubMicron Group has not received any notice that the
owner of any Leased Real Property has made any assignment, pledge, or
hypothecation of the Assigned Contract with respect thereto or the rents or use
fees due thereunder.
(j) To the SubMicron Group's knowledge, (i) the plumbing and
heating, electrical and air conditioning systems, elevator systems, and other
mechanical systems and equipment at the Real Property (the "Utility Systems")
are in working order and repair and (ii) there are no material, latent defects
in the buildings or structures or improvements on the Real Property or the
Utility Systems.
(k) The SubMicron Group shall use its best efforts to cause
the Assigned Contracts governing the Leased Real Property to be placed in
recordable form and shall obtain any consents required in connection with the
same.
(l) The SubMicron Group shall use its best efforts to obtain
and record memoranda of leases for each of the Assigned Contracts relating to
the Leased Real Property.
3.11 AUTHORITY TO CONDUCT BUSINESS AND INTELLECTUAL PROPERTY RIGHTS.
(a) Except as set forth on Schedule 3.11(a), the SubMicron
Group owns or has the means, rights, and information required to manufacture,
process, sell, offer for sale, and use the products as are presently being
manufactured, processed, offered for sale, sold, or used by the SubMicron Group
in the Manufacturing Business, including, without limitation, the means, rights,
and information required to manufacture, process, offer for sale, sell, and use
all such products without incurring any material liability for license fees or
royalties or any claims of infringement of patents, trade secrets, copyrights,
trademarks, service marks, industrial design (design patents), or other
proprietary rights. Schedule 3.11(a) sets forth a complete and accurate list of
all patents and patent applications owned by or under obligation of assignment
to the SubMicron Group, which are used in or necessary to the operation of the
Manufacturing Business (the "Patents") (in each such case, listing the owner as
shown in the
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records of the appropriate governmental entity identifying the date(s) and
jurisdiction(s) in which the patent was granted or applied for and the number of
such patent or application). The SubMicron Group is not a party to, either as
licensor or licensee, and is not bound by or subject to, any license agreement
for any patent, industrial design (design patents), process, trademark, service
mark, trade name or copyright, or any other proprietary right except as
described in Schedule 3.11(a). All trademarks, service marks, trade names, and
applications therefor or registrations thereof, owned or used by the SubMicron
Group in the Manufacturing Business or necessary for the conduct thereof (the
"Trademarks") are listed in Schedule 3.11(a) and, as applicable and to the
extent indicated thereon, have been duly registered in, filed in, or issued by
the U.S. Patent and Trademark Office or the corresponding agency or office of
the states of the United States indicated or foreign jurisdiction or, in the
case of trade names, to the extent indicated herein, have been duly registered
in, filed in, or issued by applicable state, federal, or foreign agencies are in
proper form, not disclaimed and are being duly maintained, including the
submission of all necessary filings in accordance with the legal and
administrative requirements of the appropriate jurisdictions. All software
programs and databases owned or used by the SubMicron Group in, or necessary
for, the conduct of the Manufacturing Business ("Software Programs") are listed
in Schedule 3.11(a) (the Patents, Trademarks, and Software Programs,
collectively, the "Intellectual Property"). Other than the Software Programs,
the SubMicron Group does not own or use any software that are material to the
Manufacturing Business. Except as disclosed in Schedule 3.11(a), to the
knowledge of the SubMicron Group after reasonable inquiry, (i) neither the
SubMicron Group's use of any Intellectual Property nor the conduct of the
SubMicron Group's business, past or present, infringes, violates, or dilutes any
rights of any third party, (ii) to the knowledge of the SubMicron Group after
reasonable inquiry no third party is infringing, violating, or diluting any of
the SubMicron Group's Intellectual Property rights, and (iii) no such claims are
pending or, to the knowledge of the SubMicron Group, threatened by any third
party against the SubMicron Group or by the SubMicron Group against any third
party, and (iv) to the knowledge of Sellers after reasonable inquiry no trade
secret, formula, process, designs, know-how or other information considered
material proprietary and confidential has been disclosed to any person, except
in the ordinary course of business or pursuant to an obligation of
confidentiality binding upon such person. Other than those listed in Schedule
3.11(a), there are no settlement agreements, consents, judgments, orders,
forebearances to sue, security interests, pledges, restrictions, and any other
rights of third parties or similar obligations which restrict the SubMicron
Group's rights to (i) use, sell, or license any Intellectual Property owned by
the SubMicron Group, or (ii) license or assign any of the Intellectual Property
owned by the SubMicron Group.
(b) Except for those matters set forth in Schedule 3.11(b),
the SubMicron Group has no reason to believe that the computer software,
computer firmware, other similar
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or related items of automated, computerized and/or software systems, and
computer hardware used by the SubMicron Group and included in the Transferred
Assets will not consistently operate and continue to operate in accordance with
their specifications when processing, providing, and/or receiving date-related
data before or after January 1, 2000, including leap-year considerations.
3.12 MATERIAL CONTRACTS. Except for the Excluded Assets, the Assigned
Contracts include all existing contracts, agreements, arrangements, and
commitments of the SubMicron Group, including all licenses to use intellectual
property (a) used in connection with, or relating to, the conduct of the
Manufacturing Business in the same manner as currently conducted by the
SubMicron Group or (b) by which the Transferred Assets may be bound or affected,
except for those contracts, agreements, and arrangements relating to warranty,
service, or maintenance obligations of the SubMicron Group which Purchaser is
not assuming. Schedule 3.12 sets forth a list of the following agreements to
which the SubMicron Group is party in connection with the Manufacturing
Business: (i) any agreements relating to indebtedness for borrowed money
(whether incurred, assumed, guaranteed, or secured by any asset), (ii) all
contracts with customers (other than purchase orders for previously delivered
and accepted goods pursuant to which the SubMicron Group has no outstanding
obligations), (iii) any agreement (or group of related agreements) for the lease
of personal property to or from any person or entity, (iv) any agreement (or
group of related agreements) for the purchase or sale of raw materials,
commodities, supplies, products, or other personal property, or for the
furnishing or receipt of services, the performance of which will extend over a
period of more than one year, result in a material loss to the SubMicron Group,
or involve consideration in excess of $75,000 per annum, (v) any shareholder or
voting trust agreements or any agreement concerning a partnership or joint
venture, (vi) any agreement concerning confidentiality or non-competition, (vii)
any agreement under which it has advanced or loaned any amount to any of the
employees or affiliates of the SubMicron Group, (viii) any agreement providing
for indemnification of or by the SubMicron Group, (ix) any agreement by the
SubMicron Group providing products or services to any person or entity for
consideration other than cash or receiving consideration from any person or
entity in products or services in lieu of cash, and (x) any other agreement (or
group of related agreements) the performance of which involves consideration in
excess of $75,000 (all of such foregoing contracts, arrangements, and
agreements, together with the Assigned Contracts, the "Material Contracts"). The
SubMicron Group has delivered or made available to Purchaser a correct and
complete copy of each written Material Contract and a written summary setting
forth the terms and conditions of each oral Material Contract. Except as set
forth in Schedule 3.12, all Material Contracts are valid, binding, and
enforceable in accordance with their terms and, to the knowledge of the
SubMicron Group after reasonable inquiry, will continue to be so on identical
terms immediately following the consummation of the transactions contemplated
by this Agreement and the
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Ancillary Documents, to the knowledge of the SubMicron Group after reasonable
inquiry, neither the SubMicron Group nor any other party thereto is in default
under any of such agreements, nor has any event or circumstance occurred that,
with notice or lapse of time or both, would constitute any event of default by
the SubMicron Group or any other party thereto, subject to obtaining any
required consent of the other party thereto which is set forth on Schedule 3.5.
All of the Material Contracts have been entered into in the ordinary course of
the Manufacturing Business and on an arm's-length basis. Each member of the
SubMicron Group has performed all obligations to be performed by it as of the
date of this Agreement under all Material Contracts and the SubMicron Group is
not in default or in arrears under any of the terms thereof. No condition exists
or has occurred which, with the giving of notice or the lapse of time, or both,
would constitute a default or accelerate the maturity of, or other wise modify,
any Material Contract; and all Material Contracts are in full force and effect.
No default by any other party to any Material Contract is known or claimed by
the SubMicron Group to exist.
3.13 CONTINGENCIES. Except as set forth in Schedule 3.13 and the
Petitions, the Procedures Order, and the Sale Order, there is no action, suit,
claim, demand, investigation, inquiry, complaint, litigation, arbitration, or
proceeding pending or, to the knowledge of the SubMicron Group after reasonable
inquiry, threatened against, by or affecting the SubMicron Group, or the
Transferred Assets in any court or before any arbitrator, private alternative
dispute resolution system, or governmental agency, the eventual outcome of which
could reasonably be expected to have a Material Adverse Effect, or which would
prevent or impede the transactions contemplated by this Agreement or the
Ancillary Agreements. The SubMicron Group has not been charged with, nor is it
under investigation with respect to any charge concerning, any violation of any
provision of any federal, state or other applicable law, rule, regulation, or
ordinance, or order, decree, or governmental restriction with respect to the
Manufacturing Business. There are no unsatisfied judgments against the SubMicron
Group or any consent decrees, writs, restraining orders, or preliminary or
permanent injunctions to which the SubMicron Group or any of the Transferred
Assets are subject.
3.14 TAXES.
(a) Except as disclosed in Schedule 3.14(a), (i) each member
of the SubMicron Group has duly and timely filed all tax returns required to be
filed by it ("Tax Returns"); (ii) all such Tax Returns are true, correct, and
complete; (iii) the SubMicron Group has paid all taxes (including, without
limitation, all income, property, sales, use, custom, franchise, goods and
services, ad valorem, withholding, employees income withholding, and special
security taxes and all other taxes imposed on the SubMicron Group, or its
income, properties, sales, franchises, operations, employee benefit plans, or
trusts imposed by any
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federal, state, local, or foreign jurisdiction or by any other governmental unit
or taxing authority, and all interest and penalties thereon collectively,
"Taxes") which are due and payable with respect to periods on or before the
Closing; (iv) the SubMicron Group has paid, on or before the date hereof, all
assessments and reassessments and all other Taxes, govern mental charges,
penalties, interest, and fines due and payable by it with respect to periods on
or before the Closing; (v) adequate provision has been made for Taxes payable
for the current period for which tax returns are not yet required to be filed;
(vi) there are no agreements, waivers, or other arrangements providing for an
extension of time with respect to the filing of any Tax Return by, or payment of
any Tax, governmental charge or deficiency against, any member of the SubMicron
Group; (vii) there are no actions, suits, proceedings, investigations, claims or
audits threatened or pending against the SubMicron Group in respect of Taxes,
governmental charges, or assessments, nor are there any matters under discussion
with any governmental authority relating to Taxes, governmental charges or
assessment asserted by any such authority; and (viii) each member of the
SubMicron Group has withheld from each payment made to any of its officers,
directors, former directors, and employees the amount of all Taxes, including
but not limited to, income tax, and other deductions required to be withheld
therefrom, and has paid the same to the proper tax or other receiving officers
within the time required under any applicable tax legislation.
(b) Except as disclosed in Schedule 3.14(b), there are no
pending or, to the knowledge of the SubMicron Group after reasonable inquiry,
threatened actions against any member of the SubMicron Group before any court or
administrative agency or any proceedings involving the appeals branch of any
relevant taxation authority which may materially and adversely affect the
Manufacturing Business or the Transferred Assets.
(c) Except as disclosed in Schedule 3.14(c), each of the
Akrion Entities qualify as an eligible entity disregarded from its owner (a
"Disregard Entity") as described in section 301.7701-3 of the Treasury
Regulations.
3.15 EMPLOYMENT AND LABOR MATTERS.
(a) Schedule 3.15(a) lists all employees of the SubMicron
Group, who on the date hereof perform services on a full-time or part-time
basis, together with particulars of their salary, bonuses, commissions,
position, location of employment, and length of service with the SubMicron
Group, and if such employee is absent on workers' compensation or insurance,
sick leave, short term disability or long term disability, pregnancy, maternity,
parental, family responsibility, bereavement, education and training, or
adoption leave. or any other approved or statutory leave of absence or layoff.
Schedule 3.15(a) indicates whether such employee's employment is subject to a
written agreement.
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(b) Schedule 3.15(b) contains a true and complete list of all
collective bargaining agreements, any agreements amending any labor agreements,
letters of understanding, letters of intent, side bar letters, and other
written communications between any Union (as defined in subsection (c)(i) below)
and the SubMicron Group which impose obligations on the SubMicron Group or set
out any understanding with respect to the interpretation of the provisions of
such documents ("Labor Agreement(s)"). The SubMicron Group is currently in
compliance with all of the provisions of the Labor Agreements.
(c) Except to the extent set forth in Schedule 3.15(c):
(i) the SubMicron Group is not a party to or
bound by any Labor Agreement, contract,
commitment, or arrangement, either directly
or by operation of law, with any labor or
trade union, labor organization, local or
foreign organization or association of
employees, or local or foreign branch of a
national or international organization or
association of employees that has as one of
its purposes the regulation of relations
between employers and employees through
collective bargaining, or any other
representative of employees ("Union");
(ii) no Union claims to represent the employees
of the Manufacturing Business or has been
certified as bargaining agent for the
employees;
(iii) none of the employees of the SubMicron Group
is represented by any Union and the
SubMicron Group does not have any knowledge
of any current Union organizing activities
among their employees, nor does any question
concerning representation exist concerning
such employees. There are no outstanding
applications for certification or any other
proceedings in which a Union is claiming or
seeking exclusive authority to bargain
collectively for any employees of the
SubMicron Group, nor have there been any
such activities within the past three (3)
years;
(iv) there is no unfair labor practice charge or
complaint outstanding, pending, or to the
knowledge of the SubMicron Group after
reasonable inquiry, threatened against or
affecting the SubMicron
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Group, before the National Labor Relations
Board or any similar state or foreign
agency;
(v) there is no grievance arising out of any
Labor Agreement or other grievance
procedure;
(vi) there is no Labor Disturbance outstanding,
pending, or, to the knowledge of the
SubMicron Group after reasonable inquiry,
threatened against, or affecting the
Manufacturing Business and there has not
been any Labor Disturbance during the past
three (3) years;
(vii) neither the SubMicron Group nor any person
acting on behalf of or as a bargaining agent
for the SubMicron Group, has received or
sent notice to commence collective
bargaining for the purposes of bargaining a
Labor Agreement or revision or renewal of
same, nor agreed to conduct collective
bargaining with any Union;
(viii) there are no written personnel policies,
rules, or procedures applicable to employees
of the SubMicron Group, other than those set
forth in Schedule 3.15(c), true and correct
copies of which have heretofore been
delivered or made available to Purchaser;
(ix) the SubMicron Group has at all times been in
material compliance with all obligations
under the Occupational Safety and Health
Act, as amended, and all regulations related
to the foregoing, and all other federal,
state or local laws, statutes, ordinances,
rules, regulations, codes, and orders
relating to employment and labor, including
without limitation, those relating to wages,
hours, employment, or labor standards
generally, human rights, pay equity,
employment equity, workers' compensation,
workplace safety and insurance, occupational
health and safety, employer health tax,
employment or unemployment insurance, and
income tax withholdings ("Employment Laws")
applicable to persons employed in connection
with the Manufacturing Business. The
SubMicron Group is not liable for any
assessments, penalties or other sums for
failure to comply with any Employment Laws;
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(x) the SubMicron Group has not received notice
of the intent of any federal, state, local,
or foreign agency responsible for the
enforcement of any Employment Laws to
conduct an investigation with respect to or
relating to the SubMicron Group and no such
investigation is in progress;
(xi) there are no Claims outstanding, pending,
affecting, or, to the knowledge of the
SubMicron Group after reasonable inquiry,
threatened against the SubMicron Group
before any other similar state or federal
agency responsible for the prevention of
discriminatory or unlawful employment
practices;
(xii) there are no Claims outstanding, pending,
affecting, or, to the knowledge of the
SubMicron Group after reasonable inquiry,
threatened against the SubMicron Group, in
any forum, by or on behalf of any present or
former employee of the SubMicron Group, any
applicant for employment, or classes of the
foregoing, alleging breach of any actual,
express or implied contract of employment,
any Employment Laws, wrongful dismissal, or
any other discriminatory, wrongful, or
tortious conduct in connection with the
employment relationship;
(xiii) to the knowledge of the SubMicron Group
after reasonable inquiry, no current or
former employees have suffered any illness,
disease, injury, or death by reason of
having handled or becoming exposed to or
otherwise having been harmed by any
contaminants or any substances which are
designated substances, hazardous materials,
or regulated biological chemical or physical
agents pursuant to the Occupational Safety
and Health Act or any regulations thereunder
which may at any time up to the date hereof
have been present at the workplace in the
course of their employment by the SubMicron
Group;
(xiv) there are no outstanding loans or advances
made or granted by the SubMicron Group to
any Transferred Employee, except for normal
travel advances or in the ordinary course
consistent with practice, all of which do
not exceed $10,000, except as set forth on
Schedule 3.15(c);
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(xv) the consummation of the transactions
contemplated by this Agreement will not
entitle any Transferred Employee to pay in
lieu of notice of termination, termination
pay, severance pay, retiring allowance,
retirement benefit, or any other payment
under any written or oral agreement with the
SubMicron Group;
(xvi) all obligations of the SubMicron Group,
whether arising by operation of law,
contract, past custom, or otherwise, for
wages, salaries, remuneration, compensation
bonuses, commissions, vacation and holiday
pay, sick pay or leave, termination or
severance pay or pay in lieu of notice of
termination, and any other form of
compensation payable to any current or
former persons employed in the Manufacturing
Business in respect of the services rendered
by any of them have been paid or accrued;
and
(xvii) the SubMicron Group has withheld all amounts
required by law to be withheld from payments
made by them with respect to all current and
former persons employed in the Manufacturing
Business, including without limitation,
those with respect to income tax
withholdings and unemployment or employment
insurance premiums, and have remitted such
amounts to the appropriate authorities
within the times required by law.
(d) Except as set forth in Schedule 3.15(d) there are no
written employment agreements or contracts, services, agency or consulting
agreements, retention agreements, bonus arrangements, or termination or
severance agreements with any employees of the SubMicron Group or any
independent contractors or outside vendors. Except as provided for by general
principles of applicable law, there are no oral employment agreements or
contracts with any Transferred Employee or any independent contractor or outside
vendors which are not terminable by the SubMicron Group upon providing that
period of notice (or at the SubMicron Group's option, pay in lieu of notice)
required by the applicable labor or employment standards legislation or by
providing reasonable notice under common law.
3.16 EMPLOYEE BENEFIT MATTERS.
(a) Schedule 3.16(a) sets out a true and complete list of each
pension, profit sharing, retirement, and other "pension" plan, fund or program
(within the meaning of section 3(2) of the Employment Retirement Income Security
Act of 1974, as amended ("ERISA")), each bonus, deferred compensation, incentive
compensation, executive compensation, stock
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purchase, stock option, severance or termination pay, health or other medical,
life, short- or long-term disability or other insurance, salary continuance,
supplementary unemployment benefit, and other "welfare" plan, fund or program
(within the meaning of section 3(1) of ERISA), and all other employee benefit
plans, programs, agreements, commitments or arrangements, whether written or
unwritten, formal or informal, legally binding or not, in each case that is
sponsored, maintained by or contributed to or required to be contributed to by
the SubMicron Group or any trade or business, whether or not incorporated, that
together with the SubMicron Group or the Manufacturing Business, would be deemed
a "single employer" within the meaning of section 4001(b) of ERISA (an "ERISA
Affiliate") that provides benefits or compensation to, or for the benefit of,
current or former employees of the SubMicron Group or their dependents or
beneficiaries, as well as the compensation practices and policies applicable to
such employees including practices and policies regarding vacations, sick leave,
leaves of absence, and all perquisites of employment, other than
government-sponsored employee benefit programs mandated by law ("Plan" or
"Plans").
(b) The SubMicron Group has delivered or made available to
Purchaser true, complete, and up-to-date copies of: (i) each of the written
Plans, and any amendments thereto, and a description of each unwritten Plan;
(ii) the most recent summary plan description required under ERISA with respect
thereto; (iii) if the Plan is funded through a trust or any third party funding
vehicle, a copy of the trust or other funding agreement and the latest financial
statements thereof; and (iv) the most recent determination letter received from
the Internal Revenue Service (the "IRS") with respect to each Plan intended to
qualify under section 401 of the Internal Revenue Code of 1986, as amended (the
"Code").
(c) With respect to each such Plan, except as set forth on
Schedule 3.16(c): (i) there are no outstanding complaints, actions, suits,
investigations, proceedings, grievances, arbitrations or claims pending or
threatened by any employee of the SubMicron Group (other than routine claims for
benefits) or by any other party relating to such Plan; (ii) the SubMicron Group
has not, nor has any administrator or fiduciary of any Plan, taken any action,
or failed to take any action, which would subject the SubMicron Group to any
liability for any tax or for a breach of any statutory or fiduciary duty with
respect to or in connection with such Plan; (iii) all obligations regarding such
Plan have been satisfied in all material respects, and there are no outstanding
material defaults or violations by any party relating to such Plan; (iv) such
Plan has been operated and administered in all material respects in compliance
with its terms, any Labor Agreement, and the requirements of all applicable
laws, rules, and regulations, including, without limitation, ERISA, the Code,
and all Employment Laws; and (v) full payment has been made in a timely fashion
of all contributions or other amounts required to be paid or provided by the
SubMicron Group or by any other party to such Plan in accordance with the
provisions of such Plan or under applicable laws, rules, and regulations, and
all such
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amounts properly accrued through the Closing Date will be paid and fully
discharged by the SubMicron Group on or prior to the Closing Date.
(d) At no time has the SubMicron Group or any ERISA Affiliate
sponsored, maintained or contributed to any Plan which is or is intended to be a
pension plan which is subject to title IV of ERISA, including without
limitation, any "multi-employer" pension plan as defined in section 3(37) of
ERISA. No liability under title IV or section 302 of ERISA has been incurred by
the Company or any ERISA Affiliate that has not been satisfied in full, and no
condition exists that presents a material risk to the Company or any ERISA
Affiliate of incurring any such liability, other than liability for premiums due
the Pension Benefit Guarantee Corporation (which premiums have been paid when
due).
(e) No Plan has engaged in a non-exempt "prohibited
transaction" (as defined in section 4975 of the Code and section 406 of ERISA).
(f) Each of the Plans intended to be "qualified" within the
meaning of section 401(a) of the Code is so qualified and has received a
favorable determination letter from the IRS to such effect, and no fact or
circumstance exists that could adversely affect such favorable determination.
(g) No notification is required to be given to any regulatory
authority having jurisdiction over any of the Plans with respect to the
consummation of the transactions contemplated by this Agreement.
(h) None of the Plans or any Labor Agreement provides benefits
to current or former employees of the SubMicron Group beyond their retirement or
termination of service, or to the beneficiaries or dependents of retired
employees, including without limitation, retiree health benefits, other than
coverage mandated by applicable law.
3.17 ENVIRONMENTAL MATTERS.
(a) Except as set forth in Schedule 3.17(a):
(i) the SubMicron Group has complied and are in
compliance in all material respects with all
applicable Environmental Laws (as defined
below);
(ii) the SubMicron Group has obtained all
permits, licenses, registrations,
exemptions, certificates of approval, and
other authoriza-
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tions which are required under the
Environmental Laws for the ownership, use,
and operation of the Personal Property and
Real Property; all such permits, licenses,
registrations, exemptions, certificates of
approval, and other authorizations are in
effect; no appeal nor any other action is
pending or threatened to revoke any such
permit, license, registration, exemption,
certificates of approvals, or authorization;
the SubMicron Group has applied in a timely
fashion for any renewal for such permits,
licenses, registrations, exemptions,
certificates of approval, and authorization
that have expired; and the SubMicron Group
is in material compliance with all terms and
conditions of all such permits, licenses,
registrations, exemptions, certificates of
approval, and authorizations;
(iii) there have been no Releases (as defined
below), discharges, or spills of
Contaminants (as defined below) by the
SubMicron Group or, to the knowledge of the
SubMicron Group after reasonable inquiry, by
others, individually or in the aggregate, in
excess of any amount permitted by any
Environmental Laws at such time at, on,
under or from the Real Property or the
Personal Property, or, to the knowledge of
the SubMicron Group after reasonable
inquiry, migrating to the Real Property from
adjacent properties that are reasonably
likely to subject the SubMicron Group or
Purchaser to any liability under applicable
Environmental Laws, including, but not
limited to, liability for corrective action,
restoration, remediation, compliance
actions, response costs, natural resource
damages, or tort damages, except for
discharges or spills which would not have a
Material Adverse Effect;
(iv) neither the SubMicron Group nor, to the
knowledge of the SubMicron Group after
reasonable inquiry, any of the SubMicron
Group's predecessors have disposed of,
transported, recycled, treated, handled,
generated, or stored any Contaminants at any
off-site location, or arranged for the same,
in a manner that will or could reasonably be
expected to result in any material liability
to the SubMicron Group or Purchaser under
applicable Environmental Laws, including,
but not limited to, liability for corrective
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action, restoration, remediation, compliance
actions, response costs, natural resource
damages, or tort damages;
(v) there are no litigation, investigations,
inquiries, rulings, orders, inspections, or
citations pending, or to the knowledge of
the SubMicron Group, threatened or
contemplated by any governmental officials
or other persons with respect to the
Transferred Assets, the SubMicron Group, or,
to the knowledge of the SubMicron Group
after reasonable inquiry, prior owners,
lessees, licensees, or other occupants, that
allege that the SubMicron Group or any
predecessors are in violation or are
otherwise liable or potentially liable
pursuant to Environmental Laws or in
connection with Contaminants; and
(vi) none of the Transferred Assets has been or
is being used by the SubMicron Group, or to
the knowledge of the SubMicron Group after
reasonable inquiry, prior owners, lessees,
licensees, or other occupants as a landfill
or waste disposal site.
(b) Schedule 3.17(b) contains a true, correct, and complete
description of:
(i) all permits, pending permit applications,
licenses, certificates of approval,
registrations, exemptions, authorizations,
and compliance plans required to operate the
Manufacturing Business pursuant to
applicable Environmental Laws, plans, and
compliance schedules with respect to the
SubMicron Group or the Transferred Assets;
and
(ii) all litigation, investigations, inquiries,
inspections and other proceedings, rulings,
orders or citations pending, or to the
knowledge of the SubMicron Group, threatened
or contemplated by government officials or
other third parties with respect to the
SubMicron Group or the Transferred Assets,
that allege that the SubMicron Group is in
violation of, or are otherwise liable or
potentially liable pursuant to, applicable
Environmental Laws or in connection with
Contaminants.
(c) The SubMicron Group has delivered to Purchaser true,
correct, and complete copies of all permits, pending permit applications,
licenses, registrations, exemp-
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tions, authorizations, certificates of approval, and compliance plans pursuant
to applicable Environmental Laws, regulatory plans, and compliance listed in
Schedule 3.17(b). The SubMicron Group has heretofore delivered to Purchaser true
and complete copies of all environmental studies, audits, or assessments, which
have been conducted or caused to be conducted either internally or externally,
or studies, audits, or assessments of occupational health and safety which have
been made in the last five (5) years (which are in the SubMicron Group's
possession or reasonably obtainable by the SubMicron Group) relating to the
Personal Property and Real Property or any other property formerly owned,
operated, used or leased by the SubMicron Group in connection with the
Manufacturing Business or the Transferred Assets. The SubMicron Group has kept
all records and made all filings required by applicable Environmental Laws,
except where the failure to do so would not have a Material Adverse Effect.
(d) For the purposes of this Agreement:
(i) "Environmental Laws" shall mean all federal,
local, and municipal laws, statutes,
by-laws, regulations, rules, ordinances,
guidelines, directives, policies, decrees,
or other pronouncements relating to the
regulation, protection or preservation of
the environment, occupational health and
safety, or to the regulation of
Contaminants, including, without limitation,
the Resource Conservation and Recovery Act
(42 U.S.C. 6901 et seq.), the Comprehensive
Environmental Response, Compensation, and
Liability Act (42 U.S.C. 9601 et seq.), the
Federal Clean Water Act (33 U.S.C. 1251 et
seq.), and the Occupational Safety and
Health Act (29 U.S.C. 651 et seq.), each as
amended from time to time, and similar
legislation, including, without limitation,
laws relating to Releases or threatened
Releases of Contaminants into the indoor or
outdoor environment (including, without
limitation, air, soil, subsoil, surface
water, groundwater, land, surface and
subsurface strata) or otherwise relating to
the manufacture, processing, distribution,
use, treatment, storage, Release, transport,
handling, or disposal of Contaminants, and
all laws and regulations with regard to
recordkeeping, notification, disclosure and
reporting requirements respecting
Contaminants, and all laws relating to
endangered or threatened species of fish,
wildlife, and plants, and the management or
use of natural resources;
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<PAGE> 52
(ii) "Contaminants" shall mean any substance,
gas, liquid, product, element, radiation,
vibration or matter included in any
definition of hazardous product, dangerous
goods, waste, toxic substance, hazardous
waste, extremely hazardous waste, restricted
hazardous waste, contaminant, pollutant,
toxic pollutant, deleterious substance, or
words of similar import under any
Environmental Law, or the presence of which
in the environment is reasonably likely to
adversely affect the quality of the
environment in any way; and
(iii) "Release" shall mean any release, spill,
leak, emission, pumping, injection, deposit,
discharge, dispersal, leaching, migration,
spraying, abandonment, pouring, emptying,
throwing, dumping, placing, disposal into
the indoor or outdoor environment
(including, without limitation, air, soil,
subsoil, surface water, groundwater, land,
surface, or subsurface strata), or into or
out of any property, including the movement
of Contaminants through or in the air, soil,
subsoil, surface water, groundwater, land,
surface or subsurface strata, or into or out
of any property, and when used as a verb has
a like meaning.
3.18 ASSETS. The Transferred Assets constitute all of the assets,
properties, rights, and interests (including, without limitation, real property
and tangible and intangible property) necessary for the conduct of the
Manufacturing Business as it is being currently conducted, except for the
Excluded Assets, raw materials, supplies, and personnel. Except as set forth on
Schedule 3.9(a), the Real Property constitutes all real property on which all
tangible personal property included in the Transferred Assets is ordinarily
located and all real property used in the Manufacturing Business.
3.19 CUSTOMERS AND SUPPLIERS. Except as set forth in Schedule 3.13, the
SubMicron Group is not aware of (a) any loss or threatened loss, or (b) any
bankruptcy, insolvency, or financial distress, of any of the ten (10) largest
customers, suppliers, or accounts of the Manufacturing Business for the latest
twelve (12) months ended June 30, 1999. Schedule 3.19 lists each of the ten (10)
largest customers and suppliers of the Manufacturing Business (in terms of
amounts invoiced) for the twelve (12) month period ended June 30, 1999.
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<PAGE> 53
3.20 SEC REPORTS; FINANCIAL STATEMENTS.
(a) Except as set forth in Schedule 3.20, as of the date of its
filing, each of the Company's Annual Report on Form 10-K for the year ended
December 31, 1998, Quarterly Report on Form 10-Q for the quarter ended March 31,
1999, and Quarterly Report on Form 10-Q for the quarter ended June 30, 1999 (the
"SEC Reports"), did not contain any untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of this Agreement or the circumstances
under which they were made, not misleading. Except for facts directly relating
to or arising out of the filing of the Petitions or the prosecution of the
Chapter 11 Cases, there is no material fact directly or indirectly relating to
the Manufacturing Business or the operations or condition of the SubMicron Group
(other than facts which relate to general economic trends or conditions or
general conditions affecting the industry in which the SubMicron Group operates)
that is reasonably likely to have a material adverse effect, individually or in
the aggregate, on the business, prospects, financial condition, or results of
operations of the Manufacturing Business or the Transferred Assets ("Material
Adverse Effect"), that has not been set forth in the SEC Reports or the
Disclosure Schedules. True and correct copies of the SEC Reports have been
delivered to Purchaser. Each of the consolidated balance sheets of the Company
included in or incorporated by reference in the SEC Reports (including the
related notes and schedules) fairly presents the consolidated financial position
of the SubMicron Group as of its date and each of the consolidated statements of
income, retained earnings, and cash flows of the Company included in or
incorporated by reference into the SEC Reports (including any related notes or
schedules) fairly presents the results of operations, retained earnings or cash
flows, as the case may be, of the SubMicron Group for the periods set forth
therein (subject, in the case of unaudited statements, to normal year-end audit
adjustments which would not be material in amount or effect), in each case in
accordance with U.S. GAAP consistently applied during the periods involved,
except, in the case of the unaudited statements, as permitted by Form 10-Q
pursuant to sections 13 or 15(d) of the Securities Exchange Act of 1934, as
amended (the "Exchange Act").
(b) The June 1999 Balance Sheet fairly presents the consolidated
financial position of the SubMicron Group as of its date and each of the
unaudited consolidated statements of income, retained earnings, and cash flows
of the Company for the three (3) months ended June 30, 1999 (such statements
together with the June 1999 Balance Sheet, the "June 1999 Financial Statements")
fairly presents the results of operations, retained earnings, or cash flows, as
the case may be, of the SubMicron Group for the three (3) months ended June 30,
1999 (subject to normal year-end audit adjustments which would not be material
in amount or effect), in each case in accordance with U.S. GAAP consistently
applied.
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<PAGE> 54
3.21 ABSENCE OF UNDISCLOSED LIABILITIES. Except for liabilities and
obligations (a) incurred since the date of the June 1999 Balance Sheet in the
ordinary course of business and consistent with past practice, or (b) disclosed
in Schedule 3.21, the SubMicron Group has no material liabilities or obligations
of any kind whatsoever (whether direct, indirect, accrued, or contingent), and
there is no existing condition or situation that could reasonably be expected to
result in any such liabilities or obligations.
3.22 ABSENCE OF ADVERSE AND OTHER CHANGES. Except as set forth in
Schedule 3.22 or as otherwise contemplated by this Agreement, since the date of
the June 1999 Balance Sheet, (a) there has not been any loss (including a
material reduction in order size) of (i) any booked or forecasted order with
respect to Chartered Silicon Partners Pte Ltd., (ii) the prospects of any future
orders from Chartered Silicon Partners Pte Ltd., (iii) any booked order for more
than one (1) automated wet bench from Systems, or (iv) any two (2) booked or
forecasted orders (on a net basis with respect to forecasted orders) for
automated wet benches from Systems (any of the foregoing in (a) immediately
above, a "Material Customer Loss"); (b) the Manufacturing Business has been
conducted in the ordinary course consistent with past practices; and (c) there
has not been (i) any incurrence, assumption, or guarantee by the SubMicron Group
in connection with the Manufacturing Business of any indebtedness for borrowed
money, (ii) any creation or other incurrence of any Lien (other than a Permitted
Encumbrance) on any Transferred Asset in an amount in excess of $50,000,
individually or in the aggregate, (iii) any transaction or commitment made, or
any contract or agreement entered into, by the SubMicron Group in connection
with the Manufacturing Business (including with respect to the acquisition or
disposition of any assets) or any relinquishment by the SubMicron Group in
connection with the Manufacturing Business of any contract or other right, in
either case, other than in the ordinary course of the SubMicron Group's business
and for fair consideration, (iv) any change in any method of accounting or
accounting practice by the SubMicron Group, (v) any (A) employment, deferred
compensation, severance, termination, retirement, or other similar agreement
entered into with any employee of the Manufacturing Business (or any amendment
to any such existing agreement), (B) grant of any severance pay, pay in lieu of
notice or termination pay to any such employee, other than in the ordinary
course of business consistent with past practice, or (C) any loan or advance to
any employee of the Manufacturing Business, (vi) any material change in the
methods of operation of the Manufacturing Business, (vii) any loss or damage to
the properties of the Manufacturing Business or the Transferred Assets in excess
of $100,000, (viii) any capital expenditures (or series of related capital
expenditures) in excess of $25,000 individually or $100,000 in the aggregate by
the SubMicron Group in connection with the Manufacturing Business, (ix) any
acceleration, termination, modification, or cancellation of any contract,
agreement, lease, license, or understanding by the SubMicron Group in connection
with the Manufacturing Business, outside of the ordinary course of business
consistent with past practice or as a result
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<PAGE> 55
of this Agreement, the Petitions, the Procedures Order, or the Sale Order, (x)
any capital investment in, or any loan to, any other person or entity (other
than subsidiaries of the Company) by the SubMicron Group in connection with the
Manufacturing Business, (xi) any delay or postponement of the payment of any
accounts payable or other liabilities or obligations by the SubMicron Group in
connection with the Manufacturing Business, except in the ordinary course of
business or pursuant to the express terms of such payable, liability or
obligation, (xii) any cancellation, waiver, or release of any right or claim by
the SubMicron Group in connection with the Manufacturing Business, except in the
ordinary course of business consistent with past practice or as a result of the
Chapter 11 Cases, (xiii) any grant or any license or sublicense of any rights
under or with respect to any Intellectual Property, except in the ordinary
course of business consistent with past practice, (xiv) any settlement or
payment of any amount to any other person with respect to any liability or
obligation, outside the ordinary course of the SubMicron Group's business, or
(xv) any agreement or any commitment to take any of the actions described in
this Section 3.22.
3.23 INSURANCE. Schedule 3.23 sets forth a correct and complete list
and description of all policies of insurance (including policies providing
property, casualty, liability, workers' compensation, and bond and surety
arrangements) under which the SubMicron Group is currently insured, including
(a) the name of the insurer, (b) the period of coverage and (c) the type and
amount of coverage. With respect to each such insurance policy set forth on
Schedule 3.23, (a) each such policy is in full force and effect; (b) all
premiums currently payable or previously due and payable with respect to all
periods up to and including the Closing Date have been paid; (c) no written
notice of cancellation or termination has been received with respect to any such
policy; (d) the SubMicron Group is not in material breach or default (including,
without limitation, the giving of notice thereunder); (e) each such policy is
sufficient for compliance with all requirements of law; (f) each such policy is
valid, outstanding, and enforceable; (g) each such policy will remain in full
force and effect (other than on account of actions which may be taken by the
insurance company that is a party thereto, without regard to any action by the
SubMicron Group) through the Closing; and (h) no party to the policy has
repudiated, or given written notice of an intent to repudiate, any provisions
thereof. There are no currently outstanding material losses for which the
SubMicron Group has failed to give or present notice or claim required under any
policy set forth on Schedule 3.23. The SubMicron Group has not been refused any
insurance, nor has any coverage been limited by any insurance carrier to which
the SubMicron Group has applied for any such insurance or with which they have
carried insurance during the last five (5) years. All of the Real Property and
tangible assets are currently insured for their full replacement value.
3.24 FULL DISCLOSURE. No representation or warranty of the SubMicron
Group contained in this Section 3 or in the Disclosure Schedules contains, or
will contain, any untrue
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<PAGE> 56
statement of a material fact or omits, or will omit to state, a material fact
necessary to make the statements contained herein or therein not misleading, and
all information set forth in the Disclosure Schedules is true, correct, and
complete. There is no fact known to the SubMicron Group that adversely affects
in any material respect the Manufacturing Business or the Transferred Assets,
which has not been disclosed in this Agreement or the Disclosure Schedules.
3.25 BROKERS. Except as set forth on Schedule 3.25, each member of the
SubMicron Group represents and warrants that no broker or finder has acted on
its behalf in connection with this Agreement or the transactions contemplated
herein. Each member of the SubMicron Group shall indemnify Purchaser and hold
Purchaser harmless from and against any and all Losses arising out of any claims
or demands for commissions or other compensation by any broker, finder, or
similar agent claiming to have been employed by or on behalf of the SubMicron
Group or any of their Affiliates, including any listed on Schedule 3.25.
3.26 AFFILIATE RELATIONS. Except as set forth in Schedule 3.26, no
officer, director, stockholder, Affiliate, or associate of the SubMicron Group
has any direct, indirect, or beneficial ownership of any real or personal
property which is in any way involved with or related to the conduct of the
Manufacturing Business or the Transferred Assets to be conveyed pursuant to the
terms of this Agreement and the Ancillary Agreements. All of the Assigned
Contracts have been entered into on an arm's-length basis and are commercially
reasonable.
4. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
As an inducement to Sellers to enter into this Agreement and to sell
the Transferred Assets to Purchaser, Purchaser hereby represents, warrants, and
covenants as of the date hereof and as of the Closing Date (with effect as of
immediately prior to the Closing) as follows:
4.1 ORGANIZATION. Purchaser is a limited liability company duly
organized, validly existing, and in good standing under the laws of the State of
Delaware.
4.2 AUTHORIZATION; NO INCONSISTENT AGREEMENTS. Subject only to entry of
the Sale Order, Purchaser has full corporate power and authority to enter into,
execute, and perform this Agreement and the Ancillary Documents and to carry out
the transactions contemplated hereby and thereby. This Agreement and all
transactions required hereunder to be performed by Purchaser have been duly and
validly authorized and approved by all necessary corporate or other action on
the part of Purchaser. This Agreement has been duly and validly executed and
delivered on behalf of Purchaser by its duly authorized officers, and
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this Agreement constitutes the valid and legally binding obligation of Purchaser
enforceable against Purchaser in accordance with its terms. Neither the
execution and delivery of this Agreement and the Ancillary Documents nor the
consummation of the transactions contemplated hereby or thereby will constitute
a violation or breach of the articles of incorporation or the bylaws of
Purchaser or any provision of any contract or other instrument to which
Purchaser is a party or by which any of the assets of Purchaser may be affected
or secured, or any order, writ, injunction, decree, statute, rule, or regulation
to which Purchaser is subject, or will result in the creation of any lien,
charge, or encumbrance on any of the assets of Purchaser or acceleration of any
debt.
4.3 CONSENTS. Subject to entry of the Sale Order, other than any
approval required under the HSR Act or any approval by the Equinox Parties (as
defined in Section 6.15), the execution and delivery of this Agreement and the
Ancillary Documents by Purchaser and the consummation of the transactions
contemplated by this Agreement and the Ancillary Documents do not require the
consent, approval, license, permit, waiver, authorization, or action of, or any
filing of notice to, (a) any public, governmental, judicial authority (foreign
or domestic), or (b) any person, firm, or other entity pursuant to or under any
indenture, note, mortgage, bond, security agreement, loan agreement, guaranty,
pledge or other instrument, contract, agreement, lease or commitment to which
Purchaser is a party.
4.4 BROKERS. Purchaser represents and warrants that no broker or finder
other than Blum and Company ("Blum") has acted on its behalf in connection with
this Agreement or the transactions contemplated herein. Purchaser shall
indemnify Sellers and hold Sellers harmless from and against any and all Losses
arising out of any claims or demands for commissions or other compensation by
any broker, finder, or similar agent claiming to have been employed by or on
behalf of Purchaser or any of its affiliates. Sunrise Capital Partners, L.P.
shall pay Blum $340,000 in full satisfaction for Blum's services.
5. CONDUCT OF SELLERS' BUSINESS PENDING CLOSING.
5.1 BUSINESS IN ORDINARY COURSE. Prior to the Closing, unless Purchaser
shall otherwise agree in writing, the SubMicron Group shall conduct the
Manufacturing Business only in the ordinary and usual course consistent with
past practice, subject, after the date of the filing of the Petitions, to any
obligations as debtors-in-possession under the Bankruptcy Code or orders of the
Bankruptcy Court.
Without limiting the generality of the foregoing, subject,
after the date of the filing of the Petitions, to any obligations as
debtors-in-possession under the Bankruptcy Code or orders of the Bankruptcy
Court, from the date hereof until the Closing:
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(a) The SubMicron Group shall not enter into any contracts,
arrangements, leases or licenses or agreements with any third parties except in
the ordinary course of the Manufacturing Business at prices and on terms
consistent with the prior operating practices of the SubMicron Group (and only
if the SubMicron Group provides written notice to Purchaser in accordance with
the provisions of Section 1.1(h) above).
(b) Except for sales of inventory at prices and on terms
consistent with the prior operating practices of, and in the ordinary course of
the Manufacturing Business, the SubMicron Group shall not sell, assign,
transfer, convey, or otherwise dispose of, or cause the sale, assignment,
transfer, conveyance, or other disposition of any of the Transferred Assets.
(c) The SubMicron Group shall enter into all contracts or
commitments for the purchase of raw materials, products, services, and supplies
only in the ordinary and regular course of business to enable the SubMicron
Group to conduct its normal business operations and to maintain their normal
inventory of raw materials and finished goods, at prices and on terms consistent
with the prior operating practices of the SubMicron Group.
(d) The SubMicron Group shall use its best efforts to
maintain, preserve, and protect all of the Transferred Assets in as good
condition as exists on the date hereof, except for ordinary wear and tear, and
no pledge, mortgage, lien, security interest, charge, or encumbrance shall be
granted or created in respect of any Transferred Asset (other than, the
continuation, but not the modification or amendment, of the Permitted
Encumbrances).
(e) The SubMicron Group shall make all capital expenditures
(i) consistent with any capital expenditure or budget plans of the SubMicron
Group and (ii) reasonably necessary to maintain the Transferred Assets in good
repair and operable condition.
(f) The books, records and accounts of the SubMicron Group
shall be maintained in the usual, regular, and ordinary course of business on a
basis consistent with prior practices and in accordance with U.S. GAAP.
(g) The SubMicron Group shall use its best efforts to preserve
the Manufacturing Business, including the SubMicron Group's present business
organization and its existing business relationships to keep available the
services of the SubMicron Group's present employees employed in the
Manufacturing Business, to preserve the goodwill of the SubMicron Group's
present suppliers to the Manufacturing Business, the customers of the
Manufacturing Business, and others having business relations with the
Manufacturing Business.
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(h) The SubMicron Group shall use its best efforts not to
permit any insurance policy naming any member of the SubMicron Group as a
beneficiary or a loss payee to be cancelled or terminated other than in the
ordinary course of business.
(i) The SubMicron Group shall take all reasonable action
required to preserve and protect the Intellectual Property.
5.2 NO MATERIAL CHANGES. From the date hereof and until the Closing,
unless Purchaser shall otherwise consent in writing (which consent shall not be
unreasonably withheld) subject only to the orders of the Bankruptcy Court, the
SubMicron Group shall not take any action which may materially alter the
organization, capitalization, or financial structure of the Manufacturing
Business. Without limiting the generality of the foregoing, subject only to the
orders of the Bankruptcy Court, the SubMicron Group shall not:
(a) change, amend, modify, or alter the articles of
incorporation or bylaws or other similar organizational documents of the
SubMicron Group;
(b) change, amend, increase, or decrease the authorized or
issued share capital of the SubMicron Group or declare or pay any dividend (in
cash, stock or otherwise);
(c) issue or grant any right or option to purchase or
otherwise acquire any share capital or other security of the SubMicron Group;
(d) change, amend, modify, or alter the banking arrangements
of the SubMicron Group or incur any indebtedness other than in the ordinary
course of business or other than any debtor-in-possession financing approved by
the Bankruptcy Court;
(e) except as contemplated by this Agreement, reorganize,
recapitalize, liquidate, voluntarily declare bankruptcy, or seek the appointment
of a receiver, trustee, or custodian; or
(f) merge, combine, or consolidate with another entity.
5.3 COMPENSATION OF EMPLOYEES. From the date hereof and until the
Closing, (a) no increase shall be made in the compensation or employee benefits
payable or to become payable to any employee of the SubMicron Group, and no
bonus or profit-share payment or other arrangement (whether current or deferred)
shall be made to or with any employee, and (b) no employee shall be hired by the
SubMicron Group at a salary in excess of $100,000 per annum.
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5.4 GENERAL PROHIBITIONS. From the date hereof and until the Closing,
and except as otherwise required by Section 2.17 hereof or the Procedures Order
or any other order of the Bankruptcy Court,
(a) The SubMicron Group shall not take any action that could
reasonably be likely to result in any of the representations and warranties of
the SubMicron Group set forth in this Agreement becoming untrue or any of the
conditions to the purchase and sale of the Transferred Assets set forth in
Sections 6 and 7 not being satisfied; and
(b) The SubMicron Group shall not enter into any contract,
agreement, commitment, or arrangement in violation of any of the provisions of
this Section 5.
6. CONDITIONS TO OBLIGATIONS OF PURCHASER.
All obligations of Purchaser under this Agreement are subject to the
fulfillment and satisfaction of each and all of the following conditions on or
prior to the Closing Date, unless waived in whole or in part by Purchaser in
writing, at or before the Closing:
6.1 PROCEEDINGS AND DOCUMENTS SATISFACTORY. All proceedings taken in
connection with the consummation of the transactions contemplated herein and
all documents and papers reasonably required in connection therewith shall be
reasonably satisfactory to Purchaser and their counsel; and Purchaser and their
counsel shall have timely received copies of such documents and papers, all in
form and substance reasonably satisfactory to Purchaser and their counsel, as
reasonably requested by Purchaser or their counsel in connection therewith.
6.2 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of the SubMicron Group contained in this Agreement and any Ancillary Documents
shall be true and correct when made and shall be true and correct on and as of
the Closing Date with the same force and effect as though made on and as of the
Closing Date; provided, however, that with respect to representations and
warranties in Section 3.12 hereof relating to the Excluded Assets, such
representations and warranties shall be materially true and correct.
6.3 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. The SubMicron Group
shall have performed and complied in all material respects with all agreements
and conditions required by this Agreement to be performed or complied with by
the SubMicron Group prior to or on the Closing Date.
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6.4 CERTIFICATES OF SELLERS. The SubMicron Group shall have delivered
to Purchaser certificates executed by the President of each member of the
SubMicron Group, dated as of the Closing, substantially in the form of Exhibit C
attached hereto certifying as to the fulfillment and satisfaction of the
conditions specified in Sections 6.2, 6.3, and 6.9.
6.5 RESOLUTIONS. Purchaser shall have received duly adopted resolutions
of the Board of Directors of each member of the SubMicron Group, certified by
the Secretary or Assistant Secretary of the SubMicron Group, dated as of the
Closing Date, authorizing and approving the execution of this Agreement, the
Ancillary Documents, and all other action necessary to enable the SubMicron
Group to comply with the terms hereof.
6.6 REQUIRED CONSENTS AND ASSIGNED CONTRACTS. Purchaser shall have
received from the SubMicron Group the Required Consents with respect to any
Transferred Assets which are not assigned to Purchaser pursuant to the Sale
Order and the SubMicron Group shall have taken all action required to have been
taken and made all payments required to have been made to permit assumption and
assignment of the Assigned Contracts to Purchaser under section 365(b) and (f)
of the Bankruptcy Code, except as required by Section 1.5(a)(iv).
6.7 NO INCONSISTENT REQUIREMENTS. No statute, rule, or regulation shall
have been enacted, entered, promulgated, or enforced by any court or
governmental authority (domestic or foreign); and there shall not be in effect
any judgment, order, injunction, or decree of any court of competent
jurisdiction that prohibits or restricts the consummation of the transactions
contemplated hereby.
6.8 PERMITS. All Permits shall have been transferred to Purchaser (or
Purchaser's designee) or reissued to Purchaser (or Purchaser's designee),
provided, that this condition shall be deemed satisfied to the extent that
applicable law (including, but not limited to, applicable Environmental Law)
would allow Purchaser to obtain such Permits after Closing without being deemed
to be in violation of applicable laws.
6.9 MATERIAL CUSTOMER LOSS. Since the date of this Agreement, there has
been no Material Customer Loss (as determined by Purchaser in its sole and
absolute discretion) that is not cured within seven (7) days of such Material
Customer Loss.
6.10 RELEASE OF LIENS. The SubMicron Group shall have complied with
Section 2.15 hereof.
6.11 HART-SCOTT-RODINO. All required filings under the HSR Act shall
have been completed and all applicable time limitations under the HSR Act shall
have expired without a
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request for further information by the relevant federal authorities under such
Act, or in the event of such a request for further information, the expiration
of all applicable time limitations under the HSR Act shall have occurred without
the objection of such federal authorities.
6.12 ANCILLARY DOCUMENTS. The SubMicron Group shall have executed and
delivered all Ancillary Documents contemplated by this Agreement.
6.13 BANKRUPTCY COURT ORDERS. The Bankruptcy Court shall have entered
the Procedures Order and the Sale Order, each of which shall have become Final
Orders (as defined below). The Sale Order shall have authorized Sellers to (a)
convey to Purchaser all of their right, title, and interest in and to the
Transferred Assets and the Manufacturing Business free and clear of all Liens
(other than Permitted Liens) of any nature whatsoever, which Liens shall attach
to the proceeds of the sale under section 363(f) of the Bankruptcy Code, (b)
distribute portions of the Cash Consideration as provided in Section 1.4 hereof,
and (c) convey to Purchaser the Assumed Liabilities. Simultaneous with the entry
of the Sale Order, all Assigned Contracts shall have been assumed by Sellers and
the Bankruptcy Court shall have approved such assumption and the assignment of
the Assigned Contracts thereof by the Company pursuant to section 365 of the
Bankruptcy Code by an order in form and substance reasonably acceptable to
Purchaser (the "365 Order"), which may be the Sale Order. The 365 Order shall
provide that the Assigned Contracts will be transferred to, and remain in full
force and effect for the benefit of, Purchaser, notwithstanding any provision in
such Assigned Contracts (including those described in sections 365(b)(2) and (f)
of the Bankruptcy Code) that prohibits such assignment or transfer. Nothing in
this Section 6.13, or any other section of this Agreement, shall preclude
Sellers or Purchaser from consummating the transactions contemplated herein if
Purchaser, in its sole discretion, waives the requirement that the Sale Order,
365 Order, or any of the other orders be Final Orders (as defined below). No
notice of such waiver of this or any other condition to Closing need be given
except to Sellers or Purchaser, as explicitly required in this Agreement, it
being the intention of the parties hereto that Purchaser shall be entitled to,
and is not waiving, the protection of section 363(m) of the Bankruptcy Code, the
mootness doctrine, and any similar statute or body of law if the Closing occurs
in the absence of a Final Order. For purposes of this Agreement, "Final Order"
shall mean an order or judgment of a court of competent jurisdiction, the
implementation or operation or effect of which has not been stayed and as to
which order or judgment (or any revision, modification, or amendment thereof
reasonably acceptable to Purchaser) the time to appeal or seek review or
rehearing or writ of certiorari has expired, and as to which no appeal or
petition for review or rehearing or certiorari has been taken.
6.14 CHANGE OF CORPORATE NAME. Sellers shall have delivered to
Purchaser evidence satisfactory to Purchaser of the change of each of Sellers'
corporate name to a name
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reasonably satisfactory to Purchaser effective as of the Closing; provided,
however, that Sellers shall be permitted to continue to use their respective
corporate names after the Closing to identify themselves solely to fulfill their
obligations to administer the bankruptcy estate, liquidate their remaining
assets, or close the Chapter 11 Cases.
6.15 CLAIM CONSIDERATION. The KB Mezzanine Fund II, L.P., Celerity
Silicon, L.L.C. and each of their Affiliates (the "Equinox Parties") (i) shall
have assigned to Purchaser all of their right, title and interest in, and any
claims relating to or arising out of, the Senior Subordinated Notes and the
Equinox DIP Financing Consideration, as contemplated by the Series 1999
Contribution Agreement, Series B Purchase and Sale Agreement and Series 12%
Purchase and Sale Agreement, each by and between the Equinox Parties and
Purchaser (the "Contribution Agreements"), and (ii) if requested by Purchaser,
shall have asserted the Equinox Parties' rights under that certain Intercreditor
Agreement, dated November 24, 1998, by and between the Equinox Parties and the
other holders of the Series B Notes (the "Intercreditor Agreement"), pursuant to
the terms of the Contribution Agreements, (including, without limitation, by
executing the Non-Equinox Series B Purchase and Sale Agreement, on behalf of the
holders of the Series B Notes other than the Equinox Parties).
6.16 DISREGARD ENTITY. To the extent an election has not been made to
treat the Akrion Entities as a Disregard Entity and if such Akrion Entity is
eligible to make such election, the Company shall have made and filed a timely
election, pursuant to Section 301.7701-3 of the Treasury Regulations, with the
Internal Revenue Service on Form 8832 to treat each such eligible Akrion Entity
as a Disregard Entity.
6.17 RETENTION AGREEMENTS. The Retention Agreements, each dated June 1,
1999, by and between the Company and the Retained Managers (as define below),
shall have been cancelled and shall be of no further force and effect. For
purposes of this Agreement, the "Retained Managers" shall mean David Ferran,
James Molinaro, Richard Novak, Robert Tetu, Leland Stevens, John Kizer, Jae-Inh
Song, Ismail Kashkoush, Benjamin Kimura, Kenneth Burross, John Inglis, James
Hale, Hardie Macauley, Christopher Watts, Michael Lamarra, Steven Figard, Robert
Monko, Konstantinos Kountroubis, John Volkert, John Kilpatrick, and Lisa
Bolanowski.
6.18 EQUINOX DIP FINANCING. The Bankruptcy Court shall have approved
debtor-in-possession financing to be provided by one or more of the Equinox
Parties between the date hereof and the Closing Date with an availability of not
less than $3.9 million (less any amounts drawn thereon).
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7. CONDITIONS TO OBLIGATIONS OF SELLERS.
All of the obligations of Sellers under this Agreement are subject to
the fulfillment and satisfaction of each and all of the following conditions on
or prior to the Closing Date, unless waived in whole or in part by Sellers in
writing, at or before the Closing:
7.1 REPRESENTATIONS AND WARRANTIES. The representations and warranties
of Purchaser contained in Section 4 of this Agreement shall be true and correct
on and as of the Closing Date with the same force and effect as though made as
of the Closing Date.
7.2 COMPLIANCE WITH AGREEMENTS AND CONDITIONS. Purchaser shall have
performed and complied in all material respects with all agreements and
conditions required by this Agreement to be performed or complied with by
Purchaser prior to or on the Closing Date.
7.3 CERTIFICATE OF PURCHASER. Purchaser shall have delivered to Sellers
a certificate, dated the Closing Date, in the form of Exhibit D attached hereto
certifying to the fulfillment and satisfaction of the conditions specified in
Sections 7.1 and 7.2.
7.4 RESOLUTIONS. Purchaser shall have delivered to Sellers duly adopted
resolutions of the Members or Management Committee of Purchaser, dated as of the
Closing Date, authorizing and approving the execution of this Agreement by
Purchaser and all other action necessary to enable Purchaser to comply with the
terms of this Agreement.
7.5 NO INCONSISTENT REQUIREMENTS. No statute, rule, or regulation shall
have been enacted, entered, promulgated, or enforced by any court or
governmental authority (domestic or foreign), and there shall not be in effect
any judgment, order, injunction, or decree of any court of competent
jurisdiction, which prohibits or restricts the consummation of the transactions
contemplated hereby.
7.6 HART-SCOTT-RODINO. All required filings under the HSR Act shall
have been completed and all applicable time limitations under the HSR Act shall
have expired without a request for further information by the relevant federal
authorities under such Act, or in the event of such a request for further
information, the expiration of all applicable time limitations under the Act
shall have occurred without the objection of such federal authorities.
7.7 BANKRUPTCY COURT ORDERS. The Bankruptcy Court shall have entered
the Procedures Order, the Sale Order and the 365 Order, which shall not have
been stayed pending appeal. The Sale Order shall have authorized Sellers to
convey to Purchaser all of
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their right, title, and interest in and to the Transferred Assets and the
Manufacturing Business free and clear of all Liens (other than Permitted Liens)
of any nature whatsoever, which Liens shall attach to the proceeds of the Sale
Order under Section 363(f) of the Bankruptcy Code, (b) distribute portions of
the Cash Consideration as provided in Section 1.4 hereof, and (c) convey to
Purchaser the Assumed Liabilities. Simultaneous with the entry of the Sale
Order, all Assigned Contracts shall have been assumed by Sellers and the
Bankruptcy Court shall have approved such assumption and the assignment of the
Assigned Contracts by the Company pursuant to the 365 Order, and such 365 Order
shall have provided that the Assigned Contracts will be transferred to, and
remain in full force and effect for the benefit of, Purchaser, notwithstanding
any provision in such Assigned Contracts (including those described in sections
365(b)(2) and (f) of the Bankruptcy Code) that prohibits such assignment or
transfer.
7.8 CLAIM CONSIDERATION. The Equinox Parties shall have assigned to
Purchaser all of their right, title and interest in the Senior Subordinated
Notes and the Equinox DIP Financing Consideration and any claims the Equinox
Parties may have arising out of or relating to the Senior Subordinated Notes and
the Equinox DIP Financing Consideration.
8. INDEMNITIES.
8.1 INDEMNIFICATION OF PURCHASER. Sellers shall, jointly and severally,
indemnify and hold harmless Purchaser and its officers, directors, employees,
affiliates, controlling persons, stockholders, agents and representatives, and
their successors and assigns (hereafter, individually, a "Purchaser Indemnitee,"
or collectively, "Purchaser Indemnitees") from and against, and in respect of,
any and all loss, damage, liability, obligation, Taxes, cost and expense,
including reasonable attorneys' fees, penalties, fines, interest, and amounts
paid in settlement ("Losses") pursuant to Section 8.3(b) below or otherwise,
suffered or incurred by any Purchaser Indemnitee ("Purchaser's Indemnified
Losses") by reason of, or arising out of:
(a) any misrepresentation, breach of warranty, or breach or
nonfulfillment of any agreement, undertaking or, covenant of the SubMicron Group
contained in this Agreement, the Disclosure Schedules, or the Ancillary
Documents;
(b) all obligations and liabilities of Sellers other than the
Assumed Liabilities, whether direct or indirect, fixed or contingent, known or
unknown, including, without limitation, (i) any such obligations or liabilities
or any Losses relating to the Excluded Assets, (ii) all obligations and
liabilities resulting from or arising out of any default, breach, misfeasance,
malfeasance, or nonfeasance by the SubMicron Group or its predecessors prior to
the Closing under or with respect to any Assigned Contract, and (iii) (A) any
liabilities, obligations, or responsibilities related to the SubMicron Group's
or its predecessors' violations,
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prior to the Closing Date, of applicable Environmental Laws; (B) any
liabilities, obligations, or responsibilities related to the Release, discharge,
or disposal of Contaminants at, on, under, or from the Transferred Assets prior
to the Closing Date, including, but not limited to, liabilities related to
personal or bodily injury, property damage, loss of life, or the investigation
and remediation of such Contaminants; and (C) any liabilities, obligations, or
responsibilities related to the disposal, storage, transportation, discharge,
handling, Release, or recycling of Contaminants, or the arrangement for the same
activities, by Sellers, prior to the Closing Date, at locations other than the
Transferred Assets, including, but not limited to, liabilities related to
personal or bodily injury, property damage, loss of life, or the investigation
and remediation of such Contaminants;
(c) any claims, liabilities, obligations, damages, costs and
expenses, known or unknown, fixed or contingent, claimed or demanded by third
parties against Purchaser arising out of or resulting from the SubMicron Group's
or its predecessors' prior owners' lessees' licensees' or other occupants'
operation or conduct of the Manufacturing Business or the Transferred Assets
prior to the Closing;
(d) any failure to comply with any "bulk sales" laws
applicable to the transactions contemplated hereby;
(e) any Taxes relating to the Transferred Assets or the
Manufacturing Business with respect to all periods ending on or before the
Closing Date;
8.2 INDEMNIFICATION OF SELLERS. Purchaser shall indemnify and hold
harmless Sellers, and their respective officers, directors, employees,
affiliates, controlling persons, stockholders, agents and representatives, and
their successors and assigns (hereinafter, individually, a "Seller Indemnitee,"
or collectively, "Sellers' Indemnitees") from and against any and in respect of
any and all Losses, suffered or incurred by any Sellers' Indemnitee ("Sellers'
Indemnified Losses") by reason of, or arising out of:
(a) any misrepresentation, breach of warranty, or
nonfulfillment of any agreement, undertaking, or covenant of Purchaser contained
in this Agreement or the Ancillary Documents;
(b) the Assumed Liabilities (except, with respect to Assumed
Liabilities under any Assigned Contract, where the loss results from or arises
out of any default, breach, misfeasance, malfeasance, or nonfeasance by Sellers
prior to the Closing under or with respect to such Assigned Contract); or
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(c) any claims, liabilities, obligations, damages, costs, and
expenses, known or unknown, fixed or contingent, claimed, or demanded by third
parties against Sellers arising out of or resulting from Purchaser's operation
or conduct of the Manufacturing Business or the Transferred Assets from and
after the Closing.
8.3 DEFENSE OF CLAIMS.
(a) If any claim or action by a third party arises after the
Closing Date and during the Survival Period for which (i) Sellers may be liable
to any Purchaser Indemnitee or (ii) Purchaser may be liable to any Sellers'
Indemnitee (for purposes of this Section 8.3, Purchaser Indemnitees and Sellers
Indemnitees are sometimes referred to as "Indemnitee(s)," Sellers' Indemnified
Losses and Purchaser's Indemnified Losses are sometimes referred to as Loss(es),
and Sellers and Purchaser are sometimes referred to as "Indemnitor(s)," in each
case, as the context requires), then in such event the affected Indemnitees
shall notify their Indemnitor within a reasonable time after such claim or
action arises and is known to such Indemnitees, and shall give such Indemnitor a
reasonable opportunity:
(A) to conduct any proceedings or negotiations in
connection therewith and necessary or appropriate to defend
Indemnitees;
(B) to take all other required steps or proceedings
to settle or defend any such claim or action; and
(C) to employ counsel to contest any such claim or
action in the name of Indemnitees or otherwise;
provided, however, that the failure to so notify the Indemnitor shall not
relieve the Indemnitor of its obligations hereunder, except to the extent that
the Indemnitor is actually prejudiced by such failure. The expenses of all
proceedings, contests, or lawsuits with respect to such claims or actions shall
be borne by Indemnitor. If Indemnitor wishes to assume the defense of such claim
or action, then Indemnitor shall give written notice to Indemnitees within
twenty (20) days after notice from Indemnitees of such claim or action (unless
the claim or action reasonably requires a response in less than twenty (20) days
after the notice is given to Sellers, in which event it shall notify Indemnitees
at least five (5) days prior to such reasonably required response date), and
Indemnitor shall thereafter assume the defense of any such claim or liability,
through counsel reasonably satisfactory to Indemnitees; provided that
Indemnitees may participate in such defense at their own expense, provided,
however, that if the Indemnitee is, in the judgment of its counsel, entitled to
assert a defense which conflicts with a defense of the Indemnitor or which the
Indemnitor is not entitled to assert for any reason, the
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Indemnitor shall be liable for the fees and expenses of counsel employed by the
Indemnitee for such purpose. The Indemnitor will be liable for the fees and
expenses of counsel employed by the Indemnitee for any period during which the
Indemnitor has not assumed the defense of a third party claim whether or not the
Indemnitor ultimately chooses to defend any such third party claim. In
connection with any third party claim, the defense of which has been assumed
by the Indemnitor hereby, the Indemnitor agrees to keep the Indemnitee
reasonably informed of the status thereof at all stages including providing to
the Indemnitee copies of all pleadings and other material papers and
correspondence in connection with such third party claim.
(b) If Indemnitor does not assume the defense of, or if after
so assuming, Indemnitor fails to defend any such claim or action, then
Indemnitees may defend against such claim or action in such manner as they may
deem appropriate (provided that Indemnitor may participate in such defense at
its own expense) and Indemnitees may settle such claim or litigation on such
terms as they may deem appropriate, and Indemnitor shall promptly reimburse
Indemnitees for the amount of all expenses, legal and otherwise, reasonably
incurred by Indemnitees in connection with the defense against and settlement of
such claim or action. If no settlement of such claim or litigation is made,
Indemnitor shall satisfy any judgment rendered with respect to such claim or in
such action, before Indemnitees are required to do so, and pay all expenses,
legal or otherwise, reasonably incurred by Indemnitees in the defense of such
claim or litigation.
(c) If a judgment is rendered against any of the Indemnitees
in any action covered by the indemnification hereunder, or any lien in respect
of such judgment attaches to any of the assets of any of the Indemnitees, their
Indemnitor shall immediately upon such entry or attachment pay such judgment in
full or discharge such lien unless, at the expense and direction of such
Indemnitor, an appeal is taken under which the execution of the judgment or
satisfaction of the lien is stayed. If and when a final judgment is rendered in
any such action, Indemnitor shall forthwith pay such judgment (and related
expenses) or discharge such lien before any of Indemnitees are compelled to do
so.
8.4 ADJUSTMENT TO PURCHASE PRICE. Any payments in respect of any
indemnification obligations of Sellers or Purchaser relating to this Agreement
or the Ancillary Document shall be treated by Purchaser and Sellers as an
adjustment to the Purchase Price unless a determination (as defined in section
1313(a) of the Internal Revenue Code) with respect to an indemnified party
causes any such payment not to constitute an adjustment to the Purchase Price
for federal tax purposes.
8.5 LIMITATION ON INDEMNIFICATION. Purchaser's claims for Purchaser's
Indemnified Losses shall rank and be payable as administrative claims of
Sellers' respective bank-
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ruptcy estates pursuant to sections 503(b) and 507(a) of the Bankruptcy Code;
provided that, such claims shall be subordinate in right of payment to the
allowed administrative claims of Sellers' Bankruptcy Court-authorized
professional for compensation of fees and reimbursement of expenses; provided,
further, that any such administrative claims in respect of professional fees and
expenses in excess of $550,000 shall be subordinate to Purchaser's Indemnified
Losses.
8.6 PURCHASER'S KNOWLEDGE. Purchaser's knowledge of any material
inaccuracy of any representation or warranty made by the SubMicron Group
pursuant to Section 3 hereof shall not limit or otherwise affect Purchaser's
ability to seek indemnification pursuant to Section 8.1(a) hereof; provided,
however, that the foregoing shall only apply to the extent that Purchaser's
knowledge does not pre-date the date of this Agreement (other than with respect
to the Excluded Assets and liabilities and obligations relating to Taxes for
periods prior to the Closing).
9. SURVIVAL OF REPRESENTATIONS.
9.1 SURVIVAL. The representations, warranties, covenants, agreements,
and indemnifications of the parties contained in this Agreement shall survive
the consummation of the transactions contemplated herein and continue in full
force and effect as follows (each period defined below, as applicable, the
"Survival Period"):
(a) All covenants and agreements of the parties contained in
this Agreement shall survive the consummation of the transactions contemplated
by this Agreement indefinitely, unless otherwise specifically provided herein;
(b) The representations and warranties of the parties
contained in Sections 3 and 4 of this Agreement and the indemnifications
contained in Sections 1.6, 2.5, 2.8, 2.9, 2.10, 2.12, 2.20, 8.1 and 8.2 shall
continue in effect for a period beginning on the Closing Date and ending on the
date of the Bankruptcy Closing Event; and
(c) Notwithstanding the foregoing, each Survival Period shall
be extended automatically to include any time period necessary to resolve a
specific claim for indemnification which was made before expiration of the
Survival Period, but not resolved prior to its expiration; and provided,
further, that any such extension shall apply only as to claims asserted and not
so resolved within the Survival Period.
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10. TERMINATION.
10.1 TERMINATION. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned:
(a) by the mutual written consent of the parties hereto;
(b) by either Purchaser or the Company upon written notice to
the other party (i) thirty (30) days after the date on which any request or
application for a Required Consent from a governmental entity shall have been
denied or withdrawn at the request or recommendation of the governmental entity
which must grant such Required Consent, unless within the 30-day period
following such denial or withdrawal a petition for rehearing or an amended
application has been filed with the applicable governmental entity, provided,
however, that no party shall have the right to terminate this Agreement pursuant
to this clause (i) if such denial or request or recommendation for withdrawal
shall be due to the failure of the party seeking to terminate this Agreement to
perform or observe the covenants and agreements of such party set forth herein
or (ii) if any governmental entity of competent jurisdiction shall have issued a
final nonappealable order enjoining or otherwise prohibiting the consummation of
any of the transactions contemplated by this Agreement;
(c) by either Purchaser or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant, or other agreement contained herein), if there shall have
been a material breach of any of the representations or warranties set forth in
this Agreement on the part of the other party, which breach is not cured within
thirty (30) days following written notice to the party committing such breach,
or which breach, by its nature, cannot be cured prior to the Closing, and which
breach, individually or together with all other such breaches, would have a
material adverse effect on the Manufacturing Business or the Transferred Assets,
in the case of breaches by the SubMicron Group, or a material adverse effect on
Purchaser's ability to consummate the transactions contemplated hereby, in the
case of breaches by Purchaser;
(d) by either Purchaser or the Company (provided that the
terminating party is not then in material breach of any representation,
warranty, covenant, or other agreement contained herein), if there shall have
been a material breach of any of the covenants or agreements set forth in this
Agreement on the part of the other party, which breach shall not have been cured
within thirty (30) days following receipt by the breaching party of written
notice of such breach from the other party hereto;
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(e) by Purchaser, if the Closing Date shall not have occurred
on or prior to October 22, 1999, unless the failure of such occurrence shall be
due to the failure of Purchaser to perform or observe its agreements as set
forth in this Agreement required to be performed or observed by such party on or
before the Closing Date;
(f) by Purchaser or the Company, if the Closing Date shall not
have occurred on or prior to November 30, 1999, unless the failure of such
occurrence shall be due to the failure of the party seeking to terminate this
Agreement to perform or observe its agreements as set forth in this Agreement
required to be performed or observed by such party on or before the Closing
Date;
(g) by Purchaser or the Company, if the Board of Directors of
the Company has withdrawn, modified, or changed in a manner adverse to Purchaser
its approval or recommendation of this Agreement in order to approve and permit
Sellers to execute a definitive agreement relating to an Overbid Transaction or
any other sale or disposition of a material portion of the Business or the
Assets or of an equity interest in Sellers;
(h) by Purchaser or the Company, if the Bankruptcy Court shall
have approved Sellers' execution of a definitive agreement relating to an
Overbid Transaction or any other sale or disposition of a material portion of
the Manufacturing Business or the Transferred Assets or of an equity interest in
Sellers;
(i) by Purchaser, if the Bankruptcy Court has not entered the
Procedures Order within five (5) Business Days of the Petition Date, which
termination right must be exercised within twenty four (24) hours of the failure
of the Bankruptcy Court to so enter the Procedures Order; or
(j) by Purchaser, if the Bankruptcy Court has not entered the
Sale Order on or before October 12, 1999;
(k) by Purchaser, if there shall have been a Material Customer
Loss (as determined by Purchaser in its sole and absolute discretion), which
shall remain uncured for seven days from the date of such Material Customer Loss
(such cure, as determined by Purchaser in its sole and absolute discretion), and
Purchaser agrees to assist the SubMicron Group in good faith to cure such
Material Customer Loss prior to exercising Purchaser's termination rights in
this Section 10.1(k), (provided, that, Purchaser shall not be required to assist
Sellers for more than seven days and shall not be required to take any action or
expend any money in providing such assistance);
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(l) by Purchaser, if Purchaser determines, in its sole and
absolute discretion, that any liabilities of the SubMicron Group or its direct
or indirect subsidiaries relating to Taxes for periods prior to the Closing may
become direct or indirect liabilities or obligations of Purchaser; or
(m) by Purchaser if the Bankruptcy Court modifies the proposed
Procedures Order, which termination right must be exercised within a 24 hours of
such modification.
10.2 EFFECT OF TERMINATION. In the event of a termination of this
Agreement pursuant to Section 10.1, this Agreement will become void and of no
further force and effect, except for the provisions of Sections 2.2, 2.4, 10.3
(to the extent applicable), 11.1, 11.4, 11.8 and this Section 10.2, provided,
however, nothing in this Section 10.2 will be deemed to release any party from
any liability for breach by any such party of the terms and provisions of this
Agreement or to compel specific performance by, or seek equitable relief or
similar remedies from, the other party of its obligations under this Agreement
or any Ancillary Documents.
10.3 TERMINATION PAYMENT.
(a) In the event that (i) this Agreement is terminated
pursuant to Section 10.1(g) or (h) then the Company shall pay to Purchaser,
simultaneously with the consummation of any Overbid Transaction, by wire
transfer of immediately available funds, to such account as Purchaser shall
designate, an amount equal to the sum of (x) $1 million (the "Termination Fee")
plus (y) the actual costs and expenses incurred by Purchaser and the Purchasing
Group (as defined below) in connection with that Letter Agreement, dated July
23, 1999 (the "Letter of Intent"), between the Company, Sunrise Capital
Partners, L.P., The KB Mezzanine Fund II, L.P. and Celerity Silicon, L.L.C. (the
"Purchasing Group"), this Agreement, and the transactions contemplated thereby
and hereby, including, but not limited to, professional services (including, but
not limited to, investment banking, accounting, and legal services) (the
"Expense Reimbursement", and together with the Termination Fee, the "Termination
Payment").
(b) Sellers' obligation to pay the Termination Payment shall
survive termination of this Agreement and shall constitute an administrative
expense (which shall be a superpriority administrative expense claim senior to
all other administrative expense claims other than administrative expense claims
arising under Sellers' debtor-in-possession financing facility) of Sellers under
sections 503(b) and 507(a)(1) of the Bankruptcy Code, including, without
limitation, those expenses set forth in Section 8.5 hereof.
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11. MISCELLANEOUS.
11.1 NOTICES.
(a) All notices, demands, or other communications required or
permitted to be given or made hereunder shall be in writing and delivered
personally or by courier, or sent by prepaid, first class, certified or
registered air mail, return receipt requested, or by facsimile transmission to
the intended recipient thereof at its address, or facsimile number set out
below. Any such notice, demand, or communication shall be deemed to have been
duly given immediately (if given or made by confirmed facsimile), or three (3)
days after mailing (if given or made by letter), and in proving same it shall be
sufficient to show that the envelope containing the same was duly addressed,
stamped and posted, or that receipt of a facsimile was confirmed in writing or
by return facsimile by the recipient. The addresses and facsimile numbers of the
parties for purposes of this Agreement are:
(i) If to Purchaser: Akrion LLC
Sunrise Capital Partners, L.P.
685 Third Avenue, 15th Floor
New York, NY 10017
Attn: Joseph A. Julian, Jr.
Facsimile No. (212) 582-3016
with a copy to: Skadden, Arps, Slate, Meagher & Flom LLP
919 Third Avenue
New York, New York 10022
Attn: Eileen Nugent Simon, Esq.
Facsimile No. (212) 735-2000
(ii) If to Sellers: SubMicron Systems Corporation
c/o Cozen and O'Connor
1900 Market Street
Philadelphia, PA 19103
Attn: Richard J. Busis, Esq.
Facsimile No. (215) 665-2013
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with a copy to: Cozen and O'Connor
1900 Market Street
Philadelphia, PA 19103
Attn: Richard J. Busis, Esq.
Facsimile No. (215) 665-2013
(b) Any party may change the address to which notices,
requests, demands, or other communications to such parties shall be delivered or
mailed by giving notice thereof to the other parties hereto in the manner
provided herein.
11.2 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, and all of which shall
constitute one and the same instrument.
11.3 ENTIRE AGREEMENT. This Agreement supersedes all prior discussions
and agreements between the parties with respect to the subject matter hereof,
and this Agreement, the Ancillary Documents, and the Procedures Order and the
Sale Order contain the sole and entire agreement among the parties with respect
to the matters covered hereby, except for the Confidentiality Agreement to the
extent provided in Section 2.2. The Disclosure Schedules, Exhibits and
Appendices hereto are incorporated into this Agreement and will be deemed a part
hereof as if set forth herein in full. References to "this Agreement" "herein,"
"hereof," and words of similar import refer to this Agreement, including the
Disclosure Schedules, Exhibits or Appendices as an entirety. In the event of any
conflict between this Agreement and any Disclosure Schedule, Exhibit or
Appendix, this Agreement will control. This Agreement shall not be altered or
amended except by an instrument in writing signed by or on behalf of the party
entitled to the benefit of the provision against whom enforcement is sought.
11.4 GOVERNING LAW. The validity and effect of this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Delaware, without regard to the rules relating to conflicts of law.
11.5 PARTIAL INVALIDITY AND SEVERABILITY. All rights and restrictions
contained herein may be exercised and shall be applicable and binding only to
the extent that they do not violate any applicable laws and are intended to be
limited to the extent necessary to render this Agreement legal, valid, and
enforceable. If any term of this Agreement, or part hereof, not essential to the
commercial purpose of this Agreement shall be held to be illegal, invalid, or
unenforceable by a court of competent jurisdiction, it is the intention of the
parties that the remaining terms hereof, or part hereof shall constitute their
agreement with respect to the subject matter hereof and all such remaining
terms, or parts thereof, shall remain in full force
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and effect. To the extent legally permissible, any illegal, invalid, or
unenforceable provision of this Agreement shall be replaced by a valid provision
that will implement the commercial purpose of the illegal, invalid, or
unenforceable provision.
11.6 HEADINGS. The headings of particular provisions of this Agreement
are inserted for convenience only and shall not be construed as a part of this
Agreement or serve as a limitation or expansion on the scope of any term or
provision of this Agreement.
11.7 TIME OF PERFORMANCE. Time is of the essence.
11.8 SUBMISSION TO JURISDICTION. The parties hereby agree that, without
limitation of any party's right to appeal any order of the Bankruptcy Court, (a)
the Bankruptcy Court shall retain exclusive jurisdiction to enforce the terms of
this Agreement and to decide any claims or disputes which may arise, result
from, or be connected with this Agreement, any breach or default hereunder, or
the transactions contemplated hereby and (b) any and all claims, actions, causes
of action, suits, and proceedings relating to the foregoing shall be filed and
maintained only in the Bankruptcy Court, and the parties hereby consent and
submit to the jurisdiction of the Bankruptcy Court.
11.9 ENFORCEABILITY; SUCCESSORS AND ASSIGNS. This Agreement will be
binding upon and inure to the benefit of, and is enforceable by, the respective
successors and permitted assigns of the parties hereto. This Agreement may not
be assigned by any party hereto without the prior written consent of the other
party, provided, however, that Purchaser shall be permitted to grant a security
interest in its right, title, and interest in and to this Agreement to its
lenders.
11.10 WAIVER, EXTENSION. At any time prior to the Closing, the parties
hereto may, to the extent legally allowed, (a) extend the time for the
performance of any of the obligations or other acts of the other party hereto,
(b) waive any inaccuracies in the representations and warranties contained
herein or in any document delivered pursuant hereto, or (c) waive compliance
with any of the agreements or conditions contained herein. Any agreement on the
part of a party hereto to any such extension or waiver will be valid only if set
forth in a written instrument signed on behalf of such party.
11.11 REMEDIES, NO WAIVER. The rights and remedies provided in this
Agreement and the Ancillary Documents will be cumulative and not exclusive of
any rights or remedies provided by law. No failure or delay by any party in
exercising any right, power, or privilege under this Agreement will operate as a
waiver of the right, power, or privilege. A single or partial exercise of any
right, power, or privilege will not preclude any other or further
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exercise of such right, power, or privilege or any other right, power, or
privilege. No waiver shall constitute a waiver of, or assent to, any succeeding
breach of, or default on, the same or any other term or condition hereof.
11.12 NO THIRD-PARTY RIGHTS. This Agreement is not intended, and will
not be construed, to create any rights in any parties other than Sellers and
Purchaser, and no person may assert any rights as third-party beneficiary
hereunder, except as provided in Sections 8 (Indemnities) and 11.9
(Enforceability; Successors and Assigns).
11.13 MISCELLANEOUS. For purposes of this Agreement, the term
"SubMicron Group" shall mean Sellers and the Akrion Entities and in all
instances the term the "SubMicron Group" shall be deemed to include and refer to
both (i) each member of the SubMicron Group individually, and (ii) the members
of the SubMicron Group collectively.
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12. INDEX OF DEFINITIONS.
The definitions for the following defined terms used in this Agreement
can be found as follows:
DEFINED TERM PARAGRAPH OR SECTION
------------ --------------------
active employee 2.9(a)(ii)
Affiliates 2.8(a)
Agreement Preamble
Akrion Entities 1.1(l)
Alternate Bid 2.17(d)(iii)
Ancillary Documents 1.8(a)(i)
Assigned Contracts 1.1(g)
Assumed Accrued Benefits 1.5(a)(iii)
Assumed Benefits 1.1(i)
Assumed Liabilities 1.5(a)
Auction 2.17(e)
Bankruptcy Closing Event 2.3(b)
Bankruptcy Code Recitals
Bankruptcy Court Recitals
Blum 4.4
Cash Consideration 1.3(a)
Chapter 11 Cases 2.7(a)
Claim Consideration 1.3(b)
Claims 2.9(b)(i)
Closed Purchase Orders 1.6(b)
Closing 1.7
Closing Date 1.7
Code 3.16(b)
Company Preamble
Confidentiality Agreement 2.2
Contaminants 3.17(d)(ii)
Contribution Agreements 6.15
Deposit 2.17(d)(iii)
Disclosure Schedules 3.1
Disregard Entity 3.14(c)
Domestic Subsidiaries Preamble
Employment Laws 3.15(c)(ix)
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Environmental Laws 3.17(d)(i)
Equinox DIP Financing Consideration 1.3(e)
Equinox Parties 6.15
ERISA 3.16(a)
ERISA Affiliate 3.16(a)
Exchange Act 3.20(a)
Excluded Assets 1.2
Expense Reimbursement 10.3(a)
Final Order 6.13
Greyrock 1.4(b)
Greyrock Debt 1.4(b)
Greyrock DIP Financing 1.4(b)
HSR Act 2.13(a)
Income Taxes 2.5(c)
Indemnitees 8.3(a)
Indemnitor 8.3(a)
Individual Holders 1.3(d)
Intellectual Property 3.11(a)
Intercompany Accounts 1.9
Intercreditor Agreement 6.15
Intercreditor Consideration 1.3(d)
IRS 3.16(b)
Inventories 1.1(c)
June 1999 Balance Sheet 1.9
June 1999 Financial Statements 3.20(b)
Labor Agreements 3.15(b)
Labor Disturbance 2.9(b)(i)(B)
Labor Relations Matter 2.9(b)(i)(A)
Leased Real Property 3.10(a)
Letter of Intent 10.3(a)
Liens 3.7
Losses 8.1
Manufacturing Business Recitals
Material Adverse Effect 3.20(a)
Material Contracts 3.12
Material Customer Loss 3.22
Open Purchase Orders 1.2
Overbid Deadline 2.17(d)(i)
Overbids 2.17(d)
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Owned Real Property 3.10(a)
Patents 3.11(a)
Permits 3.6
Permitted Encumbrances 3.7(a)
Personal Property 1.1(b)
Petition Date Recitals
Petitions Recitals
Plan or Plans 3.16(a)
Prepaids 1.1(j)
Procedures Order 2.7(a)
Products 2.8(a)(i)
Purchase Price 1.3
Purchaser Preamble
Purchaser Indemnitees 8.1
Purchaser Plans 2.12(a)
Purchaser's Indemnified Losses 8.1
Purchasing Group 10.3(a)
Qualified Overbid 2.17(d)(ii)
Real Property 1.1(a)
Realty Use Rights 3.10(c)
Receivables 1.1(d)
Release 3.17(d)(iii)
Required Consents 3.5
Retained Managers 6.17
Sale Hearing 2.17(d)(i)
Sale Order 2.7(b)
Schedule Updates 2.16
SEC Reports 3.20(a)
Securities Act 2.3(c)
Sellers Preamble
Sellers' Indemnified Losses 8.2
Sellers' Indemnitees 8.2
Senior Subordinated Notes 1.3(b)
Series B Notes 1.3(b)
Series 1999 Notes 1.3(b)
Software Programs 3.11(a)
SubMicron Group 11.13
Subsequent Overbid 2.17(d)(ii)(1)
Subsidiaries Preamble
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Successful Bid 2.17(d)(iii)
Successful Bidder 2.17(d)(iii)
Survival Period 9.1
Systems Preamble
Tax Returns 3.14(a)
Taxes 3.14(a)
Termination 2.9(b)(i)(C)
Termination Costs 2.9(b)(i)(C)
Termination Fee 10.3(a)
Termination Payment 10.3(a)
Third Party 2.17(b)
365 Order 6.13
Trade Payables 1.5(a)(i)
Trademarks 3.11(a)
Transfer Taxes 2.5(a)
Transferred Assets 1.1
Transferred Employees 2.9(a)(iii)
Treasury Regulations 1.6(b)
12% Notes 1.3(b)
Union 3.15(c)(i)
U.S. GAAP 3.8
Utility Systems 3.10(j)
Wet Process Stations Preamble
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first above written.
PURCHASER:
AKRION LLC
By: /s/ Joseph A. Julian, Jr.
-------------------------
Name: Joseph A. Julian, Jr.
Title: Vice President
SELLERS:
SUBMICRON SYSTEMS CORPORATION,
on behalf of itself and the Akrion Entities
By: /s/ David J. Ferran
-------------------
Name: David J. Ferran
Title: President
SUBMICRON SYSTEMS, INC.
By: /s/ David J. Ferran
-------------------
Name: David J. Ferran
Title: President
SUBMICRON WET PROCESS STATIONS, INC.
By: /s/ David J. Ferran
-------------------
Name: David J. Ferran
Title: President
S-1
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SUBMICRON SYSTEMS HOLDINGS I, INC.
By: /s/ David J. Ferran
-------------------
Name: David J. Ferran
Title: President
S-2
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LISTING OF APPENDICES
---------------------
APPENDIX DESCRIPTION
-------- -----------
1.1(a) Real Property
1.1(b) Personal Property
1.2 Excluded Assets
2.9 Non-Transferred Employees
L-1
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LISTING OF EXHIBITS
-------------------
EXHIBIT DESCRIPTION
------- -----------
A General Assignment and Bill of Sale
C Assumption Agreement
C Form of Sellers' Certificate
D Form of Purchaser's Certificate
L-2
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<TABLE>
<CAPTION>
LISTING OF DISCLOSURE SCHEDULES
-------------------------------
DISCLOSURE SCHEDULES DESCRIPTION
-------------------- -----------
<S> <C>
1.5(a) Trade Payables
3.2(a) Principal Place of Business; Foreign Qualifications;
Business Locations
3.2(b) Orders, Writs, Judgments, Injunctions and Decrees
3.4 Inconsistent Obligations
3.5 Required Consents
3.6 Permits
3.7 Permitted Encumbrances
3.9(a) Condition of Personal Property
3.9(b) Inventory
3.10(c) Realty Use Rights
3.11(a) Patents; License Agreements; Trademarks; Intellectual Property
3.11(b) Authority to Conduct Business and Intellectual Property Rights
3.12 Material Contracts
3.13 Contingencies
3.14(a) Taxes and Tax Returns
3.14(b) Pending or Threatened Actions by Taxation Authorities
3.14(c) Disregard Entity
3.15(a) Listing of Employees
3.15(b) Collective Bargaining Agreements
3.15(c) Unions, etc.
3.15(d) Employee and Severance Agreements
3.16(a) Benefit Plans
3.16(c) Benefit Plan Non-Compliance
3.17(a) Environmental Matters
3.17(b) Environmental Permits; Regulatory Plans; etc.
3.19 Ten Largest Customers and Suppliers
3.20 SEC Reports
3.21 Material Liabilities or Obligations
3.22 Absence of Adverse or Other Changes
3.23 Insurance Policies
3.25 Brokers
3.26 Affiliate Relations
</TABLE>
L-3
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EXHIBIT 99.2
[SUBMICRON SYSTEMES LOGO]
PRESS RELEASE
Contact: Robert P. Tetu
Chief Operating Officer
SubMicron Systems Corporation
(610) 530-3349
Neal D. Colton, Esq.
Counsel to SubMicron Systems Corporation
Cozen and O'Connor
(215) 665-2060
SUBMICRON SYSTEMS CORPORATION SET TO
SELL ASSETS TO MANAGEMENT-LED GROUP
COMPANY ANNOUNCES DELAWARE BANKRUPTCY FILING
ALLENTOWN, PA, SEPTEMBER 1, 1999 - SUBMICRON SYSTEMS CORPORATION (OTC BB:SUBM)
("SubMicron") announced today that it has entered into an agreement to sell
substantially all of the assets of SubMicron and its subsidiaries to Akrion LLC
("Akrion"), a management-led investment group backed by certain members of
SubMicron's senior management, Sunrise Capital Partners, L.P. ("Sunrise") and
SubMicron's current secured lenders. Sunrise is an investment fund affiliated
with the investment banking firm of Houlihan, Lokey, Howard and Zukin, Inc.
Akrion has agreed to employ substantially all of SubMicron's approximately 280
employees worldwide. In furtherance of the sale, SubMicron and its U.S.
subsidiaries, SubMicron Systems, Inc., SubMicron Wet Process Stations, Inc.
(doing business as Universal Plastics), and SubMicron Systems Holding I, Inc.
today filed voluntary petitions under the provisions of Chapter 11 of the
Federal Bankruptcy Code with the United States Bankruptcy Court for the District
of Delaware. SubMicron's Asian subsidiaries, including its Singaporean
subsidiary, Akrion (S) Pte Ltd., are not included in the bankruptcy filing, but
the stock of the Asian subsidiaries will be among the assets sold to Akrion.
SubMicron was founded in 1988 and went public in 1993 after which it embarked on
a "growth through acquisition" strategy. In 1996, SubMicron started incurring
significant losses due to product quality, high warranty costs, lengthy
installation times and poor performance of non-core business units. In 1996,
SubMicron incurred losses of over $20 million on consolidated revenues of over
$171 million. In 1997, facing a severe industry recession and an increasing
amount of debt, SubMicron's losses increased to over $47 million on revenues of
approximately $97 million.
In response to its financial and operational problems, in May 1997 SubMicron
initiated a restructuring, beginning with the employment of a new president and
chief executive officer, David Ferran. SubMicron also initiated major efforts to
correct the systemic problems causing its losses. It refocused its efforts on
its core competency, wet surface preparation, and on improving customer
satisfaction. In December 1997, Equinox Investment Partners L.L.C. and Celerity
Silicon, L.L.C. began to provide funding to SubMicron. In furtherance of its
restructuring plan, SubMicron also divested its non-core business units: Systems
Chemistry; Imtec Acculine; and Primaxx.
Along with major revisions to its operational disciplines to include product
development, quality control, asset management and planning, SubMicron has
focused on fixing quality problems with equipment in
<PAGE> 2
[SUBMICRON SYSTEMES LOGO]
PRESS RELEASE
the field and improving the quality of new equipment. Despite making significant
progress in satisfying its customers, SubMicron has faced a deteriorating
financial condition as a result of a major downturn in semiconductor capital
equipment spending which has severely impacted revenue levels. Confronted with a
highly leveraged balance sheet with over $50 million in debt and the threat of
running out of cash, SubMicron retained the services of Needham and Co. to
assist in developing a financial strategy.
After reviewing its options, it was ultimately determined that to complete a
transaction in a timely manner and preserve the operations of SubMicron, it was
necessary to effectuate an asset purchase utilizing Chapter 11 of the Federal
Bankruptcy Code. The total consideration of the transaction, unfortunately, only
addresses secured debt. There is insufficient value in SubMicron to support
payment to unsecured creditors or to retain value to the SubMicron stockholders.
The proposed sale of substantially all of SubMicron's assets will be for a total
consideration of approximately $55.5 million in a combination of cash, the
assignment back to SubMicron of in excess of $40 million of SubMicron debt and
the assumption of specified liabilities. Certain members of SubMicron's senior
management will also participate in the funding of the transaction and will have
an equity share in the newly formed company. SubMicron's current CEO, David
Ferran, will participate in the funding and will serve as Chairman and CEO of
Akrion.
Mr. Ferran stated, "I truly have mixed emotions about this transaction. On the
one hand, I am deeply disappointed in not being able to preserve or create value
for our stockholders. In my opinion, the situation was simply beyond salvage
given the historical problems of the company and the severe downturn in the
industry. On the other hand, I am proud of the tremendous progress that we have
made in getting the company back on track operationally. We have greatly
improved product quality, reliability and customer satisfaction. The creation of
Akrion and the consummation of this transaction, if approved, will enable us to
complete the job we started when I arrived just over two years ago. I am pleased
that we will be able to preserve our employees' jobs and that we will be given
the opportunity to continue serving and supporting our customers around the
world."
The completion of the transaction is subject to customary terms and conditions
as well as bankruptcy court and regulatory approval.
Certain statements in this press release, such as statements regarding
SubMicron's strategies, plans, objectives and expectations, are forward-looking
statements that involve known and unknown risks, uncertainties and other factors
which may cause the actual result of SubMicron or its efforts to execute the
transaction to be materially different. Such factors include, among others,
general economic and business conditions, the effect of competition, the actions
of the company's existing creditors and the ability of the company to secure
necessary bankruptcy and governmental approval with respect to the proposed
transaction. Other risks are detailed from time to time in the company's filings
with the Securities and Exchange Commission, including the company's 10-K and
10-Q statements.
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