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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): NOVEMBER 19, 1998
INTEGRATED PROCESS EQUIPMENT CORP.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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DELAWARE 0-20470 77-0296222
(STATE OR OTHER JURISDICTION OF (COMMISSION FILE NUMBER) (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
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911 BERN COURT
SAN JOSE, CA 95112
(ADDRESS, INCLUDING ZIP CODE, OF PRINCIPAL EXECUTIVE OFFICES)
REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE: (408) 436-2170
NOT APPLICABLE
(FORMER NAME OR FORMER ADDRESS, IF CHANGED SINCE LAST REPORT)
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Item 5. Other Events
On November 19, 1998, the Company and SpeedFam International, Inc.
("SpeedFam") entered into an Agreement and Plan of Merger among IPEC, SpeedFam
and SpeedFam, Inc. ("Merger Sub"), a wholly-owned subsidiary of SpeedFam,
providing for the merger of the Company with Merger Sub (the "Merger"). Upon
consummation of the Merger, the surviving corporation of the Merger will be a
wholly-owned subsidiary of SpeedFam.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits
2.1 Agreement and Plan of Merger, dated November 19, 1998, by and among
the Company, SpeedFam International, Inc. ("SpeedFam") and SpeedFam,
Inc., a wholly-owned subsidiary of SpeedFam.
2.2 Stock Option Agreement, dated November 19, 1998, between the Company
and SpeedFam.
2.3 Stock Option Agreement, dated November 19, 1998, between SpeedFam and
the Company.
99.1 Press Release, dated November 19, 1998.
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Pursuant to the requirements of the Securities Exchange Act of 1934,
Integrated Process Equipment Corp. has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
Integrated Process Equipment Corp.
By: /s/ John S. Hodgson
------------------------------------------
John S. Hodgson
Vice President and Chief Financial Officer
Date: November 23, 1998
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EXHIBIT INDEX
Exhibit
No. Description
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2.1 Agreement and Plan of Merger, dated November 19, 1998, by and among the
Company, SpeedFam International, Inc. ("SpeedFam") and SpeedFam, Inc.,
a wholly-owned subsidiary of SpeedFam.
2.2 Stock Option Agreement, dated November 19, 1998, between the Company
and SpeedFam.
2.3 Stock Option Agreement, dated November 19, 1998, between SpeedFam and
the Company.
99.1 Press Release, dated November 19, 1998.
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Exhibit 2.1
================================================================================
AGREEMENT AND PLAN OF MERGER
BY AND AMONG
SPEEDFAM INTERNATIONAL, INC.
SPEEDFAM, INC.
AND
INTEGRATED PROCESS EQUIPMENT CORP.
DATED AS OF NOVEMBER 19, 1998
================================================================================
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TABLE OF CONTENTS
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SECTION HEADING PAGE
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RECITALS .................................................................. 1
ARTICLE I THE MERGER.................................................. 2
Section 1.1. The Merger............................................ 2
Section 1.2. Effective Time; Closing............................... 2
Section 1.3. Effect of the Merger.................................. 2
Section 1.4. Certificate of Incorporation; Bylaws.................. 3
Section 1.5. Directors and Officers of the Surviving
Corporation........................................... 3
Section 1.6. Effect on Capital Stock............................... 3
Section 1.7. Surrender of Certificates............................. 6
Section 1.8. No Further Ownership Rights in IPEC Common
Stock or IPEC Preferred Stock......................... 7
Section 1.9. Lost, Stolen or Destroyed Certificates................ 8
Section 1.10. Tax and Accounting Consequences....................... 8
Section 1.11. Taking of Necessary Action; Further Action............ 8
ARTICLE II REPRESENTATIONS AND WARRANTIES OF IPEC...................... 8
Section 2.1. Organization of IPEC.................................. 8
Section 2.2. IPEC Capital Structure................................ 9
Section 2.3. Obligations With Respect to Capital Stock............. 11
Section 2.4. Authority............................................. 11
Section 2.5. SEC Filings; IPEC Financial Statements................ 13
Section 2.6. Absence of Certain Changes or Events.................. 14
Section 2.7. Taxes................................................. 14
Section 2.8. Intellectual Property................................. 15
Section 2.9. Compliance; Permits; Restrictions..................... 16
Section 2.10. Litigation............................................ 17
Section 2.11. Brokers' and Finders' Fees............................ 17
Section 2.12. Employee Benefit Plans................................ 17
Section 2.13. Absence of Liens and Encumbrances..................... 18
Section 2.14. Environmental Matters................................. 18
Section 2.15. Labor Matters......................................... 19
Section 2.16. Agreements, Contracts and Commitments................. 19
Section 2.17. Pooling of Interests.................................. 20
Section 2.18. Change of Control Payments............................ 20
Section 2.19. Statements; Proxy Statement/Prospectus................ 20
Section 2.20. Board Approval........................................ 21
Section 2.21. Fairness Opinion...................................... 21
Section 2.22. Section 203 of the Delaware General Corporation Law
Not Applicable; State Takeover Statutes............... 21
Section 2.23. IPEC Rights Plan...................................... 21
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ARTICLE III REPRESENTATIONS AND WARRANTIES OF SPEEDFAM AND
MERGER SUB.................................................. 22
Section 3.1. Organization of SpeedFam.............................. 22
Section 3.2. SpeedFam and Merger Sub Capital Structure............. 23
Section 3.3. Obligations With Respect to Capital Stock............. 23
Section 3.4. Authority............................................. 24
Section 3.5. SEC Filings; SpeedFam Financial Statements............ 25
Section 3.6. Absence of Certain Changes or Events.................. 26
Section 3.7. Taxes................................................. 27
Section 3.8. Intellectual Property................................. 28
Section 3.9. Compliance; Permits; Restrictions..................... 29
Section 3.10. Litigation............................................ 29
Section 3.11. Brokers' and Finders' Fees............................ 29
Section 3.12. Employee Benefit Plans................................ 29
Section 3.13. Absence of Liens and Encumbrances..................... 30
Section 3.14. Environmental Matters................................. 30
Section 3.15. Labor Matters......................................... 31
Section 3.16. Agreements, Contracts and Commitments................. 31
Section 3.17. Pooling of Interests.................................. 32
Section 3.18. Change of Control Payments............................ 32
Section 3.19. Statements; Proxy Statement/Prospectus................ 33
Section 3.20. Board Approval........................................ 33
Section 3.21. Fairness Opinion...................................... 33
Section 3.22. Section 5/11.75 of the Illinois Business
Corporation Act Not Applicable; State
Takeover Statutes..................................... 33
ARTICLE IV CONDUCT PRIOR TO THE EFFECTIVE TIME......................... 34
Section 4.1. Conduct of Business................................... 34
ARTICLE V ADDITIONAL AGREEMENTS....................................... 36
Section 5.1. Proxy Statement/Prospectus; Registration
Statement; Other Filings; Board
Recommendations....................................... 36
Section 5.2. Meetings of IPEC Stockholders and SpeedFam
Shareholders.......................................... 37
Section 5.3. Confidentiality....................................... 38
Section 5.4. No Solicitation....................................... 38
Section 5.5. Public Disclosure..................................... 42
Section 5.6. Legal Requirements.................................... 42
Section 5.7. Third Party Consents.................................. 43
Section 5.8. FIRPTA................................................ 43
Section 5.9. Notification of Certain Matters....................... 43
Section 5.10. Reasonable Efforts and Further Assurances............. 43
Section 5.11. Stock Options and Warrants............................ 43
Section 5.12. Registration Statements............................... 46
Section 5.13. Indemnification and Insurance......................... 46
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Section 5.14. NMS Listing........................................... 47
Section 5.15. SpeedFam Affiliate Agreement.......................... 47
Section 5.16. IPEC Affiliate Agreement.............................. 47
Section 5.17. Regulatory Filings; Reasonable Efforts................ 47
Section 5.18. Board of Directors of SpeedFam........................ 47
Section 5.19. Officers of SpeedFam; Transition Team................. 48
Section 5.20. Change of Name........................................ 48
Section 5.21. IPEC Rights Plan...................................... 48
Section 5.22. Director Designation Provision........................ 49
Section 5.23. Notice of Demand for Appraisal........................ 49
ARTICLE VI CONDITIONS TO THE MERGER.................................... 49
Section 6.1. Conditions to Obligations of Each Party to
Effect the Merger..................................... 49
Section 6.2. Additional Conditions to Obligations of IPEC.......... 50
Section 6.3. Additional Conditions to the Obligations of
SpeedFam and Merger Sub............................... 51
ARTICLE VII TERMINATION, AMENDMENT AND WAIVER........................... 52
Section 7.1. Termination........................................... 52
Section 7.2. Notice of Termination; Effect of Termination.......... 53
Section 7.3. Fees and Expenses..................................... 53
Section 7.4. Amendment............................................. 55
Section 7.5. Extension; Waiver..................................... 55
ARTICLE VIII GENERAL PROVISIONS.......................................... 55
Section 8.1. Non-Survival of Representations and Warranties........ 55
Section 8.2. Notices............................................... 55
Section 8.3. Interpretation; Knowledge............................. 56
Section 8.4. Counterparts.......................................... 56
Section 8.5. Entire Agreement; Third Party Beneficiaries........... 56
Section 8.6. Severability.......................................... 57
Section 8.7. Other Remedies; Specific Performance.................. 57
Section 8.8. Governing Law......................................... 57
Section 8.9. Rules of Construction................................. 57
Section 8.10. Assignment............................................ 58
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INDEX OF EXHIBITS
EXHIBIT A -- SpeedFam Stock Option Agreement
EXHIBIT B -- IPEC Stock Option Agreement
EXHIBIT C -- Certificate of Merger
EXHIBIT D -- Amended and Restated Certificate of Incorporation of the
Surviving Corporation
EXHIBIT E -- Amended and Restated Bylaws of the Surviving Corporation
EXHIBIT F -- SpeedFam Affiliate Agreement
EXHIBIT G -- IPEC Affiliate Agreement
EXHIBIT H -- Legal Opinion of SpeedFam Counsel
EXHIBIT I -- Legal Opinion of IPEC Counsel
INDEX OF ANNEXES
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AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER is made and entered into as of November
19, 1998 among SpeedFam International, Inc., an Illinois corporation
("SpeedFam"), SpeedFam, Inc., a Delaware corporation and a wholly-owned
subsidiary of SpeedFam ("Merger Sub"), and Integrated Process Equipment
Corp., a Delaware corporation ("IPEC").
RECITALS
A. Upon the terms and subject to the conditions of this Agreement and in
accordance with the Delaware General Corporation Law, as amended ("Delaware
Law"), and the Illinois Business Corporation Act, as amended ("Illinois Law"),
SpeedFam and IPEC intend to enter into a business combination transaction to
pursue their long-term business strategies.
B. The Board of Directors of SpeedFam (i) has determined that the Merger
is consistent with and in furtherance of the long-term business strategy of
SpeedFam and fair to, and in the best interests of, SpeedFam and its
shareholders, (ii) has approved this Agreement, the Merger and the other
transactions contemplated by this Agreement and (iii) has determined to
recommend that the shareholders of SpeedFam vote to approve the amendment to
SpeedFam's Articles of Incorporation as hereinafter set forth and the issuance
of shares of SpeedFam Common Stock (as defined in Section 1.6(a)) to the
stockholders of IPEC pursuant to the terms of the Merger.
C. The Board of Directors of IPEC (i) has determined that the Merger is
consistent with and in furtherance of the long-term business strategy of IPEC
and fair to, and in the best interests of, IPEC and its stockholders, (ii) has
approved this Agreement, the Merger and the other transactions contemplated by
this Agreement and (iii) has determined to recommend that the stockholders of
IPEC adopt and approve this Agreement and approve the Merger.
D. Concurrently with the execution of this Agreement, and as a condition
and inducement to SpeedFam's and IPEC's willingness to enter into this
Agreement, SpeedFam shall execute and deliver a Stock Option Agreement in favor
of IPEC in substantially the form attached hereto as Exhibit A (the "SpeedFam
Stock Option Agreement") and IPEC shall execute and deliver a Stock Option
Agreement in favor of SpeedFam in substantially the form attached hereto as
Exhibit B (the "IPEC Stock Option Agreement" and, together with the SpeedFam
Stock Option Agreement, the "Stock Option Agreements"). The Board of Directors
of SpeedFam and IPEC have each approved the Stock Option Agreements.
E. The parties intend, by executing this Agreement, to adopt a plan of
reorganization within the meaning of Section 368 of the Internal Revenue Code of
1986, as amended (the "Code").
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F. It is also intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
THE MERGER
Section 1.1. The Merger. At the Effective Time (as defined in Section 1.2)
and subject to and upon the terms and conditions of this Agreement and the
applicable provisions of Delaware Law, Merger Sub shall be merged with and into
IPEC (the "Merger"), the separate corporate existence of Merger Sub shall cease
and IPEC shall continue as the surviving corporation. IPEC as the surviving
corporation after the Merger is hereinafter sometimes referred to as the
"Surviving Corporation."
Section 1.2. Effective Time; Closing. Subject to the provisions of this
Agreement, the parties hereto shall cause the Merger to be consummated by filing
a Certificate of Merger, substantially in the form of Exhibit C hereto (the
"Certificate of Merger"), with the Secretary of State of the State of Delaware
in accordance with the relevant provisions of Delaware Law (the time of such
filing (or such later time as may be agreed in writing by the parties and
specified in the Certificate of Merger) being the "Effective Time") as soon as
practicable on or after the Closing Date (as herein defined). The closing of the
Merger (the "Closing") shall take place at the offices of Chapman and Cutler in
Phoenix, Arizona, at a time and date to be specified by the parties, which shall
be no later than the second business day after the satisfaction or waiver of the
conditions set forth in Article VI (except those which by their terms can only
be satisfied at the Closing), or at such other time, date and location as the
parties hereto agree in writing (the "Closing Date").
Section 1.3. Effect of the Merger. At the Effective Time, the effect of
the Merger shall be as provided in this Agreement and the applicable provisions
of Delaware Law. Without limiting the generality of the foregoing, and subject
thereto, at the Effective Time the separate existence of Merger Sub shall cease
and Merger Sub shall be merged into IPEC, possessing all the rights, privileges,
powers and franchises as well of a public as of a private nature of each of
Merger Sub and IPEC, and being subject to all the restrictions, disabilities and
duties of each of Merger Sub and IPEC; and all and singular, the rights,
privileges, powers and franchises of each of Merger Sub and IPEC, and all
property, real, personal and mixed, and all debts due to of each of Merger Sub
and IPEC on whatever account, as well for stock subscriptions as all other
things in action or belonging to of each of Merger Sub and IPEC shall be vested
in the Surviving Corporation; and all property, rights, privileges, powers and
franchises, and all and every other interest shall be thereafter as effectually
the property of the Surviving Corporation as they were of Merger Sub and IPEC,
and the title to any real estate vested by deed or otherwise, in Merger Sub or
IPEC shall not revert or be in any way impaired by reason of the Merger, but all
rights of creditors and all liens upon any property of each of Merger Sub and
IPEC shall be preserved unimpaired, and all debts,
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liabilities and duties of each of Merger Sub and IPEC shall thenceforth attach
to the Surviving Corporation, and may be enforced against it to the same extent
as if said debts, liabilities and duties had been incurred or contracted by it.
Section 1.4. Certificate of Incorporation; Bylaws. (a) At the Effective
Time, the Certificate of Incorporation of IPEC, as in effect immediately prior
to the Effective Time, shall be amended and restated in its entirety in the form
attached hereto as Exhibit D and shall be the Certificate of Incorporation of
the Surviving Corporation until thereafter amended as provided by law and such
Certificate of Incorporation.
(b) At the Effective Time the Bylaws of IPEC, as in effect
immediately prior to the Effective Time, shall be amended and restated in its
entirety in the form attached hereto as Exhibit E and shall be the Bylaws of the
Surviving Corporation until thereafter amended as provided by law and such
Bylaws.
Section 1.5. Directors and Officers of the Surviving Corporation. The
initial directors of the Surviving Corporation shall be the directors of Merger
Sub immediately prior to the Effective Time, until their respective successors
are duly elected or appointed and qualified. The initial officers of the
Surviving Corporation shall be the officers of Merger Sub immediately prior to
the Effective Time, until their respective successors are duly appointed.
Section 1.6. Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of Merger Sub, IPEC or the holders
of any of the following securities:
(a) Conversion of IPEC Common Stock. Each share of Common Stock,
$.01 par value, of IPEC (the "IPEC Regular Common Stock") and each share of
Class A Common Stock, $.01 par value of IPEC (the "IPEC Class A Common Stock,"
which together with the IPEC Regular Common Stock is referred to as the "IPEC
Common Stock") issued and outstanding immediately prior to the Effective Time,
(other than any shares of IPEC Common Stock to be canceled pursuant to Section
1.6(b)) will be canceled and extinguished and automatically converted (subject
to Sections 1.6(k) and (l)) into the right to receive .71 (the "Exchange Ratio")
of a share of Common Stock, without par value of SpeedFam (the "SpeedFam Common
Stock"). Certificates for SpeedFam Common Stock will be delivered only upon
surrender of the certificate representing such share of IPEC Common Stock in the
manner provided in Section 1.7 (or in the case of a lost, stolen or destroyed
certificate, upon delivery of an affidavit (and bond, if required) in the manner
provided in Section 1.9).
(b) Cancellation of Certain IPEC Stock. Each share of IPEC Common
Stock or IPEC Preferred Stock (as defined in paragraph (h) herein) held by IPEC
or owned by Merger Sub, SpeedFam or any direct or indirect wholly owned
subsidiary of IPEC or of SpeedFam immediately prior to the Effective Time shall
be canceled and extinguished without any conversion thereof.
(c) Stock Options. At the Effective Time, all options to purchase
IPEC Regular Common Stock then outstanding under IPEC's 1992 Stock Option Plan
(the "1992 IPEC
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Stock Option Plan"), shall be assumed by SpeedFam in accordance with Section
5.11. At the Effective Time, all options to purchase IPEC Regular Common Stock
granted pursuant to that certain employment agreement, dated as of August 13,
1997 between IPEC and Roger D. McDaniel, as amended (the "McDaniel Agreement"),
and which are vested as of the Effective Time, shall be assumed by SpeedFam in
accordance with Section 5.11.
(d) IPEC 1994 Employee Stock Purchase Plan. At the Effective Time,
in accordance with the terms of IPEC's 1994 Employee Stock Purchase Plan (the
"IPEC Employee Stock Purchase Plan"), the option period then in progress shall
be shortened by setting a new purchase date which shall be the trading day
immediately preceding the Effective Time (the "New Purchase Date"), so that any
IPEC Common Stock purchased on the New Purchase Date shall be automatically
converted into SpeedFam Common Stock on the same basis as all other shares of
IPEC Common Stock; provided, however, that the New Purchase Date shall be
conditional upon consummation of the Merger. On the New Purchase Date, IPEC
shall apply the funds credited as of such date under the IPEC Employee Stock
Purchase Plan within each participant's payroll withholding account to the
purchase of whole shares of IPEC Common Stock in accordance with the terms of
the IPEC Employee Stock Purchase Plan. The IPEC Employee Stock Purchase Plan
shall terminate immediately following the purchase of shares of IPEC Regular
Common Stock on the New Purchase Date.
(e) IPEC Warrants; IPEC 1994 Unit Purchase Options. At the Effective
Time, the warrant to purchase shares of IPEC Regular Common Stock between IPEC
and Hambrecht & Quist LLC granted December 26, 1995 (the "H & Q I Warrant")
shall be assumed by SpeedFam in accordance with Section 5.11. At the Effective
Time, the warrant to purchase shares of IPEC Regular Common Stock between IPEC
and Hambrecht & Quist LLC granted December 16, 1996 (the "H & Q II Warrant")
shall be assumed by SpeedFam in accordance with Section 5.11. At the Effective
Time, the warrant to purchase shares of IPEC Regular Common Stock between IPEC
and Intel Corporation granted October 14, 1996 (the "Intel I Warrant") shall be
assumed by SpeedFam in accordance with Section 5.11. At the Effective Time, the
warrant to purchase shares of IPEC Regular Common Stock between IPEC and Intel
Corporation granted December 31, 1996 (the "Intel II Warrant") shall be assumed
by SpeedFam in accordance with Section 5.11. At the Effective Time, the warrant
to purchase shares of IPEC Regular Common Stock between IPEC and Intel
Corporation granted March 31, 1997 (the "Intel III Warrant" and, together with
the Intel I Warrant and Intel II Warrant, the "Intel Warrants") shall be assumed
by SpeedFam in accordance with Section 5.11. At the Effective Time, the warrant
to purchase shares of IPEC Regular Common Stock between IPEC and Fletcher
International Limited granted December 16, 1996 (the "Fletcher Warrant") shall
be assumed by SpeedFam in accordance with Section 5.11. The H & Q I Warrant, the
H & Q II Warrant, the Intel Warrants and the Fletcher Warrant shall together be
referred to herein as the "IPEC Warrants." At the Effective Time, the Unit
Purchase Options issued by IPEC to D.H. Blair Investment Banking Corp. on
February 2, 1994 (the "UPO's") shall be assumed by SpeedFam in accordance with
Section 5.11.
(f) IPEC Series B-1 Cumulative Preferred Stock. Each share of Series
B-1 Preferred Stock, $.01 par value, of IPEC (the "IPEC Series B-1 Preferred
Stock") issued
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and outstanding immediately prior to the Effective Time (other than any shares
of IPEC Series B-1 Preferred Stock to be canceled pursuant to Section 1.6(b))
will be canceled and extinguished and automatically converted (subject to
Sections 1.6(k) and (l)) into the right to receive that number of shares of
SpeedFam Common Stock determined by multiplying (x) the number of shares of IPEC
Regular Common Stock into which the IPEC Series B-1 Preferred Stock is
convertible immediately prior to the Effective Time pursuant to the terms of the
Certificate of Designation creating the IPEC Series B-1 Preferred Stock by (y)
the Exchange Ratio. Certificates for SpeedFam Common Stock will be delivered
only upon surrender of the certificate representing such share of IPEC Series
B-1 Preferred Stock in the manner provided in Section 1.7 (or in the case of a
lost, stolen or destroyed certificate, upon delivery of an affidavit (and bond,
if required) in the manner provided in Section 1.9).
(g) IPEC Series B-2 Cumulative Preferred Stock. Each share of Series
B-2 Preferred Stock, $.01 par value, of IPEC (the "IPEC Series B-2 Preferred
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of IPEC Series B-2 Preferred Stock to be canceled pursuant to
Section 1.6(b)) will be canceled and extinguished and automatically converted
(subject to Sections 1.6(k) and (l)) into the right to receive that number of
shares of SpeedFam Common Stock determined by multiplying (x) the number of
shares of IPEC Regular Common Stock into which the IPEC Series B-2 Preferred
Stock is convertible immediately prior to the Effective Time pursuant to the
terms of the Certificate of Designation creating the IPEC Series B-2 Preferred
Stock by (y) the Exchange Ratio. Certificates for SpeedFam Common Stock will be
delivered only upon surrender of the certificate representing such share of IPEC
Series B-2 Preferred Stock in the manner provided in Section 1.7 (or in the case
of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and
bond, if required) in the manner provided in Section 1.9).
(h) IPEC Series B-3 Cumulative Preferred Stock. Each share of Series
B-3 Preferred Stock, $.01 par value, of IPEC (the "IPEC Series B-3 Preferred
Stock") issued and outstanding immediately prior to the Effective Time (other
than any shares of IPEC Series B-3 Preferred Stock to be canceled pursuant to
Section 1.6(b)) will be canceled and extinguished and automatically converted
(subject to Sections 1.6(k) and (l)) into the right to receive that number of
shares of SpeedFam Common Stock determined by multiplying (x) the number of
shares of IPEC Regular Common Stock into which the IPEC Series B-3 Preferred
Stock is convertible immediately prior to the Effective Time pursuant to the
terms of the Certificate of Designation creating the IPEC Series B-3 Preferred
Stock by (y) the Exchange Ratio. Certificates for SpeedFam Common Stock will be
delivered only upon surrender of the certificate representing such share of IPEC
Series B-3 Preferred Stock in the manner provided in Section 1.7 (or in the case
of a lost, stolen or destroyed certificate, upon delivery of an affidavit (and
bond, if required) in the manner provided in Section 1.9).
(The IPEC Series B-1 Preferred Stock, the IPEC Series B-2 Preferred
Stock and the IPEC Series B-3 Preferred Stock are hereinafter referred to
collectively as the "IPEC Preferred Stock").
(i) IPEC 6 1/4% Convertible Subordinated Notes. At the Effective
Time, SpeedFam and IPEC shall enter into a supplemental indenture with respect
to the 6 1/4% Convertible Subordinated Notes due 2004 issued by IPEC pursuant to
the Indenture between
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IPEC and State Street Bank and Trust Company of California, N.A., as trustee,
dated as of September 15, 1997 (the "IPEC Convertible Notes") in accordance with
Section 5.11.
(j) Capital Stock of Merger Sub. Each share of Common Stock, no par
value, of Merger Sub (the "Merger Sub Common Stock") issued and outstanding
immediately prior to the Effective Time shall be converted into one validly
issued, fully paid and nonassessable share of Common Stock, no par value, of the
Surviving Corporation. Each certificate evidencing ownership of shares of Merger
Sub Common Stock shall continue to evidence ownership of such shares of capital
stock of the Surviving Corporation.
(k) Adjustments to Exchange Ratio. The Exchange Ratio shall be
adjusted to reflect appropriately the effect of any stock split, reverse stock
split, stock dividend (including any dividend or distribution of securities
convertible into SpeedFam Common Stock or IPEC Common Stock), reorganization,
recapitalization or other like change with respect to SpeedFam Common Stock or
IPEC Common Stock occurring on or after the date hereof and prior to the
Effective Time.
(l) Fractional Shares. No fraction of a share of SpeedFam Common
Stock will be issued by virtue of the Merger, but in lieu thereof each holder of
shares of IPEC Common Stock or IPEC Preferred Stock who would otherwise be
entitled to a fraction of a share of SpeedFam Common Stock (after aggregating
all fractional shares of SpeedFam Common Stock to be received by such holder)
shall receive from SpeedFam an amount of cash (rounded to the nearest whole
cent) equal to the product of (i) such fraction, multiplied by (ii) the average
closing price of one share of SpeedFam Common Stock for the ten most recent days
that SpeedFam Common Stock has traded ending on the trading day immediately
prior to the Effective Time, as reported on the Nasdaq National Market.
Section 1.7. Surrender of Certificates.
(a) Exchange Agent. SpeedFam shall select an institution reasonably
satisfactory to IPEC to act as the exchange agent (the "Exchange Agent") in the
Merger.
(b) SpeedFam to Provide SpeedFam Common Stock. Promptly after the
Effective Time, SpeedFam shall make available to the Exchange Agent for exchange
in accordance with this Article I, the shares of SpeedFam Common Stock issuable
pursuant to this Article I in exchange for outstanding shares of IPEC Common
Stock and IPEC Preferred Stock, and cash in an amount sufficient for payment in
lieu of fractional shares pursuant to Section 1.6(l) and any dividends or
distributions which holders of shares of IPEC Common Stock or IPEC Preferred
Stock may be entitled pursuant to Section 1.7(d).
(c) Exchange Procedures. Promptly after the Effective Time, SpeedFam
shall cause the Exchange Agent to mail to each holder of record (as of the
Effective Time) of a certificate or certificates (the "Certificates") which
immediately prior to the Effective Time represented outstanding shares of IPEC
Common Stock or IPEC Preferred Stock whose shares were converted into the right
to receive shares of SpeedFam Common Stock pursuant to this Article I, cash in
lieu of any fractional shares pursuant to Section 1.6(l) and any dividends or
other distributions pursuant to Section 1.7(d), (i) a letter of transmittal
(which
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shall specify that delivery shall be effected, and risk of loss and title to the
Certificates shall pass, only upon delivery of the Certificates to the Exchange
Agent and shall be in such form and have such other provisions as SpeedFam may
reasonably specify) and (ii) instructions for use in effecting the surrender of
the Certificates in exchange for certificates representing shares of SpeedFam
Common Stock, cash in lieu of any fractional shares pursuant to Section 1.6(l)
and any dividends or other distributions pursuant to Section 1.7(d). Upon
surrender of Certificates for cancellation to the Exchange Agent, together with
such letter of transmittal, duly completed and validly executed in accordance
with the instructions thereto, the holders of such Certificates shall be
entitled to receive in exchange therefor certificates representing the number of
whole shares of SpeedFam Common Stock, payment in lieu of fractional shares
which such holders have the right to receive pursuant to Section 1.6(l) and any
dividends or distributions payable pursuant to Section 1.7(d), and the
Certificates so surrendered shall forthwith be canceled. Until so surrendered,
outstanding Certificates will be deemed from and after the Effective Time, for
all corporate purposes, subject to Section 1.7(d) as to the payment of
dividends, to evidence the ownership of the number of full shares of SpeedFam
Common Stock into which such shares of IPEC Common Stock or IPEC Preferred Stock
shall have been so converted and the right to receive an amount in cash in lieu
of the issuance of any fractional shares in accordance with Section 1.6(l) and
any dividends or distributions payable pursuant to Section 1.7(d).
(d) Distributions With Respect to Unexchanged Shares. No dividends
or other distributions declared or made after the date of this Agreement with
respect to SpeedFam Common Stock with a record date after the Effective Time
will be paid to the holders of any unsurrendered Certificates with respect to
the shares of SpeedFam Common Stock represented thereby until the holders of
record of such Certificates shall surrender such Certificates. Subject to
applicable law, following surrender of any such Certificates, the Exchange Agent
shall deliver to the record holders thereof, without interest, the amount of any
such dividends or other distributions with a record date after the Effective
Time payable with respect to such whole shares of SpeedFam Common Stock.
(e) Transfers of Ownership. If certificates for shares of SpeedFam
Common Stock are to be issued in a name other than that in which the
Certificates surrendered in exchange therefor are registered, it will be a
condition of the issuance thereof that the Certificates so surrendered will be
properly endorsed and otherwise in proper form for transfer and that the persons
requesting such exchange will have paid to SpeedFam or any agent designated by
it any transfer or other taxes required by reason of the issuance of
certificates for shares of SpeedFam Common Stock in any name other than that of
the registered holder of the Certificates surrendered, or established to the
satisfaction of SpeedFam or any agent designated by it that such tax has been
paid or is not payable.
(f) No Liability. Notwithstanding anything to the contrary in this
Section 1.7, neither the Exchange Agent, SpeedFam, the Surviving Corporation nor
any party hereto shall be liable to a holder of shares of SpeedFam Common Stock,
IPEC Common Stock or IPEC Preferred Stock for any amount properly paid to a
public official pursuant to any applicable abandoned property, escheat or
similar law.
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Section 1.8. No Further Ownership Rights in IPEC Common Stock or IPEC
Preferred Stock. All shares of SpeedFam Common Stock issued upon the surrender
for exchange of shares of IPEC Common Stock or IPEC Preferred Stock in
accordance with the terms of this Article I (including any cash paid in respect
thereof pursuant to Section 1.6(l) and 1.7(d)) shall be deemed to have been
issued in full satisfaction of all rights pertaining to such shares of IPEC
Common Stock or IPEC Preferred Stock, and there shall be no further registration
of transfers on the records of the Surviving Corporation of shares of IPEC
Common Stock or IPEC Preferred Stock which were outstanding immediately prior to
the Effective Time. If after the Effective Time Certificates are presented to
the Surviving Corporation for any reason, they shall be canceled and exchanged
as provided in this Article I.
Section 1.9. Lost, Stolen or Destroyed Certificates. In the event any
Certificates shall have been lost, stolen or destroyed, the Exchange Agent shall
issue in exchange for such lost, stolen or destroyed Certificates, upon the
making of an affidavit of that fact by the holder thereof, such shares of
SpeedFam Common Stock, cash for fractional shares, if any, as may be required
pursuant to Section 1.6(l) and any dividends or distributions payable pursuant
to Section 1.7(d); provided, however, that SpeedFam may, in its discretion and
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed Certificates to deliver a bond in such sum as it may
reasonably direct as indemnity against any claim that may be made against
SpeedFam, IPEC or the Exchange Agent with respect to the Certificates alleged to
have been lost, stolen or destroyed.
Section 1.10. Tax and Accounting Consequences. (a) It is intended by the
parties hereto that the Merger shall constitute a reorganization within the
meaning of Section 368 of the Code. The parties hereto adopt this Agreement as a
"plan of reorganization" within the meaning of Sections 1.368-2(g) and
1.368-3(a) of the United States Income Tax Regulations.
(b) It is intended by the parties hereto that the Merger shall
qualify for accounting treatment as a pooling of interests.
Section 1.11. Taking of Necessary Action; Further Action. If, at any time
after the Effective Time, any further action is necessary or desirable to carry
out the purposes of this Agreement and to vest the Surviving Corporation with
full right, title and possession to all assets, property, rights, privileges,
powers and franchises of IPEC and Merger Sub, the officers and directors of IPEC
and Merger Sub will take all such lawful and necessary action, so long as such
action is consistent with this Agreement.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF IPEC
IPEC represents and warrants to SpeedFam and Merger Sub, subject to
the exceptions specifically disclosed in writing in the disclosure letter
supplied by IPEC to SpeedFam dated as of the date hereof and certified by a duly
authorized officer of IPEC (the "IPEC Schedules"), as follows:
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Section 2.1. Organization of IPEC. (a) IPEC and each of its subsidiaries
is a corporation duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation; has the corporate power and
authority to own, lease and operate its assets and property and to carry on its
business as now being conducted and as proposed to be conducted; and is duly
qualified or licensed to do business and is in good standing in each
jurisdiction where the character of the properties owned, leased or operated by
it or the nature of its activities makes such qualification or licensing
necessary, except where the failure to be so qualified would not have a Material
Adverse Effect (as defined below) on IPEC.
(b) IPEC has delivered to SpeedFam a true and complete list of all
of IPEC's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and IPEC's equity interest therein.
(c) IPEC has delivered or made available to SpeedFam a true and
correct copy of the Certificate of Incorporation and Bylaws of IPEC and similar
governing instruments of each of its subsidiaries, each as amended to date, and
each such instrument is in full force and effect. Neither IPEC nor any of its
subsidiaries is in violation of any of the provisions of its Certificate of
Incorporation or Bylaws or equivalent governing instruments.
(d) When used in connection with IPEC, the term "Material Adverse
Effect" means, for purposes of this Agreement, any change, event or effect that
is materially adverse to the business, assets (including intangible assets),
financial condition or results of operations of IPEC and its subsidiaries taken
as a whole (except for those changes, events and effects that are directly
caused by (i) conditions affecting the worldwide economy as a whole; or (ii)
conditions affecting either the semiconductor, thin film memory disk or silicon
wafer capital equipment manufacturing industry, in either such case as a whole,
which conditions (in the case of clause (i) or (ii)) do not affect IPEC in a
disproportionate manner); or (iii) any adverse effect (A) on the bookings or
revenues of IPEC (or the direct consequences thereof) following the date of this
Agreement which is primarily attributable to a delay, reduction, cancellation or
change in the terms of product orders by customers of IPEC or (B) due to
employee attrition of IPEC, where such delay, reduction, cancellation, change or
attrition is primarily attributable to the transactions contemplated by this
Agreement or the pendency or announcement of the Merger. A change in the market
price of IPEC Regular Common Stock shall not, in and of itself, be deemed a
Material Adverse Effect with respect to IPEC.
Section 2.2. IPEC Capital Structure. The authorized capital stock of IPEC
consists of 50,000,000 shares of IPEC Regular Common Stock, of which there were
17,841,457 shares issued and outstanding as of November 2, 1998, 3,500,000
shares of IPEC Class A Common Stock of which there were 7,186 shares issued and
outstanding as of November 2, 1998 and 2,000,000 shares of Preferred Stock, $.01
par value, of which there were 7,204 shares of IPEC Series B-1 Preferred Stock
issued and outstanding as of November 2, 1998, 19,544 shares of IPEC Series B-2
Preferred Stock issued and outstanding as of November 2, 1998, 9,898 shares of
IPEC Series B-3 Preferred Stock issued and outstanding as of November 2, 1998,
and 50,000 shares of IPEC Series D Participating Preferred Stock ("IPEC Series D
Preferred") authorized for issuance pursuant to the IPEC Preferred Share
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Rights Agreement dated March 5, 1997, as amended (the "IPEC Rights Plan"), none
of which are issued. All outstanding shares of IPEC Common Stock and IPEC
Preferred Stock are duly authorized, validly issued, fully paid and
nonassessable and are not subject to preemptive rights created by statute, the
Certificate of Incorporation or Bylaws of IPEC or any agreement or document to
which IPEC is a party or by which it is bound. As of November 2, 1998, IPEC had
remaining a reserve of an aggregate of 7,186 shares of IPEC Regular Common for
issuance upon conversion of the IPEC Class A Common Stock. As of November 2,
1998, IPEC had remaining a reserve of an aggregate of 4,812,020 shares of IPEC
Regular Common Stock for issuance to employees, directors and consultants
pursuant to the 1992 IPEC Option Plan. As of November 2, 1998, IPEC had
remaining a reserve of an aggregate of 650,000 shares of IPEC Regular Common
Stock for issuance pursuant to options granted under the McDaniel Agreement. As
of November 2, 1998 IPEC had remaining a reserve of an aggregate of 685,038
shares of IPEC Regular Common Stock for issuance to employees under the 1994
Employee Stock Purchase Plan. As of November 2, 1998, IPEC had remaining a
reserve of an aggregate of 90,338 shares, 222,997 shares and 148,470 shares,
respectively, of IPEC Regular Common Stock for issuance upon conversion of the
IPEC Series B-1 Preferred Stock, IPEC Series B-2 Preferred Stock and IPEC Series
B-3 Preferred Stock. As of November 2, 1998, IPEC had remaining a reserve of
10,000 shares of IPEC Regular Common Stock for issuance upon the exercise of H &
Q I Warrant. As of November 2, 1998, IPEC had remaining a reserve of 20,352
shares of IPEC Regular Common Stock for issuance upon the exercise of the H & Q
II Warrant. As of November 2, 1998, IPEC had remaining a reserve of an aggregate
of 250,000 shares of IPEC Regular Common Stock for issuance upon the exercise of
the Intel Warrants. As of November 2, 1998, IPEC had remaining a reserve of
456,000 shares of IPEC Regular Common Stock for issuance upon the exercise of
the Fletcher Warrant. As of November 2, 1998 IPEC had remaining a reserve of
13,468 shares of IPEC Regular Common Stock for issuance upon exercise of the
UPO's and a reserve of 8,080 shares of IPEC Regular Common Stock for issuance
upon exercise of the Class B Warrants underlying the UPO's. As of November 2,
1998, IPEC had remaining a reserve of an aggregate of 2,948,717 shares of IPEC
Regular Common for issuance upon conversion of the IPEC Convertible Notes. As of
November 2, 1998, the Conversion Rates pursuant to which the IPEC Series B-1
Preferred Stock, the IPEC Series B-2 Preferred Stock, and the IPEC Series B-3
Preferred Stock are convertible into IPEC Regular Common Stock are 12.54, 11.41,
and 15.00 shares of IPEC Regular Common Stock per share of IPEC B-1 Preferred
Stock, IPEC B-2 Preferred Stock, and IPEC B-3 Preferred Stock, respectively
(hereinafter collectively referred to as the "Preferred Stock Conversion
Rates"). As of November 2, 1998, the Conversion Price applicable to the IPEC
Convertible Notes was $39.00 per share (the "Convertible Notes Conversion
Price"). As of November 2, 1998, the exercise price applicable to the H & Q I
Warrant was $29.25 per share (the "H & Q I Exercise Price"). As of November 2,
1998, the exercise price applicable to the H & Q II Warrant was $24.567 per
share (the "H & Q II Exercise Price"). As of November 2, 1998, the exercise
price applicable to the Intel Warrants was $14.6625 per share (the "Intel
Exercise Price"). As of November 2, 1998, the exercise price applicable to the
Fletcher Warrant was $24.567 per share (the "Fletcher Exercise Price"). As of
November 2, 1998, the exercise price applicable to the UPO's (each for 130
shares of IPEC Regular Common Stock and 78 Class B warrants, each exercisable
for one share of IPEC Regular Common Stock) was $1,650 (the "UPO Exercise
Price"). Collectively, each of the H & Q I Exercise
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Price, the H & Q II Exercise Price, the Intel Exercise Price, the Fletcher
Exercise Price and the UPO Exercise Price are hereinafter referred to as the
"Warrant Exercise Prices." No event, circumstance or fact has occurred or is in
existence which would result in any change in any Preferred Stock Conversion
Rate, the Convertible Notes Conversion Price, or the Warrant Exercise Prices.
The execution and delivery of this Agreement and the Stock Option Agreements by
IPEC do not, and the performance of this Agreement and Stock Option Agreements
by IPEC will not, result in any change in any Preferred Stock Conversion Rates
or the Convertible Notes Conversion Price. All shares of IPEC Common Stock
subject to issuance as aforesaid, upon issuance on the terms and conditions
specified in the instruments pursuant to which they are issuable, would be duly
authorized, validly issued, fully paid and nonassessable. The IPEC Schedules
list for each person who held options, rights or warrants to acquire shares of
IPEC Common Stock at November 5, 1998, the name of the holder of such option,
right, or warrant, the exercise price of such option, right or warrant, the
number of shares as to which such option, right or warrant will have vested at
such date, the vesting schedule for such option, right or warrant and whether
the exercisability of such option, right or warrant will be accelerated in any
way by the transactions contemplated by this Agreement, and indicate the extent
of acceleration, if any.
Section 2.3. Obligations With Respect to Capital Stock. Except as set
forth in Section 2.2, there are no equity securities, partnership interests or
similar ownership interests of any class of IPEC, or any securities exchangeable
or convertible into or exercisable for such equity securities, partnership
interests or similar ownership interests, issued, reserved for issuance or
outstanding. Except for securities IPEC owns, directly or indirectly through one
or more subsidiaries, there are no equity securities, partnership interests or
similar ownership interests of any class of any subsidiary of IPEC, or any
security exchangeable or convertible into or exercisable for such equity
securities, partnership interests or similar ownership interests, issued,
reserved for issuance or outstanding. Except as set forth in Section 2.2, there
are no options, warrants, equity securities, partnership interests or similar
ownership interests, calls, rights (including preemptive rights), commitments or
agreements of any character to which IPEC or any of its subsidiaries is a party
or by which it is bound obligating IPEC or any of its subsidiaries to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition, of any
shares of capital stock, partnership interests or similar ownership interests of
IPEC or any of its subsidiaries or obligating IPEC or any of its subsidiaries to
grant, extend, accelerate the vesting of or enter into any such option, warrant,
equity security, call, right, commitment or agreement. There are no registration
rights and, to the knowledge of IPEC, as of the date of this Agreement, there
are no voting trusts, proxies or other agreements or understandings with respect
to any equity security of any class of IPEC or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
Section 2.4. Authority. (a) IPEC has all requisite corporate power and
3authority to enter into this Agreement and the IPEC Stock Option Agreement and
to consummate the transactions contemplated hereby and thereby. The execution
and delivery of this Agreement and the consummation of the transactions
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<PAGE> 17
contemplated hereby, and the execution and delivery of the IPEC Stock Option
Agreement and the consummation of the transactions contemplated thereby, have
been duly authorized by all necessary corporate action on the part of IPEC,
subject only to the approval and adoption of this Agreement and the approval of
the Merger by IPEC's stockholders and the filing and recordation of the
Certificate of Merger pursuant to Delaware Law. The affirmative vote of at least
a majority of the votes entitled to be cast by the outstanding shares of the
IPEC Regular Common Stock and the IPEC Class A Common Stock, voting as a single
class, is required for IPEC's stockholders to approve and adopt this Agreement
and approve the Merger. No stockholders of any class or series of capital stock
of IPEC are entitled to vote as a separate class or series to approve and adopt
this Agreement and the Merger. This Agreement and the IPEC Stock Option
Agreement have been duly executed and delivered by IPEC and, assuming the due
authorization, execution and delivery by SpeedFam and, if applicable, Merger
Sub, constitute valid and binding obligations of IPEC, enforceable in accordance
with their respective terms, except as enforceability may be limited by
bankruptcy and other similar laws and general principles of equity. The
execution and delivery of this Agreement and the IPEC Stock Option Agreement by
IPEC do not, and the performance of this Agreement and the IPEC Stock Option
Agreement by IPEC will not, (i) conflict with or violate the Certificate of
Incorporation or Bylaws of IPEC or the equivalent organizational documents of
any of its subsidiaries, (ii) subject to compliance with the requirements set
forth in Section 2.4(b) below and, with respect to this Agreement only,
obtaining the approval and adoption of this Agreement and the approval of the
Merger by IPEC's stockholders as contemplated in Section 5.2, conflict with or
violate any law, rule, regulation, order, judgment or decree applicable to IPEC
or any of its subsidiaries or by which its or any of their respective properties
is bound or affected, or (iii) result in any breach of or constitute a default
(or an event that with notice or lapse of time or both would become a default)
under, or impair IPEC's rights or alter the rights or obligations of any third
party under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the properties or assets of IPEC or any of its
subsidiaries pursuant to, any material note, bond, mortgage, indenture,
contract, agreement, lease, license, permit, franchise or other instrument or
obligation to which IPEC or any of its subsidiaries is a party or by which IPEC
or any of its subsidiaries or its or any of their respective properties are
bound or affected. None of the execution and delivery of this Agreement and the
IPEC Stock Option Agreement, the performance of this Agreement and the IPEC
Stock Option Agreement, the consummation of the Merger of the issuance of the
IPEC Common Stock under the IPEC Stock Option Agreement will constitute a
"Fundamental Change," as such term is used in the IPEC Convertible Notes. The
IPEC Schedules list all material consents, waivers and approvals under any of
IPEC's or any of its subsidiaries' agreements, contracts, licenses or leases
required to be obtained in connection with the consummation of the transactions
contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any court, administrative agency or
commission or other governmental authority or instrumentality, foreign or
domestic ("Governmental Entity"), is required by or with respect to IPEC in
connection with the execution and delivery of this Agreement and the IPEC Stock
Option Agreement or the consummation of the Merger, except for (i) the filing of
the Certificate of Merger with the Secretary of State of the State of Delaware,
(ii) the filing of the Proxy Statement (as defined in Section 2.19) with the
Securities and Exchange Commission ("SEC") in accordance with the Securities
Exchange Act of 1934, as amended
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(the "Exchange Act"), (iii) such consents, approvals, orders, authorizations,
registrations, declarations and filings as may be required under applicable
federal and state securities laws and the Hart-Scott-Rodino Antitrust
Improvements Act of 1976, as amended (the "HSR Act") and the securities or
antitrust laws of any foreign country, and (iv) such other consents,
authorizations, filings, approvals and registrations which if not obtained or
made would not be material to IPEC or SpeedFam or have a material adverse effect
on the ability of the parties to consummate the Merger.
Section 2.5. SEC Filings; IPEC Financial Statements. (a) IPEC has filed
all forms, reports and documents required to be filed with the SEC since January
1, 1995, and has made available to SpeedFam such forms, reports and documents in
the form filed with the SEC. All such required forms, reports and documents
(including those that IPEC may file subsequent to the date hereof) are referred
to herein as the "IPEC SEC Reports." As of their respective dates, the IPEC SEC
Reports (i) were prepared in accordance with the requirements of the Securities
Act of 1933, as amended (the "Securities Act"), or the Exchange Act, as the case
may be, and the rules and regulations of the SEC thereunder applicable to such
IPEC SEC Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of IPEC's subsidiaries is required to file any forms,
reports or other documents with the SEC. IPEC meets the registrant requirements
for use of Form S-3 under the Securities Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in IPEC SEC Reports (the "IPEC
Financials"), including any IPEC SEC Reports filed after the date hereof until
the Closing, (x) complied or will comply, as the case may be, as to form in all
material respects with the published rules and regulations of the SEC with
respect thereto, (y) was or will be, as the case may be, prepared in accordance
with generally accepted accounting principles ("GAAP") applied on a consistent
basis throughout the periods involved (except as may be indicated in the notes
thereto or, in the case of unaudited interim financial statements, as may be
permitted by the SEC on Form 10-Q under the Exchange Act) and (z) fairly
presented or will fairly present, as the case may be, the consolidated financial
position of IPEC and its subsidiaries as at the respective dates thereof and the
consolidated results of IPEC's operations and cash flows for the periods
indicated, except that the unaudited interim financial statements were or are
subject to normal and recurring year-end adjustments. The balance sheet of IPEC
contained in IPEC SEC Reports as of September 30, 1998 is hereinafter referred
to as the "IPEC Balance Sheet." Except as disclosed in the IPEC Financials,
since the date of the IPEC Balance Sheet neither IPEC nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent, unknown or
otherwise) of a nature which, if known, would be required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of IPEC
and its subsidiaries taken as a whole, except liabilities (i) provided for in
the IPEC Balance Sheet, or (ii) incurred since the date of the IPEC Balance
Sheet in the ordinary course of business consistent with past practices and
immaterial in the aggregate.
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(c) IPEC has heretofore furnished to SpeedFam a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed pursuant to the Exchange Act, to
agreements, documents or other instruments which previously had been filed by
IPEC with the SEC pursuant to the Securities Act or the Exchange Act.
Section 2.6. Absence of Certain Changes or Events. Since the date of the
IPEC Balance Sheet through the date of this Agreement, there has not been: (i)
any change, event or effect that is materially adverse to the business, assets
(including intangible assets), financial condition or results of operations of
IPEC and its subsidiaries taken as a whole, (ii) any material change by IPEC in
its accounting methods, principles or practices, except as required by
concurrent changes in GAAP and described in the IPEC Schedules, or (iii) any
material revaluation by IPEC of any of its assets, including, without
limitation, writing down the value of capitalized inventory or writing off notes
or accounts receivable other than in the ordinary course of business.
Section 2.7. Taxes.
(a) Definition of Taxes. For the purposes of this Agreement, "Tax"
or "Taxes" refers to any and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes, together with all interest, penalties and additions imposed with
respect to such amounts and any obligations under any agreements or arrangements
with any other person with respect to such amounts and including any liability
for taxes of a predecessor entity.
(b) Tax Returns and Audits. (i) IPEC and each of its subsidiaries
have timely filed all federal, state, local and foreign returns, estimates,
information statements and reports ("Returns") relating to Taxes required to be
filed by IPEC and each of its subsidiaries, except such Returns which are not
material to IPEC, and have paid all Taxes shown to be due on such Returns.
(ii) Except as is not material to IPEC, IPEC and each of its
subsidiaries as of the Effective Time will have withheld with respect to
its employees all federal and state income taxes, FICA, FUTA and other
Taxes required to be withheld.
(iii) Except as is not material to IPEC, neither IPEC nor any of its
subsidiaries has been delinquent in the payment of any Tax nor is there
any Tax deficiency outstanding, proposed or assessed against IPEC or any
of its subsidiaries, nor has IPEC or any of its subsidiaries executed any
waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(iv) Except as is not material to IPEC, no audit or other examination
of any Return of IPEC or any of its subsidiaries is presently in progress,
nor has IPEC or
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any of its subsidiaries been notified of any request for such an audit or
other examination.
(v) Except as is not material to IPEC, no adjustment relating to any
Returns filed by IPEC or any of its subsidiaries has been proposed
formally or informally by any Tax authority to IPEC or any of its
subsidiaries or any representative thereof and, to the knowledge of IPEC,
no basis exists for any such adjustment which would be material to IPEC.
(vi) Neither IPEC nor any of its subsidiaries has any liability for
unpaid Taxes which has not been accrued for or reserved on the IPEC
Balance Sheet, whether asserted or unasserted, contingent or otherwise,
which is material to IPEC.
(vii) None of IPEC's assets are treated as "tax-exempt use property"
within the meaning of Section 168(h) of the Code.
(viii) There is no contract, agreement, plan or arrangement, including
but not limited to the provisions of this Agreement, covering any employee
or former employee of IPEC or any of its subsidiaries that, individually
or collectively, could give rise to the payment of any amount that would
not be deductible pursuant to Sections 280G, 404 or 162 of the Code.
(ix) Neither IPEC nor any of its subsidiaries has filed any consent
agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset
(as defined in Section 341(f)(4) of the Code) owned by IPEC.
(x) IPEC is not, and has not been at any time, a "United States real
property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
(xi) No power of attorney that is currently in force has been granted
with respect to any matter relating to Taxes payable by IPEC or any of its
subsidiaries.
(xii) Neither IPEC nor any of its subsidiaries is party to or affected
by any tax-sharing or allocation agreement or arrangement.
(xiii) The IPEC Schedules list (y) any Tax exemption, Tax holiday or
other Tax-sharing arrangement that IPEC or any of its subsidiaries has in
any jurisdiction, including the nature, amount and lengths of such Tax
exemption, Tax holiday or other Tax-sharing arrangement and (z) any
expatriate tax programs or policies affecting IPEC or any of its
subsidiaries. Each of IPEC and its subsidiaries is in full compliance with
all terms and conditions of any Tax exemption, Tax holiday or other
Tax-sharing arrangement or order of any Governmental Entity and the
consummation of the transactions contemplated hereby will not have any
adverse effect on the continued validity and effectiveness of any such Tax
exemption, Tax holiday or other Tax-sharing arrangement or order.
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Section 2.8. Intellectual Property. (a) To IPEC's knowledge, IPEC and its
subsidiaries own, or have the right to use, sell or license all intellectual
property rights being used, necessary or required for the conduct of their
respective businesses as presently conducted (such intellectual property rights
are collectively referred to herein as the "IPEC IP Rights").
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any IPEC IP Rights,
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any IPEC IP Rights or materially impair the right
of IPEC, the Surviving Corporation or SpeedFam to use, sell or license any IPEC
IP Rights or portion thereof.
(c) To IPEC's knowledge, neither the manufacture, marketing,
license, sale or intended use of any product or technology currently licensed or
sold or under development by IPEC or any of its subsidiaries violates in any
material respect any license or agreement between IPEC or any of its
subsidiaries and any third party or infringes in any material respect any
intellectual property right of any other party; and there is no pending or, to
the knowledge of IPEC, threatened claim or litigation contesting the validity,
ownership or right to use, sell, license or dispose of any IPEC IP Rights, nor
has IPEC received any written notice asserting that any IPEC IP Rights or the
proposed use, sale, license or disposition thereof conflicts or will conflict
with the rights of any other party.
(d) IPEC has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all those IPEC IP Rights requiring confidentiality.
Section 2.9. Compliance; Permits; Restrictions. (a) Neither IPEC nor any
of its subsidiaries is in conflict with, or in default or violation of (i) any
law, rule, regulation, order, judgment or decree applicable to IPEC or any of
its subsidiaries or by which IPEC or any of its subsidiaries or any of their
respective properties is bound or affected, or (ii) any note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which IPEC or any of its subsidiaries is a party or
by which IPEC or any of its subsidiaries or its or any of their respective
properties is bound or affected, which conflict, default, or violation has or
could reasonably be expected to have the effect of materially impairing the
business of IPEC together with its subsidiaries. To the knowledge of IPEC, no
investigation or review by any Governmental Entity is pending or threatened
against IPEC or any of its subsidiaries, nor has any Governmental Entity
indicated an intention to conduct the same. There is no material agreement,
judgment, injunction, order or decree binding upon IPEC or any of its
subsidiaries which has or could reasonably be expected to have the effect of
prohibiting or materially impairing any business practice of IPEC or any of its
subsidiaries, any acquisition of material property by IPEC or any of its
subsidiaries or the conduct of business by IPEC as currently conducted.
(b) IPEC and its subsidiaries hold all permits, licenses, variances,
exemptions, orders and approvals from governmental authorities which are
material to the operation of
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the business of IPEC (collectively, the "IPEC Permits"). IPEC and its
subsidiaries are in compliance in all material respects with the terms of the
IPEC Permits.
Section 2.10. Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which IPEC or any of its
subsidiaries has received any notice of assertion nor, to IPEC's knowledge, is
there a threatened action, suit, proceeding, claim, arbitration or investigation
against IPEC or any of its subsidiaries which reasonably would be likely to be
material to IPEC, or which in any manner challenges or seeks to prevent, enjoin,
alter or delay any of the transactions contemplated by this Agreement.
Section 2.11. Brokers' and Finders' Fees. Except for fees payable to
Morgan Stanley & Co. pursuant to an engagement letter effective November 18,
1998, a copy of which has been provided to SpeedFam, IPEC has not incurred, nor
will it incur, directly or indirectly, any liability for brokerage or finders'
fees or agents' commissions or any similar charges in connection with this
Agreement or any transaction contemplated hereby.
Section 2.12. Employee Benefit Plans. (a) With respect to each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan" as defined in Section 3(3) of the Employee
Retirement Income Security Act of 1974, as amended ("ERISA")) maintained or
contributed to by IPEC or any trade or business (an "ERISA Affiliate") which is
under common control with IPEC within the meaning of Section 414 of the Code
(the "IPEC Employee Plans"), IPEC has made available to SpeedFam a true and
complete copy of, to the extent applicable, (i) such IPEC Employee Plan, (ii)
the most recent annual report (Form 5500), (iii) each trust agreement related to
such IPEC Employee Plan, (iv) the most recent summary plan description for each
IPEC Employee Plan for which such a description is required, (v) the most recent
actuarial report relating to any IPEC Employee Plan subject to Title IV of ERISA
and (vi) the most recent United States Internal Revenue Service ("IRS")
determination letter issued with respect to any IPEC Employee Plan.
(b) Each IPEC Employee Plan which is intended to be qualified under
Section 401(a) of the Code has received a favorable determination from the IRS
covering the provisions of the Tax Reform Act of 1986 stating that such IPEC
Employee Plan is so qualified and nothing has occurred since the date of such
letter that could reasonably be expected to affect the qualified status of such
plan. Each IPEC Employee Plan has been operated in all material respects in
accordance with its terms and the requirements of applicable law. Neither IPEC
nor any ERISA Affiliate of IPEC has incurred or is reasonably expected to incur
any material liability under Title IV of ERISA in connection with any IPEC
Employee Plan. There have been no non-exempt prohibited transactions (as
described in Section 406 of ERISA or Section 4975 of the Code) with respect to
any IPEC Employee Plan. As to any IPEC Employee Plan which is subject to Title
IV of ERISA, there have been no "reportable events" as defined in Section 4043
of ERISA, no steps have been taken by IPEC or any ERISA Affiliate or the Pension
Benefit Guaranty Corporation to terminate any such plan and no event or
condition has occurred which might constitute grounds under Section 4042 of
ERISA for the termination of, or the appointment of a trustee to administer any
such plan. There have been no acts or omission by IPEC or any ERISA Affiliate
which have given rise to or may give rise to fines, penalties, taxes or related
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<PAGE> 23
charges under Sections 502(c), 502(i) or 4071 of ERISA or Chapter 43 of the
Code, for which IPEC may be liable. There are no actions, suits or claims (other
than routine claims for benefits) pending or threatened involving such plans or
the assets of such plans, and no facts exist which could give rise to any such
actions, suits or claims (other than routine claims for benefits). Actuarially
adequate accruals for all obligations under such plans, arrangements and
agreements are reflected in the balance sheet of IPEC. No such plan is a
multiemployer plan as defined in 3(37) of ERISA and neither IPEC nor any ERISA
Affiliate has ever contributed to or had an obligation to contribute to any
multiemployer plan.
Section 2.13. Absence of Liens and Encumbrances. IPEC and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens or encumbrances except as reflected in the IPEC Financials
and except for liens for taxes not yet due and payable, inchoate, mechanics and
materialmen's liens and such imperfections of title and encumbrances, if any,
which would not be material to IPEC.
Section 2.14. Environmental Matters.
(a) Hazardous Material. Except as reasonably would not be likely to
result in a material liability to IPEC, no underground storage tanks, landfills
or waste improvements, and no amount of any substance that has been designated
by any Governmental Entity or by applicable federal, state or local law to be
radioactive, toxic, hazardous or otherwise a danger to health or the
environment, including, without limitation, PCBs, asbestos, petroleum,
urea-formaldehyde and all substances listed as hazardous substances pursuant to
the Comprehensive Environmental Response, Compensation, and Liability Act of
1980, as amended, or defined as a hazardous waste pursuant to the United States
Resource Conservation and Recovery Act of 1976, as amended, and the regulations
promulgated pursuant to said laws, (a "Hazardous Material"), but excluding
office and janitorial supplies, are present, or have been released, as a result
of the actions of IPEC or any of its subsidiaries or any affiliate of IPEC, or,
to IPEC's knowledge, as a result of any actions of any third party or otherwise,
in, on or under any property, including the land and the improvements, ground
water and surface water thereof, that IPEC or any of its subsidiaries has at any
time owned, operated, occupied or leased.
(b) Hazardous Materials Activities. Except as reasonably would not
be likely to result in a material liability to IPEC, neither IPEC nor any of its
subsidiaries has transported, stored, used, manufactured, disposed of, released
or exposed its employees or others to Hazardous Materials in violation of any
law in effect on or before the Closing Date, nor has IPEC or any of its
subsidiaries disposed of, transported, sold, used, released, exposed its
employees or others to or manufactured any product containing a Hazardous
Material (collectively "Hazardous Materials Activities") in violation of any
rule, regulation, treaty or statute promulgated by any Governmental Entity in
effect prior to or as of the date hereof to prohibit, regulate or control
Hazardous Materials or any Hazardous Material Activity.
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<PAGE> 24
(c) Permits. IPEC and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the "IPEC
Environmental Permits") necessary for the conduct of IPEC's and its
subsidiaries' Hazardous Material Activities and other businesses of IPEC and its
subsidiaries as such activities and businesses are currently being conducted.
(d) Environmental Liabilities. No material action, proceeding,
investigation, revocation proceeding, amendment procedure, writ, injunction or
claim is pending, or to IPEC's knowledge, threatened concerning any IPEC
Environmental Permit, Hazardous Material or any Hazardous Materials Activity of
IPEC or any of its subsidiaries. IPEC is not aware of any fact or circumstance
which could involve IPEC or any of its subsidiaries in any material
environmental litigation or impose upon IPEC any material environmental
liability.
Section 2.15. Labor Matters. To IPEC's knowledge, there are no activities
or proceedings of any labor union to organize any employees of IPEC or any of
its subsidiaries and there are no strikes, or material slowdowns, work stoppages
or lockouts, or threats thereof by or with respect to any employees of IPEC or
any of its subsidiaries. IPEC and its subsidiaries are and have been in
compliance in all material respects with all applicable laws regarding
employment practices, terms and conditions of employment, and wages and hours
(including, without limitation, ERISA, WARN or any similar state or local law).
Section 2.16. Agreements, Contracts and Commitments. Except as set forth
in the IPEC Schedules, neither IPEC nor any of its subsidiaries is a party to or
is bound by:
(a) any employment or consulting agreement, contract or commitment
with any officer or director level employee or member of IPEC's Board of
Directors, other than those that are terminable by IPEC or any of its
subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit IPEC's or any of its subsidiaries' ability to
terminate employees at will;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(c) any agreement of indemnification or guaranty not entered into in
the ordinary course of business including any indemnification agreements
between IPEC or any of its subsidiaries and any of its officers or
directors;
(d) any agreement, contract or commitment containing any covenant
limiting the freedom of IPEC or any of its subsidiaries to engage in any
line of business or compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary
course of business or any
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ownership interest in any corporation, partnership, joint venture or other
business enterprise;
(f) any material joint marketing or development agreement; or
(g) any material agreement relating to the sale or purchase of any
business or business assets providing for payment of any deferred or
contingent consideration by IPEC or providing for indemnification by IPEC.
Neither IPEC nor any of its subsidiaries, nor to IPEC's knowledge any
other party to an IPEC Contract (as defined below), has breached, violated or
defaulted under, or received notice that it has breached, violated or defaulted
under, any of the material terms or conditions of any of the agreements,
contracts or commitments to which IPEC or any of its subsidiaries is a party or
by which it is bound of the type described in clauses (a) through (g) above (any
such agreement, contract or commitment, an "IPEC Contract") in such a manner as
would permit any other party to cancel or terminate any such IPEC Contract, or
would permit any other party to seek damages, which would be reasonably likely
to be material to IPEC.
Section 2.17. Pooling of Interests. To the knowledge of IPEC, based on
consultation with its independent accountants, neither IPEC nor any of its
directors, officers, affiliates or stockholders has taken any action which would
preclude SpeedFam's ability to account for the Merger as a pooling of interests.
Section 2.18. Change of Control Payments. The IPEC Schedules set forth
each plan or agreement pursuant to which any material amounts may become payable
(whether currently or in the future) to current or former officers and directors
of IPEC as a result of or in connection with the Merger.
Section 2.19. Statements; Proxy Statement/Prospectus. The information
supplied by IPEC for inclusion in the Registration Statement (as defined in
Section 3.4(b) hereof) shall not at the time the Registration Statement is filed
with the SEC and at the time it becomes effective under the Securities Act,
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the statements
therein not misleading. The information supplied by IPEC for inclusion in the
proxy statement/prospectus to be sent to the stockholders of IPEC and
shareholders of SpeedFam in connection with the meeting of IPEC's stockholders
to consider the approval and adoption of this Agreement and the approval of the
Merger (the "IPEC Stockholders' Meeting") and in connection with the meeting of
SpeedFam's shareholders to consider the approval of (i) the issuance of shares
of SpeedFam Common Stock by virtue of the Merger, (ii) the amendment of
SpeedFam's Articles of Incorporation to change SpeedFam's corporate name
(subject to and conditional upon the effectiveness of the Merger), and (iii) the
approval of any stock option or similar plan necessary for compliance with
applicable laws and regulations and to preserve the benefits of such plans as
they exist prior to the Merger with respect to IPEC, to the extent required by
Section 5.11 of this Agreement (subject to and conditional upon the
effectiveness of the Merger), (the "SpeedFam Shareholders' Meeting") (such proxy
statement/prospectus as amended or supplemented is referred to
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<PAGE> 26
herein as the "Proxy Statement") shall not, on the date the Proxy Statement is
first mailed to IPEC's stockholders and SpeedFam's shareholders, at the time of
the IPEC Stockholders' Meeting or the SpeedFam Shareholders' Meeting and at the
Effective Time, contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under which they are made,
not false or misleading; or omit to state any material fact necessary to correct
any statement in any earlier communication with respect to the solicitation of
proxies for the IPEC Stockholders' Meeting or the SpeedFam Shareholders' Meeting
which has become false or misleading. The Proxy Statement will comply as to form
in all material respects with the provisions of the Exchange Act and the rules
and regulations thereunder. If at any time prior to the Effective Time, any
event relating to IPEC or any of its affiliates, officers or directors should be
discovered by IPEC which should be set forth in an amendment to the Registration
Statement or a supplement to the Proxy Statement, IPEC shall promptly inform
SpeedFam. Notwithstanding the foregoing, IPEC makes no representation or
warranty with respect to any information supplied by SpeedFam or Merger Sub
which is contained in any of the foregoing documents.
Section 2.20. Board Approval. The Board of Directors of IPEC has, as of
the date of this Agreement, determined (i) that the Merger is fair to, and in
the best interests of IPEC and its stockholders, and (ii) to recommend that the
stockholders of IPEC approve and adopt this Agreement and approve the Merger.
Section 2.21. Fairness Opinion. IPEC has received a written opinion from
Morgan Stanley & Co., dated as of the date hereof, addressed to IPEC's
stockholders, to the effect that as of the date hereof, the Exchange Ratio is
fair to IPEC's stockholders from a financial point of view and has delivered to
SpeedFam a copy of such opinion. This representation is made only at the date of
this Agreement.
Section 2.22. Section 203 of the Delaware General Corporation Law Not
Applicable; State Takeover Statutes. The Board of Directors of IPEC has taken
all actions so that the restrictions contained in Section 203 of Delaware Law
applicable to a "business combination" (as defined in such Section 203) will not
apply to the execution, delivery or performance of this Agreement or the Stock
Option Agreements or to the consummation of the Merger or the other transactions
contemplated by this Agreement or the Stock Option Agreements. To the knowledge
of IPEC, no other state takeover statute is applicable to the Merger or the
other transactions contemplated hereby and by the Stock Option Agreements.
Section 2.23. IPEC Rights Plan. The IPEC Rights Plan has been amended (the
"IPEC Rights Plan Amendment") to (i) render the IPEC Rights Plan inapplicable to
the Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreements and (ii) ensure that (x) none of Merger Sub, SpeedFam,
SpeedFam's subsidiaries, or SpeedFam's permitted assignees or transferees under
the IPEC Stock Option Agreement is, or will become an Acquiring Person (as
defined in the IPEC Rights Plan) pursuant to the IPEC Rights Plan by reason of
the execution of this Agreement and the Stock Option Agreements and the
consummation of the transactions contemplated by this Agreement and the Stock
Option Agreements and the consummation of the Merger, or the consummation of the
other transactions contemplated by this Agreement and the Stock Option
Agreements, (y) a
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Distribution Date, a Triggering Event or Shares Acquisition Date (as such terms
are defined in the IPEC Rights Plan) does not occur by reason of the execution
of this Agreement and the Stock Option Agreements and the consummation of the
transactions contemplated by this Agreement and the Stock Option Agreements and
the consummation of the Merger, or the consummation of the other transactions
contemplated by this Agreement and the Stock Option Agreements, and (z) the IPEC
Rights Plan and all Rights thereunder shall terminate at the Effective Time of
the Merger, and such amendment may not be further amended by IPEC without the
prior written consent of SpeedFam in its sole discretion.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SPEEDFAM AND MERGER SUB
SpeedFam and Merger Sub represent and warrant to IPEC, subject to the
exceptions specifically disclosed in writing in the disclosure letter supplied
by SpeedFam to IPEC dated as of the date hereof and certified by a duly
authorized officer of SpeedFam (the "SpeedFam Schedules"), as follows:
Section 3.1. Organization of SpeedFam. (a) SpeedFam and each of its
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation; has the
corporate power and authority to own, lease and operate its assets and property
and to carry on its business as now being conducted and as proposed to be
conducted; and is duly qualified or licensed to do business and is in good
standing in each jurisdiction where the character of the properties owned,
leased or operated by it or the nature of its activities makes such
qualification or licensing necessary, except where the failure to be so
qualified would not have a Material Adverse Effect (as defined below) on
SpeedFam.
(b) SpeedFam has delivered to IPEC a true and complete list of all
of SpeedFam's subsidiaries, indicating the jurisdiction of incorporation of each
subsidiary and SpeedFam's equity interest therein.
(c) SpeedFam has delivered or made available to IPEC a true and
correct copy of the Articles of Incorporation and Bylaws of SpeedFam and similar
governing instruments of each of its subsidiaries, each as amended to date, and
each such instrument is in full force and effect. Neither SpeedFam nor any of
its subsidiaries is in violation of any of the provisions of its Articles of
Incorporation or Bylaws or equivalent governing instruments.
(d) When used in connection with SpeedFam, the term "Material
Adverse Effect" means, for purposes of this Agreement, any change, event or
effect that is materially adverse to the business, assets (including intangible
assets), financial condition or results of operations of SpeedFam and its
subsidiaries taken as a whole (except for those changes, events and effects that
are directly caused by (i) conditions affecting the worldwide economy as a
whole; or (ii) conditions affecting either the semiconductor, thin film memory
disk or silicon wafer capital equipment manufacturing industry, in either such
case as a whole, which conditions (in the case of clause (i) or (ii) do not
affect SpeedFam in a disproportionate manner); or (iii) any adverse effect (A)
on the bookings or revenues of
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SpeedFam (or the direct consequences thereof) following the date of this
Agreement which is primarily attributable to a delay, reduction, cancellation or
change in the terms of product orders by customers of SpeedFam or (B) due to
employee attrition of SpeedFam, where such delay, reduction, cancellation,
change or attrition is primarily attributable to the transactions contemplated
by this Agreement or the pendency or announcement of the Merger. A change in the
market price of SpeedFam Common Stock shall not, in and of itself, be deemed a
Material Adverse Effect with respect to SpeedFam.
Section 3.2. SpeedFam and Merger Sub Capital Structure. The authorized
capital stock of SpeedFam consists of 60,000,000 shares of Common Stock, without
par value of which there were 16,139,742 shares issued and outstanding as of
November 2, 1998, no shares held in the treasury of SpeedFam; and 1,000,000
shares of Preferred Stock, without par value, of which no shares are issued or
outstanding. The authorized capital stock of Merger Sub consists of 1,000 shares
of Common Stock, without par value, all of which, as of the date hereof, are
issued and outstanding and are held by SpeedFam. Merger Sub was formed on
November 2, 1998, for the purpose of consummating the Merger and has no material
assets or liabilities except as necessary for such purpose. All outstanding
shares of SpeedFam Common Stock are duly authorized, validly issued, fully paid
and nonassessable and are not subject to preemptive rights created by statute,
the Articles of Incorporation or Bylaws of SpeedFam or any agreement or document
to which SpeedFam is a party or by which it is bound. As of November 2, 1998,
SpeedFam had remaining a reserve of an aggregate of 807,303 shares, 1,792,600
shares and 772,520 shares, respectively, of SpeedFam Common Stock for issuance
to employees, and non-employee directors pursuant to the SpeedFam 1991 Employee
Incentive Stock Option Plan (the "SpeedFam 1991 Stock Option Plan"), the
SpeedFam 1995 Stock Plan for Employees and Directors (the "SpeedFam 1995 Stock
Option Plan") and the SpeedFam 1995 Employee Stock Purchase Plan (the "SpeedFam
Employee Stock Purchase Plan"). The SpeedFam 1991 Stock Option Plan and the
SpeedFam 1995 Stock Option Plan are referred to collectively as (the "SpeedFam
Stock Option Plans"). The SpeedFam Schedules list for each person who held
options to acquire shares of SpeedFam Common Stock at November 5, 1998, the name
of the holder of such option, the number of shares subject to such option, the
exercise price of such option, the number of shares as to which such option will
have vested at such date, the vesting schedule for such option and whether the
exercisability of such option will be accelerated in any way by the transactions
contemplated by this Agreement, and indicate the extent of acceleration, if any.
Section 3.3. Obligations With Respect to Capital Stock. Except as set
forth in Section 3.2, there are no equity securities, partnership interests or
similar ownership interests of any class of SpeedFam, or any securities
exchangeable or convertible into or exercisable for such equity securities,
partnership interests or similar ownership interests, issued, reserved for
issuance or outstanding. Except for securities SpeedFam owns, directly or
indirectly through one or more subsidiaries, there are no equity securities,
partnership interests or similar ownership interests of any class of any
subsidiary of SpeedFam, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 3.2, there are no options, warrants, equity securities,
partnership interests or similar ownership interests, calls, rights (including
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preemptive rights), commitments or agreements of any character to which SpeedFam
or any of its subsidiaries is a party or by which it is bound obligating
SpeedFam or any of its subsidiaries to issue, deliver or sell, or cause to be
issued, delivered or sold, or repurchase, redeem or otherwise acquire, or cause
the repurchase, redemption or acquisition, of any shares of capital stock,
partnership interests or similar ownership interests of SpeedFam or any of its
subsidiaries or obligating SpeedFam or any of its subsidiaries to grant, extend,
accelerate the vesting of or enter into any such option, warrant, equity
security, call, right, commitment or agreement. There are no registration rights
and, to the knowledge of SpeedFam, as of the date of this Agreement, there are
no voting trusts, proxies or other agreements or understandings with respect to
any equity security of any class of SpeedFam or with respect to any equity
security, partnership interest or similar ownership interest of any class of any
of its subsidiaries.
Section 3.4. Authority. (a) Each of SpeedFam and Merger Sub has all
requisite corporate power and authority to enter into this Agreement and to
consummate the transactions contemplated hereby and SpeedFam has all requisite
corporate power and authority to enter into the SpeedFam Stock Option Agreement
and to consummate the transactions contemplated thereby. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby, and the execution and delivery of the SpeedFam Stock Option Agreement
and the consummation of the transactions contemplated thereby, have been duly
authorized by all necessary corporate action on the part of SpeedFam and, in the
case of this Agreement, Merger Sub, subject only to the filing and recordation
of the Certificate of Merger pursuant to Delaware Law, the filing of Articles of
Amendment to the Articles of Incorporation of SpeedFam pursuant to Illinois Law,
and the approval by SpeedFam's shareholders of (i) the issuance of shares of
SpeedFam Common Stock by virtue of the Merger, (ii) the amendment of SpeedFam's
Articles of Incorporation to change SpeedFam's corporate name (subject to and
conditional upon the effectiveness of the Merger), and (iii) the approval of any
stock option or similar plan necessary for compliance with applicable laws and
regulations and to preserve the benefits of such plans as they exist prior to
the Merger, to the extent required by Section 5.11 of this Agreement (subject to
and conditional upon the effectiveness of the Merger). A vote of the holders of
at least a majority of the outstanding shares of the SpeedFam Common Stock is
required for SpeedFam's shareholders to approve each of (i) the issuance of
shares of SpeedFam Common Stock by virtue of the Merger, (ii) the amendment of
SpeedFam's Articles of Incorporation to change SpeedFam's corporate name
(subject to and conditional upon the effectiveness of the Merger), and (iii) the
approval of any stock option or similar plan necessary for compliance with
applicable laws and regulations and to preserve the benefits of such plans as
they exist prior to the Merger, to the extent required by Section 5.11 of this
Agreement (subject to and conditional upon the effectiveness of the Merger).
This Agreement has been duly executed and delivered by each of SpeedFam and
Merger Sub and, assuming the due authorization, execution and delivery by IPEC,
constitutes the valid and binding obligation of SpeedFam, enforceable in
accordance with its terms, except
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as enforceability may be limited by bankruptcy and other similar laws and
general principles of equity. The SpeedFam Stock Option Agreement has been duly
executed and delivered by SpeedFam and, assuming the due authorization,
execution and delivery of the SpeedFam Stock Option Agreement by IPEC, the
SpeedFam Stock Option Agreement constitutes the valid and binding obligation of
SpeedFam, enforceable in accordance with its terms, except as enforceability may
be limited by bankruptcy and other similar laws and general principles of
equity. The execution and delivery of this Agreement by each of SpeedFam and
Merger Sub and the execution and delivery of the SpeedFam Stock Option Agreement
by SpeedFam do not, and the performance of this Agreement by each of SpeedFam
and Merger Sub will not and the performance of the SpeedFam Stock Option
Agreement by SpeedFam will not, (i) conflict with or violate the Articles of
Incorporation or Bylaws of SpeedFam or the Certificate of Incorporation or
Bylaws of Merger Sub or the equivalent organizational documents of any of
SpeedFam's other subsidiaries, (ii) subject to compliance with the requirements
set forth in Section 3.4(b) below and with respect to this Agreement only,
obtaining the approval of SpeedFam's shareholders of (x) the issuance of shares
of SpeedFam Common Stock by virtue of the Merger, (y) the amendment of
SpeedFam's Articles of Incorporation to change SpeedFam's corporate name
(subject to and conditional upon the effectiveness of the Merger), and (z) any
stock option or similar plan, necessary for compliance with applicable laws and
regulations and to preserve the benefits of such plans as they exist prior to
the Merger, to the extent required by Section 5.11 of this Agreement (subject to
and conditional upon the effectiveness of the Merger) as contemplated in Section
5.2, conflict with or violate any law, rule, regulation, order, judgment or
decree applicable to SpeedFam or any of its subsidiaries (including Merger Sub)
or by which its or any of their respective properties is bound or affected, or
(iii) result in any breach of or constitute a default (or an event that with
notice or lapse of time or both would become a default) under, or impair
SpeedFam's rights or alter the rights or obligations of any third party under,
or give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of a lien or encumbrance on any of
the properties or assets of SpeedFam or any of its subsidiaries (including
Merger Sub) pursuant to, any material note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument or obligation
to which SpeedFam or any of its subsidiaries (including Merger Sub) is a party
or by which SpeedFam or any of its subsidiaries or its or any of their
respective properties are bound or affected. The SpeedFam Schedules list all
material consents, waivers and approvals under any of SpeedFam's or any of its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby.
(b) No consent, approval, order or authorization of, or
registration, declaration or filing with any Governmental Entity is required by
or with respect to SpeedFam or Merger Sub in connection with the execution and
delivery of this Agreement and the SpeedFam Stock Option Agreement or the
consummation of the Merger, except for (i) the filing of a Form S-4 Registration
Statement (the "Registration Statement") with the SEC in accordance with the
Securities Act, (ii) the filing of the Certificate of Merger with the Secretary
of State of the State of Delaware, (iii) the filing of the Proxy Statement with
the SEC in accordance with the Exchange Act, (iv) such consents, approvals,
orders, authorizations, registrations, declarations and filings as may be
required under applicable federal and state securities laws and the HSR Act and
the securities or antitrust laws of any foreign country, and (v) such other
consents, authorizations, filings, approvals and registrations which if not
obtained or made would not be material to SpeedFam or IPEC or have a material
adverse effect on the ability of the parties to consummate the Merger.
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Section 3.5. SEC Filings; SpeedFam Financial Statements. (a) SpeedFam has
filed all forms, reports and documents required to be filed with the SEC since
January 1, 1996, and has made available to IPEC such forms, reports and
documents in the form filed with the SEC. All such required forms, reports and
documents (including those that SpeedFam may file subsequent to the date hereof)
are referred to herein as the "SpeedFam SEC Reports." As of their respective
dates, the SpeedFam SEC Reports (i) were prepared in accordance with the
requirements of the Securities Act or the Exchange Act, as the case may be, and
the rules and regulations of the SEC thereunder applicable to such SpeedFam SEC
Reports, and (ii) did not at the time they were filed (or if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. None of SpeedFam's subsidiaries is required to file any
forms, reports or other documents with the SEC. SpeedFam meets the registrant
requirements for use of Form S-3 under the Securities Act.
(b) Each of the consolidated financial statements (including, in
each case, any related notes thereto) contained in SpeedFam SEC Reports (the
"SpeedFam Financials"), including any SpeedFam SEC Reports filed after the date
hereof until the Closing, (x) complied or will comply, as the case may be, as to
form in all material respects with the published rules and regulations of the
SEC with respect thereto, (y) was or will be, as the case may be, prepared in
accordance with GAAP applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto or, in the case of
unaudited interim financial statements, as may be permitted by the SEC on Form
10-Q under the Exchange Act) and (z) fairly presented or will fairly present, as
the case may be, the consolidated financial position of SpeedFam and its
subsidiaries as at the respective dates thereof and the consolidated results of
SpeedFam's operations and cash flows for the periods indicated, except that the
unaudited interim financial statements were or are subject to normal and
recurring year-end adjustments. The balance sheet of SpeedFam contained in
SpeedFam SEC Reports as of August 31, 1998 is hereinafter referred to as the
"SpeedFam Balance Sheet." Except as disclosed in the SpeedFam Financials, since
the date of the SpeedFam Balance Sheet neither SpeedFam nor any of its
subsidiaries has any liabilities (absolute, accrued, contingent, unknown or
otherwise) of a nature which, if known, would be required to be disclosed on a
balance sheet or in the related notes to the consolidated financial statements
prepared in accordance with GAAP which are, individually or in the aggregate,
material to the business, results of operations or financial condition of
SpeedFam and its subsidiaries taken as a whole, except liabilities (i) provided
for in the SpeedFam Balance Sheet, or (ii) incurred since the date of the
SpeedFam Balance Sheet in the ordinary course of business consistent with past
practices and immaterial in the aggregate.
(c) SpeedFam has heretofore furnished to IPEC a complete and correct
copy of any amendments or modifications, which have not yet been filed with the
SEC but which are required to be filed pursuant to the Exchange Act, to
agreements, documents or other instruments which previously had been filed by
SpeedFam with the SEC pursuant to the Securities Act or the Exchange Act.
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Section 3.6. Absence of Certain Changes or Events. Since the date of the
SpeedFam Balance Sheet through the date of this Agreement, there has not been:
(i) any change, event or effect that is materially adverse to the business,
assets (including intangible assets), financial condition or results of
operations of SpeedFam and its subsidiaries taken as a whole, (ii) any material
change by SpeedFam in its accounting methods, principles or practices, except as
required by concurrent changes in GAAP and described in the SpeedFam Schedules,
or (iii) any material revaluation by SpeedFam of any of its assets, including,
without limitation, writing down the value of capitalized inventory or writing
off notes or accounts receivable other than in the ordinary course of business.
Section 3.7. Taxes.
(a) Tax Returns and Audits. (i) SpeedFam and each of its
subsidiaries have timely filed all Returns relating to Taxes required to be
filed by SpeedFam and each of its subsidiaries, except such Returns which are
not material to SpeedFam, and have paid all Taxes shown to be due on such
Returns.
(ii) Except as is not material to SpeedFam, SpeedFam and each of its
subsidiaries as of the Effective Time will have withheld with respect to its
employees all federal and state income taxes, FICA, FUTA and other Taxes
required to be withheld.
(iii) Except as is not material to SpeedFam, neither SpeedFam nor
any of its subsidiaries has been delinquent in the payment of any Tax nor is
there any Tax deficiency outstanding, proposed or assessed against SpeedFam or
any of its subsidiaries, nor has SpeedFam or any of its subsidiaries executed
any waiver of any statute of limitations on or extending the period for the
assessment or collection of any Tax.
(iv) Except as is not material to SpeedFam, no audit or other
examination of any Return of SpeedFam or any of its subsidiaries is presently in
progress, nor has SpeedFam or any of its subsidiaries been notified of any
request for such an audit or other examination.
(v) Except as is not material to SpeedFam, no adjustment relating to
any Returns filed by SpeedFam or any of its subsidiaries has been proposed
formally or informally by any Tax authority to SpeedFam or any of its
subsidiaries or any representative thereof and, to the knowledge of SpeedFam, no
basis exists for any such adjustment which would be material to SpeedFam.
(vi) Neither SpeedFam nor any of its subsidiaries has any liability
for unpaid Taxes which has not been accrued for or reserved on the SpeedFam
Balance Sheet, whether asserted or unasserted, contingent or otherwise, which is
material to SpeedFam.
(vii) None of SpeedFam's assets are treated as "tax-exempt use
property" within the meaning of Section 168(h) of the Code.
(viii) There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this Agreement, covering any
employee or former employee of SpeedFam or any of its subsidiaries that,
individually or collectively, could give rise to the
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payment of any amount that would not be deductible pursuant to Sections 280G,
404 or 162 of the Code.
(ix) Neither SpeedFam nor any of its subsidiaries has filed any
consent agreement under Section 341(f) of the Code or agreed to have Section
341(f)(2) of the Code apply to any disposition of a subsection (f) asset (as
defined in Section 341(f)(4) of the Code) owned by SpeedFam.
(x) SpeedFam is not, and has not been at any time, a "United States
real property holding corporation" within the meaning of Section 897(c)(2) of
the Code.
(xi) No power of attorney that is currently in force has been
granted with respect to any matter relating to Taxes payable by SpeedFam or any
of its subsidiaries.
(xii) Neither SpeedFam nor any of its subsidiaries is party to or
affected by any taxsharing or allocation agreement or arrangement.
(xiii) The SpeedFam Schedules list (y) any Tax exemption, Tax
holiday or other Tax-sharing arrangement that SpeedFam or any of its
subsidiaries has in any jurisdiction, including the nature, amount and lengths
of such Tax exemption, Tax holiday or other Tax-sharing arrangement and (z) any
expatriate tax programs or policies affecting SpeedFam or any of its
subsidiaries. Each of SpeedFam and its subsidiaries is in full compliance with
all terms and conditions of any Tax exemption, Tax holiday or other Tax-sharing
arrangement or order of any Governmental Entity and the consummation of the
transactions contemplated hereby will not have any adverse effect on the
continued validity and effectiveness of any such Tax exemption, Tax holiday or
other Tax-sharing arrangement or order.
Section 3.8. Intellectual Property. (a) To SpeedFam's knowledge, SpeedFam
and its subsidiaries own, or have the right to use, sell or license all
intellectual property rights being used, necessary or required for the conduct
of their respective businesses as presently conducted (such intellectual
property rights are collectively referred to herein as the "SpeedFam IP
Rights").
(b) The execution, delivery and performance of this Agreement and
the consummation of the transactions contemplated hereby will not constitute a
material breach of any instrument or agreement governing any SpeedFam IP Rights,
will not cause the forfeiture or termination or give rise to a right of
forfeiture or termination of any SpeedFam IP Rights or materially impair the
right of SpeedFam, the Surviving Corporation or IPEC to use, sell or license any
SpeedFam IP Rights or portion thereof.
(c) To SpeedFam's knowledge, neither the manufacture, marketing,
license, sale or intended use of any product or technology currently licensed or
sold or under development by SpeedFam or any of its subsidiaries violates in any
material respect any license or agreement between SpeedFam or any of its
subsidiaries and any third party or infringes in any material respect any
intellectual property right of any other party; and there is no pending or, to
the knowledge of SpeedFam, threatened claim or litigation contesting the
validity, ownership or right to use, sell, license or dispose of any SpeedFam IP
Rights, nor
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has SpeedFam received any written notice asserting that any SpeedFam IP Rights
or the proposed use, sale, license or disposition thereof conflicts or will
conflict with the rights of any other party.
(d) SpeedFam has taken reasonable and practicable steps designed to
safeguard and maintain the secrecy and confidentiality of, and its proprietary
rights in, all those SpeedFam IP Rights requiring confidentiality.
Section 3.9. Compliance; Permits; Restrictions. (a) Neither SpeedFam nor
any of its subsidiaries is in conflict with, or in default or violation of (i)
any law, rule, regulation, order, judgment or decree applicable to SpeedFam or
any of its subsidiaries or by which SpeedFam or any of its subsidiaries or any
of their respective properties is bound or affected, or (ii) any note, bond,
mortgage, indenture, contract, agreement, lease, license, permit, franchise or
other instrument or obligation to which SpeedFam or any of its subsidiaries is a
party or by which SpeedFam or any of its subsidiaries or its or any of their
respective properties is bound or affected, which conflict, default, or
violation has or could reasonably be expected to have the effect of materially
impairing the business of SpeedFam together with its subsidiaries. To the
knowledge of SpeedFam, no investigation or review by any Governmental Entity is
pending or threatened against SpeedFam or any of its subsidiaries, nor has any
Governmental Entity indicated an intention to conduct the same. There is no
material agreement, judgment, injunction, order or decree binding upon SpeedFam
or any of its subsidiaries which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of SpeedFam
or any of its subsidiaries, any acquisition of material property by SpeedFam or
any of its subsidiaries or the conduct of business by SpeedFam as currently
conducted.
(b) SpeedFam and its subsidiaries hold all permits, licenses,
variances, exemptions, orders and approvals from governmental authorities which
are material to the operation of the business of SpeedFam (collectively, the
"SpeedFam Permits"). SpeedFam and its subsidiaries are in compliance in all
material respects with the terms of the SpeedFam Permits.
Section 3.10. Litigation. There is no action, suit, proceeding, claim,
arbitration or investigation pending, or as to which SpeedFam or any of its
subsidiaries has received any notice of assertion nor, to SpeedFam's knowledge,
is there a threatened action, suit, proceeding, claim, arbitration or
investigation against SpeedFam or any of its subsidiaries which reasonably would
be likely to be material to SpeedFam, or which in any manner challenges or seeks
to prevent, enjoin, alter or delay any of the transactions contemplated by this
Agreement.
Section 3.11. Brokers' and Finders' Fees. Except for fees payable to
Lehman Brothers pursuant to an engagement letter dated November 16, 1998, a copy
of which has been provided to IPEC, SpeedFam has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
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Section 3.12. Employee Benefit Plans. (a) With respect to each employee
benefit plan, program, arrangement and contract (including, without limitation,
any "employee benefit plan" as defined in Section 3(3) of ERISA) maintained or
contributed to by SpeedFam or any trade or business which is under common
control with SpeedFam within the meaning of Section 414 of the Code (the
"SpeedFam Employee Plans"), SpeedFam has made available to IPEC a true and
complete copy of, to the extent applicable, (i) such SpeedFam Employee Plan,
(ii) the most recent annual report (Form 5500), (iii) each trust agreement
related to such SpeedFam Employee Plan, (iv) the most recent summary plan
description for each SpeedFam Employee Plan for which such a description is
required, (v) the most recent actuarial report relating to any SpeedFam Employee
Plan subject to Title IV of ERISA and (vi) the most recent IRS determination
letter issued with respect to any SpeedFam Employee Plan.
(b) Each SpeedFam Employee Plan which is intended to be qualified
under Section 401(a) of the Code has received a favorable determination from the
IRS covering the provisions of the Tax Reform Act of 1986 stating that such
SpeedFam Employee Plan is so qualified and nothing has occurred since the date
of such letter that could reasonably be expected to affect the qualified status
of such plan. Each SpeedFam Employee Plan has been operated in all material
respects in accordance with its terms and the requirements of applicable law.
Neither SpeedFam nor any ERISA Affiliate of SpeedFam has incurred or is
reasonably expected to incur any material liability under Title IV of ERISA in
connection with any SpeedFam Employee Plan. There have been no non-exempt
prohibited transactions (as described in Section 406 of ERISA or Section 4975 of
the Code) with respect to any SpeedFam Employee Plan. As to any SpeedFam
Employee Plan which is subject to Title IV of ERISA, there have been no
"reportable events" as defined in Section 4043 of ERISA, no steps have been
taken by SpeedFam or any ERISA Affiliate or the Pension Benefit Guaranty
Corporation to terminate any such plan and no event or condition has occurred
which might constitute grounds under Section 4042 of ERISA for the termination
of, or the appointment of a trustee to administer any such plan. There have been
no acts or omission by SpeedFam or any ERISA Affiliate which have given rise to
or may give rise to fines, penalties, taxes or related charges under Sections
502(c), 502(i) or 4071 of ERISA or Chapter 43 of the Code, for which SpeedFam
may be liable. There are no actions, suits or claims (other than routine claims
for benefits) pending or threatened involving such plans or the assets of such
plans, and no facts exist which could give rise to any such actions, suits or
claims (other than routine claims for benefits). Actuarially adequate accruals
for all obligations under such plans, arrangements and agreements are reflected
in the balance sheet of SpeedFam. No such plan is a multiemployer plan as
defined in 3(37) of ERISA and neither SpeedFam nor any ERISA Affiliate has ever
contributed to or had an obligation to contribute to any multiemployer plan.
Section 3.13. Absence of Liens and Encumbrances. SpeedFam and each of its
subsidiaries has good and valid title to, or, in the case of leased properties
and assets, valid leasehold interests in, all of its material tangible
properties and assets, real, personal and mixed, used in its business, free and
clear of any liens or encumbrances except as reflected in the SpeedFam
Financials and except for liens for taxes not yet due and payable, inchoate,
mechanics and materialmen's liens and such imperfections of title and
encumbrances, if any, which would not be material to SpeedFam.
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Section 3.14. Environmental Matters.
(a) Hazardous Material. Except as reasonably would not be likely to
result in a material liability to SpeedFam, no underground storage tanks and no
amount of any Hazardous Material, but excluding office and janitorial supplies,
are present, as a result of the actions of SpeedFam or any of its subsidiaries
or any affiliate of SpeedFam, or, to SpeedFam's knowledge, as a result of any
actions of any third party or otherwise, in, on or under any property, including
the land and the improvements, ground water and surface water thereof, that
SpeedFam or any of its subsidiaries has at any time owned, operated, occupied or
leased.
(b) Hazardous Materials Activities. Except as reasonably would not
be likely to result in a material liability to SpeedFam, neither SpeedFam nor
any of its subsidiaries has transported, stored, used, manufactured, disposed
of, released or exposed its employees or others to Hazardous Materials in
violation of any law in effect on or before the Closing Date, nor has SpeedFam
or any of its subsidiaries engaged in any Hazardous Materials Activities in
violation of any rule, regulation, treaty or statute promulgated by any
Governmental Entity in effect prior to or as of the date hereof to prohibit,
regulate or control Hazardous Materials or any Hazardous Material Activity.
(c) Permits. SpeedFam and its subsidiaries currently hold all
environmental approvals, permits, licenses, clearances and consents (the
"SpeedFam Environmental Permits") necessary for the conduct of SpeedFam's and
its subsidiaries' Hazardous Material Activities and other businesses of SpeedFam
and its subsidiaries as such activities and businesses are currently being
conducted.
(d) Environmental Liabilities. No material action, proceeding,
revocation proceeding, amendment procedure, writ, injunction or claim is
pending, or to SpeedFam's knowledge, threatened concerning any SpeedFam
Environmental Permit, Hazardous Material or any Hazardous Materials Activity of
SpeedFam or any of its subsidiaries. SpeedFam is not aware of any fact or
circumstance which could involve SpeedFam or any of its subsidiaries in any
material environmental litigation or impose upon SpeedFam any material
environmental liability.
Section 3.15. Labor Matters. To SpeedFam's knowledge, there are no
activities or proceedings of any labor union to organize any employees of
SpeedFam or any of its subsidiaries and there are no strikes, or material
slowdowns, work stoppages or lockouts, or threats thereof by or with respect to
any employees of SpeedFam or any of its subsidiaries. SpeedFam and its
subsidiaries are and have been in compliance in all material respects with all
applicable laws regarding employment practices, terms and conditions of
employment, and wages and hours (including, without limitation, ERISA, WARN or
any similar state or local law).
Section 3.16. Agreements, Contracts and Commitments. Except as set forth
in the SpeedFam Schedules, neither SpeedFam nor any of its subsidiaries is a
party to or is bound by:
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(a) any employment or consulting agreement, contract or commitment
with any officer or director level employee or member of SpeedFam's Board
of Directors, other than those that are terminable by SpeedFam or any of
its subsidiaries on no more than thirty days notice without liability or
financial obligation, except to the extent general principles of wrongful
termination law may limit SpeedFam's or any of its subsidiaries' ability
to terminate employees at will;
(b) any agreement or plan, including, without limitation, any stock
option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of
which will be accelerated, by the occurrence of any of the transactions
contemplated by this Agreement or the value of any of the benefits of
which will be calculated on the basis of any of the transactions
contemplated by this Agreement;
(c) any agreement of indemnification or guaranty not entered into in
the ordinary course of business including any indemnification agreements
between SpeedFam or any of its subsidiaries and any of its officers or
directors;
(d) any agreement, contract or commitment containing any covenant
limiting the freedom of SpeedFam or any of its subsidiaries to engage in
any line of business or compete with any person or granting any exclusive
distribution rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition of assets not in the ordinary
course of business or any ownership interest in any corporation,
partnership, joint venture or other business enterprise;
(f) any material joint marketing or development agreement; or
(g) any material agreement relating to the sale or purchase of any
business or business assets providing for payment of any deferred or
contingent consideration by SpeedFam or providing for indemnification by
SpeedFam.
Neither SpeedFam nor any of its subsidiaries, nor to SpeedFam's knowledge
any other party to a SpeedFam Contract (as defined below), has breached,
violated or defaulted under, or received notice that it has breached, violated
or defaulted under, any of the material terms or conditions of any of the
agreements, contracts or commitments to which SpeedFam or any of its
subsidiaries is a party or by which it is bound of the type described in clauses
(a) through (g) above (any such agreement, contract or commitment, a "SpeedFam
Contract") in such a manner as would permit any other party to cancel or
terminate any such SpeedFam Contract, or would permit any other party to seek
damages, which would be reasonably likely to be material to SpeedFam.
Section 3.17. Pooling of Interests. To the knowledge of SpeedFam, based on
consultation with its independent accountants, neither SpeedFam nor any of its
directors, officers, affiliates or shareholders has taken any action which would
preclude SpeedFam's ability to account for the Merger as a pooling of interests.
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Section 3.18. Change of Control Payments. The SpeedFam Schedules set forth
each plan or agreement pursuant to which any material amounts may become payable
(whether currently or in the future) to current or former officers and directors
of SpeedFam as a result of or in connection with the Merger.
Section 3.19. Statements; Proxy Statement/Prospectus. The information
supplied by SpeedFam for inclusion in the Registration Statement shall not at
the time the Registration Statement is filed with the SEC and at the time it
becomes effective under the Securities Act, contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading. The
information supplied by SpeedFam for inclusion in the Proxy Statement shall not,
on the date the Proxy Statement is first mailed to SpeedFam's shareholders and
IPEC's stockholders, at the time of the SpeedFam Shareholders' Meeting or the
IPEC Stockholders' Meeting and at the Effective Time, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they are made, not false or misleading; or omit to
state any material fact necessary to correct any statement in any earlier
communication with respect to the solicitation of proxies for the SpeedFam
Shareholders' Meeting or the IPEC Stockholders' Meeting which has become false
or misleading. The Proxy Statement will comply as to form in all material
respects with the provisions of the Exchange Act and the rules and regulations
thereunder. If at any time prior to the Effective Time, any event relating to
SpeedFam or any of its affiliates, officers or directors should be discovered by
SpeedFam which should be set forth in an amendment to the Registration Statement
or a supplement to the Proxy Statement, SpeedFam shall promptly inform IPEC.
Notwithstanding the foregoing, SpeedFam makes no representation or warranty with
respect to any information supplied by IPEC which is contained in any of the
foregoing documents.
Section 3.20. Board Approval. The Board of Directors of SpeedFam has, as
of the date of this Agreement, determined (i) that the Merger is fair to, and in
the best interests of SpeedFam and its shareholders, (ii) to recommend that the
shareholders of SpeedFam approve (x) the issuance of shares of SpeedFam Common
Stock by virtue of the Merger, (y) the amendment of SpeedFam's Articles of
Incorporation to change SpeedFam's corporate name (subject to and conditional
upon the effectiveness of the Merger), and (z) such other matters relating to
any stock option or similar plan necessary for compliance with applicable laws
and regulations and to preserve the benefits of such plans as they exist prior
to the Merger, to the extent required by Section 5.11 of this Agreement (subject
to and conditional upon the effectiveness of the Merger).
Section 3.21. Fairness Opinion. SpeedFam has received a written opinion
from Lehman Brothers, dated as of the date hereof, to the effect that as of the
date hereof, the Exchange Ratio is fair to SpeedFam from a financial point of
view and has delivered to IPEC a copy of such opinion.
Section 3.22. Section 5/11.75 of the Illinois Business Corporation Act Not
Applicable; State Takeover Statutes. The Board of Directors of SpeedFam has
taken all actions so that the restrictions contained in Section 5/11.75 of
Illinois Law applicable to a "business combination" (as defined in such Section
5/11.75) will not apply to the execution,
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delivery or performance of this Agreement or the Stock Option Agreements or to
the consummation of the Merger or the other transactions contemplated by this
Agreement or the Stock Option Agreements. To the knowledge of SpeedFam, no other
state takeover statute is applicable to the Merger or the other transactions
contemplated hereby and by the Stock Option Agreements.
ARTICLE IV
CONDUCT PRIOR TO THE EFFECTIVE TIME
Section 4.1. Conduct of Business. During the period from the date of this
Agreement and continuing until the earlier of the termination of this Agreement
pursuant to its terms or the Effective Time, IPEC (which for the purposes of
this Article 4 shall include IPEC and each of its subsidiaries) and SpeedFam
(which for the purposes of this Article 4 shall include SpeedFam and each of its
subsidiaries) agree, except (i) in the case of any action or omission by IPEC to
the extent provided in Article 4 of the IPEC Schedules and in the case of any
action or omission by SpeedFam to the extent provided in Article 4 of the
SpeedFam Schedules, or (ii) to the extent that the other of them shall otherwise
consent in writing, to carry on its business diligently and in accordance with
good commercial practice and to carry on its business in the usual, regular and
ordinary course, in substantially the same manner as heretofore conducted and in
compliance with all applicable laws and regulations, to pay its debts and taxes
when due subject to good faith disputes over such debts or taxes, to pay or
perform other material obligations when due, and use its commercially reasonable
efforts consistent with past practices and policies to preserve intact its
present business organization, keep available the services of its present
officers and employees and preserve its relationships with customers, suppliers,
distributors, licensors, licensees, and others with which it has business
dealings. In addition, each of IPEC and SpeedFam will promptly notify the other
of any material event involving its business or operations. Furthermore, IPEC
and SpeedFam agree that during the period prior to the Effective Time, IPEC and
SpeedFam agree that they will exchange monthly summary financial data and that,
if the waiting period under the HSR Act has expired or terminated early, their
respective senior management groups will participate in planning meetings on a
weekly basis, at such time and place as shall be mutually agreeable. If the
waiting period under the HSR Act has not expired or been terminated early, then
such planning meetings shall occur on a frequency, cover subject matter, involve
participants, and allow for the exchange of information only to the extent that
SpeedFam's and IPEC's respective antitrust counsel agree that such actions can
reasonably be expected to occur without violation of the HSR Act. No information
or knowledge obtained in any investigation will affect or be deemed to modify
any representation or warranty contained herein or the conditions to the
obligations of the parties to consummate the Merger.
In addition, except as permitted by the terms of this Agreement or the
Stock Option Agreements, and except in the case of any action or omission by
IPEC to the extent provided in Article 4 of the IPEC Schedules, and except in
the case of any action or omission by SpeedFam to the extent provided in Article
4 of the SpeedFam Schedules, without the prior written consent of the President
and Chief Executive Officer of the other, neither IPEC nor
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SpeedFam shall do any of the following, and neither IPEC nor SpeedFam shall
permit its subsidiaries to do any of the following:
(a) Waive any stock repurchase rights, accelerate, amend or change
the period of exercisability of options or restricted stock, or reprice
options granted under any employee, consultant or director stock plans or
authorize cash payments in exchange for any options granted under any of
such plans;
(b) Grant any severance or termination pay to any officer or
employee except payments in amounts consistent with policies and past
practices or pursuant to written agreements outstanding, or policies
existing, on the date hereof and as previously disclosed in writing to the
other, or adopt any new severance plan;
(c) Transfer or license to any person or entity or otherwise extend,
amend or modify in any material respect any rights to the IPEC IP Rights
or the SpeedFam IP Rights, as the case may be, or enter into grants to
future patent rights, other than in the ordinary course of business;
(d) Declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any capital stock or
split, combine or reclassify any capital stock or issue or authorize the
issuance of any other securities in respect of, in lieu of or in
substitution for any capital stock, except for dividends payable to
holders of IPEC Preferred Stock in accordance with their terms;
(e) Repurchase or otherwise acquire, directly or indirectly, any
shares of capital stock except pursuant to rights of repurchase of any
such shares under any employee, consultant or director stock plan existing
on the date hereof;
(f) Issue, deliver, sell, authorize or propose the issuance,
delivery or sale of, any shares of capital stock or any securities
convertible into shares of capital stock, or subscriptions, rights,
warrants or options to acquire any shares of capital stock or any
securities convertible into shares of capital stock, or enter into other
agreements or commitments of any character obligating it to issue any such
shares or convertible securities, other than (i) the issuance of shares of
IPEC Regular Common Stock or SpeedFam Common Stock, as the case may be,
pursuant to the exercise of stock options therefor outstanding as of the
date of this Agreement (including those options granted pursuant to
McDaniel Agreement), (ii) options to purchase shares of IPEC Regular
Common Stock or SpeedFam Common Stock, as the case may be, to be granted
at fair market value in the ordinary course of business, consistent with
past practice and in accordance with stock option plans existing on the
date hereof, (iii) shares of IPEC Regular Common Stock or SpeedFam Common
Stock, as the case may be, issuable upon the exercise of the options
referred to in clause (ii), (iv) shares of IPEC Regular Common Stock or
SpeedFam Common Stock, as the case may be, issuable to participants in the
SpeedFam Employee Stock Purchase Plan or the IPEC Employee Stock Purchase
Plan consistent with past practice and the terms thereof, (v) shares of
IPEC Regular Common Stock or SpeedFam Common Stock, as the case may be,
issuable pursuant to the Stock Option Agreements, (vi) the issuance of
shares of
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IPEC Regular Common Stock upon conversion of the IPEC Class A Common
Stock, the IPEC Preferred Stock or the IPEC Convertible Notes, (vii) the
issuance of shares of IPEC Regular Common Stock upon exercise of IPEC
Warrants and UPO's outstanding as of the date of this Agreement, and
(viii) the issuance of shares of IPEC Series D Preferred Stock or IPEC
Regular Common Stock as may be expressly required and authorized under the
IPEC Rights Plan without further action by IPEC's Board of Directors;
(g) Cause, permit or propose any amendments to any charter document
or Bylaw (or similar governing instruments of any subsidiaries);
(h) Acquire or agree to acquire by merging or consolidating with, or
by purchasing any equity interest in or a material portion of the assets
of, or by any other manner, any business or any corporation, partnership
interest, association or other business organization or division thereof,
or otherwise acquire or agree to acquire any assets which are material,
individually or in the aggregate, to the business of IPEC or SpeedFam, as
the case may be, or enter into any material joint ventures, strategic
partnerships or alliances;
(i) Sell, lease, license, encumber or otherwise dispose of any
properties or assets which are material, individually or in the aggregate,
to the business of IPEC or SpeedFam, as the case may be, except in the
ordinary course of business consistent with past practice;
(j) Incur any indebtedness for borrowed money (other than ordinary
course trade payables or pursuant to existing credit facilities in the
ordinary course of business) or guarantee any such indebtedness or issue
or sell any debt securities or warrants or rights to acquire debt
securities of IPEC or SpeedFam, as the case may be, or guarantee any debt
securities of others;
(k) Adopt or amend any employee benefit or employee stock purchase
or employee option plan, or enter into any employment contract, pay any
special bonus or special remuneration to any director or employee, or
increase the salaries or wage rates of its officers or employees other
than in the ordinary course of business, consistent with past practice, or
change in any material respect any management policies or procedures;
(l) Pay, discharge or satisfy any claim, liability or obligation
(absolute, accrued, asserted or unasserted, contingent or otherwise),
other than the payment, discharge or satisfaction in the ordinary course
of business;
(m) Make any grant of exclusive rights to any third party;
(n) Take any action that would be reasonably likely to interfere
with SpeedFam's ability to account for the Merger as a pooling of
interests; or
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(o) Agree in writing or otherwise to take any of the actions
described in Article 4(a) through (n) above.
ARTICLE V
ADDITIONAL AGREEMENTS
Section 5.1. Proxy Statement/Prospectus; Registration Statement; Other
Filings; Board Recommendations. (a) As promptly as practicable after the
execution of this Agreement, IPEC and SpeedFam will prepare, and file with the
SEC, the Proxy Statement and SpeedFam will prepare and file with the SEC the
Registration Statement in which the Proxy Statement will be included as a
prospectus. Each of IPEC and SpeedFam will respond to any comments of the SEC,
will use its respective reasonable efforts to have the Registration Statement
declared effective under the Securities Act as promptly as practicable after
such filing and will cause the Proxy Statement to be mailed to its respective
shareholders or stockholders, as the case may be, at the earliest practicable
time. As promptly as practicable after the date of this Agreement, IPEC and
SpeedFam will prepare and file any other filings required under the Exchange
Act, the Securities Act or any other Federal, foreign or Blue Sky laws relating
to the Merger and the transactions contemplated by this Agreement (the "Other
Filings"). Each of IPEC and SpeedFam will notify the other promptly upon the
receipt of any comments from the SEC or its staff and of any request by the SEC
or its staff or any other government officials for amendments or supplements to
the Registration Statement, the Proxy Statement or any Other Filing or for
additional information and will supply the other with copies of all
correspondence between such party or any of its representatives, on the one
hand, and the SEC, or its staff or any other government officials, on the other
hand, with respect to the Registration Statement, the Proxy Statement, the
Merger or any Other Filing. The Proxy Statement, the Registration Statement and
the Other Filings will comply in all material respects with all applicable
requirements of law and the rules and regulations promulgated thereunder.
Whenever any event occurs which is required to be set forth in an amendment or
supplement to the Proxy Statement, the Registration Statement or any Other
Filing, IPEC or SpeedFam, as the case may be, will promptly inform the other of
such occurrence and cooperate in filing with the SEC or its staff or any other
government officials, and/or mailing to stockholders of IPEC or shareholders of
SpeedFam, such amendment or supplement.
(b) The Proxy Statement will include the recommendation of the Board of
Directors of IPEC in favor of adoption and approval of this Agreement and
approval of the Merger (except that the Board of Directors of IPEC may withdraw,
modify or refrain from making such recommendation to the extent that the Board
determines, in good faith, after consultation with outside legal counsel, that
compliance with the Board's fiduciary duties under applicable law would require
it to do so). In addition, the Proxy Statement will include the recommendations
of the Board of Directors of SpeedFam in favor of (x) the issuance of shares of
SpeedFam Common Stock by virtue of the Merger, (y) the amendment of SpeedFam's
Articles of Incorporation to change SpeedFam's corporate name, subject to and
conditional upon the effectiveness of the Merger, and (z) such other matters
relating to any stock option or similar plan necessary for compliance with
applicable laws and regulations and to preserve the benefits of such plans as
they exist prior to the Merger, to the
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extent required by Section 5.11 of this Agreement, subject to and conditional
upon the effectiveness of the merger (except that the Board of Directors of
SpeedFam may withdraw, modify or refrain from making such recommendations to the
extent that the Board determines, in good faith, after consultation with outside
legal counsel, that compliance with the Board's fiduciary duties under
applicable law would require it to do so).
Section 5.2. Meetings of IPEC Stockholders and SpeedFam Shareholders.
Promptly after the date hereof, IPEC will take all action necessary in
accordance with Delaware Law and its Certificate of Incorporation and Bylaws to
convene the IPEC Stockholders' Meeting to be held as promptly as practicable,
and in any event (to the extent permissible under applicable law) within 45 days
after the declaration of effectiveness of the Registration Statement, for the
purpose of voting upon this Agreement and the Merger. IPEC will consult with
SpeedFam and use its best efforts to hold the IPEC Stockholders' Meeting on the
same day as the SpeedFam Shareholders' Meeting. Promptly after the date hereof,
SpeedFam will take all action necessary in accordance with Illinois Law and its
Articles of Incorporation and Bylaws to convene the SpeedFam Shareholders'
Meeting to be held as promptly as practicable, and in any event (to the extent
permissible under applicable law) within 45 days after the declaration of
effectiveness of the Registration Statement, for the purpose of (i) voting upon
the issuance of shares of the SpeedFam Common Stock by virtue of the Merger,
(ii) amending its Articles of Incorporation to change its corporate name
(subject to and conditional upon the effectiveness of the Merger) and (iii) such
other matters relating to any stock option or similar plan necessary for
compliance with applicable laws and regulations and to preserve the benefits of
such plans as they exist prior to the Merger, to the extent required by Section
5.11 of this Agreement (subject to and conditional upon the effectiveness of the
Merger). SpeedFam will consult with IPEC and will use its best efforts to hold
the SpeedFam Shareholders' Meeting on the same day as the IPEC Stockholders'
Meeting. For so long as the Board of Directors of IPEC continues to make the
recommendation set forth in Section 5.1, IPEC will use its best efforts to
solicit from its stockholders proxies in favor of the adoption and approval of
this Agreement and the approval of the Merger and will take all other action
necessary or advisable to secure the vote or consent of its stockholders
required by the rules of the National Association of Securities Dealers, Inc. or
Delaware Law to obtain such approvals. For so long as the Board of Directors of
SpeedFam continues to make the recommendations set forth in Section 5.1,
SpeedFam will use its best efforts to solicit from its shareholders proxies in
favor of (i) the issuance of shares of SpeedFam Common Stock by virtue of the
Merger, (ii) the amendment of SpeedFam's Articles of Incorporation to change
SpeedFam's corporate name (subject to and conditional upon the effectiveness of
the Merger) and (iii) such other matters relating to any stock option or similar
plan necessary for compliance with applicable laws and regulations and to
preserve the benefits of such plans as they exist prior to the Merger, to the
extent required by Section 5.11 of this Agreement (subject to and conditional
upon the effectiveness of the Merger) and will take all other action necessary
or advisable to secure the vote or consent of its shareholders required by the
rules of the National Association of Securities Dealers, Inc. or Illinois Law to
obtain such approvals.
Section 5.3. Confidentiality. The parties acknowledge that IPEC and
SpeedFam have previously executed two Confidentiality Agreements, each dated
November 4, 1998 (the
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"Confidentiality Agreements"), which Confidentiality Agreements will continue in
full force and effect in accordance with their terms.
Section 5.4. No Solicitation.
(a) Restrictions on SpeedFam. (i) From and after the date of this
Agreement until the earlier of the Effective Time or termination of this
Agreement pursuant to its terms, SpeedFam, its subsidiaries and their respective
directors, officers, employees, representatives, investment bankers, agents and
affiliates shall not, directly or indirectly, (i) solicit or knowingly encourage
submission of, any proposals or offers by any person, entity or group (other
than IPEC and its affiliates, agents and representatives), or (ii) participate
in any discussions or negotiations with, or disclose any non-public information
concerning SpeedFam or any of its subsidiaries to, or afford any access to the
properties, books or records of SpeedFam or any of its subsidiaries to, or
otherwise assist or facilitate, or enter into any agreement or understanding
with, any person, entity or group (other than IPEC and its affiliates, agents
and representatives), in connection with any Acquisition Proposal with respect
to SpeedFam or any subsidiary of SpeedFam. For the purposes of this Agreement,
an "Acquisition Proposal" with respect to an entity means any proposal or offer
relating to (i) any merger, consolidation, sale of substantial assets or similar
transactions involving the entity or any subsidiaries of the entity (other than
sales of assets or inventory in the ordinary course of business or as permitted
under the terms of this Agreement), (ii) sale of (x) 15% or more of the
outstanding shares of capital stock of the entity or (y) shares of capital stock
of the entity with 15% or more of the voting power in the election of directors
(including without limitation by way of a tender offer or an exchange offer),
(iii) the acquisition by any person of beneficial ownership or a right to
acquire beneficial ownership of, or the formation of any "group" (as defined
under Section 13(d) of the Exchange Act and the rules and regulations
thereunder) which beneficially owns, or has the right to acquire beneficial
ownership of, (x) 15% or more of the then outstanding shares of capital stock of
the entity or (y) shares of capital stock of the entity with 15% or more of the
voting power in the election of directors (except for acquisitions for passive
investment purposes only in circumstances where the person or group qualifies
for and files a Schedule 13G with respect thereto); or (iv) any public
announcement of a proposal, plan or intention to do any of the foregoing or any
agreement to engage in any of the foregoing. SpeedFam will immediately cease any
and all existing activities, discussions or negotiations with any parties
conducted heretofore with respect to any of the foregoing. SpeedFam will (i)
notify IPEC as promptly as practicable if any inquiry or proposal is made or any
information or access is requested in connection with an Acquisition Proposal or
potential Acquisition Proposal and (ii) as promptly as practicable notify IPEC
of the significant terms and conditions of any such Acquisition Proposal. In
addition, subject to the other provisions of this Section 5.4(a), from and after
the date of this Agreement until the earlier of the Effective Time and
termination of this Agreement pursuant to its terms, SpeedFam and its
subsidiaries will not, and will instruct their respective directors, officers,
employees, representatives, investment bankers, agents and affiliates not to,
directly or indirectly, make or authorize any public statement, recommendation
or solicitation in support of any Acquisition Proposal made by any person,
entity or group (other than IPEC); provided, however, that nothing herein shall
prohibit SpeedFam's Board of Directors from taking and disclosing to SpeedFam's
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shareholders a position with respect to a tender offer pursuant to Rules 14d-9
and 14e-2 promulgated under the Exchange Act.
(ii) Notwithstanding the provisions of paragraph (a)(i) above, prior
to the Effective Time, SpeedFam may, to the extent the Board of Directors of
SpeedFam determines, in good faith, after consultation with outside legal
counsel, that the Board's fiduciary duties under applicable law require it to do
so, participate in discussions or negotiations with, and, subject to the
requirements of paragraph (a)(iii), below, furnish information to any person,
entity or group after such person, entity or group has delivered to SpeedFam in
writing, an unsolicited bona fide Acquisition Proposal which the Board of
Directors of SpeedFam in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable than the Merger to the shareholders of SpeedFam (a
"SpeedFam Superior Proposal"). In addition, notwithstanding the provisions of
paragraph (a)(i) above, in connection with a possible Acquisition Proposal,
SpeedFam may refer any third party to this Section 5.4(a) or make a copy of this
Section 5.4(a) available to a third party. In the event SpeedFam receives a
SpeedFam Superior Proposal, nothing contained in this Agreement (but subject to
the terms hereof) will prevent the Board of Directors of SpeedFam from
recommending such SpeedFam Superior Proposal to SpeedFam's shareholders or from
entering into a SpeedFam Qualifying Agreement, if the Board determines, in good
faith, after consultation with outside legal counsel, that such action is
required by its fiduciary duties under applicable law; in such case, the Board
of Directors of SpeedFam may withdraw, modify or refrain from making its
recommendations set forth in Section 5.1(b), and, to the extent it does so,
SpeedFam may refrain from soliciting proxies and taking such other action
necessary to secure the vote of its shareholders as may be required by Section
5.2; provided, however, that SpeedFam shall not recommend to its shareholders a
SpeedFam Superior Proposal for a period of not less than 48 hours after IPEC's
receipt of a copy of such SpeedFam Superior Proposal (or a description of the
significant terms and conditions thereof, if not in writing); and provided
further, that nothing contained in this Section shall limit SpeedFam's
obligation to hold and convene the SpeedFam Shareholders Meeting (regardless of
whether the recommendations of the Board of Directors of SpeedFam shall have
been withdrawn, modified or not yet made), although SpeedFam may concurrently
submit a SpeedFam Superior Proposal to SpeedFam shareholders for approval. The
term "SpeedFam Qualifying Agreement" means a merger, purchase, reorganization or
similar agreement for a SpeedFam Superior Proposal that (A) terminates
automatically upon receipt, if any, of SpeedFam shareholder approval of the
issuance of the SpeedFam Common Stock, the SpeedFam name change, and other
matters relating to any stock option or similar plans pursuant to this Agreement
(the "SpeedFam Shareholder Approval"), (B) provides that there shall be no
liability or obligation of SpeedFam upon or following termination thereof as a
result of the receipt by SpeedFam of SpeedFam Shareholder Approval, (C) does not
provide for the payment of any expenses of, or the transfer or issuance of any
assets or securities to, the party making the SpeedFam Superior Proposal (or any
affiliate of such party) except upon consummation of the SpeedFam Superior
Proposal and (D) does not require SpeedFam not to perform or comply with or take
any act inconsistent with any provision of this Agreement except (for clause
(D)) to the extent SpeedFam is specifically permitted under this Agreement to
act or omit to act in connection with a SpeedFam Superior Proposal.
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(iii) Notwithstanding anything to the contrary herein, SpeedFam will not
provide any non-public information to a third party unless: (x) SpeedFam
provides such non-public information pursuant to a nondisclosure agreement with
terms regarding the protection for confidential information and employees at
least as protective as such terms in the Confidentiality Agreements; and (y)
such non-public information is the same information previously delivered to
IPEC.
(b) Restrictions on IPEC. (i) From and after the date of this Agreement
until the earlier of the Effective Time or termination of this Agreement
pursuant to its terms, IPEC, its subsidiaries and their respective directors,
officers, employees, representatives, investment bankers, agents and affiliates
shall not, directly or indirectly, (i) solicit or knowingly encourage submission
of, any proposals or offers by any person, entity or group (other than SpeedFam
and its affiliates, agents and representatives), or (ii) participate in any
discussions or negotiations with, or disclose any non-public information
concerning IPEC or any of its subsidiaries to, or afford any access to the
properties, books or records of IPEC or any of its subsidiaries to, or otherwise
assist or facilitate, or enter into any agreement or understanding with, any
person, entity or group (other than SpeedFam and its affiliates, agents and
representatives), in connection with any Acquisition Proposal with respect to
IPEC or any subsidiary of IPEC. IPEC will immediately cease any and all existing
activities, discussions or negotiations with any parties conducted heretofore
with respect to any of the foregoing. IPEC will (i) notify SpeedFam as promptly
as practicable if any inquiry or proposal is made or any information or access
is requested in connection with an Acquisition Proposal or potential Acquisition
Proposal and (ii) as promptly as practicable notify SpeedFam of the significant
terms and conditions of any such Acquisition Proposal. In addition, subject to
the other provisions of this Section 5.4(b), from and after the date of this
Agreement until the earlier of the Effective Time and termination of this
Agreement pursuant to its terms, IPEC and its subsidiaries will not, and will
instruct their respective directors, officers, employees, representatives,
investment bankers, agents and affiliates not to, directly or indirectly, make
or authorize any public statement, recommendation or solicitation in support of
any Acquisition Proposal made by any person, entity or group (other than
SpeedFam); provided, however, that nothing herein shall prohibit IPEC's Board of
Directors from taking and disclosing to IPEC's shareholders a position with
respect to a tender offer pursuant to Rules 14d-9 and 14e-2 promulgated under
the Exchange Act.
(ii) Notwithstanding the provisions of paragraph (b)(i) above, prior
to the Effective Time, IPEC may, to the extent the Board of Directors of IPEC
determines, in good faith, after consultation with outside legal counsel, that
the Board's fiduciary duties under applicable law require it to do so,
participate in discussions or negotiations with, and, subject to the
requirements of paragraph (b)(iii), below, furnish information to any person,
entity or group after such person, entity or group has delivered to IPEC in
writing, an unsolicited bona fide Acquisition Proposal which the Board of
Directors of IPEC in its good faith reasonable judgment determines, after
consultation with its independent financial advisors, would result in a
transaction more favorable than the Merger to the stockholders of IPEC (a "IPEC
Superior Proposal"). In addition, notwithstanding the provisions of paragraph
(b)(i) above, in connection with a possible Acquisition Proposal, IPEC may refer
any third party to this Section 5.4(b) or make a copy of this Section 5.4(b)
available to a third party. In the event IPEC receives an IPEC Superior
Proposal, nothing contained in
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this Agreement (but subject to the terms hereof) will prevent the Board of
Directors of IPEC from recommending such IPEC Superior Proposal to its
stockholders or from entering into an IPEC Qualifying Agreement, if the Board
determines, in good faith, after consultation with outside legal counsel, that
such action is required by its fiduciary duties under applicable law; in such
case, the Board of Directors of IPEC may withdraw, modify or refrain from making
its recommendation set forth in Section 5.1(b), and, to the extent it does so,
IPEC may refrain from soliciting proxies and taking such other action necessary
to secure the vote of its stockholders as may be required by Section 5.2;
provided, however, that IPEC shall not recommend to its stockholders an IPEC
Superior Proposal for a period of not less than 48 hours after SpeedFam's
receipt of a copy of such IPEC Superior Proposal (or a description of the
significant terms and conditions thereof, if not in writing); and provided
further, that nothing contained in this Section shall limit IPEC's obligation to
hold and convene the IPEC Stockholders Meeting (regardless of whether the
recommendation of the Board of Directors of IPEC shall have been withdrawn,
modified or not yet made), although IPEC may concurrently submit an IPEC
Superior Proposal to IPEC stockholders for approval. The term "IPEC Qualifying
Agreement" means a merger, purchase, reorganization or similar agreement for an
IPEC Superior Proposal that (A) terminates automatically upon receipt, if any,
of IPEC stockholder approval of and adoption of this Agreement and the approval
of the Merger (the "IPEC Stockholder Approval"), (B) provides that there shall
be no liability or obligation of IPEC upon or following termination thereof as a
result of the receipt by IPEC of IPEC Stockholder Approval, (C) does not provide
for the payment of any expenses of, or the transfer or issuance of any assets or
securities to, the party making the IPEC Superior Proposal (or any affiliate of
such party) except upon consummation of the IPEC Superior Proposal, and (D) does
not require IPEC not to perform or comply with or take any act inconsistent with
any provision of this Agreement except (for clause (D)) to the extent IPEC is
specifically permitted under this Agreement to act or omit to act in connection
with an IPEC Superior Proposal.
(iii) Notwithstanding anything to the contrary herein, IPEC will not provide
any non-public information to a third party unless: (x) IPEC provides such
non-public information pursuant to a nondisclosure agreement with terms
regarding the protection for confidential information and employees at least as
protective as such terms in the Confidentiality Agreements; and (y) such
non-public information is the same information previously delivered to SpeedFam.
Section 5.5. Public Disclosure. SpeedFam and IPEC will consult with each
other before issuing any press release or otherwise making any public statement
with respect to the Merger, this Agreement or an Acquisition Proposal and will
not issue any such press release or make any such public statement prior to such
consultation, except as may be required by law or any listing agreement with a
national securities exchange or the Nasdaq National Market. If such law or
listing agreement requires disclosure prior to such consultation, the entity
issuing the press release or making the public statement will provide the press
release or the public statement in writing to the other with as much advance
notice as is practicable, and in any event at the same time as the press release
or public statement is distributed to the media.
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Section 5.6. Legal Requirements. Each of SpeedFam, Merger Sub and IPEC
will take all reasonable actions necessary or desirable to comply promptly with
all legal requirements which may be imposed on them with respect to the
consummation of the transactions contemplated by this Agreement (including
furnishing all information required in connection with approvals by or filings
with any Governmental Entity, and prompt resolution of any litigation prompted
hereby) and will promptly cooperate with and furnish information to any party
hereto necessary in connection with any such filings with or investigations by
any Governmental Entity, and any other such requirements imposed upon any of
them or their respective subsidiaries in connection with the consummation of the
transactions contemplated by this Agreement. SpeedFam will use its commercially
reasonable efforts to take such steps as may be necessary to comply with the
securities and blue sky laws of all jurisdictions which are applicable to the
issuance of SpeedFam Common Stock pursuant hereto. IPEC will use its
commercially reasonable efforts to assist SpeedFam as may be necessary to comply
with the securities and blue sky laws of all jurisdictions which are applicable
in connection with the issuance of SpeedFam Common Stock pursuant hereto.
Section 5.7. Third Party Consents. As soon as practicable following the
date hereof, SpeedFam and IPEC will each use its commercially reasonable efforts
to obtain all material consents, waivers and approvals under any of its or its
subsidiaries' agreements, contracts, licenses or leases required to be obtained
in connection with the consummation of the transactions contemplated hereby,
including, without limitation, any consents, waivers and approvals with respect
to the options, warrants and convertible securities to be assumed by SpeedFam
pursuant to Sections 1.6 and 5.11 hereof.
Section 5.8. FIRPTA. At or prior to the Closing, IPEC, if requested by
SpeedFam, shall deliver to the IRS a notice that the IPEC Common Stock and IPEC
Preferred Stock is not a "U.S. Real Property Interest" as defined and in
accordance with the requirements of Treasury Regulation Section 1.897-2(h)(2).
Section 5.9. Notification of Certain Matters. SpeedFam and Merger Sub will
give prompt notice to IPEC, and IPEC will give prompt notice to SpeedFam, of the
occurrence, or failure to occur, of any event, which occurrence or failure to
occur would be reasonably likely to cause (a) any representation or warranty
contained in this Agreement and made by it to be untrue or inaccurate in any
material respect at any time from the date of this Agreement to the Effective
Time such that the conditions set forth in Section 6.2(a) or 6.3(a), as the case
may be, would not be satisfied as a result thereof or (b) any material failure
of SpeedFam and Merger Sub or IPEC, as the case may be, or of any officer,
director, employee or agent thereof, to comply with or satisfy any covenant,
condition or agreement to be complied with or satisfied by it under this
Agreement. Notwithstanding the above, the delivery of any notice pursuant to
this section will not limit or otherwise affect the remedies available hereunder
to the party receiving such notice.
Section 5.10. Reasonable Efforts and Further Assurances. Subject to the
respective rights and obligations of SpeedFam and IPEC under this Agreement,
each of the parties to this Agreement will use its commercially reasonable
efforts to effectuate the Merger and the other transactions contemplated hereby
and to fulfill and cause to be fulfilled the conditions to closing under this
Agreement; provided that neither SpeedFam nor IPEC nor any
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subsidiary or affiliate thereof will be required to agree to any divestiture by
itself or any of its affiliates of shares of capital stock or of any business,
assets or property, or the imposition of any material limitation on the ability
of any of them to conduct their businesses or to own or exercise control of such
assets, properties and stock. Subject to the foregoing, each party hereto, at
the reasonable request of another party hereto, will execute and deliver such
other instruments and do and perform such other acts and things as may be
necessary or desirable for effecting completely the consummation of the
transactions contemplated hereby.
Section 5.11. Stock Options and Warrants. (a) At the Effective Time, each
outstanding option to purchase shares of IPEC Regular Common Stock (each an
"IPEC Stock Option") under the 1992 IPEC Stock Option Plan, whether or not
exercisable, will be assumed by SpeedFam and each option to purchase IPEC
Regular Common Stock (also an "IPEC Stock Option") granted pursuant to the
McDaniel Agreement which is vested as of the Effective Time shall be assumed by
SpeedFam. Each IPEC Stock Option so assumed by SpeedFam under this Agreement
will continue to have, and be subject to, the same terms and conditions set
forth in the 1992 IPEC Stock Option Plan or the McDaniel Agreement, as
applicable, immediately prior to the Effective Time (including, without
limitation, any repurchase rights), except that (i) each IPEC Stock Option will
be exercisable (or will become exercisable in accordance with its terms) for
that number of whole shares of SpeedFam Common Stock equal to the product of the
number of shares of IPEC Common Stock that were issuable upon exercise of such
IPEC Stock Option immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of SpeedFam
Common Stock, and (ii) the per share exercise price for the shares of SpeedFam
Common Stock issuable upon exercise of such assumed IPEC Stock Option will be
equal to the quotient determined by dividing the exercise price per share of
IPEC Common Stock at which such IPEC Stock Option was exercisable immediately
prior to the Effective Time by the Exchange Ratio, rounded up to the nearest
whole cent. After the Effective Time, SpeedFam will issue to each holder of an
outstanding IPEC Stock Option a notice describing the foregoing assumption of
such IPEC Stock Option by SpeedFam.
At the Effective Time, SpeedFam shall issue a new warrant to replace the
unexercised, issued and outstanding H & Q I Warrant which shall be exercisable
for the number of shares of SpeedFam Common Stock that equals the number of
shares of IPEC Regular Common Stock for which the H & Q I Warrant was
exercisable immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of SpeedFam Common
Stock. In addition, the H & Q I Warrant Exercise Price shall be adjusted at the
Effective Time in accordance with the terms of the H & Q I Warrant.
At the Effective Time, SpeedFam shall assume the unexercised, issued and
outstanding H & Q II Warrant which shall become exercisable for the number of
shares of SpeedFam Common Stock that equals the number of shares of IPEC Regular
Common Stock for which the H & Q II Warrant was exercisable immediately prior to
the Effective Time, adjusted in accordance with the terms of the H & Q II
Warrant. In addition, the H & Q II Exercise Price shall be adjusted at the
Effective Time in accordance with the terms of the H & Q II Warrant.
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At the Effective Time, each of the unexercised, issued and outstanding
Intel Warrants shall automatically by operation of law and their original terms,
and without necessity of any exchange or other action by the holder thereof,
become exercisable for the number of shares of SpeedFam Common Stock that equals
the number of shares of IPEC Regular Common Stock for which the Intel Warrants
were exercisable immediately prior to the Effective Time multiplied by the
Exchange Ratio, rounded down to the nearest whole number of shares of SpeedFam
Common Stock. In addition, the Intel Exercise Price shall be adjusted at the
effective Time in accordance with the terms of the Intel Warrant.
At the Effective Time, SpeedFam shall assume the unexercised, issued and
outstanding Fletcher Warrant which shall become exercisable for the number of
shares of SpeedFam Common Stock that equals the number of shares of IPEC Regular
Common Stock for which the Fletcher Warrant was exercisable immediately prior to
the Effective Time, adjusted in accordance with the terms of the Fletcher
Warrant. In addition, the Fletcher Exercise Price shall be adjusted at the
Effective Time in accordance with the terms of the Fletcher Warrant.
At the Effective Time, each of the unexercised, issued and outstanding
UPO's shall automatically by operation of law and their original terms, and
without necessity of any exchange or other action by the holder thereof, become
exercisable for the number of shares of SpeedFam Common Stock that equals the
number of shares of IPEC Regular Common Stock for which the UPO's were
exercisable immediately prior to the Effective Time multiplied by the Exchange
Ratio, rounded down to the nearest whole number of shares of SpeedFam Common
Stock, plus warrants for the number of shares of SpeedFam Common Stock that
equals the number of shares of IPEC Regular Common Stock for which the warrants
under the UPO's were exercisable immediately prior to the Effective Time
multiplied by the Exchange Ratio, rounded down to the nearest whole number of
shares of SpeedFam Common Stock (the "UPO Warrant"). In addition, the UPO
Exercise Price shall be adjusted at the Effective Time in accordance with the
terms of the UPO's, and the UPO Warrant Exercise Price shall be adjusted at the
Effective Time in accordance with the terms of the UPO Warrant.
At the Effective Time, each of the issued and outstanding IPEC Convertible
Notes shall remain outstanding thereafter as an obligation of IPEC, as
applicable, and from and after the Effective Time, the holders of the IPEC
Convertible Notes shall have the right to convert such IPEC Convertible Notes
into the number of shares of SpeedFam Common Stock receivable in the Merger by a
holder of the number of shares of IPEC Regular Common Stock into which the IPEC
Convertible Notes could have been converted immediately prior to the Merger.
IPEC shall comply with all notice requirements arising as a consequence of this
Agreement and the transactions contemplated hereby under that certain Indenture,
dated as of September 15, 1997 (the "Indenture"), between IPEC and State Street
Bank and Trust Company of California, N.A., as trustee thereunder (the
"Trustee") pursuant to which the IPEC Convertible Notes are issued and
outstanding. At the Effective Time, IPEC and SpeedFam shall execute and deliver
to the Trustee a supplemental indenture pursuant to, and satisfying the
requirements of, Section 3.5(e), 11.1 and 15.6 of the Indenture, which
supplemental shall be in form and substance reasonably satisfactory to SpeedFam
and the Trustee and shall provide, among other things, that SpeedFam shall
either
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assume, or be a guarantor of, IPEC's obligations under the Indenture (the
"Note Guarantee"). IPEC and SpeedFam shall use reasonable efforts to obtain the
consent of Noteholders required under the September 15, 1997 Registration Rights
Agreement relating to the Notes ("Notes Registration Rights Agreements") to
delete clause (B) from the definition of "Registrable Securities." Obtaining
this consent is not a condition to closing.
(b) IPEC Stock Options assumed by SpeedFam shall qualify following the
Effective Time as incentive stock options as defined in Section 422 of the Code
to the extent IPEC Stock Options qualified as incentive stock options
immediately prior to the Effective Time.
(c) The Board of Directors of IPEC will take all actions necessary,
including the making of any required announcement in a timely manner, to set the
New Purchase Date under the IPEC Employee Stock Purchase Plan and to terminate
such Plan immediately following the purchase of shares of IPEC Regular Common
Stock on the New Purchase Date. SpeedFam shall take all actions necessary to
enable employees of IPEC as of the Effective Time to participate in SpeedFam's
Employee Stock Purchase Plan commencing on the first enrollment date following
the Effective Time, giving credit for employment by IPEC for purposes of the
eligibility provisions of SpeedFam's Employee Stock Purchase Plan.
(d) SpeedFam will reserve sufficient shares of SpeedFam Common Stock for
issuance under Sections 5.11(a) and under Section 1.6(c), (e) and (i) hereof.
Section 5.12. Registration Statements. SpeedFam agrees to file a
registration statement on Form S-8 for (i) the shares of SpeedFam Common Stock
issuable with respect to the assumed 1992 IPEC Stock Options and (ii) the shares
of SpeedFam Common Stock issuable with respect to the assumed McDaniel Agreement
no later than two (2) business days after the Closing Date. SpeedFam agrees to
assume, as of the Effective Time, IPEC's obligations under the registration
rights agreements applicable to, and to file a registration statement on Form
S-3 for, the shares of SpeedFam Common Stock issuable with respect to the Intel
Warrants, the Fletcher Warrant and the UPO's no later than two (2) business days
after the Closing Date. SpeedFam further agrees to assume, as of the Effective
Time, IPEC's obligations under the registration rights agreement applicable to,
and to file a registration statement on Form S-3 for, the shares of SpeedFam
Common Stock issuable on conversion of the IPEC Convertible Notes no later than
thirty (30) business days after the Closing Date.
Section 5.13. Indemnification and Insurance. (a) From and after the
Effective Time, SpeedFam will cause the Surviving Corporation to fulfill and
honor in all respects the obligations of IPEC pursuant to any indemnification
agreements between IPEC and its directors and officers existing prior to the
date hereof. The Certificate of Incorporation and By-laws of the Surviving
Corporation will contain the provisions with respect to indemnification set
forth in the Certificate of Incorporation and By-laws of IPEC, which provisions
will not be amended, repealed or otherwise modified for a period of three years
from the Effective Time in any manner that would adversely affect the rights
thereunder of individuals who, immediately prior to the Effective Time, were
directors, officers, employees or agents of IPEC, unless such modification is
required by law. This
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Section 5.13(a) will survive the consummation of the Merger at the Effective
Time, is intended to benefit IPEC, the Surviving Corporation and the present
officers and directors of IPEC, and will be binding on all successors and
assigns of the Surviving Corporation.
(b) Notwithstanding Article IV hereof, IPEC may purchase a policy of
directors' and officers' liability insurance, to be effective for a period not
to exceed three years from the Effective Time, covering those persons who are
currently covered by IPEC's directors' and officers' liability insurance policy
but only to the extent and on terms comparable to those applicable to IPEC's
current policy; provided, however, that in no event may IPEC expend in excess of
150% of the annual premium currently paid by IPEC for such coverage for each
such year of coverage.
Section 5.14. NMS Listing. SpeedFam agrees to authorize for listing on the
Nasdaq National Market the shares of SpeedFam Common Stock issuable, and those
required to be reserved for issuance, in connection with the Merger, upon
official notice of issuance.
Section 5.15. SpeedFam Affiliate Agreement. Set forth on the SpeedFam
Schedules is a list of those persons who may be deemed to be, in SpeedFam's
reasonable judgment, affiliates of SpeedFam within the meaning of Rule 145
promulgated under the Securities Act (each a "SpeedFam Affiliate"). SpeedFam
will provide IPEC with such information and documents as IPEC reasonably
requests for purposes of reviewing such list. SpeedFam will use its reasonable
efforts to deliver or cause to be delivered to IPEC, as promptly as practicable
on or following the date hereof, from each SpeedFam Affiliate an executed
affiliate agreement in substantially the form attached hereto as Exhibit F, each
of which will be in full force and effect as of the Effective Time.
Section 5.16. IPEC Affiliate Agreement. Set forth on the IPEC Schedules is
a list of those persons who may be deemed to be, in IPEC's reasonable judgment,
affiliates of IPEC within the meaning of Rule 145 promulgated under the
Securities Act (each a "IPEC Affiliate"). IPEC will provide SpeedFam with such
information and documents as SpeedFam reasonably requests for purposes of
reviewing such list. IPEC will use its reasonable efforts to deliver or cause to
be delivered to SpeedFam, as promptly as practicable on or following the date
hereof, from each IPEC Affiliate an executed affiliate agreement in
substantially the form attached hereto as Exhibit G (the "IPEC Affiliate
Agreement"), each of which will be in full force and effect as of the Effective
Time. SpeedFam will be entitled to place appropriate legends on the certificates
evidencing any SpeedFam Common Stock to be received by an IPEC Affiliate
pursuant to the terms of this Agreement, and to issue appropriate stop transfer
instructions to the transfer agent for the SpeedFam Common Stock, consistent
with the terms of the IPEC Affiliate Agreement.
Section 5.17. Regulatory Filings; Reasonable Efforts. As soon as may be
reasonably practicable, IPEC and SpeedFam each shall file with the United States
Federal Trade Commission (the "FTC") and the Antitrust Division of the United
States Department of Justice ("DOJ") Notification and Report Forms relating to
the transactions contemplated herein as required by the HSR Act, as well as
comparable pre-merger notification forms required by the merger notification or
control laws and regulations of any applicable jurisdiction, as agreed to by the
parties. IPEC and SpeedFam each shall promptly (a) supply
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the other with any information which may be required in order to effectuate such
filings and (b) supply any additional information which reasonably may be
required by the FTC, the DOJ or the competition or merger control authorities of
any other jurisdiction and which the parties may reasonably deem appropriate.
Section 5.18. Board of Directors of SpeedFam. The Board of Directors of
SpeedFam will take all actions necessary to cause the Board of Directors of
SpeedFam, immediately after the Effective Time, to consist of nine persons, five
of whom shall have served on the Board of Directors of SpeedFam immediately
prior to the Effective Time (two of whom shall be independent of the management
of SpeedFam), and four of whom shall have served on the Board of Directors of
IPEC immediately prior to the Effective Time (three of whom shall be independent
of the management of IPEC). Mr. Roger D. McDaniel, the current chief executive
officer of IPEC, shall be considered independent of the management of IPEC for
these purposes. If, prior to the Effective Time, any of the IPEC or SpeedFam
designees shall decline or be unable to serve as an IPEC or SpeedFam director,
IPEC (if such person was designated by IPEC) or SpeedFam (if such person was
designated by SpeedFam) shall designate another person to serve in such person's
stead, which person shall be reasonably acceptable to the other party.
Section 5.19. Officers of SpeedFam; Transition Team. At the Effective
Time, James N. Farley and Sanjeev Chitre will become the Co-Chairmen of the
Board of SpeedFam, Makoto Kouzuma will retain his position as Vice Chairman of
SpeedFam, Richard J. Faubert will retain his position as the President and Chief
Executive Officer of SpeedFam and Roger K. Marach will retain his position as
Chief Financial Officer of SpeedFam. At the Effective Time, a transition team
("Transition Team") consisting of Messrs. Richard J. Faubert (Team Chairman, who
shall be the leader of the Transition Team), Makoto Kouzuma, Sanjeev Chitre and
Roger D. McDaniel will be established to address issues that may arise in
connection with the integration of SpeedFam and IPEC. The Transition Team shall
remain in place until the earlier of one (1) year from the Effective Time or
such time as the Board of Directors of SpeedFam (including the affirmative vote
of at least 2 of the SpeedFam directors who served on the IPEC Board of
Directors immediately prior to the Effective Time), determines the Transition
Team is no longer necessary. In addition, at the Effective Time, the following
persons will be appointed to the following positions: Ralph Hartung as President
and Chief Operating Officer of the CMP Division. The Board of Directors of
SpeedFam will take all actions necessary to effectuate the provisions of this
Section 5.19.
Section 5.20. Change of Name. Subject to the terms hereof, at the SpeedFam
Shareholders' Meeting SpeedFam shall propose and recommend that its Articles of
Incorporation be amended at the Effective Time to change its name to
"SpeedFam-IPEC, Inc."
Section 5.21. IPEC Rights Plan. The Board of Directors of IPEC shall take
all further action (in addition to that referred to in Section 2.23) reasonably
requested in writing by SpeedFam in order to render the IPEC Rights Plan
inapplicable to the Merger and the other transactions contemplated by this
Agreement and the Stock Option Agreements. Except as provided above with respect
to the Merger and the other transactions contemplated by this Agreement and the
Stock Option Agreements, the Board of Directors
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of IPEC shall not, without the consent of SpeedFam (a) amend the IPEC Rights
Plan or (b) take any action with respect to, or make any determination under,
the IPEC Rights Plan, including a redemption of the IPEC Rights or any action to
facilitate an Acquisition Proposal, except for any action which the Board of
Directors decides to take with respect to the IPEC Rights Plan in connection
with an IPEC Superior Proposal which the IPEC Board of Directors recommends that
IPEC stockholders approve; provided, however, that in no event may the IPEC
Board of Directors amend the IPEC Rights Plan Amendment.
Section 5.22. Director Designation Provision. The Board of Directors of
IPEC shall take all action reasonably requested by SpeedFam to terminate the
Stockholders' Agreement, dated August 31, 1993, among IPEC, Harold C. Baldauf
and Janet A. Baldauf (the "Stockholders' Agreement").
Section 5.23. Notice of Demand for Appraisal. IPEC shall give SpeedFam (i)
prompt notice of any written demands for appraisal of any shares of IPEC Class A
Common Stock or IPEC Preferred Stock, withdrawals of such demands, and any other
instruments served pursuant to Delaware Law and received by IPEC which relate to
any such demand for appraisal and (ii) the opportunity to participate in all
negotiations and proceedings which take place prior to the Effective Time with
respect to demands for appraisal under Delaware Law. IPEC shall not, except with
the prior written consent of SpeedFam or as may be required by applicable law,
voluntarily make any payment with respect to any demands for appraisal of IPEC
Class A Common Stock or IPEC Preferred Stock or offer to settle or settle any
such demands. Any payments made in respect of dissenting shares shall be made by
IPEC or the Surviving Corporation as the case may be.
ARTICLE VI
CONDITIONS TO THE MERGER
Section 6.1. Conditions to Obligations of Each Party to Effect the Merger.
The respective obligations of each party to this Agreement to effect the Merger
shall be subject to the satisfaction at or prior to the Effective Time of the
following conditions:
(a) Shareholder and Stockholder Approval. This Agreement shall have
been approved and adopted, and the Merger shall have been duly approved,
by the requisite vote under applicable law, by the stockholders of IPEC;
as well as the issuance of the SpeedFam Common Stock, the SpeedFam name
change, and other matters relating to any stock option or similar plan
shall have been duly approved by the requisite vote under applicable law
and the rules of the National Association of Securities Dealers, Inc. by
the shareholders of SpeedFam.
(b) Registration Statement Effective; Proxy Statement. The SEC shall
have declared the Registration Statement effective. No stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose, and no
similar proceeding in respect of the Proxy Statement, shall have been
initiated or threatened in writing by the SEC.
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(c) No Order; HSR Act. No Governmental Entity shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
executive order, decree, injunction or other order (whether temporary,
preliminary or permanent) which is in effect and which has the effect of
making the Merger illegal or otherwise prohibiting consummation of the
Merger. All waiting periods under the HSR Act relating to the transactions
contemplated hereby will have expired or terminated early.
(d) Tax Opinions. SpeedFam and IPEC shall each have received written
opinions from their respective counsel, Chapman and Cutler and Wilson
Sonsini Goodrich & Rosati, Professional Corporation, to the effect that
the Merger will constitute a reorganization within the meaning of Section
368(a) of the Code; provided, however, that if the counsel to either
SpeedFam or IPEC does not render such opinion, this condition shall
nonetheless be deemed to be satisfied with respect to such party if
counsel to the other party renders such opinion to such party. The parties
to this Agreement agree to make reasonable representations as requested by
such counsel for the purpose of rendering such opinions.
(e) Nasdaq Listing. The shares of SpeedFam Common Stock issuable to
stockholders of IPEC pursuant to this Agreement and such other shares
required to be reserved for issuance in connection with the Merger shall
have been authorized for listing on the Nasdaq National Market upon
official notice of issuance.
(f) Opinion of Accountants. Each of SpeedFam and IPEC shall have
received a letter from KPMG Peat Marwick, LLP, dated within two (2)
business days prior to the Effective Time, regarding that firm's
concurrence with SpeedFam's managements' and IPEC's managements'
conclusions as to the appropriateness of pooling of interest accounting
for the Merger under Accounting Principles Board Opinion No. 16, if the
Merger is consummated in accordance with this Agreement.
Section 6.2. Additional Conditions to Obligations of IPEC. The obligation
of IPEC to consummate and effect the Merger shall be subject to the satisfaction
at or prior to the Effective Time of each of the following conditions, any of
which may be waived, in writing, exclusively by IPEC:
(a) Representations and Warranties. The representations and
warranties of SpeedFam and Merger Sub contained in this Agreement shall
have been true and correct in all material respects as of the date of this
Agreement. In addition, the representations and warranties of SpeedFam and
Merger Sub contained in this Agreement shall be true and correct in all
material respects on and as of the Effective Time except for changes
contemplated by this Agreement, with the same force and effect as if made
on and as of the Effective Time, except in such cases (other than the
representations in Sections 3.2 and 3.3) where the failure to be so true
and correct would not have a Material Adverse Effect on SpeedFam. IPEC
shall have received a certificate with respect to the foregoing signed on
behalf of SpeedFam by the Chief Executive Officer and the Chief Financial
Officer of SpeedFam;
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(b) Agreements and Covenants. SpeedFam and Merger Sub shall have
performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by
them on or prior to the Effective Time, and IPEC shall have received a
certificate to such effect signed on behalf of SpeedFam by the Chief
Executive Officer and the Chief Financial Officer of SpeedFam;
(c) Opinion of SpeedFam's Counsel. IPEC shall have received the
opinion of Chapman and Cutler, counsel to SpeedFam, dated the day of the
Closing, addressed to IPEC and substantially to the effect set forth in
Exhibit H attached hereto and hereby made a part hereof; and
(d) Material Adverse Effect. No Material Adverse Effect with respect
to SpeedFam shall have occurred since the date of this Agreement.
Section 6.3. Additional Conditions to the Obligations of SpeedFam and
Merger Sub. The obligations of SpeedFam and Merger Sub to consummate and effect
the Merger shall be subject to the satisfaction at or prior to the Effective
Time of each of the following conditions, any of which may be waived, in
writing, exclusively by SpeedFam:
(a) Representations and Warranties. The representations and
warranties of IPEC contained in this Agreement shall have been true and
correct in all material respects as of the date of this Agreement. In
addition, the representations and warranties of IPEC contained in this
Agreement shall be true and correct in all material respects on and as of
the Effective Time except for changes contemplated by this Agreement, with
the same force and effect as if made on and as of the Effective Time,
except in such cases (other than the representations in Sections 2.2 and
2.3) where the failure to be so true and correct would not have a Material
Adverse Effect on IPEC. SpeedFam shall have received a certificate with
respect to the foregoing signed on behalf of IPEC by the President and the
Chief Financial Officer of IPEC;
(b) Agreements and Covenants. IPEC shall have performed or complied
in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the
Effective Time, and SpeedFam shall have received a certificate to such
effect signed on behalf of IPEC by the President and the Chief Financial
Officer of IPEC;
(c) Opinion of IPEC's Counsel. SpeedFam shall have received the
opinion of Wilson Sonsini Goodrich & Rosati, counsel to IPEC, dated the
day of the Closing, addressed to SpeedFam and substantially to the effect
set forth in Exhibit I attached hereto and hereby made a part hereof;
(d) Material Adverse Effect. No Material Adverse Effect with respect
to IPEC shall have occurred since the date of this Agreement;
(e) No Distribution Date under the IPEC Rights Plan. No Distribution
Date shall have occurred under the IPEC Rights Plan;
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(f) Termination of Contract. The Stockholders' Agreement shall have
been terminated;
(g) Appraisal Rights. Written objections to the Merger shall not
have been made by the holders of the IPEC Preferred Stock or the IPEC
Class A Common Stock in an amount which, in the aggregate, would, if
converted pursuant to Section 1.6 hereof, represent more than 500,000
shares of SpeedFam Common Stock; and
(h) Certain Third Party Consents. All necessary consents, waivers
and approvals with respect to the assumption of the options, warrants and
convertible securities to be assumed by SpeedFam pursuant to Section 1.6
and Section 5.11 hereof shall have been obtained in form and substance
reasonably satisfactory to SpeedFam.
ARTICLE VII
TERMINATION, AMENDMENT AND WAIVER
Section 7.1. Termination. This Agreement may be terminated at any time
prior to the Effective Time of the Merger, whether before or after approval of
the Merger by the stockholders of IPEC or the approval of the issuance of the
SpeedFam Common Stock in connection with the Merger by the shareholders of
SpeedFam:
(a) by mutual written consent duly authorized by the Boards of
Directors of SpeedFam and IPEC;
(b) by either IPEC or SpeedFam if the Merger shall not have been
consummated by May 31, 1999; provided, however, that the right to
terminate this Agreement under this Section 7.1(b) shall not be available
to any party whose action or failure to act has been a principal cause of
or resulted in the failure of the Merger to occur on or before such date
and such action or failure to act constitutes a breach of this Agreement;
(c) by either IPEC or SpeedFam if a Governmental Entity shall have
issued an order, decree or ruling or taken any other action (an "Order"),
in any case having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger, which order, decree or ruling is final
and nonappealable;
(d) by either IPEC or SpeedFam if the required approvals of the
stockholders of IPEC or the shareholders of SpeedFam contemplated by this
Agreement shall not have been obtained by reason of the failure to obtain
the required vote upon a vote taken at a meeting of stockholders or
shareholders, as the case may be, duly convened therefor or at any
adjournment thereof (provided that the right to terminate this Agreement
under this Section 7.1(d) shall not be available to any party where the
failure to obtain stockholder or shareholder approval of such party shall
have been caused by the action or failure to act of such party in breach
of this Agreement);
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(e) by SpeedFam, if the Board of Directors of IPEC recommends an
IPEC Superior Proposal to the stockholders of IPEC, or if the Board of
Directors of IPEC shall have withheld, withdrawn or modified in a manner
adverse to SpeedFam its recommendation in favor of adoption and approval
of this Agreement and approval of the Merger;
(f) by IPEC, if the Board of Directors of SpeedFam recommends a
SpeedFam Superior Proposal to the shareholders of SpeedFam, or if the
Board of Directors of SpeedFam shall have withheld, withdrawn or modified
in a manner adverse to IPEC its recommendation in favor of approving the
issuance of the shares of SpeedFam Common Stock by virtue of the Merger;
(g) by IPEC, upon a breach of any representation, warranty, covenant
or agreement on the part of SpeedFam set forth in this Agreement, or if
any representation or warranty of SpeedFam shall have become untrue, in
either case such that the conditions set forth in Section 6.2(a) or
Section 6.2(b) would not be satisfied as of the time of such breach or as
of the time such representation or warranty shall have become untrue,
provided that if such inaccuracy in SpeedFam's representations and
warranties or breach by SpeedFam is curable by SpeedFam through the
exercise of its commercially reasonable efforts, then IPEC may not
terminate this Agreement under this Section 7.1(g) provided SpeedFam
continues to exercise such commercially reasonable efforts to cure such
breach; or
(h) by SpeedFam, upon a breach of any representation, warranty,
covenant or agreement on the part of IPEC set forth in this Agreement, or
if any representation or warranty of IPEC shall have become untrue, in
either case such that the conditions set forth in Section 6.3(a) or
Section 6.3(b) would not be satisfied as of the time of such breach or as
of the time such representation or warranty shall have become untrue,
provided, that if such inaccuracy in IPEC's representations and warranties
or breach by IPEC is curable by IPEC through the exercise of its
commercially reasonable efforts, then SpeedFam may not terminate this
Agreement under this Section 7.1(h) provided IPEC continues to exercise
such commercially reasonable efforts to cure such breach.
Section 7.2. Notice of Termination; Effect of Termination. Any termination
of this Agreement under Section 7.1 above will be effective immediately upon the
delivery of written notice of the terminating party to the other parties hereto.
In the event of the termination of this Agreement as provided in Section 7.1,
this Agreement shall be of no further force or effect, except (i) as set forth
in this Section 7.2, Section 7.3 and Article 8 (miscellaneous), each of which
shall survive the termination of this Agreement, and (ii) nothing herein shall
relieve any party from liability for any breach of this Agreement. No
termination of this Agreement shall affect the obligations of the parties
contained in the Confidentiality Agreements or the Stock Option Agreements, all
of which obligations shall survive termination of this Agreement in accordance
with their terms.
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Section 7.3. Fees and Expenses.
(a) General. Except as set forth in this Section 7.3, all fees and
expenses incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring such expenses whether
or not the Merger is consummated; provided, however, that SpeedFam and IPEC
shall share equally all fees and expenses, other than attorneys' and accountants
fees and expenses, incurred in relation to the printing and filing of the Proxy
Statement (including any preliminary materials related thereto) and the
Registration Statement (including financial statements and exhibits) and any
amendments or supplements thereto.
(b) IPEC Payments. (i) If (x) the Board of Directors of IPEC shall have
withheld, withdrawn or modified in a manner adverse to SpeedFam its
recommendation in favor of adoption and approval of this Agreement and approval
of the Merger and at that time there shall not have occurred a Material Adverse
Effect on SpeedFam, or (y) the Board of Directors of IPEC recommends an IPEC
Superior Proposal to the stockholders of IPEC, IPEC shall pay to SpeedFam an
amount equal to $6,000,000 within one business day following the earlier to
occur of (A) termination of this Agreement pursuant to Section 7.1(e) hereof or
(B) an IPEC Negative Vote (as defined below); and
(ii) If no payment shall be required pursuant to clause 7.3(b)(i) above,
and if (x) the vote of the stockholders of IPEC approving and adopting this
Agreement and approving the Merger shall not have been obtained by reason of the
failure to obtain the required vote upon a vote taken at a meeting of
stockholders duly convened therefor or at any adjournment thereof (a "IPEC
Negative Vote") and (y) prior to such IPEC Negative Vote there shall have
occurred an Acquisition Proposal with respect to IPEC which shall have been
publicly disclosed and not withdrawn (a "IPEC Competing Proposal") and (z)
within 12 months following such IPEC Negative Vote IPEC shall enter into a
definitive agreement with respect to an Acquisition Proposal with the party (or
any affiliate of the party) that made the IPEC Competing Proposal or an
Acquisition Proposal with such party (or any such affiliate) shall have been
consummated, then, provided that there shall have not occurred a Material
Adverse Effect on SpeedFam prior to the IPEC Negative Vote, IPEC shall pay to
SpeedFam an amount equal to $6,000,000 within one business day following demand
therefor.
(c) SpeedFam Payments. (i) If (x) the Board of Directors of SpeedFam shall
have withheld, withdrawn or modified in a manner adverse to IPEC its
recommendation in favor of approving the issuance of the shares of SpeedFam
Common Stock by virtue of the Merger and at that time there shall not have
occurred a Material Adverse Effect on IPEC, or (y) the Board of Directors of
SpeedFam recommends a SpeedFam Superior Proposal to the shareholders of
SpeedFam, SpeedFam shall pay to IPEC an amount equal to $6,000,000 within one
business day following the earlier to occur of (A) termination of this Agreement
pursuant to Section 7.1(f) hereof or (B) a SpeedFam Negative Vote (as defined
below); and
(ii) If no payment shall be required pursuant to clause 7.3(c)(i) above,
and if (x) the vote of the shareholders of SpeedFam to permit the issuance of
shares of SpeedFam Common Stock by virtue of the Merger, shall not have been
obtained by reason of the failure to obtain the required vote upon a vote taken
at a meeting of shareholders duly
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convened therefor or at any adjournment thereof (a "SpeedFam Negative Vote") and
(y) prior to such SpeedFam Negative Vote there shall have occurred an
Acquisition Proposal with respect to SpeedFam which shall have been publicly
disclosed and not withdrawn (a "SpeedFam Competing Proposal") and (z) within 12
months following such SpeedFam Negative Vote SpeedFam shall enter into a
definitive agreement with respect to an Acquisition Proposal with the party (or
any affiliate of the party) that made the SpeedFam Competing Proposal or an
Acquisition Proposal with such party (or any such affiliate) shall have been
consummated, then, provided that there shall not have occurred a Material
Adverse Effect on IPEC prior to the SpeedFam Negative Vote, SpeedFam shall pay
to IPEC an amount equal to $6,000,000 within one business day following demand
therefor.
(d) Payment of the fees described in Section 7.3(b) and (c) above shall
not be in lieu of damages incurred in the event of breach of this Agreement.
Section 7.4. Amendment. Subject to applicable law, this Agreement may be
amended by the parties hereto at any time by execution of an instrument in
writing signed on behalf of each of the parties hereto.
Section 7.5. Extension; Waiver. At any time prior to the Effective Time
any party hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
Section 8.1. Non-Survival of Representations and Warranties. The
representations and warranties of IPEC, SpeedFam and Merger Sub contained in
this Agreement shall terminate at the Effective Time, and only the covenants
that by their terms survive the Effective Time shall survive the Effective Time.
Section 8.2. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to SpeedFam or SpeedFam International, Inc.
Merger Sub, to: 305 N. 54th Street
Chandler, Arizona 85226-2416
Attention: President and Chief
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<PAGE> 61
Executive Officer
Telephone No.: (602) 705-2100
Telecopy No.: (602) 705-2122
with a copy to: Chapman and Cutler
111 W. Monroe Street
Chicago, Illinois 60603
Attention: Jonathan A. Koff
Telephone No.: (312) 845-3000
Telecopy No.: (312) 701-2361
(b) if to IPEC, to: Integrated Process Equipment Corp.
4717 East Hilton Avenue
Phoenix, Arizona 85034
Attention: President and Chief
Executive Officer
Telephone No.: (602) 517-7200
Telecopy No.: (602) 517-6016
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis Currie
Telephone No.: (650) 493-9300
Telecopy No.: (650) 845-5000
Section 8.3. Interpretation; Knowledge. (a) When a reference is made in
this Agreement to Exhibits, such reference shall be to an Exhibit to this
Agreement unless otherwise indicated. The words "Include," "Includes" and
"Including" when used herein shall be deemed in each case to be followed by the
words "without limitation." The table of contents and headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement. When reference is made herein to
"The Business of" an entity, such reference shall be deemed to include the
business of all direct and indirect subsidiaries of such entity. Reference to
the subsidiaries of an entity shall be deemed to include all direct and indirect
subsidiaries of such entity. As used herein, "subsidiary" shall include only
majority-owned subsidiaries as such term is defined in Rule 1-02 of Regulation
S-X.
(b) For purposes of this Agreement, the term "Knowledge" means, with
respect to any matter in question, that any of the Chairman, Chief Executive
Officer, Chief Operating Officer, if applicable, Chief Financial Officer or
Controller of IPEC or SpeedFam, as the case may be, have actual knowledge of
such matter.
Section 8.4. Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and
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delivered to the other party, it being understood that all parties need not sign
the same counterpart.
Section 8.5. Entire Agreement; Third Party Beneficiaries. This Agreement
and the documents and instruments and other agreements among the parties hereto
as contemplated by or referred to herein, including the IPEC Schedules and the
SpeedFam Schedules (a) constitute the entire agreement among the parties with
respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreements
shall continue in full force and effect until the Closing and shall survive any
termination of this Agreement; and (b) are not intended to confer upon any other
person any rights or remedies hereunder, except with respect to the matters set
forth in Section 5.13.
Section 8.6. Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
Section 8.7. Other Remedies; Specific Performance. Except as otherwise
provided herein, any and all remedies herein expressly conferred upon a party
will be deemed cumulative with and not exclusive of any other remedy conferred
hereby, or by law or equity upon such party, and the exercise by a party of any
one remedy will not preclude the exercise of any other remedy. The parties
hereto agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to an injunction or injunctions to prevent breaches of
this Agreement and to enforce specifically the terms and provisions hereof in
any court of the United States or any state having jurisdiction, this being in
addition to any other remedy to which they are entitled at law or in equity.
Section 8.8. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Illinois, regardless of
the laws that might otherwise govern under applicable principles of conflicts of
law thereof; provided that issues involving the corporate governance of any of
the parties hereto shall be governed by their respective jurisdictions of
incorporation and that the Merger shall be governed by Delaware Law. Each of the
parties hereto irrevocably consents to the exclusive jurisdiction of any federal
court within the Ninth District of Arizona, in connection with any matter based
upon or arising out of this Agreement or the matters contemplated herein, other
than issues involving the corporate governance of any of the parties hereto,
agrees that process may be served upon them in any manner authorized by the laws
of the State of Arizona for such persons and waives and covenants not to assert
or plead any objection which they might otherwise have to such jurisdiction and
such process.
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Section 8.9. Rules of Construction. The parties hereto agree that they
have been represented by counsel during the negotiation and execution of this
Agreement and, therefore, waive the application of any law, regulation, holding
or rule of construction providing that ambiguities in an agreement or other
document will be construed against the party drafting such agreement or
document.
Section 8.10. Assignment. No party may assign either this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
approval of the of the parties. Subject to the preceding sentence, this
Agreement shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and permitted assigns.
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<PAGE> 64
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
INTEGRATED PROCESS EQUIPMENT CORP.
By /s/ Roger D. McDaniel
-----------------------------------------
Name: Roger D. McDaniel
Title: President and Chief Executive
Officer
SPEEDFAM INTERNATIONAL, INC.
By /s/ Richard J. Faubert
-----------------------------------------
Name: Richard J. Faubert
Title: President and Chief Executive
Officer
SPEEDFAM, INC.
By /s/ Richard J. Faubert
-----------------------------------------
Name: Richard J. Faubert
Title: President
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<PAGE> 1
EXHIBIT 2.2
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of November 19, 1998 (the "Agreement") is
entered into by and between Integrated Process Equipment Corp., a Delaware
corporation ("IPEC"), and SpeedFam International, Inc., an Illinois corporation
("SpeedFam").
RECITALS
WHEREAS, concurrently with the execution and delivery of this Agreement, IPEC,
SpeedFam and SpeedFam, Inc., a Delaware corporation and a wholly owned
subsidiary of SpeedFam ("Sub"), are entering into an Agreement and Plan of
Merger (the "Merger Agreement"), which provides that, among other things, upon
the terms and subject to the conditions thereof, IPEC and SpeedFam will enter
into a business combination transaction to pursue their long-term business
strategies (the "Merger"); and
WHEREAS, as a condition to IPEC's willingness to enter into the Merger
Agreement, IPEC has requested that SpeedFam agree, and SpeedFam has so agreed,
to grant to IPEC an option to acquire shares of SpeedFam's Common Stock, no par
value, upon the terms and subject to the conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants
and agreements set forth herein and in the Merger Agreement and for other good
and valuable consideration, the receipt and adequacy of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. GRANT OF OPTION
SpeedFam hereby grants to IPEC an irrevocable option (the "Option") to acquire
up to a number of shares of the Common Stock, without par value, of SpeedFam
("SpeedFam Shares") equal to 19.9% of the issued and outstanding shares as of
the first date, if any, upon which an Exercise Event (as defined in Section 2(a)
below) shall occur (the "Option Shares") (provided that the Option Shares shall
not upon timely issuance constitute more than 19.9% of the then issued and
outstanding SpeedFam Shares), in the manner set forth below (i) by paying cash
at a price of $14.875 per share (the "Exercise Price") and/or, at IPEC's
election, (ii) by exchanging therefor shares of the Common Stock, $.01 par
value, of IPEC ("IPEC Shares") at a rate (the "Exercise Ratio"), for each Option
Share, of a number of IPEC Shares equal to the Exercise Price divided by the
closing sale price of IPEC Shares on the Nasdaq National Market for the trading
day immediately preceding the date of the Closing (as defined below) of the
particular Option exercise. Capitalized terms used in this Agreement but not
defined herein shall have the meanings ascribed thereto in the Merger Agreement.
<PAGE> 2
SECTION 2. EXERCISE OF OPTION; MAXIMUM PROCEEDS
(a) The Option may be exercised by IPEC, in whole or in part, at any
time or from time to time, (i) immediately prior to the consummation of a tender
or exchange offer for 15% or more of any class of SpeedFam's capital stock, (ii)
upon the occurrence of all of the events specified in Section 7.3(c)(ii) of the
Merger Agreement, (iii) if and when the Board of Directors of SpeedFam shall
have withheld, withdrawn or modified in a manner adverse to IPEC its
recommendation in favor of approving the issuance of the shares of SpeedFam
Common Stock by virtue of the Merger and such other matters as may be required
by the Merger Agreement, or decides to postpone or not hold the SpeedFam
Shareholders' Meeting after receipt of and in connection with an Acquisition
Proposal with respect to SpeedFam and at that time there shall not have occurred
a Material Advice Effect (as defined in the Merger Agreement) on IPEC or (iv) if
and when the Board of Directors of SpeedFam recommends a SpeedFam Superior
Proposal to the shareholders of SpeedFam (any of the events specified in clauses
(i), (ii), (iii) or (iv) of this sentence being referred to herein as an
"Exercise Event"). In the event IPEC wishes to exercise the Option, IPEC shall
deliver to SpeedFam a written notice (each an "Exercise Notice") specifying the
total number of Option Shares it wishes to acquire and the form of consideration
to be paid. Each closing of a purchase of Option Shares (a "Closing") shall
occur on a date and at a time prior to the termination of the Option designated
by IPEC in an Exercise Notice delivered at least two business days prior to the
date of such Closing, which Closing shall be held at the principal offices of
SpeedFam.
(b) Notwithstanding the foregoing, upon the commencement of a tender or
exchange offer for 15% or more of any class of SpeedFam's capital stock (and/or
during any time which such a tender or exchange offer remains open), IPEC may
deliver to SpeedFam an Exercise Notice (a "Conditional Exercise Notice")
specifying that it wishes to exercise and close a purchase of Option Shares
immediately prior to the consummation of such tender or exchange offer. Unless
the Conditional Exercise Notice is withdrawn by IPEC, the Closing of a purchase
of Option Shares specified in a Conditional Exercise Notice shall take place
immediately prior to the consummation of such tender or exchange offer. In the
event that such tender or exchange offer is not consummated prior to termination
of the Option, such Conditional Exercise Notice shall be void and of no further
force and effect.
(c) The Option shall terminate upon the earliest of (i) the Effective
Time, (ii) 180 days following the termination of the Merger Agreement pursuant
to Article VII thereof if an Exercise Event shall have occurred on or prior to
the date of such termination, (iii) 12 months following the date on which the
Merger Agreement is terminated pursuant to Article VII thereof if (x) there
shall have been a SpeedFam Negative Vote and (y) prior to such SpeedFam Negative
Vote there shall have occurred an Acquisition Proposal with respect to SpeedFam
which shall have been publicly disclosed and not withdrawn, (iv) 12 months
following the date on which the Merger Agreement is terminated pursuant to
Article VII thereof if prior thereto there shall have commenced a tender or
exchange offer for 15% or more of any class of SpeedFam's capital stock and (v)
the date on which the Merger Agreement is terminated if neither an Exercise
Event, nor both of the events specified in subclauses (x) and (y) of clause
(iii), nor the commencement of a tender or exchange offer
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for 15% or more of any class of SpeedFam's capital stock shall have occurred on
or prior to such date of termination; provided, however, that if the Option
cannot be exercised by reason of any applicable government order or because the
waiting period related to the issuance of the Option Shares under the HSR Act
shall not have expired or been terminated, then the Option shall not terminate
until the tenth business day after such impediment to exercise shall have been
removed or shall have become final and not subject to appeal. Notwithstanding
the foregoing, the Option may not be exercised if (i) IPEC shall have breached
in any material respect any of its covenants or agreements contained in the
Merger Agreement or (ii) the representations and warranties of IPEC contained in
the Merger Agreement shall not have been true and correct in all material
respects on and as of the date when made.
(d) If IPEC receives in the aggregate pursuant to Section 7.3(c) of the
Merger Agreement together with proceeds in connection with any sales or other
dispositions of Option Shares and any dividends received by IPEC declared on
Option Shares, more than the sum of (x) $6,000,000 plus (y) the Exercise Price
multiplied by the number of SpeedFam Shares purchased by IPEC pursuant to the
Option, then all proceeds to IPEC in excess of such sum shall be remitted by
IPEC to SpeedFam.
SECTION 3. CONDITIONS TO CLOSING
The obligation of SpeedFam to issue Option Shares to IPEC hereunder is subject
to the conditions that (a) any waiting period under the HSR Act applicable to
the issuance of the Option Shares hereunder shall have expired or been
terminated; (b) all material consents, approvals, orders or authorizations of,
or registrations, declarations or filings with, any Federal, state or local
administrative agency or commission or other Federal state or local governmental
authority or instrumentality, if any, required in connection with the issuance
of the Option Shares hereunder shall have been obtained or made, as the case may
be; and (c) no preliminary or permanent injunction or other order by any court
of competent jurisdiction prohibiting or otherwise restraining such issuance
shall be in effect. It is understood and agreed that at any time during which
the Option is exercisable or if IPEC shall have delivered to SpeedFam a
Conditional Exercise Notice, the parties will use their respective best efforts
to satisfy all conditions to Closing, so that a Closing may take place as
promptly as practicable, and in any event, prior to consummation of a tender or
exchange offer for shares of SpeedFam capital stock; provided that neither
SpeedFam nor IPEC nor any subsidiary or affiliate thereof will be required to
agree to any divestiture by itself or any of its affiliates of shares of capital
stock or of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
SECTION 4. CLOSING
At any Closing, (a) SpeedFam shall deliver to IPEC a single certificate
in definitive form representing the number of SpeedFam Shares designated by IPEC
in its Exercise Notice, such certificate to be registered in the name of IPEC
and to bear the legend set forth
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<PAGE> 4
in Section 10 hereof, against delivery of (b) payment by IPEC to SpeedFam of the
aggregate purchase price for the SpeedFam Shares so designated and being
purchased by delivery of (i) immediately available funds and/or, at IPEC's
election, (ii) a single certificate in definitive form representing the number
of IPEC Shares being issued by IPEC in consideration therefor (based on the
Exercise Ratio), such certificate to be registered in the name of SpeedFam and
to bear the legend set forth in Section 10 hereof.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF SPEEDFAM
SpeedFam represents and warrants to IPEC that (a) SpeedFam is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Illinois and has the corporate power and authority to enter into
this Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by SpeedFam and consummation by SpeedFam of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of SpeedFam and no other corporate proceedings on
the part of SpeedFam are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by SpeedFam and constitutes a legal, valid and binding obligation of
SpeedFam and, assuming this Agreement constitutes a legal, valid and binding
obligation of IPEC, is enforceable against SpeedFam in accordance with its
terms, except as enforceability may be limited by bankruptcy and other laws
affecting the rights and remedies of creditors generally and general principles
of equity; (d) except for any filings required under the HSR Act, SpeedFam has
taken all necessary corporate and other action to authorize and reserve for
issuance and to permit it to issue upon exercise of the Option, and at all times
from the date hereof until the termination of the Option will have reserved for
issuance, a sufficient number of unissued SpeedFam Shares for IPEC to exercise
the Option in full and will take all necessary corporate or other action to
authorize and reserve for issuance all additional SpeedFam Shares or other
securities which may be issuable pursuant to Section 9(a) upon exercise of the
Option, all of which, upon their issuance and delivery in accordance with the
terms of this Agreement, will be validly issued, fully paid and nonassessable;
(e) upon delivery of the SpeedFam Shares and any other securities to IPEC upon
exercise of the Option, IPEC will acquire such SpeedFam Shares or other
securities free and clear of all material claims, liens, charges, encumbrances
and security interests of any kind or nature whatsoever, excluding those imposed
by IPEC; (f) the execution and delivery of this Agreement by SpeedFam do not,
and the performance of this Agreement by SpeedFam will not, (i) violate the
Articles of Incorporation or By-Laws of SpeedFam, (ii) conflict with or violate
any order applicable to SpeedFam or any of its subsidiaries or by which they or
any of their property is bound or affected or (iii) result in any breach of or
constitute a default (or an event which with notice or lapse of time or both
would become a default) under, or give rise to any right of termination,
amendment, acceleration or cancellation of, or result in the creation of a lien
or encumbrance on any of the property or assets of SpeedFam or any of its
subsidiaries pursuant to, any contract or agreement to which SpeedFam or any of
its subsidiaries is a party or by which SpeedFam or any of its subsidiaries or
any of their property is bound or affected, except, in the case of clauses (ii)
and (iii) above, for violations, conflicts, breaches, defaults, rights of
termination, amendment, acceleration or cancellation, liens or encumbrances
which would not, individually or in the aggregate, have
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<PAGE> 5
a Material Adverse Effect on SpeedFam; (g) the execution and delivery of this
Agreement by SpeedFam does not, and the performance of this Agreement by
SpeedFam will not, require any consent, approval, authorization or permit of, or
filing with, or notification to, any Governmental Entity by SpeedFam except
pursuant to the HSR Act or to the extent required under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"); and (h) any IPEC Shares acquired
pursuant to this Agreement will not be acquired by SpeedFam with a view to the
public distribution thereof and SpeedFam will not sell or otherwise dispose of
such shares in violation of applicable law or this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF IPEC
IPEC represents and warrants to SpeedFam that (a) IPEC is a corporation
duly incorporated, validly existing and in good standing under the laws of the
State of California and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by IPEC and the consummation by IPEC of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action on the part of IPEC and no other corporate proceedings on the
part of IPEC are necessary to authorize this Agreement or any of the
transactions contemplated hereby; (c) this Agreement has been duly executed and
delivered by IPEC and constitutes a legal, valid and binding obligation of IPEC
and, assuming this Agreement constitutes a legal, valid and binding obligation
of SpeedFam, is enforceable against IPEC in accordance with its terms, except as
enforceability may be limited by bankruptcy and other laws affecting the rights
and remedies of creditors generally and general principles of equity; (d) upon
delivery of IPEC Shares to SpeedFam in consideration of any acquisition of
SpeedFam Shares pursuant hereto, SpeedFam will acquire such IPEC Shares free and
clear of all material claims, liens, charges, encumbrances and security
interests of any kind or nature whatsoever, excluding those imposed by SpeedFam;
(e) the execution and delivery of this Agreement by IPEC do not, and the
performance of this Agreement by IPEC will not, (i) violate the Articles of
Incorporation or By-Laws of IPEC, (ii) conflict with or violate any order
applicable to IPEC or any of its subsidiaries or by which they or any of their
property is bound or affected or (iii) result in any breach of or constitute a
default (or an event which with notice or lapse of time or both would become a
default) under, or give rise to any right of termination, amendment,
acceleration or cancellation of, or result in the creation of a lien or
encumbrance on any of the property or assets of IPEC or any of its subsidiaries
pursuant to, any contract or agreement to which IPEC or any of its subsidiaries
is a party or by which IPEC or any of its subsidiaries or any of their property
is bound or affected, except, in the case of clauses (ii) and (iii) above, for
violations, conflicts, breaches, defaults, rights of termination, amendment,
acceleration or cancellation, liens or encumbrances which would not,
individually or in the aggregate, have a Material Adverse Effect on IPEC; (f)
the execution and delivery of this Agreement by IPEC does not, and the
performance of this Agreement by IPEC will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity by IPEC except pursuant to the HSR Act or the Exchange Act; and (g) any
SpeedFam Shares acquired upon exercise of the Option will not be acquired by
IPEC with a view to the public distribution thereof and IPEC will not sell or
otherwise dispose of such shares in violation of applicable law or this
Agreement.
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SECTION 7. CERTAIN RIGHTS
(a) IPEC Put. At the request of and upon notice by IPEC (the "Put
Notice"), at any time during the period during which the Option is exercisable
pursuant to Section 2 (the "Purchase Period") or in accordance with subparagraph
(iv) below, SpeedFam (or any successor entity thereof) shall purchase from IPEC
the Option, to the extent not previously exercised, at the price set forth in
subparagraph (i) below (as limited by subparagraph (iii) below), and the Option
Shares, if any, acquired by IPEC pursuant thereto, at the price set forth in
subparagraph (ii) below (as limited by subparagraph (iii) below):
(i) The difference between the "Market/Tender Offer Price" for
SpeedFam Shares as of the date IPEC gives notice of its intent to
exercise its rights under this Section 7(a) (defined as the higher of
(A) the highest price per share offered as of such date pursuant to any
Acquisition Proposal which was made prior to such date and not
terminated or withdrawn as of such date and (B) the highest closing
sale price of SpeedFam Shares on the Nasdaq National Market during the
twenty (20) trading days ending on the trading day immediately
preceding such date) and the Exercise Price, multiplied by the number
of SpeedFam Shares purchasable pursuant to the Option, but only if the
Market/Tender Offer Price is greater than the Exercise Price. For
purposes of determining the highest price offered pursuant to any
Acquisition Proposal which involves consideration other than cash, the
value of such consideration shall be equal to the higher of (x) if
securities of the same class of the proponent as such consideration are
traded on any national securities exchange or by any registered
securities association, a value based on the closing sale price or
asked price for such securities on their principal trading market on
such date and (y) the value ascribed to such consideration by the
proponent of such Acquisition Proposal, or if no such value is
ascribed, a value determined in good faith by the Board of Directors of
SpeedFam.
(ii) The Exercise Price paid by IPEC for SpeedFam Shares
acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and such Exercise Price (but only if the
Market/Tender Offer Price is greater than the Exercise Price)
multiplied by the number of SpeedFam Shares so purchased. If IPEC
issued IPEC Shares in connection with any exercise of the Option, the
Exercise Price in connection with such exercise shall be calculated as
set forth in Section 1 as if IPEC had exercised its right to pay cash
instead of issuing IPEC Shares.
(iii) Notwithstanding subparagraphs (i) and (ii) above,
pursuant to this Section 7, SpeedFam shall not be required to pay IPEC
in excess of an aggregate of (x) $6,000,000 plus (y) the Exercise Price
paid by IPEC for SpeedFam Shares acquired pursuant to the Option minus
(z) any amounts paid to IPEC by SpeedFam pursuant to Section 7.3(c) of
the Merger Agreement.
(iv) Notwithstanding the foregoing, upon the commencement of a
tender or exchange offer for 15% or more of any class of SpeedFam's
capital stock (and/or during any time which such a tender or exchange
offer remains open), IPEC may deliver to SpeedFam a Put Notice (a
"Conditional Put Notice") specifying that it
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<PAGE> 7
wishes to exercise and close immediately prior to the consummation of
such tender or exchange offer, a sale to SpeedFam pursuant to this
Section 7(a) of the Option, to the extent not previously exercised, and
the Option Shares, if any, acquired by IPEC pursuant thereto. Unless
the Conditional Put Notice is withdrawn by IPEC, the Closing of any
such sale specified in a Conditional Put Notice shall take place
immediately prior to the consummation of such tender or exchange offer.
In the event that such tender or exchange offer is not consummated
prior to termination of the Option, such Conditional Put Notice shall
be void and of no further force and effect.
(b) Redelivery of IPEC Shares. If IPEC has acquired SpeedFam Shares
pursuant to exercise of the Option by the issuance and delivery of IPEC Shares,
then SpeedFam shall, if so requested by IPEC, in fulfillment of its obligation
pursuant to the first clause of Section 7(a)(ii) with respect to the Exercise
Price paid in the form of IPEC Shares only, redeliver the certificate(s) for
such IPEC Shares to IPEC, free and clear of all claims, liens, charges,
encumbrances and security interests of any kind or nature whatsoever, other than
those imposed by IPEC.
(c) Payment and Redelivery of Option or Shares. In the event IPEC
exercises its rights under Sections 7(a) or (b), SpeedFam shall, within ten
business days after IPEC delivers notice pursuant to Section 7(a), pay the
required amount to IPEC in immediately available funds (and IPEC Shares, if
applicable) and IPEC shall surrender to SpeedFam the Option and the certificates
evidencing the SpeedFam Shares purchased by IPEC pursuant thereto, and IPEC
shall represent and warrant that such shares are then free and clear of all
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, other than those imposed by SpeedFam.
(d) SpeedFam Call. If IPEC has acquired Option Shares pursuant to
exercise of the Option (the date of any Closing relating to any such exercise
herein referred to as an "Exercise Date") and no Acquisition Proposal with
respect to SpeedFam has been consummated at any time after the date of this
Agreement and prior to the date one year following such Exercise Date (nor has
SpeedFam entered into a definitive agreement or letter of intent with respect to
such an Acquisition Proposal which agreement or letter of intent remains in
effect at the end of such year), then, at any time after the date one year
following such Exercise Date and prior to the date eighteen months following
such Exercise Date, SpeedFam may require IPEC, upon delivery to IPEC of written
notice, to sell to SpeedFam any SpeedFam Shares held by IPEC as of the day that
is ten business days after the date of such notice, up to a number of shares
equal to the number of Option Shares acquired by IPEC pursuant to exercise of
the Option in connection with such Exercise Date. The per share purchase price
for such sale (the "SpeedFam Call Price") shall be equal to the Exercise Price
plus interest at 7% per annum, less any dividends paid on the SpeedFam Shares to
be purchased by SpeedFam pursuant to this Section 7(d). The closing of any sale
of SpeedFam Shares pursuant to this Section 7(d) shall take place at the
principal offices of SpeedFam at a time and on a date designated by SpeedFam in
the aforementioned notice to IPEC, which date shall be no more than 20 and no
less than 12 business days from the date of such notice. The SpeedFam Call Price
shall be paid in immediately available funds,
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<PAGE> 8
provided that, in the event IPEC has acquired Option Shares pursuant to exercise
of the Option by issuance and delivery of IPEC Shares, at the option of
SpeedFam, the SpeedFam Call Price for part or all of any purchase of SpeedFam
Shares pursuant to this Section 7(d), up to a number of such shares equal to the
number of Option Shares acquired by IPEC by issuance and delivery of IPEC
Shares, shall be paid by delivery of a number of IPEC Shares equal to the
SpeedFam Call Price divided by the closing sale price of IPEC Shares on the
Nasdaq National Market for the trading day immediately preceding the date of the
Exercise Date on which the Option Shares to be purchased by SpeedFam pursuant to
this Section 7(d) were originally issued to IPEC.
(e) Restrictions on Transfer. Until the expiration of the Purchase
Period, SpeedFam shall not sell, transfer or otherwise dispose of any IPEC
Shares acquired by it pursuant to this Agreement.
SECTION 8. REGISTRATION RIGHTS
(a) Following the termination of the Merger Agreement, each party
hereto (a "Holder") may by written notice (a "Registration Notice") to the other
party (the "Registrant") request the Registrant to register under the Securities
Act all or any part of the shares acquired by such Holder pursuant to this
Agreement (the "Registrable Securities") in order to permit the sale or other
disposition of such shares pursuant to a bona fide firm commitment underwritten
public offering in which the Holder and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
shall use reasonable efforts to prevent any person or group from purchasing
through such offering shares representing more than 1% of the outstanding shares
of Common Stock of the Registrant on a fully diluted basis (a "Permitted
Offering"); provided, however, that any such Registration Notice must relate to
a number of shares equal to at least 2% of the outstanding shares of Common
Stock of the Registrant on a fully diluted basis and that any rights to require
registration hereunder shall terminate with respect to any shares that may be
sold pursuant to Rule 144(k) under the Securities Act. The Registration Notice
shall include a certificate executed by the Holder and its proposed managing
underwriter, which underwriter shall be an investment banking firm of nationally
recognized standing (the "Manager"), stating that (i) the Holder and the Manager
have a good faith intention to commence a Permitted Offering and (ii) the
Manager in good faith believes that, based on the then prevailing market
conditions, it will be able to sell the Registrable Securities at a per share
price equal to at least 80% of the per share average of the closing sale prices
of the Registrant's Common Stock on the Nasdaq National Market for the twenty
trading days immediately preceding the date of the Registration Notice. The
Registrant shall thereupon have the option exercisable by written notice
delivered to the Holder within ten business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part of the
Registrable Securities for cash at a price (the "Option Price" equal to the
product of (i) the number of Registrable Securities so purchased and (ii) the
per share average of the closing sale prices of the Registrant's Common Stock on
the Nasdaq National Market for the twenty trading days immediately preceding the
date of the Registration Notice. Any such purchase of Registrable Securities by
the Registrant hereunder shall take place at a closing to be held at the
principal executive offices of the Registrant or its counsel at any reasonable
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<PAGE> 9
date and time designated by the Registrant in such notice within 10 business
days after delivery of such notice. The payment for the shares to be purchased
shall be made by delivery at the time of such closing of the Option Price in
immediately available funds.
(b) If the Registrant does not elect to exercise its option to purchase
pursuant to Section 8(a) with respect to all Registrable Securities, the
Registrant shall use all reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities requested to be registered in the Registration Notice;
provided, however, that (i) neither party shall be entitled to more than an
aggregate of two effective registration statements hereunder and (ii) the
Registrant will not be required to file any such registration statement during
any period of time (not to exceed 40 days after a Registration Notice in the
case of clause (A) below or 90 days after a Registration Notice in the case of
clauses (B) and (C) below) when (A) the Registrant is in possession of material
non-public information which it reasonably believes would be detrimental to be
disclosed at such time and, in the written opinion of counsel to such
Registrant, such information would have to be disclosed if a registration
statement were filed at that time; (B) such Registrant is required under the
Securities Act to include audited financial statements for any period in such
registration statement and such financial statements are not yet available for
inclusion in such registration statement; or (C) such Registrant determines, in
its reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving the Registrant.
If consummation of the sale of any Registrable Securities pursuant to a
registration hereunder does not occur within 180 days after the filing with the
SEC of the initial registration statement therefor, the provisions of this
Section 8 shall again be applicable to any proposed registration, it being
understood that neither party shall be entitled to more than an aggregate of two
effective registration statements hereunder. The Registrant shall use all
reasonable efforts to cause any Registrable Securities registered pursuant to
this Section 8 to be qualified for sale under the securities or blue sky laws of
such jurisdictions as the Holder may reasonably request and shall continue such
registration or qualification in effect in such jurisdictions; provided,
however, that the Registrant shall not be required to qualify to do business in,
or consent to general service of process in, any jurisdiction by reason of this
provision.
(c) The registration rights set forth in this Section 8 are subject to
the condition that the Holder shall provide the Registrant with such information
with respect to such Holder's Registrable Securities, the plan for distribution
thereof, and such other information with respect to such Holder as, in the
reasonable judgment of counsel for the Registrant, is necessary to enable the
Registrant to include in a registration statement all material facts required to
be disclosed with respect to a registration thereunder.
(d) A registration effected under this Section 8 shall be effected at
the Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, the Holder and the Registrant agree to
enter into an underwriting agreement reasonably acceptable to each
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<PAGE> 10
such party, in form and substance customary for transactions of this type with
the underwriters participating in such offering.
(e) Indemnification. (i) The Registrant will indemnify the Holder, each
of its directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Registrant of any rule or regulation
promulgated under the Securities Act applicable to the Registrant in connection
with any such registration, qualification or compliance, and the Registrant will
reimburse the Holder and each of its directors and officers and each person who
controls the Holder within the meaning of Section 15 of the Securities Act, and
each underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Registrant will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of its directors
and officers and each underwriter of the Registrant's securities covered by such
registration statement and each person who controls the Registrant within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Holder of any rule or regulation
promulgated under the Securities Act applicable to the Holder in connection with
any such registration, qualification or compliance, and will reimburse the
Registrant, such directors, officers or control persons or underwriters for any
legal or any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Registrant by the Holder for use therein, provided that
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<PAGE> 11
in no event shall any indemnity under this Section 8(e) exceed the gross
proceeds of the offering received by the Holder.
(iii) Each party entitled to indemnification under this Section 8(e)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay such
expense if representation of the Indemnified Party by counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8(e) unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action. No Indemnifying Party, in the defense of any such claim
or litigation shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be required to indemnify any Indemnified
Party with respect to any settlement entered into without such Indemnifying
Party's prior consent (which shall not be unreasonably withheld).
(f) Contribution. If the indemnification from the Indemnifying Party
provided for in Section 8(e) is found, pursuant to a final judicial
determination not subject to appeal, to be unavailable to an Indemnified Party
hereunder or insufficient in respect of any claims, losses, damages and
liabilities incurred by such Indemnified Party, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the claims,
losses, damages and liabilities paid or payable by such Indemnified Party in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party in connection with the actions or
omissions that resulted in such claims, losses, damages and liabilities, as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action or omission in question, including any
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such action. The amount paid or payable by a party as a result of the
claims, losses, damages and liabilities referred to above shall be deemed to
include any legal or other expenses reasonably incurred by such party in
connection with any investigation or proceeding.
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<PAGE> 12
SECTION 9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; RIGHTS PLANS
(a) In the event of any change in the SpeedFam Shares by reason of
stock dividends, stock splits, reverse stock splits, mergers (other than the
Merger), recapitalizations, combinations, exchanges of shares and the like, the
type and number of shares or securities subject to the Option, the Exercise
Ratio and the Exercise Price shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction so that
IPEC shall receive, upon exercise of the Option, the number and class of shares
or other securities or property that IPEC would have received in respect of the
SpeedFam Shares if the Option had been exercised immediately prior to such event
or the record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any time
after the Option is exercised (in whole or in part, if at all), SpeedFam shall
not adopt a shareholders rights plan (a so-called "poison pill"), and IPEC shall
not amend the IPEC Rights Plan or adopt a new shareholders rights plan, that
contains provisions for the distribution of rights thereunder as a result of the
other party being the beneficial owner of shares of the first party by virtue of
the Option being exercisable or having been exercised (or as a result of such
other party beneficially owning shares issuable in respect of any Option
Shares). It is understood, however, that following termination (if any) of the
Merger Agreement, a party may adopt (or in the case of IPEC, adopt and/or amend)
a shareholders rights plan, that contains provisions for the distribution of
rights thereunder as a result of the other party being the beneficial owner of
shares of the first party in addition to those that may be beneficially owned by
virtue of the Option being exercisable or having been exercised (or as a result
of such other party beneficially owning shares issuable in respect of any Option
Shares).
SECTION 10. RESTRICTIVE LEGENDS
Each certificate representing Option Shares issued to IPEC hereunder, and each
certificate representing IPEC Shares delivered to SpeedFam at a Closing, shall
include a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND MAY BE REOFFERED OR SOLD ONLY IF SO
REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION
IS AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN
THE STOCK OPTION AGREEMENT DATED AS OF NOVEMBER 19,
1998, A COPY OF WHICH MAY BE OBTAINED FROM THE
ISSUER.
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<PAGE> 13
SECTION 11. LISTING AND HSR FILING
SpeedFam, upon the request of IPEC, shall promptly file an application to list
the SpeedFam Shares to be acquired upon exercise of the Option for quotation on
the Nasdaq National Market and shall use its best efforts to obtain approval of
such listing as soon as practicable. IPEC, upon the request of SpeedFam, shall
promptly file an application to list the IPEC Shares issued and delivered to
SpeedFam pursuant to Section 4 for quotation on the Nasdaq National Market and
shall use its best efforts to obtain approval of such listing as soon as
practicable. Promptly after the date hereof, each of the parties hereto shall
promptly file with the Federal Trade Commission and the Antitrust Division of
the United States Department of Justice all required premerger notification and
report forms and other documents and exhibits required to be filed under the HSR
Act to permit the acquisition of the SpeedFam Shares subject to the Option at
the earliest possible date.
SECTION 12. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and permitted assigns. Nothing contained
in this Agreement, express or implied, is intended to confer upon any person
other than the parties hereto and their respective successors and permitted
assigns any rights or remedies of any nature whatsoever by reason of this
Agreement. Any shares sold by a party in compliance with the provisions of
Section 8 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement and any transferee of such
shares shall not be entitled to the rights of such party. Certificates
representing shares sold in a registered public offering pursuant to Section 8
shall not be required to bear the legend set forth in Section 10.
SECTION 13. SPECIFIC PERFORMANCE
The parties recognize and agree that if for any reason any of the provisions of
this Agreement are not performed in accordance with their specific terms or are
otherwise breached, immediate and irreparable harm or injury would be caused for
which money damages would not be an adequate remedy. Accordingly, each party
agrees that in addition to other remedies the other party shall be entitled to
an injunction restraining any violation or threatened violation of the
provisions of this Agreement. In the event that any action shall be brought in
equity to enforce the provisions of the Agreement, neither party will allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
SECTION 14. ENTIRE AGREEMENT
This Agreement and the Merger Agreement (including the appendices thereto)
constitute the entire agreement between the parties with respect to the subject
matter hereof and supersede all other prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
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<PAGE> 14
SECTION 15. FURTHER ASSURANCES
Each party will execute and deliver all such further documents and instruments
and take all such further action as may be necessary in order to consummate the
transactions contemplated hereby.
SECTION 16. VALIDITY
The invalidity or unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of the other provisions of this Agreement,
which shall remain in full force and effect. In the event any Governmental
Entity of competent jurisdiction holds any provision of this Agreement to be
null, void or unenforceable, the parties hereto shall negotiate in good faith
and shall execute and deliver an amendment to this Agreement in order, as nearly
as possible, to effectuate, to the extent permitted by law, the intent of the
parties hereto with respect to such provision.
SECTION 17. NOTICES
All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally or by commercial delivery service, or sent
via telecopy (receipt confirmed) to the parties at the following addresses or
telecopy numbers (or at such other address or telecopy numbers for a party as
shall be specified by like notice):
(1) if to IPEC, to: Integrated Process Equipment Corp.
4717 East Hilton Avenue
Phoenix, Arizona 85034
Attention: Roger D. McDaniel
Telephone No.: (602) 517-7200
Telecopy No.: (602) 517-6016
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis Currie
Telephone No.: (650) 493-9300
Telecopy No.: (650) 845-5000
(2) if to SpeedFam, to: SpeedFam International, Inc.
305 N. 54th Street
Chandler, Arizona 85226-2416
Attention: ____________________
Telephone No.: (602) 705-2100
Telecopy No.: (602) 705-2122
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<PAGE> 15
with a copy to: Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
Attention: Jonathan A. Koff
Telephone No.: (312) 845-3000
Telecopy No.: (312) 701-2361
SECTION 18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with the laws of
the State of Illinois applicable to agreements made and to be performed entirely
within such State.
SECTION 19. COUNTERPARTS
This Agreement may be executed in two counterparts, each of which shall be
deemed to be an original, but both of which, taken together, shall constitute
one and the same instrument.
SECTION 20. EXPENSES
Except as otherwise expressly provided herein or in the Merger Agreement, all
costs and expenses incurred in connection with the transactions contemplated by
this Agreement shall be paid by the party incurring such expenses.
SECTION 21. AMENDMENTS; WAIVER
This Agreement may be amended by the parties hereto and the terms and conditions
hereof may be waived only by an instrument in writing signed on behalf of each
of the parties hereto, or, in the case of a waiver, by an instrument signed on
behalf of the party waiving compliance.
SECTION 22. ASSIGNMENT
Neither of the parties hereto may sell, transfer, assign or otherwise dispose of
any of its rights or obligations under this Agreement or the Option created
hereunder to any other person, without the express written consent of the other
party, except that the rights and obligations hereunder shall inure to the
benefit of and be binding upon any successor of a party hereto.
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<PAGE> 16
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by their respective duly authorized officers as of the date first above written.
INTEGRATED PROCESS EQUIPMENT CORP.
By /s/ Roger D. McDaniel
---------------------------------------------
Name: Roger D. McDaniel
Title: President and Chief Executive Officer
SPEEDFAM INTERNATIONAL, INC.
By /s/ Richard J. Faubert
---------------------------------------------
Name: Richard J. Faubert
Title: President and Chief Executive Officer
<PAGE> 1
EXHIBIT 2.3
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT dated as of November 19, 1998 (the
"Agreement") is entered into by and between Integrated Process Equipment Corp.,
a Delaware corporation ("IPEC"), and SpeedFam International, Inc., an Illinois
corporation ("SpeedFam").
RECITALS
WHEREAS, concurrently with the execution and delivery of this
Agreement, IPEC, SpeedFam and SpeedFam, Inc., a Delaware corporation and a
wholly owned subsidiary of SpeedFam ("Sub"), are entering into an Agreement and
Plan of Merger (the "Merger Agreement"), which provides that, among other
things, upon the terms and subject to the conditions thereof, IPEC and SpeedFam
will enter into a business combination transaction to pursue their long-term
business strategies (the "Merger"); and
WHEREAS, as a condition to SpeedFam's willingness to enter into the
Merger Agreement, SpeedFam has requested that IPEC agree, and IPEC has so
agreed, to grant to SpeedFam an option to acquire shares of IPEC's Common Stock,
$.01 par value per share together with any associated rights ("IPEC Rights")
under the IPEC Preferred Share Rights Agreement dated March 5, 1997, as amended,
upon the terms and subject to the conditions set forth herein;
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements set forth herein and in the Merger Agreement and for
other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. GRANT OF OPTION
IPEC hereby grants to SpeedFam an irrevocable option (the "Option") to
acquire up to a number of shares of the Common Stock, $.01 par value per share,
of IPEC ("IPEC Shares") equal to 19.9% of the issued and outstanding shares as
of the first date, if any, upon which an Exercise Event (as defined in Section
2(a) below) shall occur (the "Option Shares") (provided that the Option Shares
shall not upon timely issuance constitute more than 19.9% of the then issued and
outstanding IPEC Shares), in the manner set forth below (i) by paying cash at a
price of $10.56 per share (the "Exercise Price") and/or, at SpeedFam's election,
(ii) by exchanging therefor shares of the Common Stock, no par value, of
SpeedFam ("SpeedFam Shares") at a rate (the "Exercise Ratio"), for each Option
Share, of a number of SpeedFam Shares equal to the Exercise Price divided by the
closing sale price of SpeedFam Shares on The Nasdaq National Market for the
trading day immediately preceding the date of the Closing (as defined below) of
the particular Option exercise. All references in this Agreement to IPEC Shares
or Option Shares shall be deemed to include the associated IPEC
<PAGE> 2
Rights. Capitalized terms used in this Agreement but not defined herein shall
have the meanings ascribed thereto in the Merger Agreement.
Section 2. Exercise of Option; Maximum Proceeds
(a) The Option may be exercised by SpeedFam, in whole or in part, at
any time or from time to time, (i) immediately prior to the consummation of a
tender or exchange offer for 15% or more of any class of IPEC's capital stock,
(ii) upon the occurrence of all of the events specified in Section 7.3(b)(ii) of
the Merger Agreement, (iii) if and when the Board of Directors of IPEC shall
have withheld, withdrawn or modified in a manner adverse to SpeedFam its
recommendation that the stockholders of IPEC approve and adopt the Merger
Agreement and approve the Merger, or decides to postpone or not hold the IPEC
Stockholders' Meeting, after receipt of and in connection with an Acquisition
Proposal with respect to IPEC and at that time there shall not have occurred a
Material Adverse Effect (as defined in the Merger Agreement) on SpeedFam or (iv)
if and when the Board of Directors of IPEC recommends a IPEC Superior Proposal
to the stockholders of IPEC (any of the events specified in clauses (i), (ii),
(iii) or (iv) of this sentence being referred to herein as an "Exercise Event").
In the event SpeedFam wishes to exercise the Option, SpeedFam shall deliver to
IPEC a written notice (each an "Exercise Notice") specifying the total number of
Option Shares it wishes to acquire and the form of consideration to be paid.
Each closing of a purchase of Option Shares (a "Closing") shall occur on a date
and at a time prior to the termination of the Option designated by SpeedFam in
an Exercise Notice delivered at least two business days prior to the date of
such Closing, which Closing shall be held at the principal offices of IPEC.
(b) Notwithstanding the foregoing, upon the commencement of a tender or
exchange offer for 15% or more of any class of IPEC's capital stock (and/or
during any time which such a tender or exchange offer remains open), SpeedFam
may deliver to IPEC an Exercise Notice (a "Conditional Exercise Notice")
specifying that it wishes to exercise and close a purchase of Option Shares
immediately prior to the consummation of such tender or exchange offer. Unless
the Conditional Exercise Notice is withdrawn by SpeedFam, the Closing of a
purchase of Option Shares specified in a Conditional Exercise Notice shall take
place immediately prior to the consummation of such tender or exchange offer. In
the event that such tender or exchange offer is not consummated prior to
termination of the Option, such Conditional Exercise Notice shall be void and of
no further force and effect.
(c) The Option shall terminate upon the earliest of (i) the Effective
Time, (ii) 180 days following the termination of the Merger Agreement pursuant
to Article VII thereof if an Exercise Event shall have occurred on or prior to
the date of such termination, (iii) 12 months following the date on which the
Merger Agreement is terminated pursuant to Article VII thereof if (x) there
shall have been an IPEC Negative Vote and (y) prior to such IPEC Negative Vote
there shall have occurred an Acquisition Proposal with respect to IPEC which
shall have been publicly disclosed and not withdrawn, (iv) 12 months following
the date on which the Merger Agreement is terminated pursuant to Article VII
thereof if prior thereto there shall have commenced a tender or exchange offer
for 15% or more of any class of IPEC's capital stock and (v) the date on which
the Merger Agreement is terminated if
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<PAGE> 3
neither an Exercise Event, nor both of the events specified in subclauses (x)
and (y) of clause (iii), nor the commencement of a tender or exchange offer for
15% or more of any class of IPEC's capital stock shall have occurred on or prior
to such date of termination; provided, however, that if the Option cannot be
exercised by reason of any applicable government order or because the waiting
period related to the issuance of the Option Shares under the HSR Act shall not
have expired or been terminated, then the Option shall not terminate until the
tenth business day after such impediment to exercise shall have been removed or
shall have become final and not subject to appeal. Notwithstanding the
foregoing, the Option may not be exercised if (i) SpeedFam shall have breached
in any material respect any of its covenants or agreements contained in the
Merger Agreement or (ii) the representations and warranties of SpeedFam
contained in the Merger Agreement shall not have been true and correct in all
material respects on and as of the date when made.
(d) If SpeedFam receives in the aggregate pursuant to Section 7.3(b) of
the Merger Agreement together with proceeds in connection with any sales or
other dispositions of Option Shares and any dividends received by SpeedFam
declared on Option Shares, more than the sum of (x) $6,000,000 plus (y) the
Exercise Price multiplied by the number of IPEC Shares purchased by SpeedFam
pursuant to the Option, then all proceeds to SpeedFam in excess of such sum
shall be remitted by SpeedFam to IPEC.
SECTION 3. CONDITIONS TO CLOSING
The obligation of IPEC to issue Option Shares to SpeedFam hereunder is
subject to the conditions that (a) any waiting period under the HSR Act
applicable to the issuance of the Option Shares hereunder shall have expired or
been terminated; (b) all material consents, approvals, orders or authorizations
of, or registrations, declarations or filings with, any Federal, state or local
administrative agency or commission or other Federal, state or local
governmental authority or instrumentality, if any, required in connection with
the issuance of the Option Shares hereunder shall have been obtained or made, as
the case may be; and (c) no preliminary or permanent injunction or other order
by any court of competent jurisdiction prohibiting or otherwise restraining such
issuance shall be in effect. It is understood and agreed that at any time during
which the Option is exercisable or if SpeedFam shall have delivered to IPEC a
Conditional Exercise Notice, the parties will use their respective best efforts
to satisfy all conditions to Closing, so that a Closing may take place as
promptly as practicable, and in any event, prior to consummation of a tender or
exchange offer for shares of IPEC capital stock; provided that neither IPEC nor
SpeedFam nor any subsidiary or affiliate thereof will be required to agree to
any divestiture by itself or any of its affiliates of shares of capital stock or
of any business, assets or property, or the imposition of any material
limitation on the ability of any of them to conduct their businesses or to own
or exercise control of such assets, properties and stock.
SECTION 4. CLOSING
At any Closing, (a) IPEC shall deliver to SpeedFam a single certificate
in definitive form representing the number of IPEC Shares designated by SpeedFam
in its Exercise
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Notice, such certificate to be registered in the name of SpeedFam and to bear
the legend set forth in Section 10 hereof, against delivery of (b) payment by
SpeedFam to IPEC of the aggregate purchase price for the IPEC Shares so
designated and being purchased by delivery of (i) immediately available funds
and/or, at SpeedFam's election, (ii) a single certificate in definitive form
representing the number of SpeedFam Shares being issued by SpeedFam in
consideration therefor (based on the Exercise Ratio), such certificate to be
registered in the name of IPEC and to bear the legend set forth in Section 10
hereof.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF IPEC
IPEC represents and warrants to SpeedFam that (a) IPEC is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder; (b) the execution and
delivery of this Agreement by IPEC and consummation by IPEC of the transactions
contemplated hereby have been duly authorized by all necessary corporate action
on the part of IPEC and no other corporate proceedings on the part of IPEC are
necessary to authorize this Agreement or any of the transactions contemplated
hereby; (c) this Agreement has been duly executed and delivered by IPEC and
constitutes a legal, valid and binding obligation of IPEC and, assuming this
Agreement constitutes a legal, valid and binding obligation of SpeedFam, is
enforceable against IPEC in accordance with its terms, except as enforceability
may be limited by bankruptcy and other laws affecting the rights and remedies of
creditors generally and general principles of equity; (d) except for any filings
required under the HSR Act, IPEC has taken all necessary corporate and other
action to authorize and reserve for issuance and to permit it to issue upon
exercise of the Option, and at all times from the date hereof until the
termination of the Option will have reserved for issuance, a sufficient number
of unissued IPEC Shares for SpeedFam to exercise the Option in full and will
take all necessary corporate or other action to authorize and reserve for
issuance all additional IPEC Shares or other securities which may be issuable
pursuant to Section 9(a) upon exercise of the Option, all of which, upon their
issuance and delivery in accordance with the terms of this Agreement, will be
validly issued, fully paid and nonassessable; (e) upon delivery of the IPEC
Shares and any other securities to SpeedFam upon exercise of the Option,
SpeedFam will acquire such IPEC Shares or other securities free and clear of all
material claims, liens, charges, encumbrances and security interests of any kind
or nature whatsoever, excluding those imposed by SpeedFam; (f) the execution and
delivery of this Agreement by IPEC do not, and the performance of this Agreement
by IPEC will not, (i) violate the Certificate of Incorporation or By-Laws of
IPEC, (ii) conflict with or violate any order applicable to IPEC or any of its
subsidiaries or by which they or any of their property is bound or affected or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
IPEC or any of its subsidiaries pursuant to, any contract or agreement to which
IPEC or any of its subsidiaries is a party or by which IPEC or any of its
subsidiaries or any of their property is bound or affected, except, in the case
of clauses (ii) and (iii) above, for violations, conflicts, breaches, defaults,
rights of termination, amendment, acceleration or cancellation, liens or
encumbrances which would not,
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individually or in the aggregate, have a Material Adverse Effect on IPEC; (g)
the execution and delivery of this Agreement by IPEC does not, and the
performance of this Agreement by IPEC will not, require any consent, approval,
authorization or permit of, or filing with, or notification to, any Governmental
Entity by IPEC except pursuant to the HSR Act or to the extent required under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"); (h) the
execution and delivery of this Agreement by IPEC does not, and the performance
of this Agreement by IPEC will not, result in any change in the Preferred Stock
Conversion Rates, the Convertible Notes Conversion Price or in any adjustment in
the number of shares issuable, or the exercise price payable, upon the exercise
of any option or warrant to purchase any class of IPEC capital stock outstanding
on the date hereof; and (i) any SpeedFam Shares acquired pursuant to this
Agreement will not be acquired by IPEC with a view to the public distribution
thereof and IPEC will not sell or otherwise dispose of such shares in violation
of applicable law or this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF SPEEDFAM
SpeedFam represents and warrants to IPEC that (a) SpeedFam is a
corporation duly incorporated, validly existing and in good standing under the
laws of the State of Illinois and has the corporate power and authority to enter
into this Agreement and to carry out its obligations hereunder; (b) the
execution and delivery of this Agreement by SpeedFam and the consummation by
SpeedFam of the transactions contemplated hereby have been duly authorized by
all necessary corporate action on the part of SpeedFam and no other corporate
proceedings on the part of SpeedFam are necessary to authorize this Agreement or
any of the transactions contemplated hereby; (c) this Agreement has been duly
executed and delivered by SpeedFam and constitutes a legal, valid and binding
obligation of SpeedFam and, assuming this Agreement constitutes a legal, valid
and binding obligation of IPEC, is enforceable against SpeedFam in accordance
with its terms, except as enforceability may be limited by bankruptcy and other
laws affecting the rights and remedies of creditors generally and general
principles of equity; (d) upon delivery of SpeedFam Shares to IPEC in
consideration of any acquisition of IPEC Shares pursuant hereto, IPEC will
acquire such SpeedFam Shares free and clear of all material claims, liens,
charges, encumbrances and security interests of any kind or nature whatsoever,
excluding those imposed by IPEC; (e) the execution and delivery of this
Agreement by SpeedFam do not, and the performance of this Agreement by SpeedFam
will not, (i) violate the Articles of Incorporation or By-Laws of SpeedFam, (ii)
conflict with or violate any order applicable to SpeedFam or any of its
subsidiaries or by which they or any of their property is bound or affected or
(iii) result in any breach of or constitute a default (or an event which with
notice or lapse of time or both would become a default) under, or give rise to
any right of termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the property or assets of
SpeedFam or any of its subsidiaries pursuant to, any contract or agreement to
which SpeedFam or any of its subsidiaries is a party or by which SpeedFam or any
of its subsidiaries or any of their property is bound or affected, except, in
the case of clauses (ii) and (iii) above, for violations, conflicts, breaches,
defaults, rights of termination, amendment, acceleration or cancellation, liens
or encumbrances which would not, individually or in the aggregate, have a
Material Adverse Effect on SpeedFam; (f) the execution and delivery of this
Agreement by SpeedFam does not, and the performance of
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this Agreement by SpeedFam will not, require any consent, approval,
authorization or permit of, or filing with or notification to, any Governmental
Entity by SpeedFam except pursuant to the HSR Act or the Exchange Act; and (g)
any IPEC Shares acquired upon exercise of the Option will not be acquired by
SpeedFam with a view to the public distribution thereof and SpeedFam will not
sell or otherwise dispose of such shares in violation of applicable law or this
Agreement.
SECTION 7. CERTAIN RIGHTS
(a) SpeedFam Put. At the request of and upon notice by SpeedFam (the
"Put Notice"), at any time during the period during which the Option is
exercisable pursuant to Section 2 (the "Purchase Period") or in accordance with
subparagraph (iv) below, IPEC (or any successor entity thereof) shall purchase
from SpeedFam the Option, to the extent not previously exercised, at the price
set forth in subparagraph (i) below (as limited by subparagraph (iii) below),
and the Option Shares, if any, acquired by SpeedFam pursuant thereto, at the
price set forth in subparagraph (ii) below (as limited by subparagraph (iii)
below):
(i) The difference between the "MARKET/TENDER OFFER PRICE" for
IPEC Shares as of the date SpeedFam gives notice of its intent to
exercise its rights under this Section 7(a) (defined as the higher of
(A) the highest price per share offered as of such date pursuant to any
Acquisition Proposal which was made prior to such date and not
terminated or withdrawn as of such date and (B) the highest closing
sale price of IPEC Shares on The Nasdaq Stock Market during the twenty
(20) trading days ending on the trading day immediately preceding such
date) and the Exercise Price, multiplied by the number of IPEC Shares
purchasable pursuant to the Option, but only if the Market/Tender Offer
Price is greater than the Exercise Price. For purposes of determining
the highest price offered pursuant to any Acquisition Proposal which
involves consideration other than cash, the value of such consideration
shall be equal to the higher of (x) if securities of the same class of
the proponent as such consideration are traded on any national
securities exchange or by any registered securities association, a
value based on the closing sale price or asked price for such
securities on their principal trading market on such date and (y) the
value ascribed to such consideration by the proponent of such
Acquisition Proposal, or if no such value is ascribed, a value
determined in good faith by the Board of Directors of IPEC.
(ii) The Exercise Price paid by SpeedFam for IPEC Shares
acquired pursuant to the Option plus the difference between the
Market/Tender Offer Price and such Exercise Price (but only if the
Market/Tender Offer Price is greater than the Exercise Price)
multiplied by the number of IPEC Shares so purchased. If SpeedFam
issued SpeedFam Shares in connection with any exercise of the Option,
the Exercise Price in connection with such exercise shall be calculated
as set forth in Section 1 as if SpeedFam had exercised its right to pay
cash instead of issuing SpeedFam Shares.
(iii) Notwithstanding subparagraphs (i) and (ii) above,
pursuant to this Section 7, IPEC shall not be required to pay SpeedFam
in excess of an aggregate of (x)
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$6,000,000 plus (y) the Exercise Price paid by SpeedFam for IPEC Shares
acquired pursuant to the Option minus (z) any amounts paid to SpeedFam
by IPEC pursuant to Section 7.3(b) of the Merger Agreement.
(iv) Notwithstanding the foregoing, upon the commencement of a
tender or exchange offer for 15% or more of any class of IPEC's capital
stock (and/or during any time which such a tender or exchange offer
remains open), SpeedFam may deliver to IPEC a Put Notice (a
"Conditional Put Notice") specifying that it wishes to exercise and
close immediately prior to the consummation of such tender or exchange
offer, a sale to IPEC pursuant to this Section 7(a) of the Option, to
the extent not previously exercised, and the Option Shares, if any,
acquired by SpeedFam pursuant thereto. Unless the Conditional Put
Notice is withdrawn by SpeedFam, the Closing of any such sale specified
in a Conditional Put Notice shall take place immediately prior to the
consummation of such tender or exchange offer. In the event that such
tender or exchange offer is not consummated prior to termination of the
Option, such Conditional Put Notice shall be void and of no further
force and effect.
(b) Redelivery of SpeedFam Shares. If SpeedFam has acquired IPEC Shares
pursuant to exercise of the Option by the issuance and delivery of SpeedFam
Shares, then IPEC shall, if so requested by SpeedFam, in fulfillment of its
obligation pursuant to the first clause of Section 7(a)(ii) with respect to the
Exercise Price paid in the form of SpeedFam Shares only, redeliver the
certificate(s) for such SpeedFam Shares to SpeedFam, free and clear of all
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, other than those imposed by SpeedFam.
(c) Payment and Redelivery of Option or Shares. In the event SpeedFam
exercises its rights under Sections 7(a) or (b), IPEC shall, within ten business
days after SpeedFam delivers notice pursuant to Section 7(a), pay the required
amount to SpeedFam in immediately available funds (and SpeedFam Shares, if
applicable) and SpeedFam shall surrender to IPEC the Option and the certificates
evidencing the IPEC Shares purchased by SpeedFam pursuant thereto, and SpeedFam
shall represent and warrant that such shares are then free and clear of all
claims, liens, charges, encumbrances and security interests of any kind or
nature whatsoever, other than those imposed by IPEC.
(d) IPEC Call. If SpeedFam has acquired Option Shares pursuant to
exercise of the Option (the date of any Closing relating to any such exercise
herein referred to as an "Exercise Date") and no Acquisition Proposal with
respect to IPEC has been consummated at any time after the date of this
Agreement and prior to the date one year following such Exercise Date (nor has
IPEC entered into a definitive agreement or letter of intent with respect to
such an Acquisition Proposal which agreement or letter of intent remains in
effect at the end of such year), then, at any time after the date one year
following such Exercise Date and prior to the date eighteen months following
such Exercise Date, IPEC may require SpeedFam, upon delivery to SpeedFam of
written notice, to sell to IPEC any IPEC Shares held by SpeedFam as of the day
that is ten business days after the date of such notice, up to a number of
shares equal to the number of Option Shares acquired by SpeedFam pursuant to
exercise of the Option in connection with such Exercise Date. The per share
purchase price
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for such sale (the "IPEC Call Price") shall be equal to the Exercise Price plus
interest at 7% per annum, less any dividends paid on the IPEC Shares to be
purchased by IPEC pursuant to this Section 7(d). The closing of any sale of IPEC
Shares pursuant to this Section 7(d) shall take place at the principal offices
of IPEC at a time and on a date designated by IPEC in the aforementioned notice
to SpeedFam, which date shall be no more than 20 and no less than 12 business
days from the date of such notice. The IPEC Call Price shall be paid in
immediately available funds, provided that, in the event SpeedFam has acquired
Option Shares pursuant to exercise of the Option by issuance and delivery of
SpeedFam Shares, at the option of IPEC, the IPEC Call Price for part or all of
any purchase of IPEC Shares pursuant to this Section 7(d), up to a number of
such shares equal to the number of Option Shares acquired by SpeedFam by
issuance and delivery of SpeedFam Shares, shall be paid by delivery of a number
of SpeedFam Shares equal to the IPEC Call Price divided by the closing sale
price of SpeedFam Shares on The Nasdaq National Market for the trading day
immediately preceding the date of the Exercise Date on which the Option Shares
to be purchased by IPEC pursuant to this Section 7(d) were originally issued to
SpeedFam.
(e) Restrictions on Transfer. Until the expiration of the Purchase
Period, IPEC shall not sell, transfer or otherwise dispose of any SpeedFam
Shares acquired by it pursuant to this Agreement.
SECTION 8. REGISTRATION RIGHTS
(a) Following the termination of the Merger Agreement, each party
hereto (a "Holder") may by written notice (a "Registration Notice") to the other
party (the "Registrant") request the Registrant to register under the Securities
Act all or any part of the shares acquired by such Holder pursuant to this
Agreement (the "Registrable Securities") in order to permit the sale or other
disposition of such shares pursuant to a bona fide firm commitment underwritten
public offering in which the Holder and the underwriters shall effect as wide a
distribution of such Registrable Securities as is reasonably practicable and
shall use reasonable efforts to prevent any person or group from purchasing
through such offering shares representing more than 1% of the outstanding shares
of Common Stock of the Registrant on a fully diluted basis (a "Permitted
Offering"); provided, however, that any such Registration Notice must relate to
a number of shares equal to at least 2% of the outstanding shares of Common
Stock of the Registrant on a fully diluted basis and that any rights to require
registration hereunder shall terminate with respect to any shares that may be
sold pursuant to Rule 144(k) under the Securities Act. The Registration Notice
shall include a certificate executed by the Holder and its proposed managing
underwriter, which underwriter shall be an investment banking firm of nationally
recognized standing (the "Manager"), stating that (i) the Holder and the Manager
have a good faith intention to commence a Permitted Offering and (ii) the
Manager in good faith believes that, based on the then prevailing market
conditions, it will be able to sell the Registrable Securities at a per share
price equal to at least 80% of the per share average of the closing sale prices
of the Registrant's Common Stock on The Nasdaq National Market for the twenty
trading days immediately preceding the date of the Registration Notice. The
Registrant shall thereupon have the option exercisable by written notice
delivered to the Holder within ten business days after the receipt of the
Registration Notice, irrevocably to agree to purchase all or any part
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of the Registrable Securities for cash at a price (the "Option Price" equal to
the product of (i) the number of Registrable Securities so purchased and (ii)
the per share average of the closing sale prices of the Registrant's Common
Stock on The Nasdaq National Market for the twenty trading days immediately
preceding the date of the Registration Notice. Any such purchase of Registrable
Securities by the Registrant hereunder shall take place at a closing to be held
at the principal executive offices of the Registrant or its counsel at any
reasonable date and time designated by the Registrant in such notice within 10
business days after delivery of such notice. The payment for the shares to be
purchased shall be made by delivery at the time of such closing of the Option
Price in immediately available funds.
(b) If the Registrant does not elect to exercise its option to purchase
pursuant to Section 8(a) with respect to all Registrable Securities, the
Registrant shall use all reasonable efforts to effect, as promptly as
practicable, the registration under the Securities Act of the unpurchased
Registrable Securities requested to be registered in the Registration Notice;
provided, however, that (i) neither party shall be entitled to more than an
aggregate of two effective registration statements hereunder and (ii) the
Registrant will not be required to file any such registration statement during
any period of time (not to exceed 40 days after a Registration Notice in the
case of clause (A) below or 90 days after a Registration Notice in the case of
clauses (B) and (C) below) when (A) the Registrant is in possession of material
non-public information which it reasonably believes would be detrimental to be
disclosed at such time and, in the written opinion of counsel to such
Registrant, such information would have to be disclosed if a registration
statement were filed at that time; (B) such Registrant is required under the
Securities Act to include audited financial statements for any period in such
registration statement and such financial statements are not yet available for
inclusion in such registration statement; or (C) such Registrant determines, in
its reasonable judgment, that such registration would interfere with any
financing, acquisition or other material transaction involving the Registrant.
If consummation of the sale of any Registrable Securities pursuant to a
registration hereunder does not occur within 180 days after the filing with the
SEC of the initial registration statement therefor, the provisions of this
Section 8 shall again be applicable to any proposed registration, it being
understood that neither party shall be entitled to more than an aggregate of two
effective registration statements hereunder. The Registrant shall use all
reasonable efforts to cause any Registrable Securities registered pursuant to
this Section 8 to be qualified for sale under the securities or blue sky laws of
such jurisdictions as the Holder may reasonably request and shall continue such
registration or qualification in effect in such jurisdictions; provided,
however, that the Registrant shall not be required to qualify to do business in,
or consent to general service of process in, any jurisdiction by reason of this
provision.
(c) The registration rights set forth in this Section 8 are subject to
the condition that the Holder shall provide the Registrant with such information
with respect to such Holder's Registrable Securities, the plan for distribution
thereof, and such other information with respect to such Holder as, in the
reasonable judgment of counsel for the Registrant, is necessary to enable the
Registrant to include in a registration statement all material facts required to
be disclosed with respect to a registration hereunder.
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(d) A registration effected under this Section 8 shall be effected at
the Registrant's expense, except for underwriting discounts and commissions and
the fees and expenses of counsel to the Holder, and the Registrant shall provide
to the underwriters such documentation (including certificates, opinions of
counsel and "comfort" letters from auditors) as are customary in connection with
underwritten public offerings and as such underwriters may reasonably require.
In connection with any registration, the Holder and the Registrant agree to
enter into an underwriting agreement reasonably acceptable to each such party,
in form and substance customary for transactions of this type with the
underwriters participating in such offering.
(e) Indemnification. (i) The Registrant will indemnify the Holder, each
of its directors and officers and each person who controls the Holder within the
meaning of Section 15 of the Securities Act, and each underwriter of the
Registrant's securities, with respect to any registration, qualification or
compliance which has been effected pursuant to this Agreement, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Registrant of any rule or regulation
promulgated under the Securities Act applicable to the Registrant in connection
with any such registration, qualification or compliance, and the Registrant will
reimburse the Holder and each of its directors and officers and each person who
controls the Holder within the meaning of Section 15 of the Securities Act, and
each underwriter for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Registrant will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement or omission or alleged
untrue statement or omission, made in reliance upon and in conformity with
written information furnished to the Registrant by such Holder or director or
officer or controlling person or underwriter seeking indemnification.
(ii) The Holder will indemnify the Registrant, each of its directors
and officers and each underwriter of the Registrant's securities covered by such
registration statement and each person who controls the Registrant within the
meaning of Section 15 of the Securities Act, against all claims, losses, damages
and liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or any violation by the Holder of any rule or regulation
promulgated under the Securities Act applicable to the Holder in connection with
any such registration, qualification or compliance, and will reimburse the
Registrant, such directors, officers or control persons or
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underwriters for any legal or any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, in each case to the extent, but only to the extent,
that such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Registrant by the Holder for use therein, provided that in no
event shall any indemnity under this Section 8(e) exceed the gross proceeds of
the offering received by the Holder.
(iii) Each party entitled to indemnification under this Section 8(e)
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that the Indemnifying Party shall pay such
expense if representation of the Indemnified Party by counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 8(e) unless the failure
to give such notice is materially prejudicial to an Indemnifying Party's ability
to defend such action. No Indemnifying Party, in the defense of any such claim
or litigation shall, except with the consent of each Indemnified Party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation. No Indemnifying Party shall be required to indemnify any Indemnified
Party with respect to any settlement entered into without such Indemnifying
Party's prior consent (which shall not be unreasonably withheld).
(f) Contribution. If the indemnification from the Indemnifying Party
provided for in Section 8(e) is found, pursuant to a final judicial
determination not subject to appeal, to be unavailable to an Indemnified Party
hereunder or insufficient in respect of any claims, losses, damages and
liabilities incurred by such Indemnified Party, then each Indemnifying Party, in
lieu of indemnifying such Indemnified Party, shall contribute to the claims,
losses, damages and liabilities paid or payable by such Indemnified Party in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party and the Indemnified Party in connection with the actions or
omissions that resulted in such claims, losses, damages and liabilities, as well
as any other relevant equitable considerations. The relative fault of such
Indemnifying Party and Indemnified Party shall be determined by reference to,
among other things, whether any action or omission in question, including any
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact, has been made by, or relates to information
supplied by, such Indemnifying Party or Indemnified Party, and the parties'
relative intent, knowledge, access to information and
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opportunity to correct or prevent such action. The amount paid or payable by a
party as a result of the claims, losses, damages and liabilities referred to
above shall be deemed to include any legal or other expenses reasonably incurred
by such party in connection with any investigation or proceeding.
SECTION 9. ADJUSTMENT UPON CHANGES IN CAPITALIZATION; RIGHTS PLANS
(a) In the event of any change in the IPEC Shares by reason of stock
dividends, stock splits, reverse stock splits, mergers (other than the Merger),
recapitalizations, combinations, exchanges of shares and the like, the type and
number of shares or securities subject to the Option, the Exercise Ratio and the
Exercise Price shall be adjusted appropriately, and proper provision shall be
made in the agreements governing such transaction so that SpeedFam shall
receive, upon exercise of the Option, the number and class of shares or other
securities or property that SpeedFam would have received in respect of the IPEC
Shares if the Option had been exercised immediately prior to such event or the
record date therefor, as applicable.
(b) At any time during which the Option is exercisable, and at any time
after the Option is exercised (in whole or in part, if at all), SpeedFam shall
not adopt a shareholders rights plan (a so-called "poison pill"), and IPEC shall
not amend the IPEC Rights Plan or adopt a new shareholders rights plan, that
contains provisions for the distribution of rights thereunder as a result of the
other party being the beneficial owner of shares of the first party by virtue of
the Option being exercisable or having been exercised (or as a result of such
other party beneficially owning shares issuable in respect of any Option
Shares). It is understood, however, that following termination (if any) of the
Merger Agreement, a party may adopt (or in the case of IPEC, adopt and/or amend)
a shareholders rights plan, that contains provisions for the distribution of
rights thereunder as a result of the other party being the beneficial owner of
shares of the first party in addition to those that may be beneficially owned by
virtue of the Option being exercisable or having been exercised (or as a result
of such other party beneficially owning shares issuable in respect of any Option
Shares).
SECTION 10. RESTRICTIVE LEGENDS
Each certificate representing Option Shares issued to SpeedFam
hereunder, and each certificate representing SpeedFam Shares delivered to IPEC
at a Closing, if any, shall include a legend in substantially the following
form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND MAY BE REOFFERED OR
SOLD ONLY IF SO REGISTERED OR IF AN EXEMPTION FROM SUCH REGISTRATION IS
AVAILABLE. SUCH SECURITIES ARE ALSO SUBJECT TO ADDITIONAL RESTRICTIONS
ON TRANSFER AS SET FORTH IN THE STOCK OPTION
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<PAGE> 13
AGREEMENT DATED AS OF NOVEMBER 19, 1998, A COPY OF WHICH MAY BE
OBTAINED FROM THE ISSUER.
SECTION 11. LISTING AND HSR FILING
IPEC, upon the request of SpeedFam, shall promptly file an application
to list the IPEC Shares to be acquired upon exercise of the Option for quotation
on The Nasdaq National Market and shall use its best efforts to obtain approval
of such listing as soon as practicable. SpeedFam, upon the request of IPEC,
shall promptly file an application to list the SpeedFam Shares issued and
delivered to IPEC pursuant to Section 4, if any, for quotation on The Nasdaq
National Market and shall use its best efforts to obtain approval of such
listing as soon as practicable. Promptly after the date hereof, each of the
parties hereto shall promptly file with the Federal Trade Commission and the
Antitrust Division of the United States Department of Justice all required
premerger notification and report forms and other documents and exhibits
required to be filed under the HSR Act to permit the acquisition of the IPEC
Shares subject to the Option at the earliest possible date.
SECTION 12. BINDING EFFECT
This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and permitted assigns. Nothing
contained in this Agreement, express or implied, is intended to confer upon any
person other than the parties hereto and their respective successors and
permitted assigns any rights or remedies of any nature whatsoever by reason of
this Agreement. Any shares sold by a party in compliance with the provisions of
Section 8 shall, upon consummation of such sale, be free of the restrictions
imposed with respect to such shares by this Agreement and any transferee of such
shares shall not be entitled to the rights of such party. Certificates
representing shares sold in a registered public offering pursuant to Section 8
shall not be required to bear the legend set forth in Section 10.
SECTION 13. SPECIFIC PERFORMANCE
The parties recognize and agree that if for any reason any of the
provisions of this Agreement are not performed in accordance with their specific
terms or are otherwise breached, immediate and irreparable harm or injury would
be caused for which money damages would not be an adequate remedy. Accordingly,
each party agrees that in addition to other remedies the other party shall be
entitled to an injunction restraining any violation or threatened violation of
the provisions of this Agreement. In the event that any action shall be brought
in equity to enforce the provisions of the Agreement, neither party will allege,
and each party hereby waives the defense, that there is an adequate remedy at
law.
SECTION 14. ENTIRE AGREEMENT
This Agreement and the Merger Agreement (including the appendices
thereto) constitute the entire agreement between the parties with respect to the
subject matter hereof
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<PAGE> 14
and supersede all other prior agreements and understandings, both written and
oral, between the parties with respect to the subject matter hereof.
SECTION 15. FURTHER ASSURANCES
Each party will execute and deliver all such further documents and
instruments and take all such further action as may be necessary in order to
consummate the transactions contemplated hereby.
SECTION 16. VALIDITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of the other provisions of this
Agreement, which shall remain in full force and effect. In the event any
Governmental Entity of competent jurisdiction holds any provision of this
Agreement to be null, void or unenforceable, the parties hereto shall negotiate
in good faith and shall execute and deliver an amendment to this Agreement in
order, as nearly as possible, to effectuate, to the extent permitted by law, the
intent of the parties hereto with respect to such provision.
SECTION 17. NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed given if delivered personally or by commercial delivery service,
or sent via telecopy (receipt confirmed) to the parties at the following
addresses or telecopy numbers (or at such other address or telecopy numbers for
a party as shall be specified by like notice):
(1) if to IPEC, to: Integrated Process Equipment Corp.
4717 East Hilton Avenue
Phoenix, Arizona 85034
Attention: Roger D. McDaniel
Telephone No.: (602) 517-7200
Telecopy No.: (602) 517-6016
with a copy to: Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attention: Francis Currie
Telephone No.: (650) 493-9300
Telecopy No.: (650) 845-5000
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<PAGE> 15
(2) if to SpeedFam, to: SpeedFam International Inc.
305 N. 54th Street
Chandler, Arizona 85226-2416
Attention: ____________________
Telephone No.: (602) 705-2100
Telecopy No.: (602) 705-2122
with a copy to: Chapman and Cutler
111 West Monroe Street
Chicago, Illinois 60603
Attention: Jonathan A. Koff
Telephone No.: (312) 845-3000
Telecopy No.: (312) 701-2361
SECTION 18. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of Illinois applicable to agreements made and to be
performed entirely within such State.
SECTION 19. COUNTERPARTS
This Agreement may be executed in two counterparts, each of which shall
be deemed to be an original, but both of which, taken together, shall constitute
one and the same instrument.
SECTION 20. EXPENSES
Except as otherwise expressly provided herein or in the Merger
Agreement, all costs and expenses incurred in connection with the transactions
contemplated by this Agreement shall be paid by the party incurring such
expenses.
SECTION 21. AMENDMENTS; WAIVER
This Agreement may be amended by the parties hereto and the terms and
conditions hereof may be waived only by an instrument in writing signed on
behalf of each of the parties hereto, or, in the case of a waiver, by an
instrument signed on behalf of the party waiving compliance.
SECTION 22. ASSIGNMENT
Neither of the parties hereto may sell, transfer, assign or otherwise
dispose of any of its rights or obligations under this Agreement or the Option
created hereunder to any other person, without the express written consent of
the other party, except that the rights and
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<PAGE> 16
obligations hereunder shall inure to the benefit of and be binding upon any
successor of a party hereto.
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<PAGE> 17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the date first above
written.
INTEGRATED PROCESS EQUIPMENT CORP.
By /s/ Roger D. McDaniel
--------------------------------------------
Name: Roger D. McDaniel
Title: President and Chief Executive Officer
SPEEDFAM INTERNATIONAL, INC.
By /s/ Richard J. Faubert
--------------------------------------------
Name: Richard J. Faubert
Title: President and Chief Executive Officer
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<PAGE> 1
For more information, contact:
Roger K. Marach, Chief Financial Officer
SpeedFam International, Inc.
(602) 705-2100
John S. Hodgson, Vice President and
Chief Financial Officer
Lisa Lyscio, Director, Investor Relations
Integrated Process Equipment Corp.
(602) 517-7200
FOR IMMEDIATE RELEASE
SPEEDFAM AND IPEC AGREE ON MERGER
TO CREATE THE LEADING MANUFACTURER OF CMP SYSTEMS
IN THE GLOBAL SEMICONDUCTOR CAPITAL EQUIPMENT MARKET
CHANDLER, Ariz.; SAN JOSE, Calif.--November 19, 1998--SpeedFam International
Inc. (NASDAQ:SFAM) and Integrated Process Equipment Corp. (IPEC) (NASDAQ:IPEC),
two leading suppliers of chemical mechanical planarization (CMP) systems to the
semiconductor industry worldwide, today jointly announced the execution of a
definitive merger agreement. The board of directors of each company has
approved the agreement. Under its terms, all IPEC operations, technologies,
products and services will be integrated with those of SpeedFam in a new entity
that will be called SpeedFam-IPEC. The combined annual revenues of SpeedFam and
IPEC--based on their results for the fiscal years ended May 31 and June 30,
1998, respectively--were $374.3 million.
Under the terms of the merger agreement, SpeedFam shareholders will retain
their existing shares of common stock. IPEC stockholders will receive 0.71 of a
share of SpeedFam common stock for each share of IPEC common stock that they
currently own. The approximate value of the transaction, based on the closing
common stock prices for each company on November 19, 1998, is $195.9 million.
The merged company's board of directors will consist of nine members, five from
SpeedFam and four from IPEC. These will be primarily outside board members.
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<PAGE> 2
SpeedFam and IPEC Agree on Merger
"This merger will create the preeminent leader in CMP with more than 1,000
systems installed worldwide, and the broadest range of CMP systems available
today," said Richard J. Faubert, president and chief executive officer of
SpeedFam. "We believe that our complementary product lines -- IPEC's orbital
AvantGaard systems and SpeedFam's rotational Auriga systems -- set industry
standards for flexibility and high throughput. In our view, the combined
technologies will enable the new company to better serve customers by offering
systems optimized to support the entire range of CMP applications."
"The combined technological strengths of SpeedFam and IPEC will have a
synergistic effect, enabling the advance design of products and processes that
anticipate customers' future needs," added Roger D. McDaniel, president and
chief executive officer of IPEC. "The new entity will be better positioned to
serve its combined customer base worldwide through a comprehensive global sales,
service and support infrastructure. Finally, its strong financial position,
combining the revenues and assets of both companies, will enable the new company
to fund and execute its plans for continued growth and market leadership."
The senior management team of the merged entity will consist of the
following executives of each company:
-- Co-chairmen of the board: James N. Farley, chairman, SpeedFam, and
Sanjeev R. Chitre, chairman, IPEC
-- Vice chairman of the board: Makoto Kouzuma, vice chairman, SpeedFam
-- President and chief executive officer: Richard J. Faubert, president
and chief executive officer, SpeedFam
-- Chief operating officer and president of the CMP Group: Ralph D.
Hartung, chief operating officer, IPEC
-- Chief financial officer and treasurer: Roger K. Marach, chief financial
officer and treasurer, SpeedFam.
"The formation of this new management team is genuinely exciting," said
Faubert. "It comprises 'the best and the brightest' in the CMP industry today.
I'm looking forward to combining the world-class talents of the IPEC and
SpeedFam teams."
The transaction described above is subject to approval by SpeedFam
shareholders and IPEC stockholders, normal regulatory approvals and other
customary conditions. The merger is intended to
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<PAGE> 3
SPEEDFAM AND IPEC AGREE ON MERGER
quality as a tax-free reorganization and to be accounted for as a pooling of
interests. The transaction is expected to be consummated in approximately 90
days.
SPEEDFAM INTERNATIONAL, INC.
SpeedFam International, Inc. designs, develops, manufactures, markets and
supports chemical mechanical planarization (CMP) systems used in the fabrication
of semiconductor devices and other high-throughput precision surface processing
systems. SpeedFam's flat surface processing systems are also used in the thin
film memory disk media, silicon wafer and general industrial components markets.
In addition, the company markets and distributes polishing liquids (slurries),
parts and consumables used in its customers' manufacturing processes. SpeedFam
International, Inc. owns a 50-percent interest in each of two joint ventures,
SpeedFam Co., Ltd. (the Far East Joint Venture) and Fujimi Corporation.
INTEGRATED PROCESS EQUIPMENT CORP.
Integrated Process Equipment Corp. (IPEC) is a leading supplier of chemical
mechanical planarization systems used in the manufacture of advanced
semiconductors. IPEC Planar manufactures CMP equipment and CMP-related products.
IPEC Precision manufactures advanced plasma-assisted etching and metrology
equipment.
Certain statements in this news release constitute 'forward-looking
statements' within the meaning of the Private Securities Litigation Reform Act
of 1995. Such forward-looking statements involve known and unknown risks,
uncertainties and other factors which may cause the actual results, performance
or achievements of SpeedFam International and Integrated Process Equipment Corp.
to be materially different from any future results, performance or achievements
expressed or implied by such forward-looking statements. These risks,
uncertainties and other factors include the satisfaction of merger closing
conditions; regulatory, shareholder and stockholder approvals of the merger; the
actual closing of the merger; the actual effects of the merger on the combined
companies and their customers; the timely development and market acceptance of
the combined companies' future product offerings; the combined companies'
ability to successfully integrate and achieve desired operating synergies and
results; and others discussed in SpeedFam International's and Integrated Process
Equipment Corp.'s respective filings with the Securities and Exchange Commission
(SEC). This announcement is neither an offer to sell nor a solicitation of an
offer to buy any securities. The offering with respect to the proposed merger
will be made only by the proxy statement/prospectus that will be distributed to
shareholders and stockholders in connection with the consideration of the
transaction.
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