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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14D-9
SOLICITATION/RECOMMENDATION STATEMENT PURSUANT TO
SECTION 14(d)(4) OF THE SECURITIES EXCHANGE ACT OF 1934
TYLAN GENERAL, INC.
(Name of Subject Company)
TYLAN GENERAL, INC.
(Name of Person(s) Filing Statement)
COMMON STOCK, $.001 PAR VALUE
(Title of Class of Securities)
902 169 101
(CUSIP Number of Class of Securities)
DAVID J. FERRAN
CHAIRMAN OF THE BOARD,
PRESIDENT AND CHIEF EXECUTIVE OFFICER
TYLAN GENERAL, INC.
15330 AVENUE OF SCIENCE
SAN DIEGO, CALIFORNIA 92128
(619) 618-1990
(Name, address, and telephone number of person
authorized to receive notice and communications
on behalf of person(s) filing statement)
Copies to:
<TABLE>
<S> <C>
EDWARD S. ROSENTHAL, ESQ. D. BRADLEY PECK, ESQ.
Fried, Frank, Harris, Shriver & Jacobson LANCE W. BRIDGES, ESQ.
350 South Grand Avenue, 32nd Floor Cooley Godward LLP
Los Angeles, California 90071 4365 Executive Drive, Suite 1100
(213) 473-2000 San Diego, California 92121
(619) 550-6000
</TABLE>
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1. SECURITY AND SUBJECT COMPANY
The name of the subject company is Tylan General, Inc., a Delaware
corporation (the "Company"), and the address of the principal executive offices
of the Company is 15330 Avenue of Science, San Diego, California 92128.
The title of the class of equity securities to which this statement
relates is Common Stock, $.001 par value of the Company (the "Shares").
2. TENDER OFFER OF THE BIDDER
This statement relates to the tender offer (the "Offer") of Millipore
Corporation, a Massachusetts corporation ("Millipore" or the "Bidder") as
disclosed in the joint press release issued by the Company and the Bidder on
December 16, 1996, a copy of which is filed as Exhibit 99.1 hereto and is
incorporated herein by reference (the "Press Release"). The Offer is being made
by the Bidder pursuant to an Agreement and Plan of Merger (the "Agreement of
Merger") entered into on December 16, 1996 between the Company, Millipore and
MCTG Acquisition Corp. ("Bidder Sub"). The Bidder will commence the Offer within
five business days of December 16, 1996, under which Bidder Sub will offer to
purchase all of the outstanding Shares at a price of $16.00 per Share, net to
the seller in cash, subject to certain conditions therein.
The address of the principal executive offices of the Bidder is
80 Ashby Road, Bedford, Massachusetts 01730-9125.
3. IDENTITY AND BACKGROUND
(a) The name and business address of the Company, which is the person
filing this statement, are set forth in Item 1 above.
(b) (i) ARRANGEMENTS WITH THE COMPANY'S EXECUTIVE OFFICERS, DIRECTORS
AND AFFILIATES.
(1) Certain contracts, agreements, arrangements and
understandings between the Company and certain of its directors, executive
officers and affiliates, including a description of certain of the Company's
severance arrangements with certain of its executive officers, are described in
the Company's Proxy Statement in connection with the Company's 1996 Annual
Meeting of Stockholders under the Sections therein entitled "Executive
Compensation" and "Certain Transactions." The Proxy Statement is filed as
Exhibit 99.2 hereto and is incorporated by reference herein. A copy of relevant
portions of pages 14, 17 and 31 of the Proxy Statement, which are incorporated
by reference herein, are submitted with this statement as part of Exhibit 99.2.
In addition, a copy of the Company's 1989 Employment Agreement with
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David J. Ferran, the Company's Chief Executive Officer and President, is filed
as Exhibit 99.3 hereto and is incorporated by reference herein.
(2) The Company also maintains an Annual Incentive Bonus
Program ("AIBP") for its executive officers based on the achievement of annual
financial performance targets and other management objectives which are
established annually, but which are subject to adjustment by the Compensation
Committee of the Board of Directors of the Company (the "Board") as it deems
appropriate. Qualitative subjective performance criteria are utilized in the
determination of a variable portion of each executive officer's annual incentive
bonus, and the remainder of such bonus is determined based upon quantitative
objective performance criteria. The objective criteria utilized include
actual-versus-target sales, actual-versus-target earnings and other specified
management objectives. Target sales and target earnings established for the
purpose of determining bonus payments are based on the annual business plans and
operating budgets of the Company and each of its subsidiaries. The Company
accrues for these bonus payments currently throughout the year.
(3) In July 1996, the Board approved a bonus under the AIBP
in respect of the first six months of the Company's fiscal year ended October
27, 1996, calculated based on performance targets satisfied through April 30,
1996. A participant must be employed on the first business day of January 1997
(the "Payment Date") to receive payment of the first portion of the annual
bonus; provided, however, that in accordance with the Company's practice
regarding the payment of accrued bonuses, if the participant's employment is
terminated by the Company for any reason prior to the Payment Date, he or she
shall receive such bonus upon termination. The Board further decided that new
performance targets be established for the second half of fiscal 1996. Each
participant who is employed on the Payment Date shall receive payment of both
six-month bonuses in respect of the current fiscal year in a single distribution
on the Payment Date.
(4) In July 1996, the Board also approved certain amendments
to the AIBP. The amendments include the following:
a. Each participant in the AIBP who remains employed
through the first business day in the January following the end of the fiscal
year during which a change in control occurs (a "CIC Year") will receive a bonus
in respect of such CIC Year equal to (i) the bonus that would have been payable
in respect of such CIC Year assuming that all performance goals have been
satisfied, less (ii) any bonus in respect of a portion of such CIC Year that the
participant has already received;
b. Each participant in the AIBP whose employment is
terminated (a) by the Company for any reason, by the participant for "good
reason" (as defined in the AIBP) or, in the case of the Chief Executive Officer
of the Company, by
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the Chief Executive Officer for any reason during the "window period" (as
defined in the Severance Protection Agreement between the Chief Executive
Officer and the Company), (b) either after a change in control or prior to a
change in control at the request of a potential acquiror, and (c) prior to the
date on which bonuses are paid with respect to a CIC Year, will receive a bonus
in respect of the CIC Year in an amount equal to (i) the bonus that would have
been payable in respect of such CIC Year assuming that all performance goals
have been satisfied multiplied by a fraction, the numerator of which is the
number of days that have elapsed since the end of the fiscal year immediately
preceding the CIC Year through the date of such participant's termination (not
later than the end of the CIC Year) and the denominator of which is 365, less
(ii) any bonus in respect of a portion of the CIC Year which the participant has
already received.
(5) In July 1996, the Company entered into an employment
agreement with Don E. Whitson. The agreement provides that Mr. Whitson will
serve as the Company's Vice Chairman and Chief Administrative Officer at an
annual salary of $250,000. Mr. Whitson will also be eligible for an annual bonus
of up to 25% of his annual salary. The Company may terminate Mr. Whitson's
employment at any time for any reason, and in the event his employment is
terminated for cause, all compensation and benefits will cease. In the event Mr.
Whitson resigns from the Company for good reason or his employment is terminated
without cause, the Company shall continue to pay Mr. Whitson his salary (a)
until January 3, 1998, and (b) for twelve months following the later of (i) the
date of his actual termination of employment and (ii) January 3, 1998. A copy of
Mr. Whitson's employment agreement is attached hereto as Exhibit 99.4.
(6) In July 1996, the Company and Span Instruments, Inc., a
Texas corporation and wholly owned subsidiary of the Company ("Span"), entered
into an employment agreement with George A. Yurch, Jr. The agreement provides
that Mr. Yurch will serve as President of Span at an annual salary of $198,000.
Mr. Yurch will also be eligible to participate in Span's employee benefit plans
and incentive compensation programs. The term of the employment agreement is 18
months, provided that either party may terminate the agreement at any time for
any reason. In the event Mr. Yurch elects to resign from Span, he shall continue
to receive his salary for a period of six months, provided that he provides four
hours of consulting services to the Company each month. In the event Mr. Yurch's
employment is terminated for cause, Span shall continue to pay to Mr. Yurch his
salary for six months following the termination of his employment. In the event
Mr. Yurch's employment is terminated without cause, Span will continue to pay
his salary (1) until July 3, 1997, and (2) for six months following the later of
(a) the date of his actual termination of employment, and (b) July 3, 1997. A
copy of the employment agreement with Mr. Yurch is attached hereto as Exhibit
99.5.
(7) In July 1996, the Company entered into an Employment
Agreement with David L. Stone, the Company's Chief Financial Officer, which
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superseded any and all prior agreements between the parties. The agreement will
continue in effect until terminated by either party in accordance with its
terms. The agreement provides that Mr. Stone shall continue to receive such
salary as was then in effect, subject to review and possible revision at least
annually. Under the agreement, Mr. Stone is eligible to participate in the AIBP
and the Company's other employee benefit plans. The Company may terminate Mr.
Stone's employment at any time for any reason. In the event Mr. Stone resigns
from the Company for good reason (as defined in the employment agreement) or his
employment is terminated by the Company without cause (as defined in the
employment agreement), the Company shall pay Mr. Stone 18 months' base salary
and 100% of the bonus he actually received for the Company's most recently
completed fiscal year. In the event Mr. Stone resigns upon mutual agreement with
the Company and upon six months' notice, (a) the Company shall pay Mr. Stone his
base salary for six months following such notice and Mr. Stone shall continue to
serve as Chief Financial Officer or as an advisor to the Company, if required,
during such period; (b) Mr. Stone shall be eligible to receive a bonus of up to
50% of the maximum bonus for which he would have been eligible had he remained
an employee for the entire fiscal year in which his resignation occurred; and
(c) at the end of the six-month notice period and in addition to the bonus
payments, Mr. Stone shall receive a payment equal to (i) his base salary for six
months and (ii) an amount equal to 50% of the annual bonus Mr. Stone actually
received for the Company's most recently completed fiscal year. In the event Mr.
Stone is terminated for cause or he resigns without good reason, the Company
shall pay him six months' base salary and an amount equal to 50% of the bonus he
actually received for the Company's most recently completed fiscal year. A copy
of Mr. Stone's employment agreement is attached hereto as Exhibit 99.6.
(8) In July 1996, the Company entered into a Severance
Protection Agreement with David J. Ferran, the Company's Chief Executive Officer
and President. The agreement continues in effect until December 31, 1998,
subject to automatic renewals for additional one year periods unless either
party elects not to extend the term of the agreement. The agreement provides
that in the event (a) Mr. Ferran's employment is terminated without cause (as
defined in the agreement), or Mr. Ferran terminates his employment for good
reason (as defined in the agreement), within 15 months following a change in
control of the Company, or (b) Mr. Ferran terminates his employment for any
reason within 90 days following a change in control, he will receive a cash
severance payment equal to 2-1/2 times the greater of (a) the sum of base salary
and annual bonus at the rate in effect immediately prior to a change in control
and (b) the sum of his base salary at the rate in effect on his date of
termination, reduced by any amounts paid to Mr. Ferran pursuant to the
consulting agreement provision of his employment agreement. Mr. Ferran will also
receive health benefits at the Company's expense for a period of 30 months
following his termination. In July 1996, Mr. Ferran and the Company also entered
into an amendment to the Employment Agreement between the Company and Mr. Ferran
dated October 5, 1989. The amendment provides that (a) in the event that within
15 months of a change of control of the Company (i) Mr. Ferran's
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employment is terminated by the Company for cause (as defined in the employment
agreement) or (ii) Mr. Ferran resigns for other than good reasons (as defined in
the employment agreement) and (b) the Company elects to have Mr. Ferran provide
certain consulting services as specified in the employment agreement, the
Company shall pay Mr. Ferran at the time of such election in one lump sum an
amount equal to five times the sum of (x) his annual salary then in effect and
(y) the maximum bonus Mr. Ferran would have been entitled to receive through the
date of termination. Such lump sum payment shall be in addition to the other
consideration due Mr. Ferran under the employment agreement for such services as
well as the amounts payable to him under his Severance Protection Agreement. A
copy of the Severance Protection Agreement is attached hereto as Exhibit 99.7,
and a copy of the Amendment to Employment Agreement is attached hereto as
Exhibit 99.8.
(9) In July 1996, the Company entered into individual
Severance Protection Agreements with each of the following five executive
officers of the Company: Timothy R. Brown, Scott A. Cronk, David W. Dedman,
Michael A. Grandinetti and George A. Yurch, Jr. Each agreement remains in effect
until December 31, 1998, subject to automatic renewals for additional one year
periods unless either party shall elect not to extend the term of the agreement.
The agreement provides that if, within 15 months following a change in control
of the Company, (a) the executive officer's employment is terminated without
cause (as defined in the agreement) or (b) the executive officer terminates his
employment for good reason (as defined in the agreement), he will be entitled to
receive a cash severance payment equal to the greater of (a) the sum of his base
salary and annual bonus at the rate in effect immediately prior to a change in
control and (b) the sum of his base salary and annual bonus at the rate in
effect on his date of termination. The executive officer will also receive
Company-paid health benefits for a period of 12 months following termination. A
copy of the form of Severance Protection Agreement is attached hereto as Exhibit
99.9.
(10) On July 11, 1996, at a special meeting of the
subcommittee of the Compensation Committee of the Board, Messrs. Whitson and
Yurch were granted nonstatutory stock options to purchase 75,000 and 30,000
shares, respectively, of the Company's Common Stock at an exercise price of
$11.25 per share. The options were granted under the Company's 1994 Stock Option
Plan, as amended to date, and are subject to the following vesting schedule: 20%
of the shares subject to the options will vest on July 11, 1997, and thereafter,
on the first day of each October, January, April and July, the right to exercise
an additional 5% of the Options will vest, such that the options will be
completely vested on July 1, 2001.
(11) On October 3, 1996, at a meeting of a subcommittee of
the Compensation Committee of the Board, John Kizer, the Company's Vice
President and Corporate Controller, was granted an incentive stock option to
purchase 5,000 shares of the Company's Common Stock at an exercise price of
$11.25 per share. The option was
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granted under the Company's 1994 Stock Option Plan, as amended to date, and is
subject to the following vesting schedule: 20% of the shares subject to the
option will vest on July 11, 1997, and thereafter, on the first day of each
October, January, April and July, the right to exercise an additional 5% of the
shares will vest, such that the options will be completely vested on July 1,
2001. In December 1996, the Company entered into a Severance Protection
Agreement with Mr. Kizer. The agreement remains in effect until December 31,
1998, subject to automatic renewal for additional one year periods unless either
party shall elect not to extend the term of the agreement. The agreement
provides that in the event within 15 months following a change in control of the
Company, (a) Mr. Kizer's employment is terminated without cause or (b)
terminates his employment for good reason, he will be entitled to receive his
current salary, bonus and health benefits for a period of six months following
termination. Salary and bonus will be paid in a single lump sum payment; health
benefits will continue for the stated period. A copy of the Severance Protection
Agreement between the Company and Mr. Kizer is attached hereto as Exhibit 99.10.
(ii) ARRANGEMENTS WITH THE BIDDER, ITS EXECUTIVE OFFICERS,
DIRECTORS AND AFFILIATES.
(1) On December 16, 1996, the Company entered into the
Merger Agreement with the Bidder and Bidder Sub. The following summary of the
Merger Agreement is qualified in its entirety by reference to the Merger
Agreement, a copy of which is attached hereto as Exhibit 99.11. The Merger
Agreement should be read in its entirety for a more complete description of the
matters summarized below.
THE OFFER. Pursuant to the Merger Agreement, Bidder Sub will make an
offer to purchase all the outstanding Shares at a price of $16.00 per Share in
cash, without interest, upon the terms and subject to the conditions set forth
in the Offer Documents.
THE MERGER. The Merger Agreement provides that, upon the terms and
subject to the conditions of the Merger Agreement, and in accordance with
Delaware Law, Bidder Sub will be merged with and into the Company. Following the
effective time of the merger (the "Effective Time"), the separate corporate
existence of Bidder Sub will cease and the Company will continue as the
Surviving Corporation (sometimes referred to hereinafter as the "Surviving
Corporation"), and will succeed to and assume all the rights and obligations of
Bidder Sub in accordance with Delaware Law. The Certificate of Incorporation of
Bidder Sub (the "Certificate"), in effect at the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation, until duly amended in
accordance with the terms thereof, and the DGCL; provided, however, that at the
Effective Time, the Certificate shall be amended to change the name of the
Surviving Corporation to "Tylan General, Inc." The Bylaws of Bidder Sub in
effect at the Effective Time shall be the Bylaws of the Surviving Corporation,
until duly amended in accordance with the terms of DGCL.
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CONVERSION OF SHARES. At the Effective Time, each Share issued and
outstanding immediately prior to the Effective Time (other than Shares owned by
the Bidder, Bidder Sub or any other subsidiary of the Bidder) or Shares which
are held by stockholders ("Dissenting Stockholders") exercising appraisal rights
pursuant to Section 262 of the DGCL shall, by virtue of the Merger and without
any action on the part of the holder thereof, be converted into the right to
receive, without interest, an amount in cash equal to $16.00 or such greater
amount which may be paid pursuant to the Offer (the "Merger Consideration").
CONDITIONS TO THE MERGER. The Merger Agreement provides that the Merger
is subject to the satisfaction of the following conditions: (a) if approval of
the Merger by the holders of Shares is required by applicable law, the Merger
shall have been approved by the requisite vote of such holders; (b) no
injunction or other order shall have been issued or any law enacted which
prohibits the consummation of the Merger or makes such consummation illegal;
provided, however, that prior to either party invoking this provision, such
party shall have used its reasonable best efforts to have any such injunction
lifted; and (c) the waiting period applicable to the consummation of the Merger
under the Hart-Scott-Rodino Act shall have expired or been terminated and all
consents, approvals and authorizations required to be obtained prior to the
Effective Time by the Company from any governmental entity in connection with
the execution and delivery of this Agreement by the Company and the consummation
of the transactions contemplated thereby by the Company, the Bidder and Bidder
Sub shall have been made or obtained (as the case may be) except where the
failure to obtain the same would not have a material adverse effect on the
financial condition, properties, businesses or results of operations of the
company and its subsidiaries taken as a whole.
REPRESENTATIONS AND WARRANTIES. Pursuant to the Merger Agreement, the
Company has made customary representations and warranties to the Bidder relating
to the Company and each of its subsidiaries, including, among other things, with
respect to, organization and qualification, certificates of incorporation and
bylaws, capitalization, authority relative to the Merger Agreement, consents and
approvals, filings with the Securities and Exchange Commission (the
"Commission"), financial statements, absence of certain changes or events,
absence of litigation, employee benefit plans, taxes, proprietary rights,
opinions of financial advisors, brokers, compliance with environmental laws, and
the Rights Agreement.
The Bidder and Bidder Sub have also made customary representations and
warranties to the Company relating to the Bidder and Bidder Sub, including,
among other things, with respect to organization and qualification, authority
relative to the Merger Agreement, consents and approvals, filings with the
Commission, brokers, financing for the Offer and the Merger, and prior
activities.
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CONDUCT OF BUSINESS BY THE COMPANY. The Merger Agreement provides that,
prior to the Effective Time (unless the Bidder shall otherwise agree in writing
and except as otherwise contemplated by this Agreement): (a) the business of the
Company and its subsidiaries shall be conducted only in the ordinary and usual
course and, to the extent consistent therewith, each of the Company and its
subsidiaries shall use its reasonable best efforts to preserve its business
organization intact and maintain satisfactory relations with customers,
suppliers, employees and business associates, in each case in all material
respects; (b) the Company shall not (i) sell, pledge, dispose of or encumber or
agree to sell or pledge any stock owned by it in any of its subsidiaries; (ii)
amend its Certificate or Bylaws or increase or propose to increase the number of
directors of the Company; (iii) split, combine or reclassify the outstanding
Shares; or (iv) declare, set aside or pay any dividend payable in cash, stock or
property with respect to the Shares; (c) neither the Company nor any of its
subsidiaries shall (i) issue, sell, pledge, dispose of or encumber any
additional shares, or securities convertible or exchangeable for, or options,
warrants, calls, commitments or rights of any kind to acquire, any shares of its
capital stock other than, in the case of the Company, Shares issuable pursuant
to options outstanding on the date of the Merger Agreement under any employee
stock option plan; (ii) transfer, lease, license, guarantee, sell, mortgage,
pledge, dispose of or encumber any assets or incur or modify any indebtedness or
other liability involving an amount in excess of $100,000 in the aggregate other
than in the ordinary and usual course of business; (iii) acquire directly or
indirectly by redemption or otherwise any shares of the capital stock of the
Company; (iv) incur any indebtedness for borrowed money (except for working
capital under the Company's existing credit facilities and refinancing of
existing debt that permit prepayment of such debt without penalty) involving an
amount in excess of $100,000 in the aggregate or assume or endorse the
obligations of any other person or entity; (v) make any acquisition of, or
investment in, assets or stock of any other person or entity involving an amount
in excess of $100,000 in the aggregate other than in the ordinary course of
business or (vi) make or authorize any capital expenditure in excess of $500,000
in the aggregate; (d) except for normal increases in the ordinary course of
business that are consistent with past practices and that, in the aggregate, do
not result in a material increase in benefits or compensation expense, adopt or
amend (except as may be required by law or as provided in the Merger Agreement)
any bonus, profit sharing, compensation, severance, termination, stock option,
stock appreciation right, restricted stock, pension, retirement, deferred
compensation, employment, severance or other employee benefit agreements,
trusts, plans, funds or other arrangements for the benefit or welfare of any
director, officer or employee, or increase in any manner the compensation or
fringe benefits of any director, officer or employee or pay any benefit not
required by any existing plan or arrangement (including, without limitation, the
granting of stock options, stock appreciation rights, shares of restricted stock
or performance units) or enter into any contract, agreement, commitment or
arrangement to do any of the foregoing; (e) neither the Company nor any of its
subsidiaries shall, except in the ordinary and usual course of business, enter
into any material agreement or modify, amend or terminate any
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of its material agreements or waive, release or assign any material rights or
claims thereunder; and (f) neither the Company nor any of its subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
ACQUISITION PROPOSALS. Pursuant to Merger Agreement, the Company has
agreed that neither the Company nor any of its subsidiaries nor any of the
respective officers and directors of the Company or its subsidiaries shall, and
the Company shall direct and use its best efforts to cause its employees, agents
and representatives (including, without limitation, any investment banker,
attorney or accountant retained by the Company or any of its subsidiaries) not
to, initiate, continue, solicit or encourage, directly or indirectly, any
inquiries or the making of any proposal or offer (including, without limitation,
any proposal or offer to stockholders of the Company), or furnish any nonpublic
information to any third party, with respect to a merger, consolidation,
business combinations or similar transaction involving, or any tender offer,
exchange offer or other purchase of all or any significant portion of the assets
or any equity securities of, the Company or any of its subsidiaries (any such
proposal or offer being hereinafter referred to as an "Acquisition Proposal")
or, unless the Board receives an unsolicited written offer with respect to a
merger, consolidation or sale of all or substantially all of the Company's
assets or an unsolicited tender or exchange offer for the Shares is commenced,
which the Board determines in good faith (after receiving advice of independent
legal counsel that such action is required for the discharge of their fiduciary
duties) is more favorable to the stockholders of the Company than the Offer (an
"Alternative Transaction"), engage in any negotiations concerning, or provide
any confidential information or data to, or have any discussions with, any
person relating to an Acquisition Proposal, or otherwise facilitate any effort
or attempt to make or implement an Acquisition Proposal. The Company will
immediately cease and cause to be terminated any existing activities,
discussions or negotiations with any parties conducted heretofore with respect
to any of the foregoing. The Company will as promptly as reasonably practicable
(and in any event within 24 hours) notify the Bidder (i) if any such inquiries
or proposals are received by, any such information is requested from, or any
such negotiations or discussions are sought to be initiated with the Company,
(ii) of its receipt of an Acquisition Proposal or (iii) of the existence of an
Alternative Transaction. Prior to furnishing nonpublic information to, or
entering into discussions or negotiations with, any other persons or entities,
the Company shall obtain from such person or entity an executed confidentiality
agreement with terms no less favorable, taken as a whole, to the Company than
those contained in the Confidentiality Agreement, but which confidentiality
agreement shall not include any provision calling for an exclusive right to
negotiate with the Company, and the Company shall advise purchaser of all such
nonpublic information delivered to such person concurrently with its delivery to
the requesting party.
TERMINATION OF THE MERGER AGREEMENT. The Merger Agreement may be
terminated at any time prior to the Effective Time of the Merger, whether before
or after the approval of the terms of the Merger Agreement by the shareholders
of the Company:
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(1) by mutual consent of the Bidder and the Company, by action of their
respective Board of Directors;
(2) by either the Bidder or the Company, if (a) without fault of the
terminating party, the Merger shall not have been consummated by June 30, 1997
whether or not such date is before or after the approval by holders of Shares;
or (b) any court of competent jurisdiction or other governmental body located or
having jurisdiction within the United States or any country or economic region
in which the Company or any of its subsidiaries or the Bidder or any of its
affiliates, directly or indirectly, has material assets or operations, shall
have issued an order, decree or ruling or taken any other action restraining,
enjoining or otherwise prohibiting the Offer or the Merger and such order,
decree, ruling or other action shall have become final and non-appealable;
(3) by the Bidder if the Company shall have failed to comply in any
material respect with the convenants or agreements contained this Agreement to
be complied with or performed by the Company at or prior to such date of
termination and, with respect to any such failure that can be remedied, the
failure is not remedied within fifteen days after the Bidder has furnished the
Company with written notice of such failure;
(4) by the Company if the Bidder or Bidder Sub (or another bidder) (i)
shall have failed to comply in any material respect with the covenants or
agreements contained in this Agreement to be complied with or performed by the
Bidder or Bidder Sub at or prior to such date of termination and, with respect
to any such failure that can be remedied, the failure is not remedied within
fifteen days after the Company has furnished the Bidder with written notice of
such failure, (ii) shall have failed to commence the Offer within the time
required or (iii) shall have terminated or withdrawn the Offer or amended the
Offer in any manner not expressly permitted by this Agreement; or
(5) (a) by either the Bidder or the Company, if that entity is not in
material breach of any of the terms of the Merger Agreement, not sooner than the
third business day after the Company's notice to the Bidder (or the Bidder's
becoming aware) that the Company has entered into an agreement providing for an
alternative Transaction; or (b) by the Bidder, if the Board shall have withdrawn
or modified in any manner adverse to the Bidder or Bidder Sub its approval of
the Offer, the Merger Agreement and the Merger or its recommendation that the
Company's stockholders accept the Offer.
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In the event of termination and abandonment, the Agreement shall
forthwith become void and have no further effect, other than certain limited
provisions. No such termination and abandonment and nothing contained in this
section shall relieve any party from liability for any breach of this Agreement,
and, if this Agreement is terminated pursuant to clause (5) above, the Company
will be obligated to pay the Bidder a non-refundable fee of $5,000,000. In
addition, if the Company shall have failed to provide the Bidder, prior
to the termination of the Offer, with audited fiscal 1996 financial statements
which are the same in all material respects as the fiscal 1996 financial
statements (without notes) previously provided to the Bidder, accompanied by an
unqualified audit opinion by the Company's auditors and containing notes that do
not include any information that is different from that previously provided to
the Purchaser pursuant to the Merger Agreement to the extent that such
difference constitutes a material adverse effect on the Company (except where
the failure to meet such standards results solely from facts or circumstances
arising after October 31, 1996 reflected in the audited 1996 financial
statements in a manner that results in a difference from the fiscal 1996
financial statements previously provided to the Bidder that constitutes a
material adverse effect on the financial condition, properties, businesses or
results of operations of the Company and its subsidiaries taken as a whole), the
Company will be obligated to pay the Bidder a non-refundable fee of $75,000.
EXPENSES. Whether or not the Merger is consummated, each party shall
pay its own expenses incident to preparing for, entering into and carrying out
this Agreement and the consummation of the Merger.
BOARD OF DIRECTORS. The Merger Agreement provides that if requested by
the Bidder, the Company will, subject to compliance with applicable law and
immediately following the purchase by Bidder Sub of more than 50% of the
outstanding Shares pursuant to the Offer, take all actions necessary to cause
persons designated by the Bidder to become directors of the Company so that the
total number of such persons equals that number of directors, rounded up to the
next whole number, which represents the product of (x) the total number of
directors on the Board of Directors multiplied by (y) the percentage that the
number of Shares so purchased plus any Shares beneficially owned by the Bidder
or its Affiliates on the date hereof bears to the number of shares outstanding
at the time of such purchase; provided, however, that in no event shall the
Bidder be entitled to designate a majority of the Board of Directors unless it
is the beneficial owner of Shares entitling it to exercise at least a majority
of the voting power of the Company's outstanding shares entitled to vote
generally in the election of directors. In furtherance thereof, the Company will
use its reasonable best efforts to secure the resignation of all but three
directors, or will increase the size of the Board, or both, as is necessary to
permit the Bidder's designees to be elected to the Company's Board of Directors;
provided, however, that prior to the Effective Time, the Company's Board of
Directors shall always have at least three Continuing Directors. Immediately
following the purchase by Bidder Sub of more than 50% of the outstanding shares
pursuant to the Offer, the Company, if so requested, will use its reasonable
efforts to cause persons designated by the Bidder to constitute the same
percentage of each committee of such board, each board of directors of each
subsidiary of the Company and each committee of each such board (in each case to
the extent of the Company's ability to elect such persons). The Company's
obligations to appoint designees to the Board of Directors shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company shall
promptly take all actions required in order to fulfill these obligations. The
Bidder will supply to the Company in writing and be solely responsible for any
information with respect to the Bidder and its subsidiaries and the nominees,
directors
12.
<PAGE> 13
and affiliates thereof required by Section 14(f) and Rule 14f-1 to be included
in Schedule 14D-9.
Following the election or appointment of the Bidder's designees, and
prior to the Effective Time, the approval of a majority of the Continuing
Directors shall be required to authorize (and such authorization shall
constitute the authorization of the Board and no other action on the part of the
Company, including any action by any other director of the Company, shall be
required to authorize) any termination of this Agreement by the Company, any
amendment of this Agreement requiring action by the Board, any extension of time
for the performance of any of the obligations or other acts of the Bidder or
Bidder Sub, any waiver of compliance with any of the agreements or conditions
contained herein for the benefit of the Company or any other rights of the
Company hereunder, and any amendment or withdrawal by the Board of its
recommendation of the Merger.
STOCK OPTIONS. Pursuant to the Merger Agreement, the Bidder and the
Company have agreed that not later than the Effective Time and continuing for a
period of at least 120 days after the Effective Time, the Bidder shall offer in
writing to each holder of a Company Stock Option (whether or not such Company
Stock Option terminates effective as of the Effective Time by virtue of the
Merger or would have terminated thereafter) the opportunity to have such Company
Stock Option canceled and to receive an amount in cash equal to the excess of
the Merger Consideration over the exercise price per Share of such Company Stock
Option multiplied by the number of Shares previously subject to such Company
Stock Option, less all applicable withholding taxes. Any Company Stock Options
not tendered for cancellation pursuant to such offer shall continue to be
governed by the terms of such Company Stock Option and the applicable Company
Stock Option Plan.
EMPLOYEE BENEFITS. Pursuant to the Merger Agreement, the Bidder shall
(i) cause the Surviving Corporation to provide to employees of the Company and
its subsidiaries, who are employed by the Surviving Corporation or its
subsidiaries following the Effective Time ("Company Employees"), employee
benefits which in the aggregate are equal to benefits substantially comparable
to those currently provided by the Company to such employees, (ii) in the event
that Company Employees are or become eligible to participate in any plans
maintained by the Bidder or its subsidiaries (the "Bidder Benefit Plans"), the
Bidder or its subsidiaries shall grant such eligible employees credit for
purposes of eligibility, vesting and benefit accrual, for all service credited
for such purposes under comparable Company Benefit Plans, provided, however,
that, with respect to the Bidder's Retirement Plan, such service with the
Company shall be credited with respect to eligibility and vesting only, and
shall not be recognized for purposes of determining the amount of retirement
benefits, if any, under the Bidder's Retirement Plan, and (iii) with regard to
any pre-existing condition exclusion under any Bidder Benefit Plan, the
exclusion providing medical or dental benefits shall be no more
13.
<PAGE> 14
restrictive for any Company Employee who, immediately prior to commencing
participation in such Bidder Benefit Plan, was participating in a Company
Benefit Plan providing medical or dental benefits and had satisfied any
pre-existing condition provision under such Company Benefit Plan. Any expenses
that were taken into account under a Company Benefit Plan providing medical or
dental benefits in which the Company Employee participated immediately prior to
commencing participation in a Bidder Benefit Plan providing medical or dental
benefits shall be taken into account to the same extent under such Bidder
Benefit Plan, in accordance with the terms of such the Bidder Benefit Plan, for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions and lifetime benefit limits.
INDEMNIFICATION AND INSURANCE. In the Merger Agreement, the Bidder and
the Company have agreed that (i) the Certificate of Incorporation of the
Surviving Corporation shall contain provisions with respect to indemnification
not less favorable to the directors and officers then those set forth in the
Certificate of Incorporation of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by Law,
(ii) the Bidder shall cause the Surviving Corporation to use its reasonable best
efforts to maintain in effect for six years from the Effective Time, if
available, the coverage provided by the current directors' and officers'
liability insurance policies maintained (provided that the Surviving Corporation
may substitute therefor policies of at least the same coverage containing terms
and conditions which are not materially less favorable) with respect to matters
occurring prior to the Effective Time; provided, however, that Surviving
Corporation is not required to incur any annual premium in excess of 200% of the
last annual aggregate premium paid prior to the date of this Agreement for all
current directors' and officers' liability insurance policies maintained by the
Company, which the Company represents and warrants to be $150,000 (the "Current
Premium"); and provided further that if premiums for such insurance would at any
time exceed 200% of the Current Premium, then the Surviving Corporation shall
cause to be maintained policies of insurance which, in the Surviving
Corporation's good faith determination, provide the maximum coverage available
at an annual premium equal to 200% of the Current Premium, and (iii) the
indemnification shall survive the Effective Time, and is intended to be for the
benefit of, and shall be enforceable by, the Indemnified Parties and shall be
binding on the Bidder and Bidder Sub and the Surviving Corporation and their
respective successors and assigns. The Bidder shall guarantee the
indemnification obligations of the Surviving Corporation under the Merger
Agreement.
CONDITIONS TO THE OFFER. The Merger Agreement provides that Bidder Sub
shall not be required to accept for payment or, subject to any applicable rules
and regulations
14.
<PAGE> 15
of the Commission, including Rule 14e-1(c) promulgated under the Securities
Exchange Act (relating to the Bidder's obligation to pay for or return tendered
Shares promptly after termination or withdrawal of the Offer), pay for, or may
delay the acceptance for payment of or payment for, any tendered Shares, or may,
in its sole discretion, terminate or amend the Offer as to any Shares not then
paid for if a majority of the total Shares outstanding on a fully diluted basis
and as will permit Bidder Sub to effect the Merger without the vote of any
person other than Bidder Sub shall not have been properly and validly tendered
pursuant to the Offer and not withdrawn prior to the expiration of the Offer
(the "Minimum Condition"), or, if on or after the date of the Agreement, and at
or before the time of payment for any of such Shares (whether or not any of such
Shares have theretofore been accepted for payment), any of the following events
shall occur; (a) there shall have occurred (i) any general suspension of, or
limitation on trading in securities on the NYSE or in the over-the-counter
market (other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or (iii) a commencement of a war or
armed hostilities involving the United States and continuing for at least three
business days and which has a material adverse effect on the financial
condition, properties, businesses or results of operations of the Company and
its subsidiaries taken as a whole (a "Company Material Adverse Effect"); (b) the
Company shall have breached or failed to perform in any material respect its
obligations, covenants or agreements under the Agreement and, with respect to
any such failure that can be remedied, the failure is not remedied on or before
the Closing Date, or any representation or warranty of the Company set forth in
the Agreement shall have been inaccurate or incomplete in any respect except as
would not have a Company Material Adverse Effect; (c) there shall be instituted
or pending any action, litigation, proceeding, investigation or other
application (hereinafter, an "Action") before any court of competent
jurisdiction or other governmental entity by any governmental entity that is
reasonably likely to: (i) result in a restriction or prohibition on the
consummation of the transactions contemplated by the Offer or the Merger; (ii)
prohibit, or impose any material limitations on the Bidder's or Bidder Sub's
ownership or operation of all or a material portion of their or the Company's
business or assets, or to compel the Bidder or Bidder Sub to dispose of or hold
separate all or a material portion of the Bidder's or Bidder Sub's or the
Company's business or assets; (iii) make the acceptance for payment of, purchase
of, or payment for, some or all of the Shares illegal or rendering the Bidder or
Bidder Sub unable to, or restricting or prohibiting, the ability of the Bidder
or Bidder Sub to accept for payment, purchase or pay for some or all of the
Shares; or (iv) impose material limitations on the ability of the Bidder or
Bidder Sub effectively to acquire or hold or to exercise full rights of
ownership of the Shares including, without limitation, the right to vote the
Shares purchase by them on an equal basis with all other Shares on all matters
properly presented to the stockholders of the Company; (d) any statute, rule,
regulation, order or injunction shall be enacted, promulgated, entered, enforced
or deemed to or become
15.
<PAGE> 16
applicable to the Offer or the Merger that results in any of the consequences
referred to in clauses (i) through (iv) of paragraph (c) above; (e) any person,
entity or group shall have entered into a definitive agreement or an agreement
in principal with the company with respect to a tender offer or exchange offer
for some portion or all of the Shares or a merger, consolidation or other
business combination with or involving the Company; (f) the Board shall have
withdrawn or amended, or modified in a manner materially adverse to the Bidder
or Bidder Sub, its recommendation of the Offer or the Merger, or shall have
approved or recommended any other Acquisition Proposal; or (g) the Merger
Agreement shall have been terminated by the Company or the Bidder or Bidder Sub
in accordance with its terms or the Bidder or Bidder Sub shall have reached an
agreement or understanding in writing with the Company providing for termination
or amendment of the Offer or delay in payment for the Shares.
(2) On December 16, 1996, David J. Ferran, Don E. Whitson and certain
other Stockholders of the Company (each individually, a "Securityholder" and
collectively, the "Securityholders") and Bidder and Bidder Sub entered into a
Voting and Securities Purchase Agreement (the "Voting Agreement"). A copy of the
Voting Agreement is filed as Exhibit 99.12 hereto and is incorporated herein by
reference. Messrs. Ferran and Whitson own 189,309 and 734,103 Shares,
respectively, and options to purchase an additional 120,312 and 75,000 Shares,
respectively. The other Securityholders own an aggregate of 405,649 Shares and
options to purchase an additional 20,000 Shares. The Voting Agreement shall
terminate upon the earlier to occur of (i) the mutual consent of Bidder, Bidder
Sub and each of the Securityholders, (ii) the termination of the Merger
Agreement, or (iii) the Effective Time of the Merger.
Pursuant to the Voting Agreement, each Securityholder agreed
that: (i) it would validly tender (and not withdraw) pursuant to and in
accordance with the terms of the Offer, all Shares owned by such Securityholder;
(ii) subject to the fiduciary duty of any Securityholder serving as a director
or officer of the Company, in its capacity as such, it shall assist and
cooperate with the parties to the Merger Agreement in doing all things
necessary, proper or advisable under applicable laws as promptly as practicable
to consummate and make effective the Offer and the Merger and the other
transactions contemplated by the Merger Agreement; and (iii) it shall not,
directly or indirectly, solicit, initiate or continue or encourage or take other
action to facilitate any inquiries or the making of any proposal that
constitutes or may reasonably be expected to lead to, an Acquisition Proposal or
an Alternative Transaction from any person other than Bidder or Bidder Sub, or
engage in any discussions or negotiations relating thereto or in furtherance
thereof or accept or enter into any agreement with respect to any Acquisition
Proposal; provided, however, that notwithstanding any other provision of the
Voting Agreement, if such Securityholder is a director or officer of the
Company, such Securityholder may take any action, including casting a vote or
signing a written consent, in such person's capacity as a director or officer
that the Board would be permitted to take under the Merger Agreement with
respect to an Acquisition Proposal; (iv) it shall not, except
16.
<PAGE> 17
pursuant to the Merger Agreement or the Voting Agreement, sell, transfer,
pledge, hypothecate, encumber or otherwise dispose of (or enter into an
agreement to do the foregoing) any of or any of its interest in its Shares; and
(v) except pursuant to the Voting Agreement, it shall not grant any proxies,
deposit any Shares into a voting trust or enter into any voting agreement with
respect to any Shares.
Each Securityholder further agreed that, during the term of
the Voting Agreement, at any meeting of stockholders of the Company, and in any
action by written consent of the stockholders of the Company, to: (i) vote all
Shares then owned by such Securityholder in favor of adoption of the Merger
Agreement and each of the other transactions contemplated thereby and any action
required in furtherance thereof; (ii) vote such Shares against any action or
agreement that would result in a breach in any material respect of any covenant,
representation or warranty or any other obligation of the Company under the
Merger Agreement; and (iii) vote such Shares against any Acquisition Proposal,
Alternative Transaction or any other action or agreement that, directly or
indirectly, is inconsistent with or that would, or is reasonably likely to,
directly or indirectly, impede, interfere with or attempt to discourage the
Offer or the Merger or any other transaction contemplated by the Merger
Agreement; provided, however, that if such Securityholder is a director or
officer of the Company, nothing in the Voting Agreement shall be construed to
obligate such Securityholder to act, in such Securityholder's capacity as a
director or officer, in any manner which conflicts with such person's fiduciary
duties as a director of the Company. In furtherance of the foregoing, each
Securityholder appointed Bidder and the officer of Bidder, and each of them,
with full power or substitution in the premises, its proxies to vote all such
Securityholder's Shares at any meeting, general or special, of the stockholders
of the Company, and to execute one or more written consents or other instruments
from time to time in order to take such action without the necessity of a
meeting of the stockholders of the Company, in accordance with the provisions of
this paragraph.
(3) On December 13, 1996, the Bidder entered into a letter agreement
with David J. Ferran (the "Letter Agreement"). The following summary of the
Letter Agreement is qualified in its entirety by reference to the Letter
Agreement, a copy of which is attached hereto as Exhibit 99.13. Pursuant to the
Letter Agreement, the Bidder has agreed to pay Mr. Ferran a lump sum payment of
$851,425 and certain medical benefits following the consummation of the Merger.
The Bidder has also agreed to enter into a Consulting Agreement with Mr. Ferran
upon the termination of his employment following the Merger. Such Consulting
Agreement will require the Bidder to pay Mr. Ferran a lump sum amount of
$1,702,850 for his services thereunder at the termination of the Consulting
Agreement. Mr. Ferran has agreed that upon payment of the $851,425 and execution
of the Consulting Agreement, all prior agreements between the Company and Mr.
Ferran relating to his employment or the termination of his employment will be
of no further force and effect.
17.
<PAGE> 18
(4) David J. Ferran serves on the Technical Advisory
Committee of the Bidder.
4. THE SOLICITATION OR RECOMMENDATION
(a) RECOMMENDATION. On December 16, 1996, the Board, based on the unaminous
recommendation of the Special Committee, voted by a unanimous vote of the
directors present to recommend acceptance of the Offer by the holders of Shares
and of the Merger Agreement and authorization of the Merger by the stockholders
of the Company. The Board (i) approved the Offer, the purchase of Shares
pursuant to the Offer and the Merger in accordance with Section 203 of the
Delaware General Corporation Law and (ii) determined that the Offer is a
"Permitted Offer," as that term is defined in the Rights Agreement, as defined
below. The Board, based on the unanimous recommendation of the Special
Committee, by a unanimous vote of the directors present determined that the
Offer and the Merger Agreement are in the best interests of the Company and its
stockholders.
The press release announcing the Board's recommendation is filed as
Exhibit 99.1, and is incorporated herein by reference.
(b) BACKGROUND. On June 27, 1996, Danaher Corporation ("Danaher") filed
a Schedule 13D disclosing beneficial ownership of 678,400 shares of the
Company's Common Stock (approximately 10.4% of such then outstanding shares). In
its Schedule 13D, Danaher also disclosed that it "may consider seeking control
of the Issuer (the Company)." Shortly after filing its Schedule 13D, Danaher
requested a meeting with senior management of the Company, which request was
rejected.
On June 30, 1996, the Board met to consider its response to the filing
by Danaher of its Schedule 13D. The Board heard reports from the Company's
management concerning the financial condition of the Company and from the
Company's legal advisors concerning the Board's legal obligations with respect
to the filing of the Schedule 13D by Danaher. The Board also considered
Danaher's history and pattern of conduct in acquiring companies by both
negotiated and hostile means. The Board heard preliminary reports on the
advisability of certain measures to preserve stockholder value, including the
possible adoption of a stockholders rights plan.
On July 2, 1996, the Board met to consider the adoption of a
stockholder rights plan. The Board received reports from the Company's legal and
financial advisors, following which the Board approved the rights plan, and the
Company and The First National Bank of Boston entered into a Rights Agreement
(the "Rights Agreement"), under which preferred share purchase rights were
issued to the Company's stockholders. This rights plan was designed to protect
shareholders from various abusive takeover tactics, including attempts to
acquire control of the Company at an inadequate price.
18.
<PAGE> 19
In July 1996, the Company entered into severance agreements with
certain executive officers. See Item 3, "Arrangements with the Company's
Executive Officers, Directors and Affiliates."
In early August 1996, David Ferran indicated that he was considering
the possibility of making a proposal to acquire the Company, and the Company
received expressions of interest from potential industry buyers regarding an
acquisition of the Company. In response, on August 15, 1996, the Board
established a Special Committee to supervise the exploration of strategic
alternatives for the Company, including the solicitation of proposals to acquire
the Company ("Acquisition Proposals") and the negotiation and evaluation of any
Acquisition Proposals, and to make recommendations to the Board with respect to
any Acquisition Proposals. The Special Committee originally consisted of Larry
Hansen, Arthur C. Spinner and Wade Woodson. In September 1996, Mr. Woodson
resigned as a member of the Special Committee, and Bruce Rhine was appointed to
the Special Committee to replace Mr. Woodson. Mr. Spinner acted as Chairman of
the Special Committee.
On August 15, 1996, the Special Committee retained Fried, Frank,
Harris, Shriver & Jacobson ("Fried Frank") as its legal counsel and retained
Goldman, Sachs & Co. ("Goldman Sachs") as its financial advisor.
On August 19, 1996, Derrick N. Key, a member of the Board, resigned
from the Board.
On August 20, 1996, the Company issued a press release announcing that
it was exploring the possible sale of the Company.
On August 20, 1996, David J. Ferran, Don E. Whitson, Michael Khougaz, a
director of the Company, and certain other persons, including other members of
management of the Company (the "Management Group"), filed an amendment to Mr.
Whitson's Schedule 13D indicating that they had formed a group that was
exploring the possibility of making an Acquisition Proposal. On October 23,
1996, the Company and the Rights Agent executed an Amendment to the Rights
Agreement which amended the definition of an Acquiring Person under the Rights
Agreement solely for the purpose of allowing the Management Group and Equinox
Investment Partners, LLC ("Equinox") to form a group for the purpose of making
an Acquisition Proposal pursuant to the procedures established by the Special
Committee. On October 23, 1996, the Management Group filed an amendment to their
Schedule 13D indicating that Equinox and certain related entities were
contemplating joining the Management Group with respect to a possible
Acquisition Proposal.
Commencing in September 1996, Goldman Sachs contacted 58 parties with
respect to the possibility of such parties making an Acquisition Proposal.
Commencing in September 1996, Goldman Sachs distributed a Confidential Offering
Memorandum to 16
19.
<PAGE> 20
potentially interested industry and financial parties (including the Bidder)
that had entered into Confidentiality Agreements with the Company. The
opportunity to enter into a Confidentiality Agreement and to review a
Confidential Offering Memorandum had been offered to all parties who contacted
the Company or Goldman Sachs following the announcement by the Company that it
was considering a possible sale, as well as parties who the management and
Goldman Sachs thought might be interested in making an Acquisition Proposal.
Each of the potentially interested industry and financial parties were orally
contacted following distribution of the Confidential Offering Memorandum to
ascertain the degree of their interest in acquiring the Company and their
preliminary view as to form and amount of consideration, sources of financing
and contingencies, if any, as well as other relevant issues. Such participants
were also invited to make non-binding Acquisition Proposals. As a result of
this process, four parties (including the Bidder and the Management Group) were
invited into the "second stage" of the process, thereby entitling them to
perform extensive due diligence, document review, facility visitation and
management interviews.
After its organizational meeting on August 15, 1996 and a meeting on
August 16, 1996 to address guidelines for a possible management proposal to
acquire the Company, the Special Committee held meetings on September 3,
September 18, October 3, October 11, October 18, November 11, November 19,
November 27, December 5 and December 13, 1996, at each of which the Special
Committee reviewed with its financial and legal advisors the status of matters
at that point and the process going forward.
On November 12, 1996, the four remaining participants were invited to
submit definitive Acquisition Proposals on November 26, 1996. The deadline for
submitting Acquisition Proposals was extended through December 12, 1996.
In accordance with procedures established by the Special Committee for
the submission of definitive Acquisition Proposals, the Committee received
definitive Acquisition Proposals from two participants (including the Bidder).
On December 13, 1996, the Special Committee reviewed and considered analyses
prepared by its financial and legal advisors regarding the proposals. Based on
this review and in light of the factors set forth below, the Special Committee
decided to recommend that the Board proceed to a definitive agreement with the
Bidder based on its proposal. Following the meeting of the Special Committee,
the Board met to hear a report from the Special Committee and consider what
action to take with respect to the Acquisition Proposals that had been received.
At the Board's meeting, the Special Committee provided its recommendation with
respect to, and analysis of, the Acquisition Proposals, followed by a report by
Goldman Sachs and Fried Frank regarding their respective analyses. During the
meetings of the Special Committee and the Board, the financial and legal
advisors sought clarification from the Bidder and its advisors as to certain
aspects of the Bidder's Acquisition Proposal. The Board then determined that it
was in the best interests of the Company and its stockholders to seek to
negotiate a definitive merger agreement with the
20.
<PAGE> 21
Bidder. On December 13, 14, 15 and 16, the Company and its advisors and
representatives engaged in negotiations with the Bidder and its advisors and
representatives with respect to a prospective definitive merger agreement.
On December 15, 1996, the Board met to receive reports from management
and the Company's financial and legal advisors on the status of negotiations
with the Bidder.
On December 16, 1996, in response to reports of increased market
activity, the Company issued a press release announcing (i) that it was in
active negotiations with a third party regarding an acquisition of the Company
at $16.00 per Share, and (ii) that there could be no assurance that such a
transaction would, in fact, occur.
On December 16, 1996, the Board met to consider the results of that
negotiation process and, after considering reports from management and the
Company's financial and legal advisors (including Goldman Sachs' opinion that
the $16.00 in cash to be received by the holders of shares in the Offer and
Merger, taken as a unitary transaction, is fair to such holders), voted to enter
into the Merger Agreement and to recommend that stockholders accept the Offer.
(c) REASONS FOR RECOMMENDATION. Prior to reaching their conclusions,
the Special Committee and the Board received presentations from, and reviewed
the Offer with, the financial and legal advisors to the Special Committee and
the Company. In reaching their conclusions with respect to the Offer, the
Special Committee and the Board principally considered the following factors:
(i) The Per Share Price of $16.00 represents a premium over
recent and historical market prices for the Shares. On December 13, 1996, the
last trading day before announcement of the Merger Agreement and the Offer, the
closing price of the Common Stock on the NASDAQ National Market was $11.50. On
June 26, 1996, the last trading day prior to the initial filing by Danaher of
its Schedule 13D, the closing price of the Common Stock on the NASDAQ National
Market was $9.875. On August 19, 1996, the last trading day prior to the
Company's announcement that it was exploring the possible sale of the Company,
the closing price of the Common Stock on the NASDAQ National Market was $10.25.
(ii) The Offer resulted from a comprehensive auction process
that the Board and the Special Committee believe was conducted in a manner
calculated to result in the most attractive financial alternative available to
the Company's stockholders. See "Background" above. In particular, the Special
Committee and the Board noted that the auction process had been conducted over a
period of several months under the active oversight of the Special Committee
assisted by the Special Committee's legal and financial advisors, that the
auction process had been publicly announced and that the Special Committee's
legal and financial advisors had reported to the Special Committee on the
fairness of the process. The Special Committee and Board also considered the
fact
21.
<PAGE> 22
that Goldman Sachs had had preliminary conversations with 58 potentially
interested parties, of whom 16 had entered into Confidentiality Agreements with
the Company, and that four of such parties performed significant due diligence
in anticipation of submitting bids. It was the judgment of the Special Committee
and the Board that there was not a significant likelihood of receiving a more
attractive offer from any other party.
(iii) In light of the directors' familiarity with the
Company's business, short-term and long-term prospects, financial condition,
results of operation, current business strategy, and the nature of its industry
position, as well as current economic and market conditions and the directors'
recognition that the near-term trading price for the Shares, if neither the
Merger Agreement with the Bidder nor any similar transaction is consummated,
might be lower than both $16.00 and the current market price of the Common Stock
on the NASDAQ National Market, the Special Committee and the Board believe that
the Offer and the Merger reflect the best alternative currently available to the
Company. In this connection, the Board and the Special Committee took into
account the speculative nature of any effort to predict the Company's operating
performance over the next several years.
(iv) The Offer is not contingent on obtaining financing and
contains no other terms or conditions that, in the view of the Special Committee
and the Board, could materially impair the consummation of the Offer or Merger.
(v) The fact that, to the extent the Board receives an
unsolicited written offer with respect to a merger, consolidation or sale of all
or substantially all of the Company's assets or an unsolicited tender or
exchange offer for the Shares is commenced, which the Board determines in good
faith (after receiving advice of independent legal counsel that such action is
required for the discharge of their fiduciary duties) is more favorable to the
stockholders of the Company than the Offer, the Board may amend or withdraw its
recommendation or pursue a transaction with respect to such an unsolicited offer
(subject to payment of a $5 million termination fee to the Bidder) without
breaching the Merger Agreement.
(vi) The presentation of Goldman Sachs to the Special
Committee and the Board at the December 16, 1996 Board meeting and the oral
opinion of Goldman Sachs to the effect that, as of December 16, 1996, the $16.00
per Share in cash to be received by the holders of Shares in the Offer and
Merger, taken as a unitary transaction, is fair to such holders. Goldman Sachs
delivered a written opinion to the Board and Special Committee confirming its
oral opinion, which set forth the respective assumptions made, matters
considered and limits of their review. A copy of the Goldman Sachs opinion is
set forth as Exhibit 99.14 to this Schedule 14D-9 and is incorporated herein by
reference. Stockholders are urged to read the Goldman Sachs opinion in its
entirety. Goldman Sachs will receive certain fees in connection with its
engagement by the
22.
<PAGE> 23
Company and the Special Committee. See "Item 5. Persons Retained, Employed or to
be Compensated."
5. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED
The Board's financial advisor in connection with the Offer and other
matters arising in connection therewith is Goldman Sachs.
Pursuant to an engagement letter dated June 30, 1996, the Company has
agreed to pay Goldman Sachs a fee in connection with its services as financial
advisor to the Board and the rendering of a fairness opinion. The Company paid a
fee of $150,000 to Goldman Sachs upon the signing of the engagement letter.
Under the engagement letter, Goldman Sachs will also be eligible to receive
additional compensation (based on the value of the transaction) in the event the
Company effects certain specified corporate recapitalizations or reorganizations
during the term of the engagement letter or at any time during two-year period
following the termination of the engagement letter as set forth therein. The
Company also has agreed to reimburse Goldman Sachs for its reasonable
out-of-pocket expenses, including fees and expenses of counsel, and to indemnify
Goldman Sachs against certain liabilities, including liabilities under the
federal securities laws or relating to or arising out of Goldman Sachs'
engagement as financial advisor.
Goldman Sachs is an internationally recognized investment banking firm
and is regularly engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, corporate restructurings, strategic
alliances, negotiated underwritings, secondary distributions of listed and
unlisted securities, private placements and valuations for corporate and other
purposes. The Board selected Goldman Sachs to act as its financial advisor in
connection with the Offer on the basis of its experience in advising companies
in connection with similar offers.
Neither the Company nor any person acting on its behalf currently
intends to employ, retain or compensate any other person to make solicitations
or recommendations to holders of the Common Stock its behalf concerning the
Offer.
6. RECENT TRANSACTIONS AND INTENT WITH RESPECT TO SECURITIES
(a) To the best of the Company's knowledge, no transactions in Shares
have been effected during the last 60 days by the Company or by any executive
officer, director, affiliate or subsidiary of the Company.
(b) To the best of its knowledge, the Company believes that its
directors, executive officers and the stockholders who are a party to the Voting
Agreement currently intend to tender Shares held or beneficially owned by them
in response to the
23.
<PAGE> 24
Offer. Except as indicated in the preceding sentence, the Company has no
knowledge whether its other affiliates currently intend to tender any Shares in
response to the Offer.
7. CERTAIN NEGOTIATIONS AND TRANSACTIONS BY THE SUBJECT COMPANY
(a) Except as indicated above in connection with the Offer, no
activities, discussions or negotiations are underway or being undertaken by the
Company which relate to or would result in: (1) an extraordinary transaction,
such as a merger or reorganization, involving the Company or any subsidiary of
the Company; (2) a purchase, sale or transfer of a material amount of assets of
the Company or any subsidiary of the Company; (3) a tender offer for, or other
acquisition of, securities by or of the Company; or (4) any material change in
the present capitalization or dividend policy of the Company.
(b) None.
8. ADDITIONAL INFORMATION TO BE FURNISHED
None.
9. MATERIAL TO BE FILED AS EXHIBITS
EXHIBIT DESCRIPTION
99.1 Joint Press Release issued by the Company and the Bidder,
dated December 16, 1996.
99.2 Notice of Annual Meeting and Proxy Statement of the Company
issued in connection with the Company's 1996 Annual Meeting
of Stockholders held on April 8, 1996.(1)
99.3 Employment Agreement, dated October 5, 1989, between the
Company and David J. Ferran.
99.4 Employment Agreement, dated July 3, 1996, between the Company
and Don E. Whitson.
99.5 Employment Agreement, dated July 3, 1996, between the
Company, Span and George A. Yurch, Jr.
99.6 Employment Agreement, dated July 2, 1996, between the Company
and David L. Stone.
99.7 Severance Protection Agreement, dated July 22, 1996, between
the Company and David J. Ferran.
24.
<PAGE> 25
99.8 Amendment to Employment Agreement, dated July 22, 1996,
between the Company and David J. Ferran.
99.9 Form of Severance Protection Agreement between the Company
and Tim Brown, Scott Cronk, David Dedman, Mike Grandinetti
and George A. Yurch, Jr.
99.10 Severance Protection Agreement, dated December 13, 1996,
between the Company and John Kizer.
99.11 Agreement and Plan of Merger, dated December 16, 1996,
between the Company, the Bidder and Bidder Sub.
99.12 Voting and Securities Purchase Agreement, dated December 16,
1996, between the Company, the Bidder, Bidder Sub and Certain
Stockholders of the Company.
99.13 Letter Agreement, dated December 16, 1996, between the Bidder
and David J. Ferran.
99.14 Opinion Letter of Goldman Sachs, dated December 16, 1996.
- --------------------
(1) Incorporated by reference to the Company's definitive proxy materials
filed with the Commission on February 26, 1996 pursuant to Rule 14a-6
under the Securities Exchange Act of 1934, as amended, in connection
with the Company's 1996 Annual Meeting of Stockholders. With respect
thereto, copies of relevant portions of pages 14 and 17, set forth
under the caption "Executive Compensation," and relevant portions of
page 31, set forth under the caption "Certain Transactions," are
submitted with this statement as part of Exhibit 99.2.
25.
<PAGE> 26
SIGNATURE
After reasonable inquiry and to the best of its knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
TYLAN GENERAL, INC.
Date: December 17, 1996 /s/ DAVID J. FERRAN
------------------------------------
David J. Ferran
Chairman of the Board, President
and Chief Executive Officer
26.
<PAGE> 27
EXHIBIT INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT DESCRIPTION NUMBERED PAGES
------- ----------- --------------
<S> <C> <C>
99.1 Joint Press Release issued by the Company and the Bidder,
dated December 16, 1996.
99.2 Notice of Annual Meeting and Proxy Statement of the Company
issued in connection with the Company's 1996 Annual Meeting
of Stockholders held on April 8, 1996.(1)
99.3 Employment Agreement, dated October 5, 1989, between the
Company and David J. Ferran.
99.4 Employment Agreement, dated July 3, 1996, between the Company
and Don E. Whitson.
99.5 Employment Agreement, dated July 3, 1996, between the
Company, Span and George A. Yurch, Jr.
99.6 Employment Agreement, dated July 2, 1996, between the Company
and David L. Stone.
99.7 Severance Protection Agreement, dated July 22, 1996, between
the Company and David J. Ferran.
99.8 Amendment to Employment Agreement, dated July 22, 1996,
between the Company and David J. Ferran.
99.9 Form of Severance Protection Agreement between the Company
and Tim Brown, Scott Cronk, David Dedman, Mike Grandinetti
and George A. Yurch, Jr.
99.10 Severance Protection Agreement, dated December 13, 1996,
between the Company and John Kizer.
99.11 Agreement and Plan of Merger, dated December 16, 1996,
between the Company, the Bidder and Bidder Sub.
99.12 Voting and Securities Purchase Agreement, dated December 16,
1996, between the Company, the Bidder, Bidder Sub and Certain
Stockholders of the Company.
</TABLE>
<PAGE> 28
99.13 Letter Agreement, dated December 16, 1996, between the Bidder
and David J. Ferran.
99.14 Opinion Letter of Goldman Sachs, dated December 16, 1996.
- --------------------
(1) Incorporated by reference to the Company's definitive proxy materials
filed with the Commission on February 26, 1996 pursuant to Rule 14a-6
under the Securities Exchange Act of 1934, as amended, in connection
with the Company's 1996 Annual Meeting of Stockholders. With respect
thereto, copies of relevant portions of pages 14 and 17, set forth
under the caption "Executive Compensation," and relevant portions of
page 31, set forth under the caption "Certain Transactions," are
submitted with this statement as part of Exhibit 99.2.
<PAGE> 1
Exhibit 99.01
PRESS RELEASE
MILLIPORE TO ACQUIRE TYLAN GENERAL
December 16, 1996, 7:55 PM EST
BEDFORD, Mass. -- (BUSINESS WIRE)--Dec. 16, 1996--Millipore Corporation
(NYSE/MIL) and Tylan General (NASDAQ/TYGN) announced today that Millipore has
entered into a definitive agreement to acquire Tylan General for $16.00 per
share in cash, or approximately $133 million, plus the assumption of Tylan's
outstanding debt. Completion of this transaction is expected in the first
quarter of 1997.
Tylan General is a leading supplier to the microelectronics industry of
precision mass flow controllers, pressure and vacuum measurement and control
equipment and ultraclean gas panels. The Company has been a leading developer
of measurement and control products and technologies to measure and control the
flow of process gases used in the manufacturing of semiconductor devices,
including introducing the first mass flow controllers for semiconductor
applications and the first adaptive pressure control system. Headquartered in
San Diego, California, Tylan had 1996 sales of approximately $150 million.
C. William Zadel, Millipore's Chairman and CEO, commented: "The acquisition of
Tylan General significantly strengthens Millipore's competitive position in
microelectronics, the Company's fastest growing market over the past three
years. It expands our product and service offering to our microelectronics
customers, accelerates our R&D program in gas monitoring, and adds excellent
software and electronics skills to our core competencies. The acquisition also
combines two breakthrough technology platforms: Tylan's intelligent gas panels
and Millipore's smart purifiers, which will allow us to develop integrated
products for the gas market that offer greater reliability and lower cost. We
will also continue to serve our existing customers with separate components as
well as integrated systems that combine Millipore and Tylan technologies.
Together we will be better able to help the microelectronics industry sustain
its incredible pace of performance improvements and cost reduction in
manufacturing integrated circuit devices."
Zadel continued: "This acquisition and our recent purchase of Amicon fit
perfectly into our long-range strategic plan, and both present unique
opportunities to strengthen Millipore for the future. Biotechnology-derived
drugs and increasingly powerful semiconductor devices require new purification
tools for discovery and manufacturing; these acquisitions help us meet that
technical and market need."
Arthur C. Spinner, Chairman of the Special Committee of the Board of Directors
of Tylan General that supervised the process of soliciting bids for the
acquisition of Tylan General, commented: "This transaction represents the
culmination of an extensive auction process
1.
<PAGE> 2
that we believed was designed to provide the best financial opportunity for the
stockholders of Tylan General."
David J. Ferran, Chairman and Chief Executive Officer of Tylan General, added,
"I am very enthusiastic about this transaction and the prospects offered by a
combination of our business with that of Millipore. This transaction will be
beneficial for Tylan General's employees, customers and suppliers, as well as
for its stockholders."
Millipore intends to finance the acquisition of Tylan General with bank
borrowings and expects the acquisition to be accretive to earnings by the
second half of 1997 and to significantly enhance the long-term growth of
Millipore's revenues and profits. Millipore will, within five business days,
commence a tender offer at $16.00 per share for all the shares of Tylan
General. The offer is subject to the condition that a majority of the shares
are tendered. The tender offer, if successful, will be followed as promptly as
possible by a merger in which any remaining shares of Tylan General stock will
be converted into the right to receive $16.00 per share in cash.
Millipore was advised in the acquisition by Credit Suisse First Boston; Tylan
General was advised by Goldman, Sachs & Co.
Millipore is a multinational company that applies its purification technology
to critical research and manufacturing problems in the microelectronics,
biopharmaceutical and analytical laboratory markets.
More information on Millipore can be found at www.millipore.com; and on Tylan
at www.tylangeneral.com.
Certain statements discussed in this news release are forward-looking
statements that involve a number of risks and uncertainties. In addition to the
factors discussed above, among the other factors that could cause actual
results to differ materially are the following: changes in foreign exchange
rates; increased regulatory concerns on the part of the biopharmaceutical
industry; swings in demand for microelectronics products; competitive factors
such as new membrane technology and/or a new method of chip manufacture which
relies less heavily on purified chemicals and gases; and other risk factors
listed from time to time in the Company's SEC reports, including but not
limited to the report on the Form 10-K for the year ended December 31, 1995.
2.
<PAGE> 1
Exhibit 99.02
THE FOLLOWING EXCERPT IS FROM PAGE 14 OF THE PROXY STATEMENT FOR THE 1996 ANNUAL
MEETING OF STOCKHOLDERS (THE "PROXY STATEMENT") UNDER THE HEADING "EXECUTIVE
COMPENSATION":
COMPENSATION OF DIRECTORS
As consideration for service on the Company's Board of Directors, each
non-employee director of the Company receives $2,000 for each meeting of the
Board of Directors attended and $500 for each committee meeting of the Board of
Directors attended by committee members. In the fiscal year ended October 29,
1995, the total compensation paid to non-employee directors was $71,000. The
members of the Board of Directors are also eligible for reimbursement for their
expenses incurred in connection with attendance at Board meetings in accordance
with Company policy.
Each non-employee director of the Company also receives stock option
grants under the 1994 Non-Employee Directors' Stock Option Plan (the "Directors'
Plan"). The Directors' Plan provides for the automatic grant of options to
purchase shares of Common Stock to non-employee directors of the Company. Option
grants under the Directors' Plan are non-discretionary and are not intended to
qualify as incentive stock options under the Code.
The maximum number of shares of Common Stock that may be issued
pursuant to options granted under the Directors' Plan is 75,000... The options
granted under the Directors' Plan become exercisable in three equal annual
installments beginning on the date one year after the date of grant.
THE FOLLOWING EXCERPT IS FROM PAGE 17 OF THE PROXY STATEMENT UNDER THE HEADING
"EXECUTIVE COMPENSATION":
EMPLOYMENT AGREEMENTS
Pursuant to an employment agreement between the Company and David J.
Ferran entered into in 1989, Mr. Ferran's annual salary and bonus are determined
by the Compensation Committee of the Board of Directors. If Mr. Ferran's
employment is terminated by the Company for cause or he resigns (except under
certain circumstances), the Company may require Mr. Ferran to provide exclusive
consulting services to the Company for 45 hours per quarter for one year
following such event. In consideration for such services, the Company will pay
Mr. Ferran
1.
<PAGE> 2
consulting fees equal to his annual salary at the time of such termination or
resignation, will continue to provide health insurance benefits and will
accelerate the vesting of a portion of his stock options. If Mr. Ferran's
employment is terminated without cause or he resigns under certain
circumstances, Mr. Ferran may at his election require the Company to enter into
a consulting arrangement on the same terms as above, in which case the Company
will pay Mr. Ferran consulting fees equal to his annual salary at the time of
such termination or resignation and the maximum bonus he would have been
entitled to through the date of termination, will continue to provide health
insurance benefits and will accelerate the vesting of a portion of his stock
options.
THE FOLLOWING EXCERPT IS FROM PAGE 31 OF THE PROXY STATEMENT UNDER THE HEADING
"CERTAIN TRANSACTIONS":
The Company has entered into indemnity agreements with certain officers
and directors which provide, among other things, that the Company will indemnify
such officer or director, under the circumstances and to the extent provided for
therein, for expenses, damages, judgments, fines and settlements he may be
required to pay in actions or proceedings which he is or may be made a party by
reason of his position as a director, officer or other agent of the Company, and
otherwise to the full extent permitted under Delaware law and the Company's
Bylaws.
In November 1992, the Company issued 12% Subordinated Notes due
November 15, 1999 in the aggregate principal amount of $5,000,000 (the "Notes")
and a Warrant to purchase up to 887,845 shares of its Common Stock, as adjusted,
at a nominal exercise price to an affiliate of Kleinwort Benson Limited, an
entity associated with Mr. Khougaz, a director of the Company. Pursuant to the
Notes, the Company made interest payments of $50,000 per month through January
1995 and paid monitoring fees which amounted to $15,000 in fiscal 1995. A
portion of the proceeds from the Company's initial public offering were used to
prepay the Notes in February 1995 and, in connection therewith, the Company paid
a prepayment premium of $250,000. In addition, the Warrant holder exercised the
Warrant and sold 391,687 shares in such offering. The net value realized by the
Warrant holder in such sale was $2,549,882.
Robert J. Ferran, a former director of the Company and the father of
David J. Ferran, the Chairman of the Board, President and Chief Executive
Officer of the Company, performed services for the Company as a consultant in
fiscal 1995. The aggregate remuneration paid to Robert J. Ferran for such
services was $40,000 in fiscal 1995.
2.
<PAGE> 1
Exhibit 99.03
EMPLOYMENT AGREEMENT
This Agreement ("Agreement") is made and effective as of October 5,
1989 by and between VACUUM GENERAL, INC. ("VGI"), a California corporation, with
its executive offices in San Diego, California and DAVID J. FERRAN
("Executive"), an individual residing in the State of California, with reference
to the following facts.
A. Executive has been employed by VGI since its creation and
Executive's background, expertise and efforts have contributed to the success of
VGI.
B. The Board of Directors ("Board") of VGI, without the vote of
Executive, has determined that the best interests of VGI would be served by
Executive's continued employment by VGI in the capacity of President and Chief
Executive Officer and such mutually acceptable additional capacities as the
Board may delegate to him from time-to-time during the term of this Agreement.
C. VGI wishes to assure itself of the continued benefit of Executive's
services provided in this Agreement, and Executive is willing to serve in the
employ of VGI solely within the terms hereof for said period.
D. VGI and Executive desire to define their respective rights and
obligations as provided herein.
NOW THEREFORE, in consideration of the premises and mutual promises
contained herein, and for other good and valuable consideration, receipt of
which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
VGI agrees to continue Executive in its employ and Executive
agrees to remain in the employ of VGI for the period stated in Section 3 hereof
and upon the terms and conditions herein provided.
2. POSITION AND RESPONSIBILITIES
(A) DUTIES. VGI shall employ Executive in the capacity of
President and Chief Executive Officer and such other mutually acceptable
executive positions as the Board may determine to be in the best interest of
VGI, and Executive shall serve as such for the term and under other conditions
hereinafter set forth. Executive shall devote his full business time and
attention to the performance of services of the nature and scope and in the
manner currently rendered by him for VGI, and to such other services as may be
1.
<PAGE> 2
necessarily requested by the Board that are consistent with those required of a
President and Chief Executive Officer of a company. In this capacity as
President and Chief Executive Officer, Executive shall perform such duties and
have such powers and authority as are customary for the President and Chief
Executive Officer of a company. In the event that, without his consent,
Executive is assigned to a position involving a different title or materially
lesser authority and responsibility, then Executive shall have the option,
exercisable for 30 days following notice to Executive of such assignment or new
title, to consider that this Agreement has been terminated without cause in
which case Executive shall be entitled to the benefits set forth in Section 8(c)
herein.
(B) COMPETITIVE ACTIVITY. Except upon the prior written
consent of the Compensation Committee of the Board of Directors of VGI (the
"Committee"), Executive, during the term of his employment hereunder, will not
accept any other employment of any nature and will not engage, directly or
indirectly, in any other business activity (whether or not pursued for pecuniary
advantage) that is or may be competitive with, or that might place him in a
competing position to that of VGI or any other corporation or entity that
directly or indirectly controls, is controlled by or is under common control
with VGI.
3. TERM OF EMPLOYMENT
The effective date of this Agreement shall be October 5, 1989
and shall remain in effect until terminated pursuant to Section 7.
4. WORKING FACILITIES
Executive shall be furnished with a private office,
secretarial and other necessary clerical and stenographical assistance, and such
other facilities, amenities and services as may at the time be generally
furnished to executive officers of VGI and as are appropriate for Executive's
position and adequate for the performance of his duties.
5. PLACE OF PERFORMANCE
In connection with this Agreement, Executive shall maintain an
office at VGI's current principal executive offices in San Diego, California.
6. SALARY, BONUS, EXPENSES AND BENEFITS
(a) SALARY. VGI shall pay Executive an initial monthly salary
of $11,666.66. Executive's salary shall be reviewed and revised (if appropriate)
at least
2.
<PAGE> 3
annually by the Committee and shall be adjusted based upon Executive's job
performance, VGI's financial condition and performance and the salary and
compensation levels of executives in similar companies with similar
responsibilities. Any increases in Executive's salary pursuant to this Section
6(a), shall require approval by the Committee, without the vote of the Executive
(if Executive is a member of such Committee).
(b) BONUS. VGI shall pay Executive an annual bonus up to
twenty-five percent (25%) of Executive's annual salary for the immediately
preceding year. The Committee, without the vote of the Executive (if Executive
is a member of such Committee), shall determine in good faith the amount of such
bonus giving consideration to VGI's overall achievement of the goals set forth
on VGI's annual plan for the applicable fiscal year and Executive's performance
during the year. VGI shall pay such bonus no later than 45 days after the end of
each fiscal year of VGI.
(c) PARTICIPATION IN WELFARE AND BENEFIT PLANS. Executive
shall be entitled to participate in, personally and/or for the benefit of his
family or other beneficiaries, any welfare, insurance, pension, or other
employee benefit plans as are at the time made generally available to other
executives of VGI. Executive shall be eligible to receive during the term hereof
all benefits for which executives are eligible under every such plan or program
to the extent permissible under the general terms and provisions of such plans
or programs and in accordance with the provisions thereof.
(d) VACATION. Executive shall be entitled to 4 weeks' paid
vacation time each year, during which such time his compensation hereunder shall
be paid in full. Unless otherwise directed by the Committee, Executive shall
have the discretion to take vacation time on the dates as he determines to be
appropriate and not detrimental to VGI.
(e) HOLIDAYS, LEAVE DAYS, ETC. Executive shall be entitled to
such holidays, sick leave, leaves of absence and other absences as are at the
time made generally available to other executives of VGI of comparable tenure
and positions.
(f) AUTOMOBILE. During the term of this Agreement, VGI shall
make an automobile available to Executive under such terms and conditions as are
presently applied or as may be later applied to other executives of VGI of
comparable tenure and position. In connection therewith, VGI shall bear all
expenses relating to such automobile, including insurance, maintenance and
repair, gas and oil. Upon termination of this Agreement, VGI shall offer
Executive the right to purchase the automobile then being operated by Executive
at the depreciated value of such automobile or to assume VGI's lease of such
automobile and shall execute and deliver to Executive all documentation
necessary to establish Executive's ownership or leasing of such automobile.
3.
<PAGE> 4
(g) LIFE INSURANCE. VGI shall pay for and provide life
insurance for each year of this Agreement for the benefit of Executive under
VGI's group life insurance plan.
(h) HEALTH INSURANCE. VGI shall provide health insurance for
Executive under VGI's health insurance plan.
(i) DISABILITY INSURANCE. VGI shall provide disability
insurance for Executive pursuant to VGI's directors' and officers' disability
policy according to VGI's policy established by the Committee.
(j) REIMBURSEMENT OF EXPENSES. VGI shall pay or reimburse
Executive, on a monthly basis, for reasonable travel, entertainment, promotional
and other expenses incurred by Executive in the performance of his obligations
under this Agreement. Executive must submit timely detailed expense reports for
appropriate review prior to reimbursement.
(k) TAX, LEGAL AND FINANCIAL ADVICE. VGI shall pay for the
fees and expenses of legal, tax and financial advisory, and income tax
preparation services for Executive in an aggregate amount not to exceed $1,500
for each year of this Agreement; provided that no payment of any fees shall be
made by VGI for legal services obtained by Executive in connection with any
dispute with VGI regarding this Agreement.
(l) OTHER FRINGE BENEFITS. Executive shall be entitled to any
and all other fringe benefits according to VGI's policy as set by the Committee.
7. TERMINATION
Executive's employment under this Agreement may be terminated
by VGI or Executive as herein provided, without further obligation or liability
except as expressly provided herein:
(a) RESIGNATION, DEATH OR DISABILITY. Executive's employment
hereunder shall be terminated at any time by Executive's resignation (other than
a resignation for good reason as provided in Section 7(d)), or by Executive's
death or disability. In the event Executive wishes to resign, he shall give the
Board of Directors of VGI not less than 30 days prior notice of such
resignation, which notice shall indicate the proposed resignation date.
Following receipt of such notice, VGI, through an action by its Board of
Directors, shall have the right to accelerate the date of Executive's
resignation and to cause his resignation to become effective at any time prior
to the resignation date set forth in Executive's original notice; provided,
however, that such acceleration or changed effective date of resignation shall
not affect in any manner the
4.
<PAGE> 5
delivery of any benefits or payments to which Executive may be entitled under
Section 8 of this Agreement. In the event Executive resigns, VGI shall have the
right to require Executive to provide consulting services to VGI as provided in
said Section 8(c). For purposes of this Agreement, disability shall be deemed to
have occurred only after the following procedure has been satisfied. If within
45 days after notice of proposed termination for disability is given to
Executive by VGI, Executive has not returned to the performance of substantially
all his duties, VGI may terminate Executive's employment by giving notice of
termination for disability. The notice of proposed termination may only be given
by VGI following Executive's substantial and material absence from Executive's
duties by reason of physical or mental disability for a period of 120 calendar
days.
(b) TERMINATION FOR CAUSE. Executive's employment hereunder
may be terminated by the Board for cause; provided, however, that Executive
shall be given notice of the Board's findings of conduct by Executive amounting
to cause for such termination. Cause for termination under this Agreement shall
be limited to (i) Executive's personal dishonesty or gross misconduct; (ii) a
material breach of any provision of this Agreement; (iii) Executive's refusal or
failure to act in accordance with any lawful, reasonable direction or order of
the Board and such refusal or failure results or is reasonably likely to result
in a materially adverse effect on VGI's business; (iv) conviction of any felony
involving moral turpitude (not including a conviction for operating a motor
vehicle under the influence of alcohol or any other motor vehicle violation if
no bodily injury to a third party is involved); (v) any chemical dependency or
substance abuse resulting in a continuous and material impairment of Executive's
ability to perform his duties under this Agreement; (vi) the willful and
continued failure by Executive to substantially perform Executive's duties with
VGI or its subsidiaries or affiliates (other than any failure resulting from
disability) after a written demand identifies the manner in which the Board
believes that Executive has not substantially performed his duties. Termination
of Executive's employment under this Agreement for cause as set forth in clauses
(i) or (iv) of the preceding sentence shall be deemed to be effective upon
delivery of notice thereof in accordance with the provisions of Section 9(i) of
this Agreement. Executive shall have 30 days from the date notice is given for
cause as set forth in clause (ii), (iii), (v) or (vi) of the second sentence of
this Section 7(b) to cure such conduct.
(c) TERMINATION WITHOUT CAUSE. VGI shall have the right,
exercisable at any time during the term of this Agreement on a written notice to
Executive, to terminate Executive's employment without cause upon 30 days prior
notice. If Executive is terminated without cause, he shall be entitled to
receive the severance benefits pursuant to Section 8(c) hereof subject to his
full compliance with said Section 8(c).
5.
<PAGE> 6
(d) RESIGNATION FOR GOOD REASON. During the term hereof,
Executive may regard Executive's employment as being constructively terminated
and may, therefore, resign within 30 days of Executive's discovery of the
occurrence of one or more of the following events, any of which will constitute
"good reason" for such resignation:
(i) Without Executive's express written consent, the
assignment to Executive of any duties materially inconsistent with Executive's
position, duties, responsibilities and status with VGI;
(ii) Without Executive's express written consent, the
termination and/or material reduction in Executive's facilities (including
office space and general location) and staff reporting available to Executive
unless such reduction occurs as part of a company-wide action authorized by the
Board of Directors (including the vote of Executive) to reduce VGI's expenses;
(iii) A material reduction by VGI of Executive's base salary
or of any bonus compensation formula applicable to him unless in connection with
a company-wide salary expense reduction necessitated by poor financial
performance of the Company as determined by the Committee in its reasonable
discretion;
(iv) A failure by VGI to maintain any of the employee benefits
to which Executive is entitled at a level substantially equal to or greater than
the value of those employee benefits currently in effect through the
continuation of the same or substantially similar plans, programs and policies;
or the taking of any action by VGI or its affiliate(s) which would materially
affect Executive's participation in or reduce Executive's benefits under any
such plans, programs or policies, or deprive Executive of any material fringe
benefits enjoyed by Executive unless such failure or reduction occurs as part of
a company-wide action authorized by the Board of Directors (including the vote
of Executive) to reduce VGI's expenses;
(v) The failure by VGI to permit Executive to take
substantially the same number of paid vacation days and leave to which Executive
is entitled;
(vi) VGI or any affiliate(s) requiring Executive to be based
anywhere other than within 25 miles of San Diego, California, except for
required travel on VGI's or an affiliate's business to an extent substantially
consistent with Executive's present business travel obligations;
(vii) Any termination of Executive's employment by VGI which
is not effected pursuant to the requirements of this Section 7 with respect to
death, disability or termination for cause;
6.
<PAGE> 7
(viii) The failure of VGI to obtain the assumption of this
Agreement by any successor as contemplated in Section 10(e) hereof;
(ix) A material breach of any provision of this Agreement by
VGI; and
(x) A material breach by VGI of any provision of the Option
Agreement that has been entered into between Executive and VGI pursuant to VGI's
1989 Non-qualified Stock Option Plan.
In the event of the occurrence of any of the above listed events and in
the event Executive wishes to resign on the basis of occurrence of such event,
Executive shall give VGI notice of his proposed resignation, and VGI shall have
a period of 30 days following its receipt of such notice to remedy the breach or
occurrence giving rise to such proposed resignation. In the event VGI fails to
so remedy said breach or occurrence by expiration of said 30-day period,
Executive shall be deemed to have resigned from his employment with VGI for good
reason pursuant to this Section 7(d).
(e) TERMINATION OBLIGATIONS. Executive here acknowledges and
agrees that all personal property of VGI, including, without limitation, all
books, manuals, records, reports, notes, contracts, lists, and other documents,
proprietary information, copies of any of the foregoing, and equipment furnished
to or prepared by Executive in the course of or incident to his employment,
belong to VGI and shall be promptly returned to VGI upon termination of his
employment for any reason. Executive shall retain the rights to remove all of
his personal property from the premises of VGI and any personal property of VGI
as may be mutually agreed upon between VGI and Executive.
8. PAYMENTS TO EXECUTIVE UPON TERMINATION.
(a) DEATH OR DISABILITY. In the event of Executive's death or
disability, all benefits generally available to VGI's executives as of the date
of such an event as determined by the Committee shall be payable to Executive or
Executive's estate, without reduction, in accordance with the terms of any plan,
contract, understanding or arrangement forming the basis for such payment,
including but not limited to, payments under the plans identified in Section
6(c). Executive shall be entitled to such other payments as might arise from any
plan, contract, understanding or arrangement between Executive and VGI at the
time of any such event pursuant to Section 6(c) or 6(i) hereof.
(b) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON.
In the event Executive is terminated by VGI for cause as provided in Section
7(b) or Executive resigns for other than good reasons as defined in Section
7(d), neither VGI nor an affiliate shall have any further obligation or
liability of any nature to Executive under
7.
<PAGE> 8
this Agreement or otherwise, except to the extent provided in any plan
identified in Section 6(c) or as may be expressly required by law, provided,
however, that VGI shall, at its option, have the right to require Executive to
provide consulting services to VGI on the terms of Section 8(c) below.
In such event, VGI shall have the right, exercisable not later than ten
(10) days following the effective date of such resignation or termination, to
require Executive to provide consulting services upon the terms provided in
Section 8(c) below, provided however, that in such event VGI shall not be
obligated to pay the bonus amount described in Section 8(c)(2)(iv).
(c) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Upon the occurrence of termination without cause, or resignation for good
reason, as defined in Section 7(d), Executive may elect to require VGI to enter
into a consulting contract with Executive under these terms:
(i) During the one year period subsequent to
termination, Executive shall provide consulting services to VGI in the areas of
his expertise for up to 45 hours per quarter. During this one year period, in
recognition of his exposure to confidential information of VGI, such services
will be exclusive to VGI in the area of mass flow and vacuum control and
measurement, and Executive will not provide his services in any manner, directly
or indirectly, to any other person or entity engaged in such business. In the
event Executive shall fail for any reason to comply with the restrictions set
forth in the foregoing sentence, VGI's obligations pursuant to Section
8(c)(2)(i) and (ii) below shall terminate.
(ii) As consideration for such consulting services:
(1) VGI shall pay monthly to Executive (or in
the event of Executive's subsequent death, to Executive's surviving spouse, or
if none, to Executive's estate) for a period of one (1) year, a sum equal to the
monthly rate of salary paid to Executive immediately prior to such termination.
(2) VGI shall continue to provide to Executive
during the one year period subsequent to Executive's termination or resignation,
at VGI's expense, those benefits to which Executive is entitled to immediately
prior to the termination pursuant to Section 6(h) above as if Executive
continued to remain in the employ of VGI. In the event of Executive's death
during such one year period, such benefits shall be made available to
Executive's dependents to the extent such benefits would otherwise be available
to dependents of a deceased VGI executive.
8.
<PAGE> 9
(3) Any options to purchase the capital stock of
VGI held by Executive which would vest in the eighteen (18) months following
Executive's termination to vest immediately as of the date of such termination.
(4) VGI shall pay Executive any amount equal to
the maximum potential bonus Executive would have been entitled to receive
pursuant to Section 6(b) hereof through the date of Executive's termination. VGI
shall pay such amount no later than 45 days after the end of VGI fiscal year in
which such termination occurred.
(5) In the event Executive does not elect to
enter into the consulting relationship in accordance wit this Section 8(c) upon
termination without good cause or a resignation for good reason, VGI shall have
no further obligation or liability to Executive with respect to his employment
or hereunder following such termination or resignation, and Executive shall be
deemed to have released any and all claims, rights or causes of action against
VGI relating thereto. If Executive does elect to enter into the consulting
relationship, such consulting relationship shall be accepted by Executive in
full satisfaction of all claims, rights or causes of action with respect to his
employment or hereunder, and VGI shall have no further liability or obligation
relating thereto.
9. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. The terms and provisions of this
Agreement shall constitute the entire understanding between Executive and VGI
with respect to the subject matter hereof, and shall supersede any and all prior
agreements or understandings between Executive and VGI, whether written or oral.
(b) AMENDMENTS. This Agreement may be amended or modified only
by a written instrument executed by Executive and VGI.
(c) GOVERNING LAW. This Agreement shall be governed by,
interpreted and enforced in accordance with California law as such laws are
applied to agreements between California residents entered into and to be
performed in California.
(d) SEVERABILITY. In the event that any terms or provisions of
this Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) ASSUMPTION. VGI shall require any successor-in-interest
(whether director or indirect or as a result of purchase, merger, consolidation
or otherwise) to all or substantially all of the business and/or assets of VGI
to expressly assume and agree to
9.
<PAGE> 10
perform the obligations under this Agreement in the same manner and to the same
extent that VGI would be required to perform it if no such succession had taken
place.
(f) ASSIGNABILITY. The rights or obligations contained in this
Agreement shall not be assigned, transferred, or divided in any manner by
Executive or VGI, without the prior written consent of the other; provided,
however, that nothing in this Section 10(f) shall preclude Executive from
designating a beneficiary to receive any benefits hereunder upon his death, or
the executors, administrators or other legal representatives of Executive or his
estate from assigning any rights hereunder to the person(s) entitled hereto.
Notwithstanding the foregoing, this Agreement shall be assignable by VGI without
Executive's consent and be binding on any entity which by purchase of assets,
mergers, or otherwise, becomes a successor to the business of VGI.
(g) WAIVER OF BREACH. Any waiver of any breach of employment
terms set forth herein shall not be construed to be a continuing waiver of
consent to any subsequent breach on the part of either Executive or VGI.
(h) HEADINGS. The headings of paragraphs herein are included
solely for convenience of reference and shall not control themeaning or
interpretation and performance of any of the provisions of this Agreement.
(i) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if mailed by United States certified or
registered mail, prepaid, to the parties or their permitted assignees at the
following addresses (or at such other address as shall be given in writing by
either party to the other):
To: Vacuum General
9577 Chesapeake Drive
San Diego, California 92123
To: David J. Ferran
1141 Gorsline Drive
El Cajon, California 92021
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
VACUUM GENERAL, INC. DAVID J. FERRAN
By: /s/ [signature illegible] /s/ David J. Ferran
------------------------- ---------------------
Its: Chief Operating Officer
10.
<PAGE> 1
Exhibit 99.04
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and effective as of July 3, 1996
by and between TYLAN GENERAL, Inc., a Delaware corporation (the "Company"), and
DONALD E. WHITSON (the "Employee"), with respect to the following facts.
A. The Board of Directors (the "Board") of the Company has determined
that the best interests of the Company would be served by Employee's employment
by the Company in the capacity of Vice Chairman and Chief Administrative Officer
and such mutually acceptable additional capacities as the Chief Executive
Officer may delegate to him from time-to-time during the term of this Agreement.
B. The Company wishes to assure itself of the continued benefit of
Employee's services provided in this Agreement, and Employee is willing to serve
in the employ of the Company solely within the terms hereof for said period.
C. The Company and Employee desire to define their respective rights
and obligations as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Employee to serve in
the capacity of Vice Chairman and Chief Administrative Officer of the Company,
and Employee hereby accepts such employment by the Company upon the terms and
conditions set forth herein.
2. POSITION AND RESPONSIBILITIES
(a) DUTIES. The Company shall employ Employee in the capacity
of Vice Chairman and Chief Administrative Officer and such other mutually
acceptable executive positions as the Chief Executive Officer may determine to
be in the best interests of the Company, and Employee shall serve as such for
the term and under other conditions hereinafter set forth. Employee shall
devote his full business time and attention to the performance of such
services and to such other services as may be
1.
<PAGE> 2
necessarily requested by the Chief Executive Officer that are consistent with
those required of a Vice Chairman and Chief Administrative Officer of a company.
In this capacity as Vice Chairman and Chief Administrative Officer, Employee
shall perform such duties and have such powers and authority as are customary
for the Vice Chairman and Chief Administrative Officer of a company. The
Employee shall report directly to and shall be responsible to the Chief
Executive Officer regarding his services. In the event that, without his
consent, Employee is assigned to a position involving a different title or
materially lesser authority and responsibility, then Employee shall have the
option, exercisable for 30 days following notice to Employee of such assignment
or new title, to consider that this Agreement has been terminated without cause
in which case Employee shall be entitled to the benefits set forth in Section
8(c) herein.
(b) COMPETITIVE ACTIVITY. Except upon the prior written
consent of the Chief Executive Officer, Employee, during the term of his
employment hereunder, will not accept any other employment of any nature and
will not engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that is or may be competitive
with, or that might place him in a competing position to that of the Company
or any other corporation or entity that directly or indirectly controls, is
controlled by or is under common control with the Company.
3. TERM OF EMPLOYMENT
The effective date of this Agreement shall be July 3, 1996
(the "Effective Date") and shall remain in effect until terminated pursuant to
Section 7.
4. WORKING FACILITIES
Employee shall be furnished with a private office,
secretarial and other necessary clerical and stenographic assistance, and such
other facilities, amenities and services as may at the time be generally
furnished to executive officers of the Company and as are appropriate for
Employee's position and adequate for the performance of his duties hereunder.
5. PLACE OF PERFORMANCE
In connection with this Agreement, Employee shall maintain an
office at the principal executive offices of Span Instruments, Inc. ("Span") in
Plano, Texas.
6. SALARY, BONUS, EXPENSES AND BENEFITS
(a) SALARY. The Company shall pay Employee an initial salary
of $250,000 per year. Employee's salary shall be reviewed and revised (if
appropriate) at least annually by the Chief Executive Officer and shall be
adjusted based upon
2.
<PAGE> 3
Employee's job performance, the Company's financial condition and performance
and the salary and compensation levels of executives in similar companies with
similar responsibilities. Furthermore, any salary payable to Employee after the
second anniversary of the Effective Date shall be determined in accordance with
the Company's compensation policy for senior management. Any increases in
Employee's salary pursuant to this Section 6(a) shall require approval by the
Compensation Committee of the Board of Directors of the Company (the
"Committee") (without the vote of the Employee if Employee is a member of such
committee).
(b) BONUS. The Company shall pay Employee an annual bonus of
up to twenty-five percent (25%) of Employee's annual salary for the immediately
preceding year. The Committee (without the vote of the Employee if Employee is a
member of such committee) shall determine in good faith the amount of such bonus
giving consideration to the Company's overall achievement of the goals set forth
in the Company's annual plan for the applicable fiscal year and Employee's
performance during the year. The Company shall pay such bonus no later than 45
days after the end of each fiscal year of the Company.
(c) PARTICIPATION IN WELFARE AND BENEFIT PLANS. Employee shall
be entitled to participate in, personally and/or for the benefit of his family
or other beneficiaries, any welfare, insurance, pension, or other employee
benefit plans as are at the time made generally available to other executives of
the Company. Employee shall be eligible to receive during the term hereof all
benefits for which executives are eligible under every such plan or program to
the extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof.
(d) VACATION. Employee shall be entitled to six weeks' paid
vacation time each year, during which such time his compensation hereunder shall
be paid in full. Unless otherwise directed by the Chief Executive Officer,
Employee shall have the discretion to take vacation time on the dates as he
determines to be appropriate and not detrimental to the Company.
(e) HOLIDAYS, LEAVE DAYS, ETC. Employee shall be entitled to
such holidays, sick leave, leaves of absence and other absences as are at the
time made generally available to other executives of the Company of comparable
tenure and position.
(f) AUTOMOBILE. During the term of this Agreement, the Company
shall make an automobile available to Employee under such terms and conditions
as are presently applied or as may be later applied to other executives of the
Company of comparable tenure and position. In connection therewith, the Company
shall bear all expenses relating to such automobile, including insurance,
maintenance and repair, gas
3.
<PAGE> 4
and oil. Upon termination of this Agreement, the Company shall offer Employee
the right to purchase the automobile then being operated by Employee at the
depreciated value of such automobile or to assume the Company's lease of such
automobile and shall execute and deliver to Employee all documentation necessary
to establish Employee's ownership or leasing of such automobile.
(g) LIFE INSURANCE. The Company shall pay for and provide life
insurance for each year of this Agreement for the benefit of Employee under the
Company's group life insurance plan.
(h) HEALTH INSURANCE. The Company shall provide health
insurance for Employee under the Company's health insurance plan.
(i) DISABILITY INSURANCE. The Company shall provide disability
insurance for Employee pursuant to the Company's directors' and officers'
disability policy according to the Company's policy established by the
Committee.
(j) REIMBURSEMENT OF EXPENSES. The Company shall pay or
reimburse Employee, on a monthly basis, for reasonable travel, entertainment,
promotional and other expenses incurred by Employee in the performance of his
obligations under this Agreement. Employee must submit timely detailed expense
reports for appropriate review prior to reimbursement.
(k) TAX, LEGAL AND FINANCIAL ADVICE. The Company shall pay for
the fees and expenses of legal, tax and financial advisory, and income tax
preparation services for Employee in an aggregate amount not to exceed $1,500
for each year of this Agreement; provided that no payment of any fees shall be
made by the Company for legal services obtained by Employee in connection with
any dispute with the Company regarding this Agreement.
(l) OTHER FRINGE BENEFITS. Employee shall be entitled to any
and all other fringe benefits according to the Company's policy as set by the
Committee.
7. TERMINATION
Employee's employment under this Agreement may be terminated
by the Company or Employee as herein provided, without further obligation or
liability except as expressly provided herein.
(a) RESIGNATION, DEATH OR DISABILITY. Employee's employment
hereunder may be terminated at any time by Employee's resignation (other than a
resignation for good reason as provided in Section 7(d)), or by Employee's death
or disability. In the event Employee wishes to resign, he shall give the Company
not less
4.
<PAGE> 5
than 30 days prior notice of such resignation, which notice shall indicate the
proposed resignation date. Following receipt of such notice, the Company shall
have the right to accelerate the date of Employee's resignation and to cause his
resignation to become effective at any time prior to the resignation date set
forth in Employee's original notice; provided, however, that such acceleration
or changed effective date of resignation shall not affect in any manner the
delivery of any benefits or payments to which Employee may be entitled under
Section 8 of this Agreement. For purposes of this Agreement, disability shall be
deemed to have occurred only after the following procedure has been satisfied.
If within 45 days after notice of proposed termination for disability is given
to Employee by the Company, Employee has not returned to the performance of
substantially all his duties, the Company may terminate Employee's employment by
giving notice of termination for disability. The notice of proposed termination
may only be given by the Company following Employee's substantial and material
absence from Employee's duties by reason of physical or mental disability for a
period of 120 calendar days.
(b) TERMINATION FOR CAUSE. Employee's employment hereunder may
be terminated by the Company for cause; provided, however, that Employee shall
be given notice of the Company's findings of conduct by Employee amounting to
cause for such termination. Cause for termination under this Agreement shall be
limited to (i) Employee's personal dishonesty or gross misconduct; (ii) a
material breach of any material provision of this Agreement; (iii) Employee's
refusal or failure to act in accordance with any lawful, reasonable direction or
order of the Chief Executive Officer or the Board and such refusal or failure
results or is reasonably likely to result in a materially adverse effect on the
Company's business; (iv) conviction of any felony involving moral turpitude (not
including a conviction for operating a motor vehicle under the influence of
alcohol or any other motor vehicle violation if no bodily injury to a third
party is involved); (v) any chemical dependency or substance abuse resulting in
a continuous and material impairment of Employee's ability to perform his duties
under this Agreement; or (vi) the willful and continued failure by Employee to
substantially perform Employee's duties with the Company or its subsidiaries or
affiliates (other than any failure resulting from disability) after a written
demand identifies the manner in which the Company believes that Employee has not
substantially performed his duties. Termination of Employee's employment under
this Agreement for cause as set forth in clauses (i) or (iv) of the preceding
sentence shall be deemed to be effective upon delivery of notice thereof in
accordance with the provisions of Section 9(i) of this Agreement. Employee shall
have 30 days from the date notice is given for cause as set forth in clause
(ii), (iii), (v) or (vi) of the second sentence of this Section 7(b) to cure
such conduct.
(c) TERMINATION WITHOUT CAUSE. The Company shall have the
right, exercisable at any time during the term of this Agreement upon written
notice to Employee, to terminate Employee's employment without cause upon 30
days prior
5.
<PAGE> 6
notice. If Employee is terminated without cause, he shall be entitled to receive
the severance benefits pursuant to Section 8(c) hereof subject to his full
compliance with said Section 8(c).
(d) RESIGNATION FOR GOOD REASON. During the term hereof,
Employee may regard Employee's employment as being constructively terminated and
may, therefore, resign within 30 days of Employee's discovery of the occurrence
of one or more of the following events, any of which will constitute "good
reason" for such resignation:
(1) Without Employee's express written consent, the
assignment to Employee of any duties materially inconsistent with Employee's
position, duties, responsibilities and status with the Company;
(2) Without Employee's express written consent, the
termination and/or material reduction in Employee's facilities (including office
space and general location) and staff reporting available to Employee, unless
such reduction occurs as part of a company-wide action authorized by the Board
(including the vote of Employee) to reduce the Company's expenses;
(3) A reduction by the Company of Employee's base
salary or of any bonus compensation formula applicable to him unless in
connection with (i) an across-the-board reduction for all senior management of
the Company, (ii) a reduction after the second anniversary of the Effective Date
in order to make Employee's salary consistent with the Company's compensation
policy for senior management or (iii) a company-wide salary expense reduction
necessitated by poor financial performance of the Company, in any case as
determined by the Committee in its reasonable discretion;
(4) A failure by the Company to maintain any of the
employee benefits to which Employee is entitled at a level substantially equal
to or greater than the value of those employee benefits currently in effect
through the continuation of the same or substantially similar plans, programs
and policies; or the taking of any action by the Company or its affiliate(s)
that would materially affect Employee's participation in or reduce Employee's
benefits under any such plans, programs or policies, or deprive Employee of any
material fringe benefits enjoyed by Employee unless such failure or reduction
occurs as part of a company-wide action authorized by the Board (including the
vote of Employee if Employee is a Director of the Company) to reduce the
Company's expenses;
(5) The failure by the Company to permit Employee to
take substantially the same number of paid vacation days and leave to which
Employee is entitled;
6.
<PAGE> 7
(6) The Company or any affiliate(s) requiring
Employee to be based anywhere other than within 20 miles of Plano, Texas, except
for required travel on the Company's or an affiliate's business to an extent
substantially consistent with Employee's present business travel obligations;
(7) Any termination of Employee's employment by the
Company which is not affected pursuant to the requirements of this Section 7
with respect to death, disability or termination for cause;
(8) The failure of the Company to obtain the
assumption of this Agreement by any successor as contemplated in Section 9(e)
hereof; and
(9) A material breach of any provision of this
Agreement by the Company.
In the event of the occurrence of any of the above listed events and in the
event Employee wishes to resign on the basis of occurrence of such event,
Employee shall give the Company notice of his proposed resignation, and the
Company shall have a period of 30 days following its receipt of such notice to
remedy the breach or occurrence giving rise to such proposed resignation. In the
event the Company fails to so remedy said breach or occurrence by expiration of
said 30-day period, Employee shall be deemed to have resigned from his
employment with the Company for good reason pursuant to this Section 7(d).
(e) TERMINATION OBLIGATIONS. Employee hereby acknowledges and
agrees that all personal property of the Company, including, without limitation,
all books, manuals, records, reports, notes, contracts, lists, and other
documents, proprietary information, copies of any of the foregoing, and
equipment furnished to or prepared by Employee in the course of or incident to
his employment, belong to the Company and shall be promptly returned to the
Company upon termination of his employment for any reason. Employee shall retain
the rights to remove all of his personal property from the premises of the
Company and any personal property of the Company as may be mutually agreed upon
between the Company and Employee.
8. PAYMENTS TO EMPLOYEE UPON TERMINATION.
(a) DEATH OR DISABILITY. In the event of Employee's death or
disability, all benefits generally available to the Company's executives as of
the date of such an event as determined by the Committee shall be payable to
Employee or Employee's estate, without reduction, in accordance with the terms
of any plan, contract, understanding or arrangement forming the basis for such
payment, including, but not limited to, payments under the plans identified in
Section 6(c). Employee shall be entitled to such other payments as might arise
from any plan, contract, understanding or
7.
<PAGE> 8
arrangement between Employee and the Company at the time of any such event
pursuant to Section 6(c) or 6(i) hereof.
(b) TERMINATION FOR CAUSE OR RESIGNATION WITHOUT GOOD REASON.
In the event Employee is terminated by the Company for cause as provided in
Section 7(b) or Employee resigns for other than good reasons as defined in
Section 7(d), neither the Company nor an affiliate shall have any further
obligation or liability of any nature to Employee under this Agreement or
otherwise.
(c) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Upon the occurrence of termination without cause, or resignation for good
reason, as defined in Section 7(d), Employee shall be entitled to receive the
following:
(1) SEVERANCE PAYMENT. The Company shall continue to
pay to the Employee his salary (i) until the date that is eighteen (18) months
from the effective date of this Agreement (the "Initial Period") and (ii) for
twelve (12) months following the later of (x) the date of Employee's actual
termination of employment and (y) termination of the Initial Period (the
"Severance Payment"). Such salary shall be determined with reference to the
salary in effect for the month in which the date of employment termination
occurs.
(2) METHOD OF PAYMENT. The Severance Payment shall be
paid to Employee in cash in one lump sum no later than thirty (30) days
following the actual date of termination.
(3) PAYMENT IN LIEU OF CONTRACT DAMAGES. The
Severance Payment shall be in lieu of any further payments to the Employee and
any further accrual of benefits with respect to periods subsequent to the date
of the employment termination and shall constitute a full satisfaction and
discharge of any claims by Employee related to the Agreement or the
circumstances surrounding the termination of employment hereunder.
Notwithstanding the preceding sentence, neither the Severance Payment nor any
other payments under this Section 8(c) shall reduce or offset any benefits the
Employee may be entitled to under the specific terms of the benefit plans of the
Company.
9. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. The terms and provisions of this
Agreement, together with the terms and provisions of the Noncompetition
Agreement dated the date hereof between Employee and the Parent, shall
constitute the entire understanding between Employee and the Company with
respect to the subject matter hereof, and shall supersede any and all prior
agreements or understandings between Employee and the Company (or any affiliate
of the Company, including Span), whether written or oral.
8.
<PAGE> 9
(b) AMENDMENTS. This Agreement may be amended or modified only
by a written instrument executed by Employee and the Company.
(c) GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.
(d) SEVERABILITY. In the event that any terms or provisions of
this Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) ASSUMPTION. The Company shall require any
successor-in-interest (whether direct or indirect or as a result of purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
(f) ASSIGNABILITY. The rights or obligations contained in this
Agreement shall not be assigned, transferred or divided in any manner by
Employee or the Company, without the prior written consent of the other;
provided, however, that nothing in this Section 9(f) shall preclude Employee
from designating a beneficiary to receive any benefits hereunder upon his death,
or the executors, administrators or other legal representatives of Employee or
his estate from assigning any rights hereunder to the person(s) entitled
thereto. Notwithstanding the foregoing, this Agreement shall be assignable by
the Company without Employee's consent and be binding on (i) any affiliate of
the Company and (ii) any entity which by purchase of assets, merger or
otherwise, becomes a successor to the business of the Company.
(g) WAIVER OF BREACH. Any waiver of any breach of employment
terms set forth herein shall not be construed to be a continuing waiver or
consent to any subsequent breach on the part of Employee or the Company.
(h) HEADINGS. The headings of paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation and performance of any of the provisions of this Agreement.
(i) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if mailed by United States certified or
registered mail, prepaid, to the parties or their permitted assignees at the
following addresses (or at such other address as shall be given in writing by
either party to the other):
9.
<PAGE> 10
To: Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
Attn: Chief Executive Officer
To: Donald E. Whitson
Span Instruments, Inc.
1947 Avenue K
Plano, Texas 75074
10.
<PAGE> 11
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
TYLAN GENERAL, INC.
By: /s/ David J. Ferran
--------------------------------
Its: Chairman of the Board, President
and Chief Executive Officer
EMPLOYEE
/s/ Donald E. Whitson
--------------------------------
Donald E. Whitson
11.
<PAGE> 1
Exhibit 99.05
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and effective as of July 3, 1996,
by and between TYLAN GENERAL, INC., a Delaware corporation (the "Parent"), SPAN
INSTRUMENTS, INC., a Texas corporation and a wholly-owned subsidiary of Parent
(the "Company"), and GEORGE A. YURCH, JR. (the "Employee").
WHEREAS, the Company desires to assure itself of the continued
services of Employee, and Employee desires to be employed by the Company, under
the terms and conditions herein; and
WHEREAS, the Company, the Parent and Employee desire to define their
respective rights and obligations as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT; TERM
(a) EMPLOYMENT. The Company hereby agrees to continue to
employ, and the Parent hereby agrees to cause the Company to continue to employ,
the Employee to serve in the capacity of President of the Company, and Employee
hereby accepts such continued employment by the Company upon the terms and
conditions set forth herein.
(b) TERM. The effective date of this Agreement shall be July
3, 1996 (the "Effective Date") and shall remain in effect until the earlier of
(i) eighteen (18) months from the effective date or (ii) the date when
Employee's employment is terminated pursuant to Section 3 of this Agreement.
(c) DUTIES. During the term of this Agreement, Employee will,
to the best of his ability, devote substantially all of his business time and
attention to the performance of his duties hereunder, including such
responsibilities as shall be established by custom, by the Bylaws of the
Company and, from time to time, by the Board of Directors and/or senior
management of the Company or the Parent.
(d) COMPETITIVE ACTIVITY. Employee, during the term of his
employment hereunder, will not accept any other employment of any nature and
will not engage, directly or indirectly, in any other business activity
(whether or not pursued for pecuniary advantage) that is or may be competitive
with, or that might place him in a competing position to that of the Company
or any other corporation or entity that directly or indirectly controls, is
controlled by or is under common control with the Company.
1.
<PAGE> 2
2. SALARY AND BENEFITS
(a) SALARY. The Company shall pay to Employee for the services
to be rendered hereunder a salary at an annual rate of $198,000, payable in
installments in accordance with Company policy, subject to increase in
accordance with the policies of the Company or the Parent, as determined by its
Board of Directors, in force from time to time (the "Salary").
(b) BENEFITS. Employee shall be eligible to participate in the
Company's employee benefit plans and incentive compensation programs for
employees, including the stock option plan of the Parent, subject in each case
to the generally applicable terms and conditions of the plan or program in
question.
3. TERMINATION
(a) GENERAL. Employee's employment under this Agreement may be
terminated by the Company, the Parent or Employee as herein provided, without
further obligation or liability except as expressly provided herein. The Company
shall not provide or pay for any employee benefits or bonuses following the
termination of Employee's employment pursuant to Section 3(b), 3(c) or 3(d)
hereof, and the vesting of any stock options granted to Employee during the term
of his employment with the Company shall cease on the date of such termination
of employment.
(b) RESIGNATION. Employee's employment hereunder may be
terminated at any time, upon 30 days prior notice, by Employee's resignation. If
Employee resigns, he shall be entitled to receive payments pursuant to Section
4(a) hereof, subject to his full compliance with said Section 4(a).
(c) DEATH OR DISABILITY. Employee's employment shall terminate
upon the date of Employee's death or disability. For purposes of this Agreement,
disability shall be deemed to have occurred only after the following procedure
has been satisfied. If within 45 days after notice of proposed termination for
disability is given to Employee by the Company or the Parent, Employee has not
returned to the performance of substantially all his duties, the Company or the
Parent may terminate Employee's employment by giving notice of termination for
disability. The notice of proposed termination may only be given by the Company
or the Parent following Employee's substantial and material absence from
Employee's duties by reason of physical or mental disability for a period of 120
calendar days.
(d) TERMINATION FOR CAUSE. Employee's employment hereunder may
be terminated by the Company or the Parent for cause; provided, however, that
Employee shall be given notice of the findings of conduct by Employee amounting
to cause for such termination. Cause for termination under this Agreement shall
be limited to
2.
<PAGE> 3
(i) Employee's personal dishonesty or gross misconduct; (ii) a material breach
of any provision of this Agreement; (iii) Employee's refusal or failure to act
in accordance with any lawful, reasonable direction or order of the Board of
Directors or senior management of the Company or the Parent and such refusal or
failure results or is reasonably likely to result in a materially adverse effect
on the Company's or the Parent's business; or (iv) the continued failure by
Employee to perform Employee's duties with the Company or its subsidiaries or
affiliates, including the Parent (other than any failure resulting from
disability) in a manner consistent with Employee's position after a written
demand identifies the manner in which Employee's supervisor believes that
Employee has not substantially performed his duties. Termination of Employee's
employment under this Agreement for cause as set forth in clause (i) of the
preceding sentence shall be deemed to be effective upon delivery of notice
thereof in accordance with the provisions of Section 5(i) of this Agreement.
Employee shall have 30 days from the date notice is given for cause as set forth
in clause (ii), (iii) or (iv) of the second sentence of this Section 3(d) to
cure such conduct.
(e) TERMINATION WITHOUT CAUSE. The Company and the Parent
shall have the right, exercisable at any time during the term of this Agreement
upon written notice to Employee, to terminate Employee's employment without
cause upon 30 days prior notice. If Employee is terminated without cause, he
shall be entitled to receive severance benefits pursuant to Section 4(d) hereof,
subject to his full compliance with said Section 4(d).
(f) TERMINATION OBLIGATIONS. Employee hereby acknowledges and
agrees that all personal property of the Company or the Parent, including,
without limitation, all books, manuals, records, reports, notes, contracts,
lists, and other documents, proprietary information, copies of any of the
foregoing, and equipment furnished to or prepared by Employee in the course of
or incident to his employment, belong to the Company or the Parent, as the case
may be, and shall be promptly returned to the Company or the Parent, as the case
may be, upon termination of his employment for any reason. Employee shall retain
the rights to remove all of his personal property from the premises of the
Company and any personal property of the Company or the Parent as may be
mutually agreed upon between the Company or the Parent and Employee.
4. PAYMENTS TO EMPLOYEE UPON TERMINATION.
(a) RESIGNATION. In the event of Employee's resignation, the
Company shall continue to pay Employee Employee's Salary for a period of six (6)
months commencing on the date of Employee's resignation. Such salary shall be
determined with reference to the salary in effect for the month in which the
date of employment termination occurs. The Company's obligation to make each
such monthly payment is
3.
<PAGE> 4
conditioned on Employee's performance of four (4) hours of consulting services
per month for the Company; provided, however, that the Company's obligation to
make such monthly payments pursuant to this Section 4(a) shall cease if Employee
engages, at any time during the six (6) months following his resignation,
directly or indirectly, in any other business activity (whether or not pursued
for pecuniary advantage) that is or may be competitive with, or that might place
him in a competing position to that of the Company or any other corporation or
entity that directly or indirectly controls, is controlled by or is under common
control with the Company.
(b) DEATH OR DISABILITY. In the event of Employee's death or
disability, all benefits generally available to the Company's employees as of
the date of such an event as determined by the Board of Directors of the Company
shall be payable to Employee or Employee's estate, without reduction, in
accordance with the terms of any plan, contract, understanding or arrangement
forming the basis for such payment.
(c) TERMINATION FOR CAUSE. In the event Employee is terminated
by the Company or the Parent for cause as provided in Section 3(d) hereof,
Employee shall be entitled to receive the following:
(1) TERMINATION PAYMENT. The Company shall continue
to pay to the Employee his salary for six (6) months following the date of
Employee's actual termination of employment (the "Termination Payment"). Such
salary shall be determined with reference to the salary in effect for the month
in which the date of employment termination occurs.
(d) TERMINATION WITHOUT CAUSE. In the event Employee is
terminated by the Company or the Parent without cause as provided in Section
3(e) hereof, Employee shall be entitled to receive the following:
(1) SEVERANCE PAYMENT. The Company shall continue to
pay to the Employee his salary (i) until the date that is twelve (12) months
from the effective date of this Agreement (the "Initial Period") and (ii) for
six (6) months following the later of (x) the date of Employee's actual
termination of employment and (y) termination of the Initial Period (the
"Severance Payment"). Such salary shall be determined with reference to the
salary in effect for the month in which the date of employment termination
occurs.
(e) PAYMENT IN LIEU OF CONTRACT DAMAGES. The Termination
Payment and the Severance Payment shall be in lieu of any further payments to
the Employee and any further accrual of benefits with respect to periods
subsequent to the date of the employment termination and shall constitute a full
satisfaction and discharge of any claims by Employee related to the Agreement or
the circumstances surrounding the termination of employment hereunder.
Notwithstanding the preceding sentence, neither the Termination Payment, the
Severance Payment nor any other payments under this
4.
<PAGE> 5
Section 4(e) shall reduce or offset any benefits the Employee may be entitled to
under the specific terms of the benefit plans of the Company.
5. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. The terms and provisions of this
Agreement, together with the terms and provisions of the Noncompetition
Agreement dated the date hereof between Employee and the Parent, shall
constitute the entire understanding between Employee, the Company and the Parent
with respect to the subject matter hereof, and shall supersede any and all prior
agreements or understandings between Employee, the Company and the Parent,
whether written or oral.
(b) AMENDMENTS. This Agreement may be amended or modified only
by a written instrument executed by Employee, the Company and the Parent.
(c) GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.
(d) SEVERABILITY. In the event that any terms or provisions of
this Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(e) ASSUMPTION. The Company and the Parent shall require any
successor-in-interest (whether direct or indirect or as a result of purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company or the Parent to expressly assume and agree to
perform the obligations under this Agreement in the same manner and to the same
extent that the Company or the Parent would be required to perform it if no such
succession had taken place.
(f) ASSIGNABILITY. The rights or obligations contained in this
Agreement shall not be assigned, transferred or divided in any manner by
Employee, the Company or the Parent, without the prior written consent of the
other; provided, however, that nothing in this Section 5(f) shall preclude
Employee from designating a beneficiary to receive any benefits hereunder upon
his death, or the executors, administrators or other legal representatives of
Employee or his estate from assigning any rights hereunder to the person(s)
entitled thereto. Notwithstanding the foregoing, this Agreement shall be
assignable by the Company without Employee's consent and be binding on (i) the
Parent or any other affiliate of the Company, and (ii) any entity which by
purchase of assets, merger or otherwise, becomes a successor to the business of
the Company or the Parent.
5.
<PAGE> 6
(g) WAIVER OF BREACH. Any waiver of any breach of employment
terms set forth herein shall not be construed to be a continuing waiver or
consent to any subsequent breach on the part of Employee, the Parent or the
Company.
(h) HEADINGS. The headings of paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation and performance of any of the provisions of this Agreement.
(i) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally delivered or if mailed by United States certified or
registered mail, prepaid, to the parties or their permitted assignees at the
following addresses (or at such other address as shall be given in writing by
either party to the other):
To: Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
Attn: Chief Executive Officer
To: Span Instruments, Inc.
2201 Avenue K
Plano, Texas 75074
Attn: President
To: George A. Yurch, Jr.
-----------------------------
-----------------------------
6.
<PAGE> 7
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
TYLAN GENERAL, INC. SPAN INSTRUMENTS, INC.
By:/s/ David J. Ferran By:/s/ Donald E. Whitson
------------------------------------ -----------------------------
Its:Chairman of the Board, President Its: Chief Executive Officer
and Chief Executive Officer
EMPLOYEE
/s/ George A. Yurch, Jr.
- --------------------------------
George A. Yurch, Jr.
7.
<PAGE> 1
Exhibit 99.06
EMPLOYMENT AGREEMENT
THIS AGREEMENT ("Agreement") is made and effective as of July 2, 1996
by and between TYLAN GENERAL, Inc., a Delaware corporation (the "Company"), and
DAVID L. STONE (the "Employee"), with respect to the following facts.
A. The Board of Directors (the "Board") of the Company has determined
that the best interests of the Company would be served by Employee's employment
by the Company in the capacity of Chief Financial Officer and such mutually
acceptable additional capacities as the Chief Administrative Officer may
delegate to him from time to time during the term of this Agreement.
B. The Company wishes to assure itself of the continued benefit of
Employee's services provided in this Agreement, and Employee is willing to serve
in the employ of the Company solely within the terms hereof for said period.
C. The Company and Employee desire to define their respective rights
and obligations as provided herein.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions contained herein, and for other good and valuable consideration,
receipt of which is hereby acknowledged, the parties agree as follows:
1. EMPLOYMENT
The Company hereby agrees to employ the Employee to serve in
the capacity of Chief Financial Officer of the Company, and Employee hereby
accepts such employment by the Company upon the terms and conditions set forth
herein.
2. POSITION AND RESPONSIBILITIES
(a) DUTIES. The Company shall employ Employee in the capacity
of Chief Financial Officer and such other mutually acceptable executive
positions as the Chief Administrative Officer may determine to be in the best
interests of the Company, and Employee shall serve as such for the term and
under other conditions hereinafter set forth. Employee shall devote his full
business time and attention to the performance of such services and to such
other services as may be necessarily requested by the Chief Administrative
Officer that are consistent with those required of a Chief Financial Officer of
a company. In this capacity as Chief Financial Officer, Employee shall perform
such duties and have such powers and authority as are customary for the Chief
Financial Officer of a company. The Employee shall report directly to and shall
be responsible to the Chief Administrative Officer regarding his services. In
the event that, without his consent, Employee is assigned to a position
involving a different title or
1.
<PAGE> 2
materially lesser authority and responsibility, then Employee shall have the
option, exercisable for 30 days following notice to Employee of such assignment
or new title, to resign for good reason, as defined in Section 7(d) herein, in
which case Employee shall be entitled to the benefits set forth in Section 8(c)
herein.
(b) COMPETITIVE ACTIVITY. Except upon the prior written
consent of the Chief Administrative Officer, Employee, during the term of his
employment hereunder, will not accept any other employment of any nature and
will not engage, directly or indirectly, in any other business activity (whether
or not pursued for pecuniary advantage) that is or may be competitive with, or
that might place him in a competing position to that of the Company or any other
corporation or entity that directly or indirectly controls, is controlled by or
is under common control with the Company.
3. TERM OF EMPLOYMENT
The effective date of this Agreement shall be July 2, 1996
(the "Effective Date"), and it shall remain in effect until terminated pursuant
to Section 7.
4. WORKING FACILITIES
Employee shall be furnished with a private office,
secretarial and other necessary clerical assistance, and such other facilities,
amenities and services as may at the time be generally furnished to executive
officers of the Company and as are appropriate for Employee's position and
adequate for the performance of his duties hereunder.
5. PLACE OF PERFORMANCE
In connection with this Agreement, Employee shall maintain an
office at the principal executive offices of Tylan General, Inc. in San Diego,
California.
6. SALARY, BONUS, EXPENSES AND BENEFITS
(a) SALARY. The Company shall continue to pay Employee such
salary as is currently in effect as to Employee. Employee's salary shall be
reviewed and revised (if appropriate) at least annually by the Chief
Administrative Officer and shall be adjusted based upon Employee's job
performance, the Company's financial condition and performance and the salary
and compensation levels of executives in similar companies with similar
responsibilities. Any increases in Employee's salary pursuant to this Section
6(a) shall require approval by the Compensation Committee of the Board of
Directors of the Company (the "Committee") (without the vote of the Employee if
Employee is a member of such committee).
2.
<PAGE> 3
(b) BONUS. Employee shall be eligible to participate in the
Company's annual incentive bonus plan, as administered by the Committee. The
Committee (without the vote of the Employee if Employee is a member of such
committee) shall determine in good faith the amount of such bonus giving
consideration to the Company's overall achievement of the goals set forth in the
Company's annual plan for the applicable fiscal year and Employee's performance
during the year. The Company shall pay such bonus no later than 45 days after
the end of each fiscal year of the Company.
(c) PARTICIPATION IN WELFARE AND BENEFIT PLANS. Employee shall
be entitled to participate in, personally and/or for the benefit of his family
or other beneficiaries, any welfare, insurance, pension, or other employee
benefit plans as are at the time made generally available to other executives of
the Company. Employee shall be eligible to receive during the term hereof all
benefits for which executives are eligible under every such plan or program to
the extent permissible under the general terms and provisions of such plans or
programs and in accordance with the provisions thereof.
(d) VACATION. Employee shall be entitled to seven weeks' paid
vacation time each year, during which such time his compensation hereunder shall
be paid in full. Unless otherwise directed by the Chief Administrative Officer,
Employee shall have the discretion to take vacation time on the dates as he
determines to be appropriate and not detrimental to the Company.
(e) HOLIDAYS, LEAVE DAYS, ETC. Employee shall be entitled to
such holidays, sick leave, leaves of absence and other absences as are at the
time made generally available to other executives of the Company of comparable
tenure and position.
(f) AUTOMOBILE. During the term of this Agreement, the Company
shall make an automobile available to Employee under such terms and conditions
as are presently applied or as may be later applied to other executives of the
Company of comparable tenure and position. In connection therewith, the Company
shall bear all expenses relating to such automobile, including insurance,
maintenance and repair, gas and oil. Upon termination of this Agreement, the
Company shall offer Employee the right to purchase the automobile then being
operated by Employee at the depreciated value of such automobile or to assume
the Company's lease of such automobile and shall execute and deliver to Employee
all documentation necessary to establish Employee's ownership or leasing of such
automobile.
(g) LIFE INSURANCE. The Company shall pay for and provide life
insurance for each year of this Agreement for the benefit of Employee under the
Company's group life insurance plan.
3.
<PAGE> 4
(h) HEALTH INSURANCE. The Company shall provide health
insurance for Employee under the Company's health insurance plan.
(i) DISABILITY INSURANCE. The Company shall provide disability
insurance for Employee pursuant to the Company's directors' and officers'
disability policy according to the Company's policy established by the
Committee.
(j) REIMBURSEMENT OF EXPENSES. The Company shall pay or
reimburse Employee, on a monthly basis, for reasonable travel, entertainment,
promotional and other expenses incurred by Employee in the performance of his
obligations under this Agreement. Employee must submit timely detailed expense
reports for appropriate review prior to reimbursement.
(k) OTHER FRINGE BENEFITS. Employee shall be entitled to any
and all other fringe benefits according to the Company's policy as set by the
Committee.
7. TERMINATION
Employee's employment under this Agreement may be terminated
by the Company or Employee as herein provided, without further obligation or
liability except as expressly provided herein.
(a) RESIGNATION, DEATH OR DISABILITY. Employee's employment
hereunder may be terminated at any time by Employee's resignation (other than a
resignation for good reason as provided in Section 7(d)), or by Employee's death
or disability. In the event Employee wishes to resign, he shall give the Company
not less than six months' prior notice of such resignation, which notice shall
indicate the proposed resignation date. Following receipt of such notice, the
Company shall have the right to accelerate the date of Employee's resignation
and to cause his resignation to become effective at any time prior to the
resignation date set forth in Employee's original notice; provided, however,
that such acceleration or changed effective date of resignation shall not affect
in any manner the delivery of any benefits or payments to which Employee may be
entitled under Section 8 of this Agreement. For purposes of this Agreement,
disability shall be deemed to have occurred only after the following procedure
has been satisfied. If within 45 days after notice of proposed termination for
disability is given to Employee by the Company, Employee has not returned to the
performance of substantially all his duties, the Company may terminate
Employee's employment by giving notice of termination for disability. The notice
of proposed termination may only be given by the Company following Employee's
substantial and material absence from Employee's duties by reason of physical or
mental disability for a period of 120 calendar days. This section shall be
carried out in accordance with the provisions of the federal Americans with
Disabilities Act.
4.
<PAGE> 5
(b) TERMINATION FOR CAUSE. Employee's employment hereunder may
be terminated by the Company for cause; provided, however, that Employee shall
be given notice of the Company's findings of conduct by Employee amounting to
cause for such termination. Cause for termination under this Agreement shall be
limited to (i) Employee's personal dishonesty or gross misconduct; (ii) a
material breach of any material provision of this Agreement; (iii) Employee's
refusal or failure to act in accordance with any lawful, reasonable direction or
order of the Chief Administrative Officer or the Board and such refusal or
failure results or is reasonably likely to result in a materially adverse effect
on the Company's business; (iv) conviction of any felony involving moral
turpitude (not including a conviction for operating a motor vehicle under the
influence of alcohol or any other motor vehicle violation if no bodily injury to
a third party is involved); (v) any chemical dependency or substance abuse
resulting in a continuous and material impairment of Employee's ability to
perform his duties under this Agreement; or (vi) the willful and continued
failure by Employee to substantially perform Employee's duties with the Company
or its subsidiaries or affiliates (other than any failure resulting from
disability) after a written demand identifies the manner in which the Company
believes that Employee has not substantially performed his duties. Termination
of Employee's employment under this Agreement for cause as set forth in clauses
(i) or (iv) of the preceding sentence shall be deemed to be effective upon
delivery of notice thereof in accordance with the provisions of Section 9(i) of
this Agreement. Employee shall have 30 days from the date notice is given for
cause as set forth in clause (ii), (iii), (v) or (vi) of the second sentence of
this Section 7(b) to cure such conduct.
(c) TERMINATION WITHOUT CAUSE. The Company shall have the
right, exercisable at any time during the term of this Agreement upon written
notice to Employee, to terminate Employee's employment without cause upon 30
days prior notice. If Employee is terminated without cause, he shall be entitled
to receive the severance benefits pursuant to Section 8(c) hereof subject to his
full compliance with said Section 8(c).
(d) RESIGNATION FOR GOOD REASON. During the term hereof,
Employee may regard Employee's employment as being constructively terminated and
may, therefore, resign within 30 days of Employee's discovery of the occurrence
of one or more of the following events, any of which will constitute "good
reason" for such resignation:
(1) Without Employee's express written consent, the
assignment to Employee of any duties materially inconsistent with Employee's
position, duties, responsibilities and status with the Company;
(2) Without Employee's express written consent, the
termination of and/or material reduction in Employee's facilities (including
office space and general
5.
<PAGE> 6
location) and staff reporting available to Employee, unless such reduction
occurs as part of a company-wide action authorized by the Board to reduce the
Company's expenses;
(3) A reduction by the Company of Employee's base
salary or of any bonus compensation formula applicable to him unless in
connection with (i) an across-the-board reduction for all senior management of
the Company, (ii) a reduction after the second anniversary of the Effective Date
in order to make Employee's salary consistent with the Company's compensation
policy for senior management or (iii) a company-wide salary expense reduction
necessitated by poor financial performance of the Company, in any case as
determined by the Committee in its reasonable discretion;
(4) A failure by the Company to maintain any of the
employee benefits to which Employee is entitled at a level substantially equal
to or greater than the value of those employee benefits currently in effect
through the continuation of the same or substantially similar plans, programs
and policies; or the taking of any action by the Company or its affiliate(s)
that would materially affect Employee's participation in or reduce Employee's
benefits under any such plans, programs or policies, or deprive Employee of any
material fringe benefits enjoyed by Employee unless such failure or reduction
occurs as part of a company-wide action authorized by the Board (including the
vote of Employee if Employee is a Director of the Company) to reduce the
Company's expenses;
(5) The failure by the Company to permit Employee to
take substantially the same number of paid vacation days and leave to which
Employee is entitled;
(6) The Company or any affiliate(s) requiring
Employee to be based anywhere other than within 20 miles of San Diego,
California, except for required travel on the Company's or an affiliate's
business to an extent substantially consistent with Employee's present business
travel obligations;
(7) Any termination of Employee's employment by the
Company which is not effected pursuant to the requirements of this Section 7
with respect to death, disability or termination for cause;
(8) The failure of the Company to obtain the
assumption of this Agreement by any successor as contemplated in Section 9(e)
hereof;
(9) Any termination by the Company of Employee's
service on the Senior Executive Committee of the Company; and
(10) A material breach of any provision of this
Agreement by the Company.
6.
<PAGE> 7
In the event of the occurrence of any of the above listed events and in the
event Employee wishes to resign on the basis of occurrence of such event,
Employee shall give the Company notice of his proposed resignation, and the
Company shall have a period of 30 days following its receipt of such notice to
remedy the breach or occurrence giving rise to such proposed resignation. In the
event the Company fails to so remedy said breach or occurrence by expiration of
said 30-day period, Employee shall be deemed to have resigned from his
employment with the Company for good reason pursuant to this Section 7(d).
(e) RESIGNATION UPON MUTUAL AGREEMENT. In the event that
Employee resigns upon mutual agreement by the Company and Employee and upon six
months' notice by Employee to the Company, and on the condition that Employee
cooperates in performing all services reasonably required by the Company to
achieve a smooth transition following Employee's departure from the Company,
Employee shall be entitled to receive the payments and benefits set forth in
Section 8(d) herein.
(f) TERMINATION OBLIGATIONS. Employee hereby acknowledges and
agrees that all personal property of the Company, including, without limitation,
all books, manuals, records, reports, notes, contracts, lists, and other
documents, proprietary information, copies of any of the foregoing, and
equipment furnished to or prepared by Employee in the course of or incident to
his employment, belong to the Company and shall be promptly returned to the
Company upon termination of his employment for any reason. Employee shall retain
the rights to remove all of his personal property from the premises of the
Company and any personal property of the Company as may be mutually agreed upon
between the Company and Employee.
8. PAYMENTS TO EMPLOYEE UPON TERMINATION.
(a) DEATH OR DISABILITY. In the event of Employee's death or
disability, all benefits generally available to the Company's executives as of
the date of such an event as determined by the Committee shall be payable to
Employee or Employee's estate, without reduction, in accordance with the terms
of any plan, contract, understanding or arrangement forming the basis for such
payment, including, but not limited to, payments under the plans identified in
Section 6(c). Employee shall be entitled to such other payments as might arise
from any plan, contract, understanding or arrangement between Employee and the
Company at the time of any such event pursuant to Section 6(c) or 6(i) hereof.
7.
<PAGE> 8
(b) TERMINATION FOR CAUSE. In the event Employee is terminated
by the Company for cause as provided in Section 7(b), Employee shall be entitled
to receive the following:
(1) SEVERANCE PAYMENT. The Company shall pay
Employee severance benefits equal to: (1) six months' base salary, such salary
payable at Employee's base salary in effect at the time of termination; and (2)
an amount equal to fifty percent (50%) of the bonus that Employee actually
received for the Company's most recently completed fiscal year (the "Severance
Payments").
(2) METHOD OF PAYMENT. The Severance Payments made
to Employee pursuant to Section 8(b)(1) above shall be paid to Employee as
follows: (i) the Company shall pay Employee that portion of the Severance
Payments equal to one month's base salary as promptly as possible following
Employee's termination for cause; and (ii) the remainder of the Severance
Payments shall be payable in one lump sum upon Employee's execution of a general
release in accordance with Section 8(b)(3) below. All Severance Payments will be
subject to standard deductions and withholding.
(3) PAYMENT IN LIEU OF CONTRACT DAMAGES. Payment of
the Severance Payments shall be in lieu of any further payments to the Employee
and any further accrual of benefits with respect to periods subsequent to the
date of the employment termination, and payment of all Severance Payments other
than that portion described in Section 8(b)(2)(i) above shall be conditioned on
Employee's execution within 21 days of employment termination of a general
release, in a form satisfactory to the Company, of any claims by Employee
related to the Agreement or the circumstances surrounding the termination of
employment hereunder.
(4) STOCK OPTION VESTING. All stock options granted
to Employee under a Stock Option Plan of the Company or otherwise shall cease
vesting as of the date of Employee's termination for cause or resignation
without good reason.
(5) HEALTH INSURANCE. To the extent permitted by the
federal COBRA law and by the Company's current group health insurance policies,
Employee will be eligible to continue his health insurance benefits at his own
expense and, later, to convert to an individual policy if Employee wishes.
Employee will be provided with a separate notice of his COBRA rights upon
termination. If Employee elects continued coverage under COBRA upon termination,
the Company, as part of Employee's Severance Payments, will pay Employee's COBRA
premiums for six (6) months following the date of Employee's termination for
cause.
(c) TERMINATION WITHOUT CAUSE OR RESIGNATION FOR GOOD REASON.
Upon the occurrence of termination without cause, or resignation for good
reason, as defined in Section 7(d), Employee shall be entitled to receive the
following:
8.
<PAGE> 9
(1) SEVERANCE BENEFITS. The Company shall pay
Employee severance benefits equal to: (1) eighteen (18) months' base salary,
such salary payable at Employee's base salary in effect at the time of
termination; and (2) an amount equal to one hundred percent (100%) of the bonus
that Employee actually received for the Company's most recently completed fiscal
year (the "Severance Benefits").
(2) METHOD OF PAYMENT. The Severance Benefits
provided for in Section 8(c)(1) above shall be paid to Employee as follows: (i)
the Company shall pay Employee that portion of the Severance Benefits equal to
one month's base salary as promptly as possible following Employee's termination
without cause or resignation for good reason; and (ii) the remainder of the
Severance Benefits shall be payable in one lump sum upon Employee's execution of
a general release in accordance with Section 8(c)(3) below. All Severance
Benefits will be subject to standard deductions and withholding.
(3) PAYMENT IN LIEU OF CONTRACT DAMAGES. Payment of
the Severance Benefits shall be in lieu of any further payments to the Employee
and any further accrual of benefits with respect to periods subsequent to the
date of the employment termination, and payment all Severance Benefits other
than that portion described in Section 8(c)(2)(i) above shall be conditioned on
Employee's execution within 21 days of employment termination of a general
release, in a form satisfactory to the Company, of any claims by Employee
related to the Agreement or the circumstances surrounding the termination of
employment hereunder. Notwithstanding the preceding sentence, neither the
Severance Benefits nor any other payments under this Section 8(c) shall reduce
or offset any benefits the Employee may be entitled to under the specific terms
of the benefit plans of the Company.
(4) STOCK OPTION VESTING. All stock options granted
to Employee under a Stock Option Plan of the Company or otherwise shall cease
vesting as of the date of Employee's termination without cause or resignation
for good reason.
(5) HEALTH INSURANCE. To the extent permitted by the
federal COBRA law and by the Company's current group health insurance policies,
Employee will be eligible to continue his health insurance benefits at his own
expense and, later, to convert to an individual policy if Employee wishes.
Employee will be provided with a separate notice of his COBRA rights upon
termination. If Employee elects continued coverage under COBRA upon termination,
the Company, as part of Employee's Severance Benefits, will pay Employee's COBRA
premiums for eighteen (18) months following the date of Employee's termination
without cause or resignation for good reason.
(d) RESIGNATION UPON MUTUAL AGREEMENT. In the event that
Employee resigns upon mutual agreement by the Company and Employee and upon six
months'
9.
<PAGE> 10
notice to the Company, and on the condition that Employee cooperates in
performing all services reasonably required by the Company to achieve a smooth
transition following Employee's departure from the Company, Employee shall be
entitled to receive the following:
(1) EMPLOYMENT DURING NOTICE PERIOD. Following the
date upon which Employee gives notice of resignation, the Company shall pay
Employee an amount equal to six (6) months' base salary (the "Mutual Agreement
Payments"). Such Mutual Agreement Payments shall be determined with reference to
the salary in effect for the month in which the date of notice of resignation
occurs. During the six months following Employee's notice of resignation (the
"Notice Period"), Employee shall, at the discretion of the Chief Administrative
Officer, continue to serve in the capacity of Chief Financial Officer of the
Company or in an unnamed advisory capacity, unless the Chief Administrative
Officer determines that Employee's services are not required. Whether or not
Employee's services are required during the Notice Period, Employee shall
receive the Mutual Agreement Payments.
(2) BONUS PAYMENTS. Effective upon Employee's
resignation upon mutual agreement, Employee's participation in the Company's
annual incentive bonus plan shall cease. At the end of the Notice Period,
Employee shall be eligible to receive a bonus of up to fifty percent (50%) of
the maximum bonus for which he would have been eligible had he remained an
employee of the Company for the remainder of the fiscal year in which his
resignation upon mutual agreement occurs (the "Bonus Payment"). The performance
measures upon which any such Bonus Payment is based shall be determined by
Employee's supervisor, and any such Bonus Payment shall be at the sole
discretion of Employee's supervisor. Notwithstanding the foregoing sentence, in
the event that Employee's services are not required during the Notice Period,
Employee shall receive the maximum Bonus Payment for which he would have been
eligible had he served in the capacity of Chief Financial Officer during the
Notice Period.
(3) GUARANTEED PAYMENT. At the end of the Notice
Period and in addition to the Bonus Payments, Employee shall receive a payment
equal to: (1) Employee's base salary for six (6) months, such salary payable at
Employee's base salary in effect at the time of Employee's notice of
resignation; and (2) an amount equal to fifty percent (50%) of the annual bonus
Employee actually received for the Company's most recently completed fiscal year
(the "Guaranteed Payment").
(4) METHOD OF PAYMENT. The Mutual Agreement
Payments, the Bonus Payment and the Guaranteed Payment provided for in Sections
8(d)(1), (2) and (3) above shall be paid to Employee as follows: (i) the Company
shall pay Employee that portion of the Mutual Agreement Payments equal to one
month's base salary as promptly as possible following Employee's notice of
resignation; and (ii) the remainder of the
10.
<PAGE> 11
Mutual Agreement Payments, the Bonus Payment and the Guaranteed Payment shall be
payable in one lump sum upon Employee's execution of a general release in
accordance with Section 8(d)(5) below. All payments under this Section 8(d) will
be subject to standard deductions and withholding.
(5) PAYMENT IN LIEU OF CONTRACT DAMAGES. Payments
under this Section 8(d) shall be in lieu of any further payments to the Employee
and any further accrual of benefits with respect to periods subsequent to the
date of the employment termination, and payment of all Mutual Agreement Payments
other than that portion described in Section 8(d)(4)(i) above, all Bonus
Payments and all Guaranteed Payments shall be conditioned on Employee's
execution within 21 days of his notice of resignation of a general release, in a
form satisfactory to the Company, of any claims by Employee related to the
Agreement or the circumstances surrounding the termination of employment
hereunder. Notwithstanding the preceding sentence, no payments under this
Section 8(d) shall reduce or offset any benefits the Employee may be entitled to
under the specific terms of the benefit plans of the Company.
(6) STOCK OPTION VESTING. All stock options granted
to Employee under a Stock Option Plan of the Company or otherwise shall cease
vesting (i) as of the last day of the Notice Period if Employee continues to
provide services to the Company throughout the Notice Period; (ii) as of the
last day during the Notice Period on which Employee provides services to the
Company; or (iii) as of the date of Employee's resignation upon mutual agreement
if the Company chooses not to employ Employee during the Notice Period.
(7) HEALTH INSURANCE. To the extent permitted by the
federal COBRA law and by the Company's current group health insurance policies,
Employee will be eligible to continue his health insurance benefits at his own
expense and, later, to convert to an individual policy if Employee wishes.
Employee will be provided with a separate notice of his COBRA rights upon
termination. If Employee elects continued coverage under COBRA upon termination,
the Company, as part of Employee's Mutual Agreement Payments and Guaranteed
Payments, will pay Employee's COBRA premiums for twelve (12) months following
the date of Employee's resignation upon mutual agreement.
9. GENERAL PROVISIONS
(a) ENTIRE AGREEMENT. The terms and provisions of this
Agreement shall constitute the entire understanding between Employee and the
Company with respect to the subject matter hereof, and shall supersede any and
all prior agreements or understandings between Employee and the Company (or any
affiliate of the Company, including Span), whether written or oral.
11.
<PAGE> 12
(b) NO ADDITIONAL PAYMENTS OR BENEFITS. Except as expressly
provided herein, Employee will not receive any additional compensation,
severance or benefits of any kind after the date of termination.
(c) AMENDMENTS. This Agreement may be amended or modified only
by a written instrument executed by Employee and the Company.
(d) GOVERNING LAW. The validity, interpretation, construction
and performance of this Agreement shall be governed by the laws of the State of
California.
(e) SEVERABILITY. In the event that any terms or provisions of
this Agreement shall be held to be invalid or unenforceable, such invalidity or
unenforceability shall not affect the validity or enforceability of the
remaining terms and provisions hereof.
(f) ASSUMPTION. The Company shall require any
successor-in-interest (whether direct or indirect or as a result of purchase,
merger, consolidation or otherwise) to all or substantially all of the business
and/or assets of the Company to expressly assume and agree to perform the
obligations under this Agreement in the same manner and to the same extent that
the Company would be required to perform it if no such succession had taken
place.
(g) ASSIGNABILITY. The rights or obligations contained in this
Agreement shall not be assigned, transferred or divided in any manner by
Employee or the Company, without the prior written consent of the other;
provided, however, that nothing in this Section 9(f) shall preclude Employee
from designating a beneficiary to receive any benefits hereunder upon his death,
or the executors, administrators or other legal representatives of Employee or
his estate from assigning any rights hereunder to the person(s) entitled
thereto. Notwithstanding the foregoing, this Agreement shall be assignable by
the Company without Employee's consent and be binding on (i) any affiliate of
the Company and (ii) any entity which by purchase of assets, merger or
otherwise, becomes a successor to the business of the Company.
(h) WAIVER OF BREACH. Any waiver of any breach of employment
terms set forth herein shall not be construed to be a continuing waiver or
consent to any subsequent breach on the part of Employee or the Company.
(i) HEADINGS. The headings of paragraphs herein are included
solely for convenience of reference and shall not control the meaning or
interpretation and performance of any of the provisions of this Agreement.
(j) NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if personally
12.
<PAGE> 13
delivered or if mailed by United States certified or registered mail, prepaid,
to the parties or their permitted assignees at the following addresses (or at
such other address as shall be given in writing by either party to the other):
To: Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
Attn: Chief Administrative Officer
To: David L. Stone
3103 Azahar Street
Carlsbad, California 92009
13.
<PAGE> 14
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed on the day and year first written above.
TYLAN GENERAL, INC.
By:/s/ David J. Ferran
-------------------------
Its:Chairman of the Board, President
and Chief Executive Officer
EMPLOYEE
/s/ David L. Stone
--------------------------
David L. Stone
14.
<PAGE> 1
Exhibit 99.07
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT made as of the 22nd day of July, 1996, by and
between Tylan General, Inc. (the "Company") and David J. Ferran (the
"Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter defined)
exists and that the threat or the occurrence of a Change in Control can result
in significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ
of the Company, particularly in the event of a threat or the occurrence of a
Change in Control, the Company desires to enter into this Agreement with the
Executive to provide the Executive with certain benefits in the event his
employment is terminated as a result of, or in connection with, a Change in
Control and to provide the Executive with certain other benefits whether or not
the Executive's employment is terminated.
NOW, THEREFORE, in consideration of the respective agreements of
the parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the
date hereof and shall continue in effect until December 31, 1998; provided,
however, that on December 31, 1997 and on each anniversary thereof, the term of
this Agreement shall be automatically extended for one year unless either the
Company or the Executive shall have given written notice to the other prior
thereto that the term of this Agreement shall not be so extended; and provided,
further, however, that notwithstanding any such notice by the Company not to
extend, the term of this Agreement shall not expire prior to the expiration of
15 months after the occurrence of a Change in Control.
2. Definitions.
2.1 Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all
amounts earned or accrued through the "Termination Date" (as
hereinafter defined) but not paid as of the Termination Date including
(i) base salary, (ii) reimbursement for reasonable and necessary
expenses incurred by the Executive on behalf of the Company ending on
the Termination Date, (iii) vacation and sick leave pay (to the extent
1.
<PAGE> 2
provided by Company policy or applicable law), and (iv) bonuses and
incentive compensation (other than the "Pro Rata Bonus" (as hereinafter
defined)).
2.2 Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the greater of (a) the Executive's annual base salary at the
rate in effect immediately prior to the Change in Control and (b) the
Executive's annual base salary at the rate in effect on the Termination
Date, and shall include all amounts of his base salary that are
deferred under the qualified and non-qualified employee benefit plans
of the Company or any other agreement or arrangement.
2.3 Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the greater of the Executive's annual bonus (without
giving effect to any pro ration) for the fiscal year in which a Change
in Control has occurred and the Executive's annual bonus (without
giving effect to any pro ration) for the fiscal year in which the
Termination Date occurs (calculated in accordance with any plan,
policy, agreement, or arrangement pursuant to which the Executive is
entitled to an annual bonus).
2.4 Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a
felony involving moral turpitude or the termination is evidenced by a
resolution adopted in good faith by two-thirds of the Board that the
Executive (a) intentionally and continually failed substantially to
perform his reasonably assigned duties with the Company (other than a
failure resulting from the Executive's incapacity due to physical or
mental illness or from the Executive's assignment of duties that would
constitute "Good Reason" as hereinafter defined) which failure
continued for a period of at least thirty days after a written notice
of demand for substantial performance has been delivered to the
Executive specifying the manner in which the Executive has failed
substantially to perform, or (b) intentionally engaged in conduct which
is demonstrably and materially injurious to the Company; provided,
however, that no termination of the Executive's employment shall be for
Cause until (x) there shall have been delivered to the Executive a copy
of a written notice setting forth that the Executive was guilty of the
conduct set forth in this Section 2.4 and specifying the particulars
thereof in detail, and (y) the Executive shall have been provided an
opportunity to be heard in person by the Board (with the assistance of
the Executive's counsel if the Executive so desires). Neither an act
nor a failure to act, on the Executive's part shall be considered
"intentional" unless the Executive has acted or failed to act with a
lack of good faith and with a lack of reasonable belief that the
Executive's action or failure to act was in the best interest of the
Company. Notwithstanding anything contained in this Agreement to the
contrary, no failure to perform by the Executive after a Notice of
Termination is given by the Executive shall constitute Cause for
purposes of this
2.
<PAGE> 3
Agreement.
2.5 Change in Control. For purposes of this Agreement, a "Change
in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for
purposes of Section 13(d) or 14(d) of the Securities Exchange Act
of 1934, as amended (the "1934 Act")) immediately after which such
Person has "Beneficial Ownership" (within the meaning of Rule
13d-3 promulgated under the 1934 Act) of thirty percent or more of
the combined voting power of the Company's then outstanding Voting
Securities; provided, however, that in determining whether a
Change in Control has occurred, Voting Securities which are
acquired in a "Non-Control Acquisition" (as hereinafter defined)
shall not constitute an acquisition which would cause a Change in
Control. A "Non-Control Acquisition" shall mean an acquisition by
(1) an employee benefit plan (or a trust forming a part thereof)
maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity
securities or equity interest is owned directly or indirectly by
the Company (a "Subsidiary"), (2) the Company or any Subsidiary,
or (3) any Person in connection with a "Non-Control Transaction."
(b) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for any reason
to constitute at least two-thirds of the Board; provided, however,
that if the election, or nomination for election by the Company's
stockholders, of any new director was approved by a vote of at
least two-thirds of the then Incumbent Board, such new director
shall, for purposes of this Agreement, be considered as a member
of the Incumbent Board; provided, further, however, that no
individual shall be considered a member of the Incumbent Board if
such individual initially assumed office as a result of either an
actual or threatened "Election Contest" (as described in Rule
14a-11 promulgated under the 1934 Act) or other actual or
threatened solicitation of proxies or consents by or on behalf of
a Person other than the Board (a "Proxy Contest") including by
reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or
reorganization involving the Company, unless
3.
<PAGE> 4
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
own, directly or indirectly, immediately following such merger,
consolidation or reorganization, at least seventy percent of the
combined voting power of the outstanding Voting Securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially the
same proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
and
(B) the individuals who were members of the
Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Corporation or a
corporation beneficially owning, directly or indirectly, a
majority of the Voting Securities of the Surviving Corporation,
and
(C) no Person (other than the Company, any
Subsidiary, any employee benefit plan (or any trust forming a part
thereof) maintained by the Company, the Surviving Corporation or
any Subsidiary, or any Person who, immediately prior to such
merger, consolidation or reorganization had Beneficial Ownership
of fifteen percent or more of the then outstanding Voting
Securities) owns, directly or indirectly, fifteen percent or more
of the combined voting power of the Surviving Corporation's then
outstanding voting securities, and
(D) a transaction described in clauses (A)
through (C) shall herein be referred to as a "Non-Control
Transaction";
(2) A complete liquidation or dissolution of the
Company; or
(3) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be
deemed to occur solely because any Person (the "Subject Person")
acquired Beneficial Ownership of more than the permitted amount of
the outstanding Voting Securities as a result of the acquisition
of Voting Securities by the Company
4.
<PAGE> 5
which, by reducing the number of Voting Securities outstanding,
increases the proportional number of shares Beneficially Owned by
the Subject Person, provided that if a Change in Control would
occur (but for the operation of this sentence) as a result of the
acquisition of Voting Securities by the Company, and after such
share acquisition by the Company, the Subject Person becomes the
Beneficial Owner of any additional Voting Securities which
increases the percentage of the then outstanding Voting Securities
Beneficially Owned by the Subject Person, then a Change in Control
shall occur.
(d) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is
terminated prior to a Change in Control and the Executive
reasonably demonstrates that such termination (i) was at the
request of a third party who has indicated an intention or taken
steps reasonably calculated to effect a Change in Control and who
effectuates a Change in Control (a "Third Party") or (ii)
otherwise occurred in connection with, or in anticipation of, a
Change in Control which actually occurs, then for all purposes of
this Agreement, the date of a Change in Control with respect to
the Executive shall mean the date immediately prior to the date of
such termination of the Executive's employment.
2.6 Company. For purposes of this Agreement, the "Company"
shall include the Company's "Successors and Assigns" (as hereinafter
defined).
2.7 Disability. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for a
period of one hundred eighty consecutive days and the Executive has not
returned to his full time employment prior to the Termination Date as
stated in the "Notice of Termination" (as hereinafter defined).
2.8 Good Reason (a)For purposes of this Agreement, "Good
Reason" shall mean the occurrence after a Change in Control of any of
the events or conditions described in subsections (1) through (9)
hereof:
(1) a change in the Executive's status, title,
position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable judgment,
represents an adverse change from his status, title, position or
responsibilities as in effect at any time within ninety days
preceding the date of a Change in Control or at any time
thereafter; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment,
are inconsistent with his status, title, position or
responsibilities as in effect at any time within ninety days
5.
<PAGE> 6
preceding the date of a Change in Control or at any time
thereafter; or any removal of the Executive from or failure to
reappoint or reelect him to any of such offices or positions,
except in connection with the termination of his employment for
Disability, Cause, as a result of his death or by the Executive
other than for Good Reason; provided, however, that, for purposes
of this Section 2.8(a)(1), the fact that a Change in Control has
occurred, in and of itself, shall not be deemed to constitute Good
Reason;
(2) a reduction in the Executive's base salary
or any failure to pay the Executive any compensation or benefits
to which he is entitled within five days of notice thereof;
(3) any event or occurrence constituting "good
reason," as it may be defined in any agreement between the
Executive and the Company or any of its affiliates;
(4) the Company's requiring the Executive to be
based at any place outside a 25-mile radius from the Executive's
primary place of employment (at the time of the Change of
Control), except for reasonably required travel on the Company's
business which is not materially greater than such travel
requirements prior to the Change in Control;
(5) the failure by the Company to provide the
Executive with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee
benefit plan, program and practice in which the Executive was
participating at any time within ninety days preceding the date of
a Change in Control or at any time thereafter;
(6) the insolvency or the filing (by any party,
including the Company) of a petition for bankruptcy of the
Company, which petition is not dismissed within sixty days;
(7) any material breach by the Company of any
provision of this Agreement;
(8) any purported termination of the
Executive's employment for Cause by the Company which does not
comply with the terms of Section 2.4; or
(9) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any Successors and
Assigns to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof.
6.
<PAGE> 7
(b) Any event or condition described in Section
2.8(a)(1) through (9) which occurs prior to a Change in Control
but which the Executive reasonably demonstrates (1) was at the
request of a Third Party, or (2) otherwise arose in connection
with, or in anticipation of, a Change in Control which actually
occurs, shall constitute Good Reason for purposes of this
Agreement notwithstanding that it occurred prior to the Change in
Control.
(c) The Executive's right to terminate his employment
pursuant to this Section 2.8 shall not be affected by his
incapacity due to a Disability
2.9 Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a
written notice of termination from the Company of the Executive's
employment which indicates the specific termination provision in this
Agreement relied upon and which sets forth in reasonable detail the
facts and circumstances claimed to provide a basis for termination of
the Executive's employment under the provision so indicated.
2.10 Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall have the meaning ascribed to such term in any agreement
between the Executive and the Company or any of its affiliates, or if
no such agreement with respect to such term exists, shall mean an
amount equal to (a) the Bonus Amount, multiplied by a fraction, (i) the
numerator of which is the number of days from the first day of the
Company's fiscal year in which the Executive ceases to be employed by
the Company until the Termination Date, and (ii) the denominator of
which is 365, less (b) any bonus included in the Bonus Amount in
respect of such fiscal year and previously paid.
2.11 Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity
acquiring all or substantially all the assets and business of the
Company whether by operation of law or otherwise, and any affiliate of
such Successors and Assigns.
2.12 Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death,
his date of death, (b) in the case of Good Reason, the last day of his
employment, and (c) in all other cases, the date specified in the
Notice of Termination; provided, however, that if the Executive's
employment is terminated by the Company for Cause or due to Disability,
the date specified in the Notice of Termination shall be at least 30
days from the date the Notice of Termination is given to the Executive,
provided that in the case of Disability the Executive shall not have
returned to the full-time performance of his duties during such period
of at least 30 days.
7.
<PAGE> 8
3. Termination of Employment.
3.1 Severance Pay and Benefits. If, during the term of this
Agreement, the Executive shall cease to be employed by Company prior to
the expiration of 15 months after the occurrence of a Change in
Control, the Executive shall be entitled to the following compensation
and benefits:
(a) If the Executive's employment with the Company
shall be terminated at any time prior to the expiration of 15
months after the occurrence of the Change in Control (x) by reason
of the Executive's death or (y) by the Company for Disability, the
Company shall pay to the Executive the Accrued Compensation plus
the Pro Rata Bonus.
(b) During the period commencing on the date of the
Change in Control and ending on the 90th day thereafter (the
"Window Period"), if the Executive's employment with the Company
shall be terminated (other than by reason of the Executive's death
and other than by the Company for Disability), whether at the
instigation of the Executive or the Company, with or without
Cause, for Good Reason or not, the Executive shall be entitled to
the following:
(1) the Company shall pay the Executive all
Accrued Compensation and a Pro-Rata Bonus;
(2) the Company shall pay the Executive as
severance pay and in lieu of any further compensation for
periods subsequent to the Termination Date, in a single
payment an amount in cash equal to two and one-half times the
sum of (A) the Base Amount and (B) the Bonus Amount; provided,
however, that if and only if the Executive's employment with
the Company is terminated for the reasons set forth in Section
8(c) of that certain Employment Agreement between Vacuum
General, Inc. and the Executive, dated October 5, 1989, as it
may be amended, supplemented, restated or replaced from time
to time, including any such amendment, supplement, restatement
or replacement that is between the Company and the Executive
(the "Existing Employment Agreement") and the Executive elects
to require the Company to enter into a consulting contract
with the Executive in accordance with Section 8(c) of the
Existing Employment Agreement, the amount payable to the
Executive pursuant to this subsection 2 shall be reduced by an
amount equal to the aggregate amount payable or paid to the
Executive pursuant to Sections 8(c)(2)(i) and 8(c)(2)(iv) of
the Existing Employment Agreement but in any event the amount
payable to the Executive pursuant to this subsection 2 shall
not be reduced to an amount less than zero; and provided,
further, that if any
8.
<PAGE> 9
amount payable to the Executive pursuant to Sections 8(c)(2)(i)
and 8(c)(2)(iv) of the Existing Employment Agreement is not
actually paid to the Executive (for whatever reason or no reason,
whether in accordance with the last sentence of Section 8(c)(1) of
the Existing Employment Agreement or otherwise) within the one
year period subsequent to the Termination Date, all remaining
unpaid amounts described in Sections 8(c)(2)(i) and 8(c)(2)(iv) of
the Existing Employment Agreement shall become immediately due and
payable by the Company pursuant to this Agreement with interest at
the prime rate plus 2% or at the maximum rate permitted by
applicable law, if lower (for purposes of this subsection 2, the
prime rate will be the prime commercial lending rate as announced
from time to time by Bank of America NT&SA, or its successor, as
in effect at the close of business on the business day preceding
the Termination Date); and
(3) for a number of months equal to 30 (the
"Continuation Period"), the Company shall at its expense continue
on behalf of the Executive and his dependents and beneficiaries
the medical, dental and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to the
Change in Control or at any time thereafter or (y) to other senior
executives who continue in the employ of the Company during the
Continuation Period. The coverage and benefits (including
deductibles and costs) provided in this Section 3.1(b)(3) during
the Continuation Period shall be no less favorable to the
Executive and his dependents and beneficiaries, than the most
favorable of such coverages and benefits described in clauses (x)
and (y) herein. The Company's obligation hereunder with respect to
the foregoing benefits shall be limited to the extent that the
Executive obtains any such benefits pursuant to a subsequent
employer's benefit plans, in which case the Company may reduce the
coverage of any benefits it is required to provide the Executive
hereunder as long as the aggregate coverages and benefits of the
combined benefit plans is no less favorable to the Executive than
the coverages and benefits required to be provided hereunder. This
subsection (3) shall not be interpreted so as to limit any
benefits to which the Executive, his dependents or beneficiaries
may be entitled under any of the Company's employee benefit plans,
programs or practices following the Executive's termination of
employment, including without limitation, retiree medical and life
insurance benefits.
(c) After the expiration of the Window Period and
prior to the expiration of 15 months after the occurrence of the
Change in Control, if the Executive's employment with the Company
shall be terminated (other than by
9.
<PAGE> 10
reason of the Executive's death and other than by the Company for
Disability) (x) by the Company for any reason other than for Cause
or (y) by the Executive for Good Reason, the Executive shall be
entitled to the compensation and benefits described in subsections
(1) through (3) in Section 3.1(b) above.
(d) After the expiration of the Window Period and
prior to the expiration of 15 months after the occurrence of the
Change of Control, if the Executive's employment with the Company
shall be terminated by the Executive other than for Good Reason,
the Company shall pay to the Executive the Accrued Compensation
plus the Pro Rata Bonus.
(e) After the expiration of the Window Period and
prior to the expiration of 15 months after the occurrence of the
Change of Control, if the Executive's employment with the Company
shall be terminated by the Company for Cause, the Company shall
pay to the Executive the Accrued Compensation.
3.2 Payment Form. The amounts provided for in Sections 3.1 and
3.1(b)(1) and (2) shall be paid in a single lump sum cash payment
within five days after the Executive's Termination Date (or earlier, if
required by applicable law).
3.3 No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be
offset or reduced by the amount of any compensation or benefits
provided to the Executive in any subsequent employment except as
provided in Section 3.1(b)(3).
3.4 Other Severance Arrangements. Whether or not any Change in
Control shall occur, the following shall apply:
(a) The Existing Employment Agreement shall continue
in full force and effect in accordance with its terms.
(b) The Executive's entitlement to any other
compensation or benefits or any indemnification shall be
determined in accordance with the Company's employee benefit
plans, bonus plan and other applicable programs, policies and
practices or any indemnification agreement then in effect.
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by either party shall be communicated
by Notice of Termination to the other party. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
10.
<PAGE> 11
5. Excise Tax Limitation.
5.1 Notwithstanding anything contained in this Agreement to
the contrary, to the extent that any payment or distribution of any
type to or for the benefit of the Executive (the "Severance Benefit")
would be subject to the excise tax (the "Excise Tax") imposed under
Section 4999 of the Internal Revenue Code of 1986, as amended (the
"Code"), the Severance Benefit shall be reduced (but not below zero) if
and to the extent that a reduction in the Severance Benefit would
result in the Executive retaining a larger amount, on an after-tax
basis (taking into account federal, state and local income taxes and
the Excise Tax), than if the Executive received the entire amount of
such Severance Benefit. Unless the Executive shall have given prior
written notice specifying a different order to the Company to
effectuate the foregoing, the Company shall reduce or eliminate the
Severance Benefit, by first reducing or eliminating the portion of the
Severance Benefit which is not payable in cash and then by reducing or
eliminating cash payments, in each case in reverse order beginning with
payments or benefits which are to be paid the farthest in time from the
Determination (as hereinafter defined).
5.2 The initial determination of whether the Severance Benefit
shall be reduced as provided in Section 5.1 and the amount of such
reduction shall be made at the Company's expense by an accounting firm
selected by the Company from among the six largest accounting firms in
the United States (the "Accounting Firm"). The Accounting Firm shall
provide its determination (the "Determination"), together with detailed
supporting calculations and documentation to the Company and the
Executive within ten days of the Termination Date. If the Accounting
Firm determines that no Excise Tax is payable by the Executive with
respect to a Severance Benefit, it shall furnish the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will
be imposed with respect to any such Severance Benefit, and such
Determination shall be binding, final and conclusive upon the Company
and the Executive. If the Accounting Firm determines that an Excise Tax
would be payable, the Executive shall have the right to accept the
Determination of the Accounting Firm to the extent of the reduction, if
any, pursuant to Section 5.1, or to have such Determination reviewed by
an accounting firm selected by the Executive, at the expense of the
Company, in which case the determination of such second accounting firm
shall be binding, final and conclusive upon the Company and Executive.
6. Successors; Binding Agreement.
6.1 This Agreement shall be binding upon and shall inure to
the benefit of the Company, its Successors and Assigns, and the Company
shall require any
11.
<PAGE> 12
Successors and Assigns to expressly assume and agree to perform this
Agreement in the same manner and to the same extent that the Company
would be required to perform it if no such succession or assignment had
taken place.
6.2 Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries
or legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) reasonably
incurred by the Executive as they become due as a result of (a) the Executive
seeking to obtain or enforce any right or benefit provided by this Agreement
(including, but not limited to, any such fees and expenses incurred in
connection with the Dispute, and (b) the Executive's hearing before the Board as
contemplated in Section 2.4 of this Agreement; provided, however, that the
circumstances set forth in clause (a) (other than as a result of the Executive's
termination of employment under circumstances described in Section 2.5(d))
occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices (other than
such policies, plans, programs or practices set forth in the Existing Employment
Agreement, which in accordance with Section 3.4(a) and subject to Section 16,
shall continue in full force and effect)) and for which the Executive may
qualify, nor shall anything herein limit or reduce such rights as the Executive
may have under any other agreements with the Company (except for any severance
or termination agreement (other than the Existing Employment Agreement, which in
accordance with Section 3.4(a) and subject to Section 16, shall continue in full
force and effect)). Amounts which are vested benefits or which the Executive is
12.
<PAGE> 13
otherwise entitled to receive under any plan or program of the Company shall be
payable in accordance with such plan or program, except as explicitly modified
by this Agreement.
10. No Guaranteed Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and may be terminated by either the Executive or the
Company at any time.
11. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
12. Mutual Non-Disparagement. The Executive agrees that it will not
make or publish any statement critical of the Company, its affiliates and their
respective executive officers and directors, or in any way adversely affecting
or otherwise maligning the business or reputation of any member of the Company,
its affiliates and subsidiaries and their respective officers, directors and
employees. The Company, its affiliates and subsidiaries agree and the Company
shall use its best efforts to cause their respective executive officers and
directors to agree, that they will not make or publish any statement critical of
the Executive, or in any way adversely affecting or otherwise maligning the
Executive's reputation.
13. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in San Diego county in the State of California.
13.
<PAGE> 14
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof, and, in
such event, such provision shall be changed and interpreted so as to best
accomplish the objectives of such invalid or unenforceable provision within the
limits of applicable law or applicable court decisions.
16. Entire Agreement. This Agreement, together with the Existing
Employment Agreement, constitutes the entire agreement between the parties
hereto and supersedes all prior agreements (other than the Existing Employment
Agreement), if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed by its duly authorized officer and the Executive has executed this
Agreement as of the day and year first above written.
TYLAN GENERAL, INC.
ATTEST: By: /s/ Don E. Whitson
------------------------
Don E. Whitson
Vice Chairman and Chief
Administrative Officer
By: /s/ David J. Ferran
------------------------
David J. Ferran
<PAGE> 1
Exhibit 99.08
AMENDMENT TO
EMPLOYMENT AGREEMENT
This Amendment (this "Amendment") is entered into as of July 22, 1996,
by and among Tylan General, Inc., a Delaware corporation (the "Company"), and
David J. Ferran, an individual residing in the State of California (the
"Executive").
WHEREAS, the Company and the Executive are parties to an Employment
Agreement, between Vacuum General, Inc., the predecessor of the Company, and the
Executive, dated as of October 5, 1989 (the "Existing Employment Agreement");
WHEREAS, the Company and the Executive are parties to a Severance
Protection Agreement, dated as of the date hereof; and
WHEREAS, the parties desire to amend Section 8(b) of the Existing
Employment Agreement as set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
hereinafter set forth, the parties do hereby agree as follows:
1. Section 8(b) of the Existing Employment Agreement is hereby amended
by adding a new third paragraph thereto as follows:
"Notwithstanding the other provisions of this Section 8(b), if
the Executive is terminated by VGI for cause as provided in
Section 7(b) or the Executive resigns for other than good
reasons as defined in Section 7(d) prior to the expiration of
15 months after the occurrence of a Change in Control (as
defined in the Severance Protection Agreement between the
Company and the Executive, dated as of July 22, 1996 (the
"Severance Protection Agreement")) and VGI elects to require
the Executive to provide consulting services upon the terms
provided in Section 8(c) below, VGI shall be obligated to pay
in one lump sum payment at the time of such election an amount
equal to five times the aggregate amounts provided for in
Section 8(c)(2)(i) and 8(c)(2)(iv) in lieu of the amounts
specified therein, in addition to the other consideration
specified in Sections 8(c)(2)(ii) and (iii). Such lump sum
payment shall be in addition to and not in lieu of any amounts
otherwise payable to Executive, whether pursuant to the
Severance Protection Agreement or otherwise."
1.
<PAGE> 2
2. Section 9(a) of the Existing Employment Agreement is hereby amended
by deleting such subsection in its entirety and substituting therefor the
following:
"(a) Entire Agreement. This Agreement, together with the
Severance Protection Agreement, constitutes the entire
agreement between the parties hereto and supersedes all prior
agreements (other than the Severance Protection Agreement), if
any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof."
3. Except as specifically provided in this Amendment, the Existing
Employment Agreement shall remain in full force and effect.
4. This Amendment may be executed in one or more counterparts, each of
which shall for all purposes be deemed to be an original and all of which shall
constitute the same instrument.
5. This Amendment shall be construed in accordance with and governed by
the laws of the State of California as such laws are applied to agreements
between California residents entered into and to be performed in California.
IN WITNESS WHEREOF, the parties have caused this amendment to be
executed on the day and year first written above.
TYLAN GENERAL, INC.
By: /s/ Don E. Whitson
------------------------------
Name: Don E. Whitson
Title: Vice Chairman and Chief
Administrative Officer
/s/ David J. Ferran
------------------------------
David J. Ferran
2.
<PAGE> 1
Exhibit 99.09
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT is made as of the day of July, 1996, by and between
Tylan General, Inc. (the "Company") and (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter defined)
exists and that the threat or the occurrence of a Change in Control can result
in significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company, particularly in the event of a threat or the occurrence of a Change
in Control, the Company desires to enter into this Agreement with the Executive
to provide the Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in Control and to
provide the Executive with certain other benefits whether or not the Executive's
employment is terminated.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the date
hereof and shall continue in effect until December 31, 1998; provided, however,
that on December 31, 1997 and on each anniversary thereof, the term of this
Agreement shall automatically be extended for one year unless either the Company
or the Executive shall have given written notice to the other prior thereto that
the term of this Agreement shall not be so extended; and provided, further,
however, that notwithstanding any such notice by the Company not to extend, the
term of this Agreement shall not expire prior to the expiration of 15 months
after the occurrence of a Change in Control.
2. Definitions.
2.1 Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the "Termination Date" (as hereinafter defined)
but not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the
Termination Date, (iii) vacation and sick leave pay (to the extent
1.
<PAGE> 2
provided by Company policy or applicable law), and (iv) bonuses and
incentive compensation (other than the "Pro Rata Bonus" (as hereinafter
defined)).
2.2 Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the greater of (a) the Executive's annual base salary at the
rate in effect immediately prior to the Change in Control and (b) the
Executive's annual base salary at the rate in effect on the Termination
Date, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company
or any other agreement or arrangement.
2.3 Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the greater of the Executive's annual bonus (without
giving effect to any pro ration) for the fiscal year in which a Change in
Control has occurred and the Executive's annual bonus (without giving
effect to any pro ration) for the fiscal year in which the Termination Date
occurs (calculated in accordance with any plan, policy, agreement, or
arrangement pursuant to which the Executive is entitled to an annual
bonus).
2.4 Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony
involving moral turpitude or the termination is evidenced by a resolution
adopted in good faith by two-thirds of the Board that the Executive (a)
intentionally and continually failed substantially to perform his
reasonably assigned duties with the Company (other than a failure resulting
from the Executive's incapacity due to physical or mental illness or from
the Executive's assignment of duties that would constitute "Good Reason" as
hereinafter defined) which failure continued for a period of at least
thirty days after a written notice of demand for substantial performance
has been delivered to the Executive specifying the manner in which the
Executive has failed substantially to perform, or (b) intentionally engaged
in conduct which is demonstrably and materially injurious to the Company;
provided, however, that no termination of the Executive's employment shall
be for Cause until (x) there shall have been delivered to the Executive a
copy of a written notice setting forth that the Executive was guilty of the
conduct set forth in this Section 2.4 and specifying the particulars
thereof in detail, and (y) the Executive shall have been provided an
opportunity to be heard in person by the Board (with the assistance of the
Executive's counsel if the Executive so desires). Neither an act nor a
failure to act, on the Executive's part shall be considered "intentional"
unless the Executive has acted or failed to act with a lack of good faith
and with a lack of reasonable belief that the Executive's action or failure
to act was in the best interest of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by the
Executive after a Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.
2.
<PAGE> 3
2.5 Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of thirty percent or more of the combined voting
power of the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in
connection with a "Non-Control Transaction."
(b) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; provided, however, that if
the election, or nomination for election by the Company's stockholders,
of any new director was approved by a vote of at least two-thirds of
the then Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or
reorganization involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or
reorganization, own, directly or indirectly, immediately
following such merger, consolidation or
3.
<PAGE> 4
reorganization, at least seventy percent of the combined
voting power of the outstanding Voting Securities of the
corporation resulting from such merger or consolidation or
reorganization (the "Surviving Corporation") in substantially
the same proportion as their ownership of the Voting
Securities immediately before such merger, consolidation or
reorganization, and
(B) the individuals who were members
of the Incumbent Board immediately prior to the execution of
the agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members
of the board of directors of the Surviving Corporation or a
corporation beneficially owning, directly or indirectly, a
majority of the Voting Securities of the Surviving
Corporation, and
(C) no Person (other than the
Company, any Subsidiary, any employee benefit plan (or any
trust forming a part thereof) maintained by the Company, the
Surviving Corporation or any Subsidiary, or any Person who,
immediately prior to such merger, consolidation or
reorganization had Beneficial Ownership of fifteen percent or
more of the then outstanding Voting Securities) owns, directly
or indirectly, fifteen percent or more of the combined voting
power of the Surviving Corporation's then outstanding voting
securities, and
(D) a transaction described in
clauses (A) through (C) shall herein be referred to as a
"Non-Control Transaction";
(2) A complete liquidation or dissolution of
the Company; or
(3) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes
the Beneficial Owner of any
4.
<PAGE> 5
additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
(d) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is terminated
prior to a Change in Control and the Executive reasonably demonstrates
that such termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control (a "Third
Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for
all purposes of this Agreement, the date of a Change in Control with
respect to the Executive shall mean the date immediately prior to the
date of such termination of the Executive's employment.
2.6 Company. For purposes of this Agreement, the "Company"
shall include the Company's "Successors and Assigns" (as hereinafter
defined).
2.7 Disability. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for a
period of one hundred eighty consecutive days and the Executive has not
returned to his full time employment prior to the Termination Date as
stated in the "Notice of Termination" (as hereinafter defined).
2.8 Good Reason. (a) For purposes of this Agreement,
"Good Reason" shall mean the occurrence after a Change in Control of
any of the events or conditions described in subsections (1) through
(9) hereof:
(1) a change in the Executive's status,
title, position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable judgment,
represents an adverse change from his status, title, position or
responsibilities as in effect at any time within ninety days
preceding the date of a Change in Control or at any time
thereafter; the assignment to the Executive of any duties or
responsibilities which, in the Executive's reasonable judgment,
are inconsistent with his status, title, position or
responsibilities as in effect at any time within ninety days
preceding the date of a Change in Control or at any time
thereafter; or any removal of the Executive from or failure to
reappoint or reelect him to any of such offices or positions,
except in connection with the termination of his employment for
Disability, Cause, as a result of his death or by the Executive
other than for Good Reason, provided, however, that, for purposes
of this Section 2.8(a)(i), the fact that a Change in
5.
<PAGE> 6
Control has occurred, in and of itself, shall not be deemed to
constitute Good Reason;
(2) a reduction in the Executive's base
salary or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of notice
thereof;
(3) the Company's requiring the Executive to
be based at any place outside a 25-mile radius from his primary
place of employment (at the time of the Change of Control), except
for reasonably required travel on the Company's business which is
not materially greater than such travel requirements prior to the
Change in Control;
(4) the failure by the Company to provide
the Executive with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee
benefit plan, program and practice in which the Executive was
participating at any time within ninety days preceding the date of
a Change in Control or at any time thereafter;
(5) the insolvency or the filing (by any
party, including the Company) of a petition for bankruptcy of the
Company, which petition is not dismissed within sixty days;
(6) any material breach by the Company of
any provision of this Agreement;
(7) any purported termination of the
Executive's employment for Cause by the Company which does not
comply with the terms of Section 2.4;
(8) any event or occurrence constituting
"good reason," as it may be defined in any agreement between the
Executive and the Company or any of its affiliates; or
(9) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any Successors and
Assigns to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof.
(b) Any event or condition described in Section
2.8(a)(1) through (9) which occurs prior to a Change in Control but
which the Executive reasonably demonstrates (1) was at the request of a
Third Party, or (2) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs,
6.
<PAGE> 7
shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.
(c) The Executive's right to terminate his employment
pursuant to this Section 2.8 shall not be affected by his incapacity
due to a Disability
2.9 Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a written
notice of termination from the Company of the Executive's employment which
indicates the specific termination provision in this Agreement relied upon
and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated.
2.10 Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall have the meaning ascribed to such term in any agreement
between the Executive and the Company or any of its affiliates, or if no
such agreement with respect to such term exists, shall mean an amount equal
to (a) the Bonus Amount, multiplied by a fraction, (i) the numerator of
which is the number of days from the first day of the Company's fiscal year
in which the Executive ceases to be employed by the Company until the
Termination Date, and (ii) the denominator of which is 365, less (b) any
bonus included in the Bonus Amount in respect of such fiscal year and
previously paid.
2.11 Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring
all or substantially all the assets and business of the Company whether by
operation of law or otherwise, and any affiliate of such Successors and
Assigns.
2.12 Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death, his
date of death, (b) in the case of Good Reason, the last day of his
employment, and (c) in all other cases, the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is
terminated by the Company for Cause or due to Disability, the date
specified in the Notice of Termination shall be at least 30 days from the
date the Notice of Termination is given to the Executive, provided that in
the case of Disability the Executive shall not have returned to the
full-time performance of his duties during such period of at least 30 days.
3. Termination of Employment.
3.1 Severance Pay and Benefits. If, during the term of this
Agreement, the Executive shall cease to be employed by Company prior to the
expiration of 15
7.
<PAGE> 8
months after the occurrence of a Change in Control, the Executive shall be
entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company
shall be terminated (x) by the Company for Cause or Disability, (y) by
reason of the Executive's death, or (z) by the Executive other than for
Good Reason, the Company shall pay to the Executive the Accrued
Compensation and, if such termination is other than by the Company for
Cause, the Pro Rata Bonus.
(b) If the Executive's employment with the Company
shall be terminated by the Company other than for Cause or Disability
or the Executive's employment with the Company shall be terminated by
the Executive for Good Reason, the Executive shall be entitled to the
following:
(1) the Company shall pay the Executive all
Accrued Compensation and a Pro-Rata Bonus;
(2) the Company shall pay the Executive as
severance pay and in lieu of any further compensation for periods
subsequent to the Termination Date, in a single payment an amount
in cash equal to one times the sum of (A) the Base Amount and (B)
the Bonus Amount.
(3) for a number of months equal to 12 (the
"Continuation Period"), the Company shall at its expense continue
on behalf of the Executive and his dependents and beneficiaries
the medical, dental and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to the
Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Company during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
3.1(b)(3) during the Continuation Period shall be no less
favorable to the Executive and his dependents and beneficiaries,
than the most favorable of such coverages and benefits during any
of the periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long
as the aggregate coverages and benefits of the combined benefit
plans is no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection (3)
shall not be interpreted so as to limit any benefits to which the
Executive, his dependents or beneficiaries may be entitled under
any of the Company's employee benefit plans, programs or
8.
<PAGE> 9
practices following the Executive's termination of employment,
including without limitation, retiree medical and life insurance
benefits;
3.2 Payment Form. The amounts provided for in Sections 3.1(a)
and 3.1(b)(1) and (2) shall be paid in a single lump sum cash payment
within five days after the Executive's Termination Date (or earlier, if
required by applicable law).
3.3 No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be offset
or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as provided in Section
3.1(b)(3).
3.4 Other Severance Arrangements. If the Executive is entitled
to severance pay and benefits pursuant to this Agreement following a
Change in Control, the following shall apply:
(a) The severance pay and benefits provided for in
this Section 3 shall be reduced by the amount of any other severance or
termination pay to which the Executive may be entitled under any
agreement with the Company or any of its Affiliates.
(b) The Executive's entitlement to any other
compensation or benefits or any indemnification shall be determined in
accordance with the Company's employee benefit plans and other
applicable programs, policies and practices or any indemnification
agreement then in effect.(1)
- --------
(1) Because Mr. Yurch's Employment Agreement provides for certain
severance payments, Section 3.4 of Mr. Yurch's Severance Protection Agreement
reads in full as follows:
"Other Severance Arrangements. If the Executive is entitled to
severance pay and benefits pursuant to this Agreement following a Change in
Control, the following shall apply:
(a) The Employment Agreement among the Company, Span Instruments, Inc.
("Span") and the Executive, dated July 3, 1996 (as it may be amended,
supplemented, restated or replaced from time to time, including any such
amendment, supplement, restatement or replacement that is between the Company,
Span and the Executive) (the "Existing Employment Agreement"), shall continue in
full force and effect in accordance with its terms; provided, however, that if
the Executive resigns or is terminated with or without cause, the amount payable
to the Executive pursuant to Section 3.1 of this Agreement shall be reduced by
an amount equal to the aggregate amount payable or paid
9.
<PAGE> 10
to the Executive pursuant to Section 4(a), Section 4(c) or Section 4(d) of the
Existing Employment Agreement, as the case may be, but in any event the amount
payable to the Executive pursuant to Section 3.1 of this Agreement shall not be
reduced to an amount less than zero; and provided, further, that if any amount
payable to the Executive pursuant to Section 4(a), Section 4(c) or Section 4(d)
of the Existing Employment Agreement is not actually paid to the Executive (for
whatever reason or no reason, whether in accordance with the last sentence of
Section 4(a) of the Existing Employment Agreement or otherwise) within the one
year period subsequent to the Termination Date, all remaining unpaid amounts
described in Section 4(a), Section 4(c) or Section 4(d) of the Existing
Employment Agreement shall become immediately due and payable pursuant to this
Agreement with interest at the prime rate plus 2% or at the maximum rate
permitted by applicable law, if lower (for purposes of this subsection (a), the
prime rate will be the prime commercial lending rate as announced from time to
time by Bank of America NT&SA, or its successor, as in effect at the close of
business on the business day preceding the Termination Date).
(b) The severance pay and benefits provided for in this Section 3 shall
be reduced by the amount of any other severance or termination pay to which the
Executive may be entitled under any agreement with the Company or any of its
Affiliates.
(c) The Executive's entitlement to any other compensation or benefits
or any indemnification shall be determined in accordance with the Company's
employee benefit plans and other applicable programs, policies and practices or
any indemnification agreement then in effect."
10.
<PAGE> 11
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company shall be communicated
by Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
5. Excise Tax Limitation.
5.1 Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits provided under
this Agreement and benefits provided to, or for the benefit of, the
Executive under any other Company plan or agreement (such payments or
benefits are collectively referred to as the "Payments") would be subject
to the excise tax (the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Payments shall
be reduced (but not below zero) if and to the extent necessary so that no
Payment to be made or benefit to be provided to the Executive shall be
subject to the Excise Tax (such reduced amount is hereinafter referred to
as the "Limited Payment Amount"). Unless the Executive shall have given
prior written notice specifying a different order to the Company to
effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments
which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other
plan, arrangement or agreement governing the Executive's rights and
entitlements to any benefits or compensation.
5.2 The determination of whether the Payments shall be reduced
to the Limited Payment Amount pursuant to this Agreement and the amount of
such Limited Payment Amount shall be made, at the Company's expense, by an
accounting firm selected by the Executive which is one of the six largest
accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"),
together with detailed supporting calculations and documentation to the
Company and the Executive within ten days of the Termination Date, if
applicable, or such other time as requested by the Company or by the
Executive (provided the Executive reasonably believes that any of the
Payments may be subject to the Excise Tax) and if the Accounting Firm
determines that no Excise Tax is payable by the Executive with respect to
the Payments, it shall furnish the Executive with an opinion reasonably
acceptable to the Executive that no Excise Tax will be imposed with respect
to any such Payments. The Determination shall be binding, final and
conclusive upon the Company and the Executive.
6. Successors; Binding Agreement.
6.1 This Agreement shall be binding upon and shall inure to
the benefit of the Company, its Successors and Assigns, and the Company
shall require any Successors and Assigns to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment
had taken place.
6.2 Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) reasonably
incurred by the Executive as they become due as a result of (a) the Executive
seeking to obtain or enforce any right or benefit provided by this Agreement
(including, but not limited to, any such fees and expenses incurred in
connection with the Dispute, and (b) the Executive's hearing before the Board as
contemplated in Section 2.4 of this Agreement; provided,
11.
<PAGE> 12
however, that the circumstances set forth in clause (a) (other than as a result
of the Executive's termination of employment under circumstances described in
Section 2.5(d)) occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.(2)
10. No Guaranteed Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written
- --------
(2) Section 9 of Mr. Yurch's Severance Protection Agreement reads in full
as follows:
"Non-exclusivity of Rights. Nothing in this Agreement shall prevent or
limit the Executive's continuing or future participation in any benefit, bonus,
incentive or other plan or program provided by the Company (except for any
severance or termination policies, plans, programs or practices (other than such
policies, plans, programs or practices set forth in the Existing Employment
Agreement, which in accordance with Section 3.4(a) and Section 16, shall
continue in full force and effect)) and for which the Executive may qualify, nor
shall anything herein limit or reduce such rights as the Executive may have
under any other agreements with the Company (except for any severance or
termination agreement (other than the Existing Employment Agreement, which in
accordance with Section 3.4(a) and Section 16, shall continue in full force and
effect)). Amounts which are vested benefits or which the Executive is otherwise
entitled to receive under any plan or program of the Company shall be payable in
accordance with such plan or program, except as explicitly modified by this
Agreement."
12.
<PAGE> 13
agreement between the Executive and the Company, the employment of the Executive
by the Company is "at will" and may be terminated by either the Executive or the
Company at any time.
11. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
12. Mutual Non-Disparagement. The Company, its affiliates and
subsidiaries agree and the Company shall use its best efforts to cause their
respective executive officers and directors to agree, that they will not make or
publish any statement critical of the Executive, or in any way adversely
affecting or otherwise maligning the Executive's reputation. The Executive
agrees that it will not make or publish any statement critical of the Company,
its affiliates and their respective executive officers and directors, or in any
way adversely affecting or otherwise maligning the business or reputation of any
member of the Company, its affiliates and subsidiaries and their respective
officers, directors and employees.
13. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in San Diego county in the State of California.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof, and, in
such event, such provision shall be changed and interpreted so as to best
accomplish the objectives of such invalid or unenforceable provision within the
limits of applicable law or applicable court decisions.
13.
<PAGE> 14
16. Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto and supersedes all prior agreements, if any,
understandings and arrangements, oral or written, between the parties hereto
with respect to the subject matter hereof.(3)
- --------
(3) Section 16 of Mr. Yurch's Severance Protection Agreement reads in full
as follows:
"Entire Agreement. This Agreement, together with the Existing Employment
Agreement, constitutes the entire agreement between the parties hereto and
supersedes all prior agreements (other than the Existing Employment Agreement),
if any, understandings and arrangements, oral or written, between the parties
hereto with respect to the subject matter hereof."
14.
<PAGE> 15
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
TYLAN GENERAL, INC.
ATTEST: By: _____________________________
Name:
Title:
By: _____________________________
[Executive]
15.
<PAGE> 1
Exhibit 99.10
SEVERANCE PROTECTION AGREEMENT
THIS AGREEMENT is made as of the 13th day of December, 1996, by and
between Tylan General, Inc. (the "Company") and John Kizer (the "Executive").
WHEREAS, the Board of Directors of the Company (the "Board")
recognizes that the possibility of a Change in Control (as hereinafter defined)
exists and that the threat or the occurrence of a Change in Control can result
in significant distractions of its key management personnel because of the
uncertainties inherent in such a situation;
WHEREAS, the Board has determined that it is essential and in the
best interest of the Company and its stockholders to retain the services of the
Executive in the event of a threat or occurrence of a Change in Control and to
ensure his continued dedication and efforts in such event without undue concern
for his personal financial and employment security; and
WHEREAS, in order to induce the Executive to remain in the employ of
the Company, particularly in the event of a threat or the occurrence of a Change
in Control, the Company desires to enter into this Agreement with the Executive
to provide the Executive with certain benefits in the event his employment is
terminated as a result of, or in connection with, a Change in Control and to
provide the Executive with certain other benefits whether or not the Executive's
employment is terminated.
NOW, THEREFORE, in consideration of the respective agreements of the
parties contained herein, it is agreed as follows:
1. Term of Agreement. This Agreement shall commence as of the date
hereof and shall continue in effect until December 31, 1998; provided,
however, that on December 31, 1997 and on each anniversary thereof, the
term of this Agreement shall automatically be extended for one year unless
either the Company or the Executive shall have given written notice to the
other prior thereto that the term of this Agreement shall not be so
extended; and provided, further, however, that notwithstanding any such
notice by the Company not to extend, the term of this Agreement shall not
expire prior to the expiration of 15 months after the occurrence of a
Change in Control.
2. Definitions.
2.1 Accrued Compensation. For purposes of this Agreement,
"Accrued Compensation" shall mean an amount which shall include all amounts
earned or accrued through the "Termination Date" (as hereinafter defined)
but not paid as of the Termination Date including (i) base salary, (ii)
reimbursement for reasonable and necessary expenses incurred by the
Executive on behalf of the Company during the period ending on the
Termination Date, (iii) vacation and sick leave pay (to the extent
1.
<PAGE> 2
provided by Company policy or applicable law), and (iv) bonuses and
incentive compensation (other than the "Pro Rata Bonus" (as hereinafter
defined)).
2.2 Base Amount. For purposes of this Agreement, "Base Amount"
shall mean the greater of (a) the Executive's annual base salary at the
rate in effect immediately prior to the Change in Control and (b) the
Executive's annual base salary at the rate in effect on the Termination
Date, and shall include all amounts of his base salary that are deferred
under the qualified and non-qualified employee benefit plans of the Company
or any other agreement or arrangement.
2.3 Bonus Amount. For purposes of this Agreement, "Bonus
Amount" shall mean the greater of the Executive's annual bonus (without
giving effect to any pro ration) for the fiscal year in which a Change in
Control has occurred and the Executive's annual bonus (without giving
effect to any pro ration) for the fiscal year in which the Termination Date
occurs (calculated in accordance with any plan, policy, agreement, or
arrangement pursuant to which the Executive is entitled to an annual
bonus).
2.4 Cause. For purposes of this Agreement, a termination of
employment is for "Cause" if the Executive has been convicted of a felony
involving moral turpitude or the termination is evidenced by a resolution
adopted in good faith by two-thirds of the Board that the Executive (a)
intentionally and continually failed substantially to perform his
reasonably assigned duties with the Company (other than a failure resulting
from the Executive's incapacity due to physical or mental illness or from
the Executive's assignment of duties that would constitute "Good Reason" as
hereinafter defined) which failure continued for a period of at least
thirty days after a written notice of demand for substantial performance
has been delivered to the Executive specifying the manner in which the
Executive has failed substantially to perform, or (b) intentionally engaged
in conduct which is demonstrably and materially injurious to the Company;
provided, however, that no termination of the Executive's employment shall
be for Cause until (x) there shall have been delivered to the Executive a
copy of a written notice setting forth that the Executive was guilty of the
conduct set forth in this Section 2.4 and specifying the particulars
thereof in detail, and (y) the Executive shall have been provided an
opportunity to be heard in person by the Board (with the assistance of the
Executive's counsel if the Executive so desires). Neither an act nor a
failure to act, on the Executive's part shall be considered "intentional"
unless the Executive has acted or failed to act with a lack of good faith
and with a lack of reasonable belief that the Executive's action or failure
to act was in the best interest of the Company. Notwithstanding anything
contained in this Agreement to the contrary, no failure to perform by the
Executive after a Notice of Termination is given by the Executive shall
constitute Cause for purposes of this Agreement.
2.
<PAGE> 3
2.5 Change in Control. For purposes of this Agreement, a
"Change in Control" shall mean any of the following events:
(a) An acquisition (other than directly from the
Company) of any voting securities of the Company (the "Voting
Securities") by any "Person" (as the term person is used for purposes
of Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as
amended (the "1934 Act")) immediately after which such Person has
"Beneficial Ownership" (within the meaning of Rule 13d-3 promulgated
under the 1934 Act) of thirty percent or more of the combined voting
power of the Company's then outstanding Voting Securities; provided,
however, that in determining whether a Change in Control has occurred,
Voting Securities which are acquired in a "Non-Control Acquisition" (as
hereinafter defined) shall not constitute an acquisition which would
cause a Change in Control. A "Non-Control Acquisition" shall mean an
acquisition by (1) an employee benefit plan (or a trust forming a part
thereof) maintained by (x) the Company or (y) any corporation or other
Person of which a majority of its voting power or its equity securities
or equity interest is owned directly or indirectly by the Company (a
"Subsidiary"), (2) the Company or any Subsidiary, or (3) any Person in
connection with a "Non-Control Transaction."
(b) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for any reason to
constitute at least two-thirds of the Board; provided, however, that if
the election, or nomination for election by the Company's stockholders,
of any new director was approved by a vote of at least two-thirds of
the then Incumbent Board, such new director shall, for purposes of this
Agreement, be considered as a member of the Incumbent Board; provided,
further, however, that no individual shall be considered a member of
the Incumbent Board if such individual initially assumed office as a
result of either an actual or threatened "Election Contest" (as
described in Rule 14a-11 promulgated under the 1934 Act) or other
actual or threatened solicitation of proxies or consents by or on
behalf of a Person other than the Board (a "Proxy Contest") including
by reason of any agreement intended to avoid or settle any Election
Contest or Proxy Contest; or
(c) Approval by stockholders of the Company of:
(1) A merger, consolidation or reorganization
involving the Company, unless
(A) the stockholders of the Company,
immediately before such merger, consolidation or reorganization,
own, directly or indirectly, immediately following such merger,
consolidation or
3.
<PAGE> 4
reorganization, at least seventy percent of the combined voting
power of the outstanding Voting Securities of the corporation
resulting from such merger or consolidation or reorganization
(the "Surviving Corporation") in substantially the same
proportion as their ownership of the Voting Securities
immediately before such merger, consolidation or reorganization,
and
(B) the individuals who were members of
the Incumbent Board immediately prior to the execution of the
agreement providing for such merger, consolidation or
reorganization constitute at least two-thirds of the members of
the board of directors of the Surviving Corporation or a
corporation beneficially owning, directly or indirectly, a
majority of the Voting Securities of the Surviving Corporation,
and
(C) no Person (other than the Company,
any Subsidiary, any employee benefit plan (or any trust forming a
part thereof) maintained by the Company, the Surviving
Corporation or any Subsidiary, or any Person who, immediately
prior to such merger, consolidation or reorganization had
Beneficial Ownership of fifteen percent or more of the then
outstanding Voting Securities) owns, directly or indirectly,
fifteen percent or more of the combined voting power of the
Surviving Corporation's then outstanding voting securities, and
(D) a transaction described in clauses
(A) through (C) shall herein be referred to as a "Non-Control
Transaction";
(2) A complete liquidation or dissolution of
the Company; or
(3) An agreement for the sale or other
disposition of all or substantially all of the assets of the
Company to any Person (other than a transfer to a Subsidiary).
Notwithstanding the foregoing, a Change in Control shall not be deemed
to occur solely because any Person (the "Subject Person") acquired
Beneficial Ownership of more than the permitted amount of the
outstanding Voting Securities as a result of the acquisition of Voting
Securities by the Company which, by reducing the number of Voting
Securities outstanding, increases the proportional number of shares
Beneficially Owned by the Subject Person, provided that if a Change in
Control would occur (but for the operation of this sentence) as a
result of the acquisition of Voting Securities by the Company, and
after such share acquisition by the Company, the Subject Person becomes
the Beneficial Owner of any
4.
<PAGE> 5
additional Voting Securities which increases the percentage of the then
outstanding Voting Securities Beneficially Owned by the Subject Person,
then a Change in Control shall occur.
(d) Notwithstanding anything contained in this
Agreement to the contrary, if the Executive's employment is terminated
prior to a Change in Control and the Executive reasonably demonstrates
that such termination (i) was at the request of a third party who has
indicated an intention or taken steps reasonably calculated to effect a
Change in Control and who effectuates a Change in Control (a "Third
Party") or (ii) otherwise occurred in connection with, or in
anticipation of, a Change in Control which actually occurs, then for
all purposes of this Agreement, the date of a Change in Control with
respect to the Executive shall mean the date immediately prior to the
date of such termination of the Executive's employment.
2.6 Company. For purposes of this Agreement, the "Company"
shall include the Company's "Successors and Assigns" (as hereinafter
defined).
2.7 Disability. For purposes of this Agreement, "Disability"
shall mean a physical or mental infirmity which impairs the Executive's
ability to substantially perform his duties with the Company for a period
of one hundred eighty consecutive days and the Executive has not returned
to his full time employment prior to the Termination Date as stated in the
"Notice of Termination" (as hereinafter defined).
2.8 Good Reason. (a) For purposes of this Agreement, "Good
Reason" shall mean the occurrence after a Change in Control of any of the
events or conditions described in subsections (1) through (9) hereof:
(1) a change in the Executive's status,
title, position or responsibilities (including reporting
responsibilities) which, in the Executive's reasonable judgment,
represents an adverse change from his status, title, position or
responsibilities as in effect at any time within ninety days preceding
the date of a Change in Control or at any time thereafter; the
assignment to the Executive of any duties or responsibilities which, in
the Executive's reasonable judgment, are inconsistent with his status,
title, position or responsibilities as in effect at any time within
ninety days preceding the date of a Change in Control or at any time
thereafter; or any removal of the Executive from or failure to
reappoint or reelect him to any of such offices or positions, except in
connection with the termination of his employment for Disability,
Cause, as a result of his death or by the Executive other than for Good
Reason, provided, however, that, for purposes of this Section
2.8(a)(i), the fact that a Change in
5.
<PAGE> 6
Control has occurred, in and of itself, shall not be deemed to
constitute Good Reason;
(2) a reduction in the Executive's base
salary or any failure to pay the Executive any compensation or
benefits to which he is entitled within five days of notice
thereof;
(3) the Company's requiring the Executive to
be based at any place outside a 25-mile radius from his primary
place of employment (at the time of the Change of Control), except
for reasonably required travel on the Company's business which is
not materially greater than such travel requirements prior to the
Change in Control;
(4) the failure by the Company to provide the
Executive with compensation and benefits, in the aggregate, at
least equal (in terms of benefit levels and/or reward
opportunities) to those provided for under each other employee
benefit plan, program and practice in which the Executive was
participating at any time within ninety days preceding the date of
a Change in Control or at any time thereafter;
(5) the insolvency or the filing (by any
party, including the Company) of a petition for bankruptcy of the
Company, which petition is not dismissed within sixty days;
(6) any material breach by the Company of any
provision of this Agreement;
(7) any purported termination of the
Executive's employment for Cause by the Company which does not
comply with the terms of Section 2.4;
(8) any event or occurrence constituting
"good reason," as it may be defined in any agreement between the
Executive and the Company or any of its affiliates; or
(9) the failure of the Company to obtain an
agreement, satisfactory to the Executive, from any Successors and
Assigns to assume and agree to perform this Agreement, as
contemplated in Section 7 hereof.
(b) Any event or condition described in Section
2.8(a)(1) through (9) which occurs prior to a Change in Control but
which the Executive reasonably demonstrates (1) was at the request of a
Third Party, or (2) otherwise arose in connection with, or in
anticipation of, a Change in Control which actually occurs,
6.
<PAGE> 7
shall constitute Good Reason for purposes of this Agreement
notwithstanding that it occurred prior to the Change in Control.
(c) The Executive's right to terminate his employment
pursuant to this Section 2.8 shall not be affected by his incapacity
due to a Disability
2.9 Notice of Termination. For purposes of this Agreement,
following a Change in Control, "Notice of Termination" shall mean a written
notice of termination from the Company of the Executive's employment which
indicates the specific termination provision in this Agreement relied upon
and which sets forth in reasonable detail the facts and circumstances
claimed to provide a basis for termination of the Executive's employment
under the provision so indicated.
2.10 Pro Rata Bonus. For purposes of this Agreement, "Pro Rata
Bonus" shall have the meaning ascribed to such term in any agreement
between the Executive and the Company or any of its affiliates, or if no
such agreement with respect to such term exists, shall mean an amount equal
to (a) the Bonus Amount, multiplied by a fraction, (i) the numerator of
which is the number of days from the first day of the Company's fiscal year
in which the Executive ceases to be employed by the Company until the
Termination Date, and (ii) the denominator of which is 365, less (b) any
bonus included in the Bonus Amount in respect of such fiscal year and
previously paid.
2.11 Successors and Assigns. For purposes of this Agreement,
"Successors and Assigns" shall mean a corporation or other entity acquiring
all or substantially all the assets and business of the Company whether by
operation of law or otherwise, and any affiliate of such Successors and
Assigns.
2.12 Termination Date. For purposes of this Agreement,
"Termination Date" shall mean (a) in the case of the Executive's death, his
date of death, (b) in the case of Good Reason, the last day of his
employment, and (c) in all other cases, the date specified in the Notice of
Termination; provided, however, that if the Executive's employment is
terminated by the Company for Cause or due to Disability, the date
specified in the Notice of Termination shall be at least 30 days from the
date the Notice of Termination is given to the Executive, provided that in
the case of Disability the Executive shall not have returned to the
full-time performance of his duties during such period of at least 30 days.
3. Termination of Employment.
3.1 Severance Pay and Benefits. If, during the term of this
Agreement, the Executive shall cease to be employed by Company prior to the
expiration of 15
7.
<PAGE> 8
months after the occurrence of a Change in Control, the Executive shall
be entitled to the following compensation and benefits:
(a) If the Executive's employment with the Company
shall be terminated (x) by the Company for Cause or Disability, (y) by
reason of the Executive's death, or (z) by the Executive other than for
Good Reason, the Company shall pay to the Executive the Accrued
Compensation and, if such termination is other than by the Company for
Cause, the Pro Rata Bonus.
(b) If the Executive's employment with the Company
shall be terminated by the Company other than for Cause or Disability
or the Executive's employment with the Company shall be terminated by
the Executive for Good Reason, the Executive shall be entitled to the
following:
(1) the Company shall pay the Executive all
Accrued Compensation and a Pro-Rata Bonus;
(2) the Company shall pay the Executive as
severance pay and in lieu of any further compensation for periods
subsequent to the Termination Date, in a single payment an amount
in cash equal to one half times the sum of (A) the Base Amount and
(B) the Bonus Amount.
(3) for a number of months equal to 6 (the
"Continuation Period"), the Company shall at its expense continue
on behalf of the Executive and his dependents and beneficiaries
the medical, dental and hospitalization benefits provided (x) to
the Executive at any time during the 90-day period prior to the
Change in Control or at any time thereafter or (y) to other
similarly situated executives who continue in the employ of the
Company during the Continuation Period. The coverage and benefits
(including deductibles and costs) provided in this Section
3.1(b)(3) during the Continuation Period shall be no less
favorable to the Executive and his dependents and beneficiaries,
than the most favorable of such coverages and benefits during any
of the periods referred to in clauses (x) and (y) above. The
Company's obligation hereunder with respect to the foregoing
benefits shall be limited to the extent that the Executive obtains
any such benefits pursuant to a subsequent employer's benefit
plans, in which case the Company may reduce the coverage of any
benefits it is required to provide the Executive hereunder as long
as the aggregate coverages and benefits of the combined benefit
plans is no less favorable to the Executive than the coverages and
benefits required to be provided hereunder. This subsection (3)
shall not be interpreted so as to limit any benefits to which the
Executive, his dependents or beneficiaries may be entitled under
any of the Company's employee benefit plans, programs or
8.
<PAGE> 9
practices following the Executive's termination of employment,
including without limitation, retiree medical and life insurance
benefits;
3.2 Payment Form. The amounts provided for in Sections 3.1(a)
and 3.1(b)(1) and (2) shall be paid in a single lump sum cash payment
within five days after the Executive's Termination Date (or earlier, if
required by applicable law).
3.3 No Mitigation. The Executive shall not be required to
mitigate the amount of any payment provided for in this Agreement by
seeking other employment or otherwise and no such payment shall be offset
or reduced by the amount of any compensation or benefits provided to the
Executive in any subsequent employment except as provided in Section
3.1(b)(3).
3.4 Other Severance Arrangements. If the Executive is entitled
to severance pay and benefits pursuant to this Agreement following a Change
in Control, the following shall apply:
(a) The Severance Agreement between the Company and
the Executive, dated August 8, 1996 (as it may be amended,
supplemented, restated or replaced from time to time, including any
such amendment, supplement, restatement or replacement that is between
the Company and the Executive) (the "Existing Severance Agreement"),
shall continue in full force and effect in accordance with its terms;
provided, however, that if the Executive resigns or is terminated with
or without cause, the amount payable to the Executive pursuant to
Section 3.1 of this Agreement shall be reduced by an amount equal to
the aggregate amount payable or paid to the Executive pursuant to
paragraph (a) of the Existing Severance Agreement, as the case may be,
but in any event the amount payable to the Executive pursuant to
Section 3.1 of this Agreement shall not be reduced to an amount less
than zero; and provided, further, that if any amount payable to the
Executive pursuant to paragraph (a) of the Existing Severance Agreement
is not actually paid to the Executive (for whatever reason or no
reason) within the one year period subsequent to the Termination Date,
all remaining unpaid amounts described in paragraph (a) of the Existing
Severance Agreement shall become immediately due and payable pursuant
to this Agreement with interest at the prime rate plus 2% or at the
maximum rate permitted by applicable law, if lower (for purposes of
this subsection (a), the prime rate will be the prime commercial
lending rate as announced from time to time by Bank of America NT&SA,
or its successor, as in effect at the close of business on the business
day preceding the Termination Date).
9.
<PAGE> 10
(b) The severance pay and benefits provided for in
this Section 3 shall be reduced by the amount of any other severance or
termination pay to which the Executive may be entitled under any agreement with
the Company or any of its Affiliates.
(c) The Executive's entitlement to any other
compensation or benefits or any indemnification shall be determined in
accordance with the Company's employee benefit plans and other
applicable programs, policies and practices or any indemnification
agreement then in effect.
4. Notice of Termination. Following a Change in Control, any purported
termination of the Executive's employment by the Company shall be communicated
by Notice of Termination to the Executive. For purposes of this Agreement, no
such purported termination shall be effective without such Notice of
Termination.
5. Excise Tax Limitation.
5.1 Notwithstanding anything contained in this Agreement to
the contrary, to the extent that the payments and benefits provided under
this Agreement and benefits provided to, or for the benefit of, the
Executive under any other Company plan or agreement (such payments or
benefits are collectively referred to as the "Payments") would be subject
to the excise tax (the "Excise Tax") imposed under Section 4999 of the
Internal Revenue Code of 1986, as amended (the "Code"), the Payments shall
be reduced (but not below zero) if and to the extent necessary so that no
Payment to be made or benefit to be provided to the Executive shall be
subject to the Excise Tax (such reduced amount is hereinafter referred to
as the "Limited Payment Amount"). Unless the Executive shall have given
prior written notice specifying a different order to the Company to
effectuate the foregoing, the Company shall reduce or eliminate the
Payments, by first reducing or eliminating the portion of the Payments
which are not payable in cash and then by reducing or eliminating cash
payments, in each case in reverse order beginning with payments or benefits
which are to be paid the farthest in time from the Determination (as
hereinafter defined). Any notice given by the Executive pursuant to the
preceding sentence shall take precedence over the provisions of any other
plan, arrangement or agreement governing the Executive's rights and
entitlements to any benefits or compensation.
5.2 The determination of whether the Payments shall be reduced
to the Limited Payment Amount pursuant to this Agreement and the amount of
such Limited Payment Amount shall be made, at the Company's expense, by an
accounting firm selected by the Executive which is one of the six largest
accounting firms in the United States (the "Accounting Firm"). The
Accounting Firm shall provide its determination (the "Determination"),
together with detailed supporting calculations and documentation to the
Company and the Executive within ten days of the
10.
<PAGE> 11
Termination Date, if applicable, or such other time as requested by the
Company or by the Executive (provided the Executive reasonably believes
that any of the Payments may be subject to the Excise Tax) and if the
Accounting Firm determines that no Excise Tax is payable by the Executive
with respect to the Payments, it shall furnish the Executive with an
opinion reasonably acceptable to the Executive that no Excise Tax will be
imposed with respect to any such Payments. The Determination shall be
binding, final and conclusive upon the Company and the Executive.
6. Successors; Binding Agreement.
6.1 This Agreement shall be binding upon and shall inure to
the benefit of the Company, its Successors and Assigns, and the Company
shall require any Successors and Assigns to expressly assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform it if no such succession or assignment
had taken place.
6.2 Neither this Agreement nor any right or interest hereunder
shall be assignable or transferable by the Executive, his beneficiaries or
legal representatives, except by will or by the laws of descent and
distribution. This Agreement shall inure to the benefit of and be
enforceable by the Executive's legal personal representative.
7. Fees and Expenses. The Company shall pay all legal fees and related
expenses (including the costs of experts, evidence and counsel) reasonably
incurred by the Executive as they become due as a result of (a) the Executive
seeking to obtain or enforce any right or benefit provided by this Agreement
(including, but not limited to, any such fees and expenses incurred in
connection with the Dispute, and (b) the Executive's hearing before the Board as
contemplated in Section 2.4 of this Agreement; provided, however, that the
circumstances set forth in clause (a) (other than as a result of the Executive's
termination of employment under circumstances described in Section 2.5(d))
occurred on or after a Change in Control.
8. Notice. For the purposes of this Agreement, notices and all other
communications provided for in the Agreement (including the Notice of
Termination) shall be in writing and shall be deemed to have been duly given
when personally delivered or sent by certified mail, return receipt requested,
postage prepaid, by overnight courier or by facsimile, addressed to the
respective addresses and facsimile numbers last given by each party to the
other, provided that all notices to the Company shall be directed to the
attention of the Board with a copy to the Secretary of the Company. All notices
and communications shall be deemed to have been received on the date of delivery
thereof or on the third business day after the mailing thereof, except that
notice of change of address shall be effective only upon receipt.
11.
<PAGE> 12
9. Non-exclusivity of Rights. Nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any benefit,
bonus, incentive or other plan or program provided by the Company (except for
any severance or termination policies, plans, programs or practices) and for
which the Executive may qualify, nor shall anything herein limit or reduce such
rights as the Executive may have under any other agreements with the Company
(except for any severance or termination agreement). Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any plan
or program of the Company shall be payable in accordance with such plan or
program, except as explicitly modified by this Agreement.
10. No Guaranteed Employment. The Executive and the Company acknowledge
that, except as may otherwise be provided under any other written agreement
between the Executive and the Company, the employment of the Executive by the
Company is "at will" and may be terminated by either the Executive or the
Company at any time.
11. Settlement of Claims. The Company's obligation to make the payments
provided for in this Agreement and otherwise to perform its obligations
hereunder shall not be affected by any circumstances, including, without
limitation, any set-off, counterclaim, recoupment, defense or other right which
the Company may have against the Executive or others.
12. Mutual Non-Disparagement. The Company, its affiliates and
subsidiaries agree and the Company shall use its best efforts to cause their
respective executive officers and directors to agree, that they will not make or
publish any statement critical of the Executive, or in any way adversely
affecting or otherwise maligning the Executive's reputation. The Executive
agrees that it will not make or publish any statement critical of the Company,
its affiliates and their respective executive officers and directors, or in any
way adversely affecting or otherwise maligning the business or reputation of any
member of the Company, its affiliates and subsidiaries and their respective
officers, directors and employees.
13. Miscellaneous. No provision of this Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing and signed by the Executive and the Company. No waiver by either
party hereto at any time of any breach by the other party hereto of, or
compliance with, any condition or provision of this Agreement to be performed by
such other party shall be deemed a waiver of similar or dissimilar provisions or
conditions at the same or at any prior or subsequent time. No agreement or
representations, oral or otherwise, express or implied, with respect to the
subject matter hereof have been made by either party which are not expressly set
forth in this Agreement.
12.
<PAGE> 13
14. Governing Law. This Agreement shall be governed by and construed
and enforced in accordance with the laws of the State of California without
giving effect to the conflict of laws principles thereof. Any action brought by
any party to this Agreement shall be brought and maintained in a court of
competent jurisdiction in San Diego county in the State of California.
15. Severability. The provisions of this Agreement shall be deemed
severable and the invalidity or unenforceability of any provision shall not
affect the validity or enforceability of the other provisions hereof, and, in
such event, such provision shall be changed and interpreted so as to best
accomplish the objectives of such invalid or unenforceable provision within the
limits of applicable law or applicable court decisions.
16. Entire Agreement. This Agreement, together with the Existing
Severance Agreement, constitutes the entire agreement between the parties hereto
and supersedes all prior agreements (other than the Existing Severance
Agreement), if any, understandings and arrangements, oral or written, between
the parties hereto with respect to the subject matter hereof.
13.
<PAGE> 14
IN WITNESS WHEREOF, the Company has caused this Agreement to be executed by
its duly authorized officer and the Executive has executed this Agreement as of
the day and year first above written.
TYLAN GENERAL, INC.
ATTEST: By: /s/ David J. Ferran
--------------------------------
David J. Ferran
Chairman of the Board, President
and Chief Executive Officer
By: /s/ John Kizer
--------------------------------
John Kizer
14.
<PAGE> 1
EXHIBIT 99.11
AGREEMENT AND PLAN OF MERGER
AGREEMENT AND PLAN OF MERGER (Cash Merger) (hereinafter called this
"Agreement"), dated as of December 16, 1996, among TYLAN GENERAL, INC., a
Delaware corporation (the "Company"), MILLIPORE CORPORATION, a Massachusetts
corporation ("Purchaser"), and MCTG ACQUISITION CORP., a Delaware corporation
and a wholly-owned subsidiary of Purchaser ("Purchaser Sub"), the Company and
Purchaser Sub sometimes being hereinafter collectively referred to as the
"Constituent Corporations."
RECITALS
WHEREAS, the Boards of Directors of Purchaser and the Company each have
determined that it is in the best interests of their respective stockholders for
Purchaser to acquire the Company upon the terms and subject to the conditions
set forth herein; and
WHEREAS, the Company, Purchaser and Purchaser Sub desire to make
certain representations, warranties, covenants and agreements in connection with
this Agreement.
NOW, THEREFORE, in consideration of the premises, and of the
representations, warranties, covenants and agreements contained herein, the
parties hereto hereby agree as follows:
ARTICLE I
THE TENDER OFFER
1.1. Tender Offer.
(a) Provided that this Agreement shall not have been
terminated in accordance with Article IX hereof and none of the events set forth
in Annex A hereto shall have occurred or be existing, within five business days
after the public announcement of the execution of this Agreement, Purchaser Sub
will commence a tender offer (the "Offer") for all of the outstanding shares of
common stock, par value $0.001 per share (the "Shares"), of the Company at a
price of $16.00 per Share in cash, net to the seller, which Offer shall have an
initial expiration date not later than twenty (20) business days after the
commencement of the Offer. The obligation of Purchaser Sub to accept for payment
and pay for Shares tendered pursuant to the Offer shall be subject only to the
satisfaction or waiver of the conditions to the Offer set forth in Annex A
hereto. It is agreed that the Minimum Condition (as defined in Annex A) and the
other conditions set forth in Annex A hereto are for the sole benefit of
Purchaser Sub and may be asserted by Purchaser Sub regardless of the
circumstances giving rise to any such condition unless the Purchaser, Purchaser
Sub or their Affiliates shall have caused the circumstances giving
<PAGE> 2
rise to such condition. Purchaser Sub expressly reserves the right in its sole
discretion to waive, in whole or in part, at any time or from time to time, any
such condition (other than the Minimum Condition, which may not be waived
without the prior written consent of the Company), to increase the price per
Share payable in the Offer or to make any other changes in the terms and
conditions of the Offer, provided that, unless previously approved by the
Company in writing, no change may be made that decreases the price per Share
payable in the Offer, reduces the Minimum Condition, changes the form of
consideration payable in the Offer, reduces the maximum number of Shares to be
purchased in the Offer, imposes conditions to the Offer in addition to those set
forth in Annex A hereto or amends or modifies such conditions in any manner
adverse to the holders of Shares. Purchaser Sub covenants and agrees that,
subject to the conditions of the Offer set forth in Annex A hereto, Purchaser
Sub shall accept for payment and pay for Shares that have been validly tendered
and not withdrawn pursuant to the Offer as soon as it is permitted to do so
under applicable law; provided that, if the number of Shares that have been
validly tendered and not withdrawn represent less than 90% of the Shares
outstanding on a fully diluted basis, Purchaser Sub may extend the Offer up to
the fifth business day following the date on which all conditions to the Offer
shall first have been satisfied or waived.
(b) Purchaser agrees, as to the offer to purchase and related
letter of transmittal (which together constitute the "Offer Documents") and the
Company agrees, as to the Schedule 14D-9, that such documents shall, in all
material respects, comply with the requirements of the Securities Exchange Act
of 1934 (the "Exchange Act") and the rules and regulations thereunder and other
applicable laws. The Company and its counsel, as to the Offer Documents, and
Purchaser Sub and its counsel, as to the Schedule 14D-9, shall be given an
opportunity to review such documents prior to their being filed with the SEC.
(c) In connection with the Offer, the Company will cause its
transfer agent to furnish promptly to Purchaser Sub a list, as of a recent date,
of the record holders of Shares and their addresses, as well as mailing labels
containing the names and addresses of all record holders of Shares and lists of
security positions of Shares held in stock depositories. The Company will
furnish Purchaser Sub with such additional information (including, but not
limited to, updated lists of holders of Shares and their addresses, mailing
labels and lists of security positions) and such other assistance as Purchaser
or Purchaser Sub or their agents may reasonably request in communicating the
Offer to the record and beneficial holders of Shares. Subject to the
requirements of applicable law, and except for such steps as are necessary to
disseminate the Offer Documents and any other documents necessary to consummate
the Merger, Purchaser Sub and its Affiliates and Associates shall hold in
confidence the information contained in any such labels, listings and files,
will use such information only in connection with the Offer and the Merger, and,
if this Agreement shall be terminated, will deliver to the Company all copies of
such information then in their possession.
1.2. Company Action.
(a) The Company hereby approves of and consents to the Offer
and represents and warrants that its Board of Directors, at a meeting called and
held on December 16, 1996, by a
2
<PAGE> 3
unanimous vote of the directors present, (i) determined that this Agreement and
the transactions contemplated hereby, including the Offer and the Merger, are
fair to and in the best interests of the stockholders of the Company, (ii)
approved this Agreement and the transactions contemplated hereby, including the
Offer and the Merger, and (iii) resolved to recommend that the stockholders of
the Company accept the Offer, tender their Shares thereunder to Purchaser Sub
and, if required by applicable law, approve and adopt this Agreement and the
Merger. Subject to the fiduciary duties of the Board under applicable law (as
determined in good faith after consultation with independent counsel), the
Company hereby consents to the inclusion in the Offer Documents of the
recommendations of the Board described in this Section 1.2(a).
(b) As soon as practicable on or prior to the date of
commencement of the Offer, the Company shall file with the SEC a
Solicitation/Recommendation Statement on Schedule 14D-9 (together with any
amendments or supplements thereto, the "Schedule 14D-9") and shall mail the
Schedule 14D-9 to the stockholders of the Company promptly after the
commencement of the Offer. The Schedule 14D-9 shall, subject to the fiduciary
duties of the Board under applicable law (as determined in good faith after
consultation with independent counsel), at all times contain the determinations,
approvals and recommendations described in Section 1.2(a). Purchaser, Purchaser
Sub and the Company each agrees promptly to correct any information provided by
it for use in the Schedule 14D-9 if and to the extent that any such information
shall have become false or misleading in any material respect and the Company
further agrees to take all steps necessary to cause the Schedule 14D-9 as so
corrected to be filed with the SEC and to be disseminated to holders of Shares,
in each case as and to the extent required by applicable federal securities
laws. Purchaser, Purchaser Sub and their counsel shall be given a reasonable
opportunity to review and comment on the Schedule 14D-9 prior to its filing with
the SEC and shall be provided with any comments the Company and its counsel may
receive from the SEC or its staff with respect to the Schedule 14D-9 promptly
after receipt of such comments.
ARTICLE II
THE MERGER; CLOSING; EFFECTIVE TIME
2.1. The Merger. Subject to the terms and conditions of this Agreement,
at the Effective Time (as defined in Section 2.3), Purchaser Sub shall be merged
with and into the Company and the separate corporate existence of Purchaser Sub
shall thereupon cease (the "Merger"). The Company shall be the surviving
corporation in the Merger (sometimes hereinafter referred to as the "Surviving
Corporation") and shall continue to be governed by the laws of the State of
Delaware, and the separate corporate existence of the Company with all its
rights, privileges, immunities, powers and franchises shall continue unaffected
by the Merger, except as set forth in Section 3.1. The Merger shall have the
effects specified in the Delaware General Corporation Law (the "DGCL").
2.2. Closing. The closing of the Merger (the "Closing") shall take
place (i) at the offices of Fried, Frank, Harris, Shriver & Jacobson, 350 South
Grand Avenue, 32nd Floor,
3
<PAGE> 4
Los Angeles, California 90071 at 10:00 A.M. on the first business day on which
the last to be fulfilled or waived of the conditions set forth in Article VIII
hereof shall be fulfilled or waived in accordance with this Agreement or (ii) at
such other place and time and/or on such other date as the Company and Purchaser
may agree.
2.3. Effective Time. As soon as practicable following the Closing, and
provided that this Agreement has not been terminated or abandoned pursuant to
Article IX hereof, the Company and the Purchaser will cause a Certificate of
Merger (the "Delaware Certificate of Merger") to be executed and filed with the
Secretary of State of Delaware as provided in Section 251 of the DGCL. The
Merger shall become effective on the date on which the Delaware Certificate of
Merger has been duly filed with the Secretary of State of Delaware, and such
time is hereinafter referred to as the "Effective Time."
2.4. Subsequent Actions. If at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any deeds, bills of
sale, assignments, assurances or any other actions or things are necessary or
desirable to vest, perfect or confirm of record or otherwise in the Surviving
Corporation its right, title or interest in, to or under any of the rights,
properties or assets of the Company or Purchaser Sub acquired or to be acquired
by the Surviving Corporation as a result of or in connection with the Merger, or
otherwise to carry out this Agreement, the officers and directors of the
Surviving Corporation shall be authorized to execute and deliver, in the name
and on behalf of the Company or Purchaser Sub, all such deeds, bills of sale,
assignments and assurances and to take and do, in the name and on behalf of each
of such corporations or otherwise, all such other actions and things as may be
necessary or desirable to vest, perfect or confirm of record or otherwise any
and all right, title and interest in, to and under such rights, properties or
assets of the Surviving Corporation or otherwise to carry out this Agreement.
ARTICLE III
CERTIFICATE OF INCORPORATION AND BY-LAWS
OF THE SURVIVING CORPORATION
3.1. The Certificate of Incorporation. The Certificate of Incorporation
of the Purchaser Sub (the "Certificate") in effect at the Effective Time shall
be the Certificate of Incorporation of the Surviving Corporation, until duly
amended in accordance with the terms thereof, and the DGCL; provided, however,
that at the Effective Time the Certificate shall be amended to change the name
of the Surviving Corporation to Tylan General, Inc.
3.2. The By-Laws. The By-Laws of Purchaser Sub in effect at the
Effective Time shall be the By-Laws of the Surviving Corporation, until duly
amended in accordance with the terms thereof and the DGCL.
4
<PAGE> 5
ARTICLE IV
OFFICERS AND DIRECTORS
OF THE SURVIVING CORPORATION
4.1. Officers and Directors. The directors of Purchaser Sub and the
officers of the Company, together with any additional individuals designated by
Purchaser, at the Effective Time shall, from and after the Effective Time, be
the directors and officers, respectively, of the Surviving Corporation until
their successors have been duly elected or appointed and qualified or until
their earlier death, resignation or removal in accordance with the Surviving
Corporation's Certificate of Incorporation and By-Laws.
4.2. Actions by Directors. Following the election or appointment of
Purchaser's designees pursuant to Section 4.3 hereof, and prior to the Effective
Time, the approval of a majority of the Continuing Directors shall be required
to authorize (and such authorization shall constitute the authorization of the
Board of Directors of the Company and no other action on the part of the
Company, including any action by any other director of the Company, shall be
required to authorize) any termination of this Agreement by the Company, any
amendment of this Agreement requiring action by the Board of Directors of the
Company, any extension of time for the performance of any of the obligations or
other acts of Purchaser or Purchaser Sub, any waiver of compliance with any of
the agreements or conditions contained herein for the benefit of the Company or
any other rights of the Company hereunder, and any amendment or withdrawal by
the Board of Directors of its recommendation of the Merger pursuant to Section
7.3 hereof.
4.3. Boards of Directors; Committees. If requested by Purchaser, the
Company will, subject to compliance with applicable law and immediately
following the purchase by Purchaser Sub of more than 50 percent of the
outstanding Shares pursuant to the Offer, take all actions necessary to cause
persons designated by Purchaser to become directors of the Company so that the
total number of such persons equals that number of directors, rounded up to the
next whole number, which represents the product of (x) the total number of
directors on the Board of Directors multiplied by (y) the percentage that the
number of Shares so purchased plus any Shares beneficially owned by Purchaser or
its Affiliates on the date hereof bears to the number of Shares outstanding at
the time of such purchase; provided, however, that in no event shall Purchaser
be entitled to designate a majority of the Board of Directors unless it is the
beneficial owner of Shares entitling it to exercise at least a majority of the
voting power of the Company's outstanding shares entitled to vote generally in
the election of directors. In furtherance thereof, the Company will use its
reasonable best efforts to secure the resignation of all but three directors, or
will increase the size of the Board, or both, as is necessary to permit
Purchaser's designees to be elected to the Company's Board of Directors;
provided, however, that prior to the Effective Time, the Company's Board of
Directors shall always have at least three Continuing Directors. Immediately
following the purchase by Purchaser Sub of more than 50% of the outstanding
Shares pursuant to the Offer, the Company, if so requested, will use its
reasonable
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efforts to cause persons designated by Purchaser to constitute the same
percentage of each committee of such board, each board of directors of each
subsidiary of the Company and each committee of each such board (in each case to
the extent of the Company's ability to elect such persons). The Company's
obligations to appoint designees to the Board of Directors shall be subject to
Section 14(f) of the Exchange Act and Rule 14f-1 thereunder. The Company shall
promptly take all actions required in order to fulfill its obligations under
this Section 4.3 and shall include in the Schedule 14D-9 such information as is
required under such Section 14(f), Rule 14(f)-1 and Schedule 14D-9. The
Purchaser will supply to the Company in writing and be solely responsible for
any information with respect to the Purchaser and its subsidiaries
(collectively, the "Purchaser Companies") and the nominees, directors and
Affiliates thereof required by Section 14(f) and Rule 14f-1 to be included in
the Schedule 14D-9.
ARTICLE V
CONVERSION OR CANCELLATION OF SHARES IN THE MERGER
5.1. Conversion or Cancellation of Shares. The manner of converting or
canceling shares of the Company and Purchaser Sub in the Merger shall be as
follows:
(a) At the Effective Time, each Share issued and outstanding
immediately prior to the Effective Time (other than Shares owned by Purchaser,
Purchaser Sub or any other subsidiary of Purchaser) or Shares which are held by
stockholders ("Dissenting Stockholders") exercising appraisal rights pursuant to
Section 262 of the DGCL) shall, by virtue of the Merger and without any action
on the part of the holder thereof, be converted into the right to receive,
without interest, an amount in cash equal to $16.00 or such greater amount which
may be paid pursuant to the Offer (the "Merger Consideration"). All such Shares,
by virtue of the Merger and without any action on the part of the holders
thereof, shall no longer be outstanding and shall be canceled and retired and
shall cease to exist, and each holder of a certificate representing any such
Shares shall thereafter cease to have any rights with respect to such Shares,
except the right to receive the Merger Consideration for such Shares upon the
surrender of such certificate in accordance with Section 5.2 or the right, if
any, to receive payment from the Surviving Corporation of the "fair value" of
such Shares as determined in accordance with Section 262 of the DGCL.
(b) At the Effective Time, each Share issued and outstanding
at the Effective Time and owned by any of the Purchaser Companies, and each
Share issued and held in the Company's treasury at the Effective Time, shall, by
virtue of the Merger and without any action on the part of the holder thereof,
cease to be outstanding, shall be canceled and retired without payment of any
consideration therefor and shall cease to exist.
(c) At the Effective Time, each share of Common Stock, par
value $0.01 per share, of Purchaser Sub issued and outstanding immediately prior
to the Effective Time shall, by virtue of the Merger and without any action on
the part of Purchaser Sub or the holders of such shares, be converted into one
Share.
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5.2. Payment for Shares. Purchaser shall make available or cause to be
made available to the paying agent appointed by Purchaser with the Company's
prior approval (the "Paying Agent") amounts sufficient in the aggregate to
provide all funds necessary for the Paying Agent to make payments pursuant to
Section 5.1(a) hereof to holders of Shares issued and outstanding immediately
prior to the Effective Time. Promptly after the Effective Time, the Purchaser
shall instruct the Paying Agent to mail to each person who was, at the Effective
Time, a holder of record (other than any of the Purchaser Companies) of issued
and outstanding Shares a form (mutually agreed to by Purchaser and the Company)
of letter of transmittal and instructions for use in effecting the surrender of
the certificates which, immediately prior to the Effective Time, represented any
of such Shares in exchange for payment therefor. Upon surrender to the Paying
Agent of such certificates, together with such letter of transmittal, duly
executed and completed in accordance with the instructions thereto, the
Surviving Corporation shall promptly cause to be paid to the persons entitled
thereto a check in the amount to which such persons are entitled, after giving
effect to any required tax withholdings. No interest will be paid or will accrue
on the amount payable upon the surrender of any such certificate. If payment is
to be made to a person other than the registered holder of the certificate
surrendered, it shall be a condition of such payment that the certificate so
surrendered shall be properly endorsed or otherwise in proper form for transfer
and that the person requesting such payment shall pay any transfer or other
taxes required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation or the Paying Agent that such tax has been paid or is not
applicable. One hundred eighty days following the Effective Time, the Surviving
Corporation shall be entitled to cause the Paying Agent to deliver to it any
funds (including any interest received with respect thereto) made available to
the Paying Agent which have not been disbursed to holders of certificates
formerly representing Shares outstanding on the Effective Time, and thereafter
such holders shall be entitled to look to the Surviving Corporation only as
general creditors thereof with respect to the cash payable upon due surrender of
their certificates. Notwithstanding the foregoing, neither the Paying Agent nor
any party hereto shall be liable to any holder of certificates formerly
representing Shares for any amount paid to a public official pursuant to any
applicable abandoned property, escheat or similar law. The Surviving Corporation
shall pay all charges and expenses, including those of the Paying Agent, in
connection with the exchange of cash for Shares and Purchaser shall reimburse
the Surviving Corporation for such charges and expenses.
5.3. Dissenters' Rights. If any Dissenting Stockholder shall be
entitled to be paid the "fair value" of his or her Shares, as provided in
Section 262 of the DGCL, the Company shall give Purchaser notice thereof and
Purchaser shall have the right to participate, at its own expense, in all
negotiations and proceedings with respect to any such demands. Neither the
Company nor the Surviving Corporation shall, except with the prior written
consent of Purchaser, which consent shall not be unreasonably withheld,
voluntarily make any payment with respect to, or settle or offer to settle, any
such demand for payment. If any Dissenting Stockholder shall fail to perfect or
shall have effectively withdrawn or lost the right to dissent, the Shares held
by such Dissenting Stockholder shall thereupon be treated as though such Shares
had been converted into the Merger Consideration pursuant to Section 5.1.
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5.4. Transfer of Shares After the Effective Time. No transfers of
Shares shall be made on the stock transfer books of the Surviving Corporation at
or after the Effective Time.
5.5. Stockholders' Meeting. If approval by the Company's stockholders
is required by applicable law to consummate the Merger, the Company, acting
through its Board of Directors, shall in accordance with applicable law, as soon
as practicable following the consummation of the Offer:
(i) duly call, give notice of, convene and hold a special
meeting of its stockholders (the "Stockholders' Meeting") for the purpose of
considering and taking action upon this Agreement and the Merger;
(ii) subject to the fiduciary duties of the Board under
applicable law (as determined in good faith after consultation with independent
counsel), include in the Proxy Statement the recommendation of its Board of
Directors that the stockholders of the Company vote in favor of the approval and
adoption of this Agreement and the transactions contemplated hereby (including
the Merger); and
(iii) use its reasonable best efforts (A) to obtain and
furnish the information required to be included by it in the Proxy Statement
and, after consultation with Purchaser, respond promptly to any comments made by
the SEC with respect to the Proxy Statement and any preliminary version thereof
and cause the Proxy Statement to be mailed to its stockholders at the earliest
practicable time following the consummation of the Offer and (B) subject to the
fiduciary duties of the Board under applicable law (as determined in good faith
after consultation with independent counsel), to obtain the necessary approvals
by its stockholders of this Agreement and the transactions contemplated hereby
(including the Merger).
At such meeting, Purchaser and Purchaser Sub will vote all Shares owned
by them in favor of this Agreement and the transactions contemplated hereby
(including the Merger).
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
6.1. Representations and Warranties of the Company. Except as set forth
in the Disclosure Schedule delivered by the Company to Purchaser concurrently
with the execution of this Agreement (the "Company Disclosure Schedule"), the
Company hereby represents and warrants to Purchaser that:
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<PAGE> 9
(a) Organization and Qualification; Subsidiaries.
Each of the Company and each of its subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of each of their
respective jurisdictions of incorporation or organization, as the case may be,
has all requisite corporate power and authority to own, lease and operate its
respective properties and to carry on its respective business as is now being
conducted. Each of the Company and each of its subsidiaries is duly qualified as
a foreign corporation and in good standing to do business in each jurisdiction
in which the character of its properties owned or leased or the nature of the
business conducted by it makes such qualification necessary, other than where
the failure to be so qualified would not have a Company Material Adverse Effect.
Company Disclosure Schedule 6.1(a) sets forth (i) a true and complete list of
all of the Company's directly or indirectly owned subsidiaries, together with
the jurisdiction of incorporation or organization of each subsidiary and the
percentage of each subsidiary's outstanding capital stock or other equity
interests owned by the Company, another subsidiary of the Company or any
Affiliate of the Company, and (ii) a true and complete list of all partnerships
and joint venture arrangements or other business entities in which the Company
or any subsidiary of the Company owns, either directly or indirectly, an equity
interest, together with the jurisdiction of organization thereof and the
percentage of equity of such partnership or joint venture as is represented by
such equity interest owned by the Company, such subsidiary and any Affiliate of
the Company.
(b) Certificates of Incorporation and By-Laws.
The Company has heretofore furnished to Purchaser complete and correct
copies of the Certificate of Incorporation and the By-Laws of the Company, which
are in full force and effect on the date hereof. The Company will provide
complete and correct copies of the comparable charter documents of each of its
subsidiaries promptly following the date hereof. The Company and its
subsidiaries are not in violation of any of the provisions of their respective
Certificates of Incorporation, By-Laws or other charter documents.
(c) Capitalization.
(A) The authorized capital stock of the Company consists of (i)
50,000,000 shares of Common Stock, $0.001 par value per share ("Company Common
Stock") of which, as of the date hereof: (w) 7,873,491 shares of Company Common
Stock were issued and outstanding, all of which are duly authorized, validly
issued, fully paid and nonassessable and not subject to preemptive rights
created by statute, the Company's Certificate of Incorporation or By-Laws or any
agreement to which the Company is a party or is bound; (x) no shares of Company
Common Stock were held in the treasury of the Company; and (y) (1) 1,094,449
shares of Company Common Stock were reserved for future issuance pursuant to
outstanding stock options (collectively, the "Stock Options") granted to certain
employees, directors and consultants of the Company pursuant to the Company's
1989 Non-Qualified Stock Option Plan, 1994 Stock Option Plan, the 1996
Nonstatutory Stock Option Plan, the Employee Stock Purchase Plan, and the 1994
Non-Employee Directors' Stock Option Plan (collectively, the "Company Option
Plans"), and
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<PAGE> 10
(2) 10,624 shares of Company Common Stock were reserved for future issuance
pursuant to outstanding stock options granted to the parties listed on Company
Disclosure Schedule 6.1(c)(A) (the "Miscellaneous Stock Options", and
collectively with the Stock Options, the "Company Stock Options") and (ii)
10,000,000 shares of preferred stock, par value $0.001 per share, of the Company
(the "Company Preferred Stock" and, together with the Company Common Stock and
the Company Stock Options, the "Company Securities") of which, as of the date
hereof, 100,000 shares of Series A Junior Participating Preferred Stock, $0.001
par value per share, were reserved for issuance with respect to certain Rights
(as defined in the Rights Agreement, dated as of July 2, 1996, between the
Company and The First National Bank of Boston, as Rights Agent, as amended (the
"Rights Agreement")). The Company Option Plans are the only plans or agreements
pursuant to which the Company has granted Company Stock Options. Except as
described in this Section 6.1(c), no shares of Company Common Stock are reserved
for any other purpose. Except as set forth in Company Disclosure Schedule
6.1(c)(A), since October 31, 1996, no shares of Company Common Stock have been
issued by the Company, except pursuant to the exercise of Company Stock Options
outstanding on the date of this Agreement, in each case in accordance with each
of their respective terms. Each of the outstanding shares of capital stock of,
or other equity interests in, each of the Company and its subsidiaries is duly
authorized and validly issued, and, in the case of shares of capital stock,
fully paid and nonassessable, and, except as set forth in Company Disclosure
Schedule 6.1(c)(A), all such outstanding shares or other equity interests are
owned by the Company or another subsidiary of the Company free and clear of all
security interests, liens, claims, pledges, agreements, limitations on the
Company's or such subsidiaries' voting rights, charges or other encumbrances of
any nature whatsoever.
(B) Except as set forth in Company Disclosure Schedule 6.1(c)(B) and
except as set forth in Section 6.1(c)(A) above or otherwise contemplated hereby,
there are no options, warrants or other rights (including registration rights),
agreements, arrangements or commitments of any character to which the Company or
any of its subsidiaries is a party relating to the issued or unissued capital
stock of, or other equity interests in, the Company or any of its subsidiaries,
or obligating the Company or any of its subsidiaries to grant, issue or sell any
shares of the capital stock of, or other equity interests in, the Company or any
of its subsidiaries, by sale, lease, license or otherwise. There are no
obligations, contingent or otherwise, of the Company or any of its subsidiaries
to (x) repurchase, redeem or otherwise acquire any shares of Company Common
Stock or Company Preferred Stock, or the capital stock of, or other equity
interests in, any subsidiary of the Company; or (y) except as set forth in
Company Disclosure Schedule 6.1(c)(B), provide funds to, or make any investment
in (in the form of a loan, capital contribution or otherwise), or provide any
guarantee with respect to the obligations of, any subsidiary of the Company or
any other person. Neither the Company nor any of its subsidiaries directly or
indirectly owns, or has agreed to purchase or otherwise acquire, any of the
capital stock of, or other equity interest in, or any interest convertible into
or exchangeable or exercisable for, any of the capital stock of, or other equity
interest in, any corporation, partnership, joint venture or other business
association or entity. Except for the Company's Annual Incentive Bonus Program
and as set forth in Company Disclosure Schedule 6.1(c)(B), there are no
agreements, arrangements or commitments of any character (contingent or
otherwise) pursuant to which any person is or may
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be entitled to receive any payment based on the revenues or earnings, or
calculated in accordance therewith, of the Company or any of its subsidiaries.
Except as set forth in Company Disclosure Schedule 6.1(c)(B), there are no
voting trusts, proxies or other agreements or understandings to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound with respect to the voting of any shares of capital
stock of the Company or any of its subsidiaries.
(C) The Company has previously delivered to Purchaser true and complete
copies of each of the Company Option Plans and the forms of Company Stock
Options issued pursuant to the respective Company Option Plan, including all
amendments thereto. Except as contemplated by this Agreement, there have been no
changes in the terms of outstanding Company Stock Options not reflected in such
documents so delivered. Except for the Company Option Plans, and all such
amendments, agreements and documentation to them, there are no agreements,
instruments or other documents binding on the Company or any of its subsidiaries
with respect to the Company Stock Options, or any other options or warrants to
purchase shares of Company Common Stock. The Company has previously delivered to
Purchaser a true and complete written list setting forth (i) the number of
shares subject to each Company Stock Option currently outstanding, (ii) the
exercise price for each such Company Stock Option, (iii) the grant date for each
such Company Stock Option, and (iv) the expiration date for each such Company
Stock Option. Except for the Amendment to Employment Agreement dated as of July
22, 1996 between the Company and David J. Ferran, except as permitted by this
Agreement and except as set forth in Company Disclosure Schedule 6.1(c)(C),
since July 28, 1996, the Company has not taken any action that has resulted in
or which will result in the acceleration of vesting of any of the Company Stock
Options.
(d) Authority; Approval.
The Company has all requisite corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by the Company
(other than when required by law with respect to the Merger, the approval and
adoption of this Agreement by the holders of a majority of the outstanding
shares of Company Common Stock in accordance with Delaware Law). The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby (other than, with respect to the approval and
adoption of this Agreement, by the holders of a majority of the outstanding
shares of Company Common Stock in accordance with Delaware Law). This Agreement
has been duly and validly executed and delivered by the Company and, assuming
the due authorization, execution and delivery thereof by Purchaser and Purchaser
Sub, constitutes the legal, valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to: (i)
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws from time to time in effect affecting creditors'
rights generally and (ii) general principles of equity including, without
limitation, standards of
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materiality, good faith, fair dealing and reasonableness, whether such
principles are considered in a proceeding of law or in equity. The Company
hereby represents that the Special Committee of the Board of Directors has
recommended that the Board of Directors of the Company approve the Merger and
that the Board of Directors of the Company has unanimously adopted a resolution
approving the Merger and has resolved to recommend approval of the Merger to the
Company's stockholders.
(e) No Conflict; Required Filings and Consents.
(A) To the knowledge of the Company, except as set forth on Company
Disclosure Schedule 6.1(e), the execution and delivery of this Agreement by the
Company does not, and the performance of this Agreement by the Company,
(including, without limitation, consummation of the Merger) will not, (i)
conflict with or violate the Certificate of Incorporation or By-Laws, or the
equivalent organizational documents, in each case as amended or restated, of the
Company or any of its subsidiaries, (ii) conflict with or violate any foreign,
federal, state or local law, statute, treaty, ordinance, rule, regulation,
order, writ, injunction, decree, judgment or decree (collectively, "Laws")
applicable to the Company or any of its subsidiaries or by which 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 give to others any rights of termination,
amendment, acceleration or cancellation of, or result in the creation of any
lien, security interest, charge or other encumbrance ("Encumbrance") on any of
the properties or assets of the Company or any of its subsidiaries pursuant to
any note, bond, mortgage, indenture, lease or other instrument or obligation to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or any of their respective properties is bound or
affected, other than, in the case of (ii) and (iii), any such conflicts,
violations, defaults, rights, or Encumbrances that, individually or in the
aggregate, would not have a Company Material Adverse Effect.
(B) To the knowledge of the Company, except as set forth on Company
Disclosure Schedule 6.1(e)(A), the execution and delivery of this Agreement by
the Company does not, and the performance of this Agreement by the Company
(including, without limitation, consummation of the Merger) will not, require
any consent, approval, authorization or permit of, or filing with or
notification to, any governmental or regulatory authority, either domestic or
foreign ("Governmental Entities"), except (i) for applicable requirements, if
any, of the Securities Act of 1933, as amended (the "Securities Act"), the
Exchange Act, state securities or blue sky laws ("Blue Sky Laws"), the NASDAQ,
and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the
"HSR Act"), and the filing and recordation of appropriate merger documents as
required by Delaware Law and (ii) where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not, either individually or in the aggregate, have a Company Material
Adverse Effect.
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(f) Reports; Financial Statements.
(A) Since January 28, 1995, the Company has filed all forms, reports,
statements and other documents required to be filed with the SEC including,
without limitation, (A) all Annual Reports on Form 10-K, (B) all Quarterly
Reports on Form 10-Q, (C) all proxy statements relating to meetings of
stockholders (whether annual or special) of the Company, (D) all Reports on Form
8-K, (E) all other reports or registration statements (including the Form S-4
filed in connection with its acquisition of Span Instruments, Inc.) and (F) all
amendments and supplements to all such reports and registration statements
(collectively referred to as the "SEC Reports"). The SEC Reports, including all
SEC Reports filed after the date of this Agreement and prior to the Effective
Time (i) were or will be prepared in all material respects in accordance with
the requirements of applicable Law (including, the Securities Act and the
Exchange Act, as the case may be, and the rules and regulations of the SEC
thereunder applicable to such SEC Reports) and (ii) did not at the time they
were filed, or will not at the time they are filed, 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.
(B) Each of the consolidated financial statements (including, in each
case, any related notes thereto) contained in the SEC Reports filed prior to or
after the date of this Agreement, and the consolidated financial statements as
of and for the fiscal year ended October 31, 1996 (the "Fiscal 1996 Financial
Statements"), a copy of which has previously been provided to Purchaser
(collectively, the "Company Financial Statements") (i) have been or will be
prepared in accordance with the published rules and regulations of the SEC and
generally accepted accounting principles applied on a consistent basis
throughout the periods involved (except (1) to the extent required by changes in
generally accepted accounting principles, (2) with respect to SEC Reports filed
prior to the date of this Agreement, as may be indicated in the notes thereto
and (3) the Fiscal 1996 Financial Statements do not include any notes) and (ii)
fairly present or will fairly present the consolidated financial position of the
Company and its subsidiaries, as of the respective dates thereof, and the
consolidated results of operations and cash flows and changes in financial
position for the respective periods then ended, except that (x) any unaudited
interim financial statements were or will be subject to normal year-end
adjustments and (y) any pro forma financial statements contained in such
consolidated financial statements are not necessarily indicative of the
consolidated financial position of the Company and its subsidiaries, as of the
respective dates thereof, and the consolidated results of operations and cash
flows and changes in financial position for the respective periods then ended.
Upon completion of the audit of the Fiscal 1996 Financial Statements, the
Company will provide a copy thereof to the Purchaser, which will be the same in
all material respects as the Fiscal 1996 Financial Statements previously
provided to the Purchaser, will be accompanied by an unqualified audit opinion
by Ernst & Young, LLP, the Company's independent public accountants, and will
contain notes that do not include any information that is different from that
provided to the Purchaser under or pursuant to this Agreement or any document
referenced herein or in the Schedules hereto to the extent that such difference
constitutes a Company Material Adverse Effect (the "Audited Fiscal 1996
Financial Statements").
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(C) Except as disclosed on Company Disclosure Schedule 6.1(f), neither
the Company nor any of its subsidiaries is liable as an indemnitor, guarantor,
surety or endorser, and no person has the power to confess judgment against the
Company or any of its subsidiaries, assets, properties or business except as
would not, individually or in the aggregate, result in or reasonably be likely
to result in a Company Material Adverse Effect.
(g) Absence of Certain Changes or Events.
Except as disclosed in the SEC Reports filed prior to the date of this
Agreement or as contemplated in this Agreement, since October 31, 1996, there
has not been:
(A) any declaration, setting aside or payment of any dividend or other
distribution (whether in cash, stock or property) with respect to any of the
Company's capital stock;
(B) any material change by the Company or its subsidiaries in their
accounting methods, principles or practices (except for changes made after the
date of this Agreement as required by changes in generally accepted accounting
principles);
(C) any amendment of any material term of any outstanding equity
security of the Company or any subsidiary;
(D) any repurchase, redemption or other acquisition by the Company or
any subsidiary of any outstanding shares of capital stock or other equity
securities of, or other ownership interests in, the Company or any subsidiary;
or
(E) any change, event or series of changes or events which would have a
Company Material Adverse Effect, except for general economic changes and changes
that may affect the industries of the Company or any of its subsidiaries
generally.
(h) Absence of Litigation.
Except as set forth in Company Disclosure Schedule 6.1(h), there is no
action, suit, investigation or proceeding, (collectively, "Litigation"), pending
or, to the knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries which if adversely determined, individually or in the
aggregate, would have a Company Material Adverse Effect, and neither the Company
nor any of its subsidiaries is subject to any judgments, decrees, injunctions,
rules or orders of any Governmental Entity or arbitrator (collectively, "Orders"
and Orders together with Litigation being referred to as "Claims"), except for
matters which, individually or in the aggregate, would not have a Company
Material Adverse Effect.
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(i) Employee Benefit Plans.
(a) For purposes of this Section, the term "Company Benefit Plans"
shall mean all material pension, retirement, profit-sharing, deferred
compensation, stock option, employee stock ownership, severance pay, vacation,
bonus or other incentive plans, and all other employee programs, arrangements or
agreements, whether arrived at through collective bargaining or otherwise, all
medical, vision, dental and other health plans, all life insurance plans, and
all other employee benefit plans or fringe benefit plans, including, without
limitation, any "employee benefit plan," as that term is defined in Section 3(3)
of ERISA, currently adopted, maintained by, sponsored in whole or in part by, or
contributed to by the Company or its Affiliates for the benefit of employees,
retirees, dependents, spouses, directors, independent contractors or other
beneficiaries and under which employees, retirees, dependents, spouses,
directors, independent contractors, or other beneficiaries are eligible to
participate. Any of the Company Benefit Plans which is an "employee pension
benefit plan," as that term is defined in Section 3(2) of ERISA, is referred to
herein as a "Company ERISA Plan."
(b) Except as set forth on Company Disclosure Schedule 6.1(i), no
Company Benefit Plan is or has been a multiemployer plan within the meaning of
Section 3(37) of ERISA. As to any multiemployer plan set forth on Company
Disclosure Schedule 6.1(i), prior to the date hereof the Company has provided to
Purchaser a true and correct copy of any estimate of the "withdrawal liability"
that would arise if the Company were to withdraw or cause a withdrawal from such
plan that is within the knowledge of the Company. To the knowledge of the
Company, all Company Benefit Plans are in compliance with the applicable
provisions (including, without limitation, any funding requirements or
limitations) of ERISA and the Internal Revenue Code of 1986, as amended (the
"Code"), except for any breach or violation that would not have a Company
Material Adverse Effect. No Company Benefit Plan provides for post-retirement
medical benefit obligations (without regard to COBRA obligations). Except as set
forth on Company Disclosure Schedule 6.1(i), no Company ERISA Plan which is a
defined benefit pension plan has any "unfunded current liability," as that term
is defined in Section 302(d)(8)(A) of ERISA, and the present fair market value
of the assets of any such plan exceeds the plan's "benefit liabilities," as that
term is defined in Section 4001(a)(16) of ERISA, when determined under actuarial
factors that would apply if the plan terminated in accordance with all
applicable legal requirements.
(c) Company Disclosure Schedule 6.1(i) sets forth a true and correct
list of all Company Benefit Plans. The Company has provided Purchaser with
access to true and correct copies of each governing document for each Company
Benefit Plan, together with the most recent summary plan description and annual
report for each such plan and the actuarial report for any Company Benefit Plan
that is a defined benefit pension plan or funded welfare benefit plan.
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(j) Taxes.
(a) Except as would not, individually or in the aggregate, have a
Company Material Adverse Effect, the Company and each of its subsidiaries has
filed all federal, state, local and foreign income and other tax returns
required to be filed by it, has paid all taxes, assessments, fees and other
governmental charges of any nature whatsoever, with any related penalties,
interest and liabilities (any of the foregoing being referred to herein as a
"Tax"), that are due and payable on or before the date hereof, other than such
Taxes as are being contested in good faith. There are no material claims or
assessments pending against the Company or any of its subsidiaries for any
alleged deficiency in Tax, and the Company does not know of any threatened Tax
claims, assessments or investigations against the Company or any of its
subsidiaries which if upheld could have a Company Material Adverse Effect.
(b) The Company and all of its subsidiaries have paid or are
withholding and will pay when due to the proper taxing authorities all
withholding amounts required to be withheld with respect to all Taxes, including
without limitation sales and use Taxes and Taxes on income or benefits and Taxes
for unemployment, social security or other similar programs with respect to
salary and other compensation of directors, officers and employees of the
Company and its subsidiaries, except when the failure to pay or withhold would
not have a Company Material Adverse Effect.
(c) Neither the Company nor any of its subsidiaries has any liability
for any federal, state, local, foreign or other Taxes of any corporation or
entity other than the Company and its subsidiaries, including without limitation
any liability arising from the application of U.S. Treasury Regulations Section
1.1502-6 or any analogous provision of state, local or foreign law, except any
liability that would not have a Company Material Adverse Effect.
(d) Neither the Company nor any of its subsidiaries is or has been a
party to any Tax sharing agreement with any corporation other than the Company
and its subsidiaries.
(e) To the best of the Company's knowledge and as of the date hereof,
no person who holds 5 percent or more of the stock of the Company is a "foreign
person" as defined in Section 1445(f)(3) of the Code.
(k) Proprietary Rights.
The Company and its subsidiaries possess or have adequate rights to use
all material trademarks, trade names, patents, service marks, marks, brand
names, computer programs, databases, industrial designs and copyrights necessary
for the operation of the businesses of each of Company and its subsidiaries
(collectively, the "Proprietary Rights"). Except as set forth on Company
Disclosure Schedule 6.1(k), all of the Proprietary Rights that are material to
the conduct of the Company's business taken as a whole are owned by the Company
or its subsidiaries free and clear of any and all Encumbrances that would have a
material adverse effect on the value of, or ability of Purchaser to utilize, the
item of the Proprietary Rights to which such
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Encumbrances relates, and neither the Company nor any such subsidiary has
forfeited or otherwise relinquished any Proprietary Rights which forfeiture
would have a Company Material Adverse Effect. The use of the Proprietary Rights
by the Company or its subsidiaries does not conflict with, infringe upon,
violate or interfere with or constitute an appropriation of any right, title,
interest or goodwill, including, without limitation, any intellectual property
right, trademark, trade name, patent, service mark, brand mark, brand name,
computer program, database, industrial design, copyright or any pending
application therefor of any other person, except where such conflict,
infringement, violation, interference or appropriation would not result in a
Company Material Adverse Effect. Except as set forth on Company Disclosure
Schedule 6.1(k), the Company has received no written notice that the use of any
Proprietary Rights or trade dress by the Company or its subsidiaries conflicts
with, infringes upon, violates or interferes with any rights of any other
person. There are no pending claims that any of the Proprietary Rights is
invalid or conflicts with the asserted rights of any other person or has not
been used or enforced or has been failed to be used or enforced in a manner that
would result in the abandonment, cancellation or unenforceability of any of the
Proprietary Rights that is material to the conduct of the Company's business.
Except as set forth on Company Disclosure Schedule 6.1(k), neither the Company
nor any of its subsidiaries has (i) granted any third party any license or other
right to use any of the Proprietary Rights or (ii) a license or other right to
use any intellectual property of a third party.
(l) Opinion of Financial Advisor.
The Company has received the written opinion (the "Fairness Opinion")
of Goldman, Sachs & Co. ("Goldman Sachs") dated the date of this Agreement to
the effect that the $16.00 in cash to be received by the holders of Shares in
the Offer and Merger, taken as a unitary transaction, is fair to such holders;
it being understood and acknowledged that such Fairness Opinion has been
rendered to the Board of Directors of the Company and may not be relied by
Purchaser, Purchaser Sub, their affiliates or their respective stockholders.
(m) Brokers.
No broker, finder or investment banker (other than Goldman Sachs) is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Company.
(n) Environmental Matters; Compliance with Laws.
(A) For purposes of this Agreement:
"Environmental Law" means any applicable federal, state or local law
regulating or prohibiting Releases into any part of the environment, or
pertaining to the protection of natural resources, the environment and public
and employee health and safety including, without limitation, the Comprehensive
Environmental Response, Compensation, and Liability Act (42 U.S.C. Section 9601
et seq.), the Hazardous Materials Transportation Act (49 U.S.C. Section
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1801 et seq.), the Resource Conservation and Recovery Act (42 U.S.C. Section
6901 et seq.), the Clean Water Act (33 U.S.C. Section 1251 et seq.), the Clean
Air Act (42 U.S.C. Section 7401 et seq.), the Toxic Substances Control Act (15
U.S.C. Section 7401 et seq.), the Federal Insecticide, Fungicide, and
Rodenticide Act (7 U.S.C. Section 136 et seq.), and the Occupational Safety and
Health Act (29 U.S.C. Section 651 et seq.) and the regulations promulgated
pursuant thereto, as such laws have been and may be amended or supplemented
through the Closing Date;
"Hazardous Material" means any substance, material or waste which is
regulated pursuant to any Environmental Law by any public or governmental
authority in the jurisdictions in which the applicable party or its subsidiaries
conducts business, including, without limitation, any material or substance
which is defined as a "hazardous waste," "hazardous material," "hazardous
substance," "extremely hazardous waste" or "restricted hazardous waste,"
"contaminant," "toxic waste" or "toxic substance" under any provision of
Environmental Law; and
"Release" means any release, spill, effluent, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching or
migration into the indoor or outdoor environment, or into or out of any property
owned, operated or leased by the applicable party or its subsidiaries.
(B) Except as set forth on Company Disclosure Schedule 6.1(n) or as
would not, individually or in the aggregate, have a Company Material Adverse
Effect:
(i) The operations of the Company and its subsidiaries,
including without limitation any generation, transportation, treatment, storage
or disposal of hazardous waste, as defined and regulated under 40 C.F.R. Parts
260-270 (in effect as of the date of this Agreement) or any state equivalent, to
the Company's knowledge have been for the last three years, and currently are,
in compliance with all Environmental Laws;
(ii) The Company and its subsidiaries currently maintain in
full force and effect all permits, licenses, variances, exceptions and approvals
required under applicable Environmental Laws for their respective businesses as
of the date hereof;
(iii) As of the date hereof and with the exception of the
permits, licenses, variances, exceptions and approvals referenced in Section
6.1(n)(B)(ii), the Company and its subsidiaries are not subject to any
outstanding written orders from any Governmental Entity respecting the
remediation of any Hazardous Materials or any Release or threatened Release of a
Hazardous Material;
(iv) The Company and its subsidiaries have not received within
the last three years any written notice alleging any, and as of the date hereof,
to the Company's knowledge, there is no investigation of any such party with
respect to, the violation of any Environmental Law arising from the owned or
leased properties and the operations of the Company and its subsidiaries;
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(v) There is no suit, action or proceeding pending or, to the
knowledge of the Company, threatened against the Company or any of its
subsidiaries arising under Environmental Laws;
(vi) To the knowledge of the Company, there has been no
Release of any Hazardous Material into the indoor or outdoor environment at, on
or from the owned or leased properties of the Company or its subsidiaries in
violation of any Environmental Laws;
(vii) To the knowledge of the Company, there is not now on or
in any owned or leased property of the Company or its subsidiaries any of the
following: (1) any underground storage tanks or surface impoundments, (2) any
friable asbestos-containing materials or (3) any polychlorinated biphenyls, in
each case in violation of Environmental Laws;
(viii) To the knowledge of the Company, the Company does not
have liability for violations of any Environmental Law by any other person or
entities that it has assumed contractually or by operation of law which would
reasonably be likely to have a Company Material Adverse Effect; and
(ix) Purchaser and Purchaser Sub acknowledge that the
representations and warranties contained in this Section 6.1(n) are the only
representations and warranties being made with respect to the environmental
matters or Environmental Laws, no other representation contained in this
Agreement shall apply to any environmental matter or Environmental Laws and no
other representation or warranty, express or implied, is being made with respect
thereto.
(o) Rights Agreement.
The Company has taken all necessary action so that none of the
execution of this Agreement, the acquisition of Shares pursuant to the Offer or
the consummation of the Merger will (i) cause any person to become an Acquiring
Person (as such term is defined in the Rights Agreement) or (ii) give rise to a
Distribution Date or a Triggering Event (as defined in the Rights Agreement).
6.2. Representations and Warranties of Purchaser and Purchaser Sub.
Except as set forth in the Disclosure Schedule delivered by the Purchaser and
Purchaser Sub to the Company concurrently with the execution of this Agreement
(the "Purchaser Disclosure Schedule"), Purchaser and Purchaser Sub hereby
jointly represent and warrant to Purchaser that:
(a) Organization and Qualification; subsidiaries.
Each of Purchaser and Purchaser Sub and each of Purchaser's
subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of each of their respective jurisdictions of
incorporation or organization, as the case may be, has all requisite corporate
power and authority to own, lease and operate its respective properties and to
carry on its respective business as is now being conducted. Each of Purchaser
and Purchaser Sub and each of
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Purchaser's subsidiaries is duly qualified as a foreign corporation and in good
standing to do business in each jurisdiction in which the character of its
properties owned or leased or the nature of the business conducted by it makes
such qualification necessary, other than where the failure to be so qualified
would not have a Purchaser Material Adverse Effect.
(b) Authority; Approval.
Purchaser has all requisite corporate power and authority to execute
and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by Purchaser.
The execution and delivery of this Agreement by Purchaser and the consummation
by Purchaser of the transactions contemplated hereby have been duly authorized
by all necessary corporate action and no other corporate proceedings on the part
of Purchaser are necessary to authorize this Agreement or to consummate the
transactions contemplated hereby. This Agreement has been duly and validly
executed and delivered by Purchaser and, assuming the due authorization,
execution and delivery thereof by the Company, constitutes the legal, valid and
binding obligations of Purchaser, enforceable against Purchaser in accordance
with its terms: (i) subject to applicable bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws from time to
time in effect affecting creditors' rights generally and (ii) general principles
of equity including, without limitation, standards of materiality, good faith,
fair dealing and reasonableness, whether such principles are considered in a
proceeding of law or in equity.
Purchaser Sub has all requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby to be consummated by Purchaser
Sub. The execution and delivery of this Agreement by Purchaser Sub and the
consummation by Purchaser Sub of the transactions contemplated hereby have been
duly authorized by all necessary corporate action and no other corporate
proceedings on the part of Purchaser Sub are necessary to authorize this
Agreement or to consummate the transactions contemplated hereby. This Agreement
has been duly and validly executed and delivered by Purchaser Sub and, assuming
the due authorization, execution and delivery thereof by the Company,
constitutes the legal, valid and binding obligations of Purchaser Sub,
enforceable against Purchaser Sub in accordance with its terms: (i) subject to
applicable bankruptcy, insolvency, reorganization, fraudulent transfer,
moratorium or similar laws from time to time in effect affecting creditors'
rights generally and (ii) general principles of equity including, without
limitation, standards of materiality, good faith, fair dealing and
reasonableness, whether such principles are considered in a proceeding of law or
in equity.
(c) No Conflict; Required Filings and Consents.
(A) To the knowledge of Purchaser and Purchaser Sub, except as set
forth on Purchaser Disclosure Schedule 6.2(c)(A), the execution and delivery of
this Agreement by Purchaser and Purchaser Sub does not, and the performance of
this Agreement by Purchaser and Purchaser Sub will not, (i) conflict with or
violate the Certificate of Incorporation or By-Laws, or the equivalent
organizational documents, in each case as amended or restated, of the Purchaser,
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Purchaser Sub or any of Purchaser's subsidiaries, (ii) conflict with or violate
any laws applicable to Purchaser or Purchaser Sub, respectively, or any of
Purchaser's subsidiaries or by which 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 give to others any rights of termination, amendment, acceleration or
cancellation of, or result in the creation of any Encumbrance on any of the
properties or assets of Purchaser or Purchaser Sub, respectively, or any of
Purchaser's subsidiaries pursuant to any note, bond, mortgage, indenture, lease
or other instrument or obligation to which Purchaser or Purchaser Sub,
respectively, or any of Purchaser's subsidiaries is a party or by which
Purchaser or Purchaser Sub, respectively, or any of Purchaser's subsidiaries or
any of their respective properties is bound or affected, other than, in the case
of (ii) and (iii), any such conflicts, violations, defaults, rights, liens,
security interests, charges or Encumbrances that, individually or in the
aggregate, would not have a Purchaser Material Adverse Effect. Neither Purchaser
nor any of its Affiliates or Associates (as such terms are defined in Section
203 of Delaware Law) is an "interested stockholder" (as such term is defined in
Section 203 of Delaware Law) of the Company.
(B) To the knowledge of the Purchaser and Purchaser Sub, except as set
forth on Purchaser Disclosure Schedule 6.2(c)(A), the execution and delivery of
this Agreement by the Purchaser and Purchaser Sub does not, and the performance
of this Agreement by the Purchaser and Purchaser Sub will not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entities, except (i) for applicable requirements, if any,
of the Securities Act, the Exchange Act, Blue Sky Laws, the NASDAQ, and the HSR
Act, and the filing and recordation of appropriate merger documents as required
by Delaware Law and (ii) where the failure to obtain such consents, approvals,
authorizations or permits, or to make such filings or notifications, would not,
either individually or in the aggregate, have a Purchaser Material Adverse
Effect.
(d) Brokers.
No broker, finder or investment banker is entitled to any brokerage,
finder's or other fee or commission in connection with the transactions
contemplated by this Agreement based upon arrangements made by or on behalf of
the Purchaser (other than CS First Boston, any entitlement to fees of which will
not be the liability of the Company prior to the closing of the Merger).
(e) Financing.
Parent and Purchaser have available financing in an amount sufficient
to consummate the Offer and the Merger, evidence of which has been delivered to
the Company.
(f) No Prior Activities
Except for obligations incurred in connection with its incorporation or
organization or the negotiation and consummation of this Agreement and the
transactions contemplated hereby, Purchaser Sub has neither incurred any
obligation or liability nor engaged in any business or
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activity of any type or kind whatsoever or entered into any agreement or
arrangement with any person or entity.
ARTICLE VII
COVENANTS
7.1. Interim Operations of the Company. The Company covenants and
agrees that, prior to the Effective Time (unless Purchaser shall otherwise agree
in writing and except as otherwise contemplated by this Agreement):
(a) the business of the Company and its subsidiaries shall be
conducted only in the ordinary and usual course and, to the extent consistent
therewith, each of the Company and its subsidiaries shall use its reasonable
best efforts to preserve its business organization intact and maintain
satisfactory relations with customers, suppliers, employees and business
associates, in each case in all material respects.
(b) the Company shall not (i) sell, pledge, dispose of or
encumber or agree to sell or pledge any stock owned by it in any of its
subsidiaries; (ii) amend its Certificate or By-Laws or increase or propose to
increase the number of directors of the Company; (iii) split, combine or
reclassify the outstanding Shares; or (iv) declare, set aside or pay any
dividend payable in cash, stock or property with respect to the Shares.
(c) neither the Company nor any of its subsidiaries shall
(i) issue, sell, pledge, dispose of or encumber any additional shares of, or
securities convertible or exchangeable for, or options, warrants, calls,
commitments or rights of any kind to acquire, any shares of its capital stock
other than, in the case of the Company, Shares issuable pursuant to options
outstanding on the date hereof under any Company Option Plan; (ii) transfer,
lease, license, guarantee, sell, mortgage, pledge, dispose of or encumber any
assets or incur or modify any indebtedness or other liability involving an
amount in excess of $100,000 in the aggregate other than in the ordinary and
usual course of business; (iii) acquire directly or indirectly by redemption or
otherwise any shares of the capital stock of the Company (iv) incur any
indebtedness for borrowed money (except for working capital under the Company's
existing credit facilities and refinancings of existing debt that permit
prepayment of such debt without penalty) involving an amount in excess of
$100,000 in the aggregate or assume or endorse the obligations of any other
person or entity; (v) make any acquisition of, or investment in, assets or
stock of any other person or entity involving an amount in excess of $100,000
in the aggregate other than in the ordinary and usual course of business or
(vi) make or authorize any capital expenditure in excess of $500,000 in the
aggregate.
(d) except for normal increases in the ordinary course of
business that are consistent with past practices and that, in the aggregate, do
not result in a material increase in benefits or compensation expense, adopt or
amend (except as may be required by law or as provided in this Agreement) any
bonus, profit sharing, compensation, severance, termination,
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stock option, stock appreciation right, restricted stock, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreements, trusts, plans, funds or other arrangements for the benefit or
welfare of any director, officer or employee, or increase in any manner the
compensation or fringe benefits of any director, officer or employee or pay any
benefit not required by any existing plan or arrangement (including, without
limitation, the granting of stock options, stock appreciation rights, shares of
restricted stock or performance units) or enter into any contract, agreement,
commitment or arrangement to do any of the foregoing.
(e) neither the Company nor any of its subsidiaries shall,
except in the ordinary and usual course of business, enter into any material
agreement or modify, amend or terminate any of its material agreements or waive,
release or assign any material rights or claims thereunder.
(f) neither the Company nor any of its subsidiaries will
authorize or enter into an agreement to do any of the foregoing.
7.2. Acquisition Proposals. The Company agrees that neither the Company
nor any of its subsidiaries nor any of the respective officers and directors of
the Company or its subsidiaries shall, and the Company shall direct and use its
best efforts to cause its employees, agents and representatives (including,
without limitation, any investment banker, attorney or accountant retained by
the Company or any of its subsidiaries) not to, initiate, continue, solicit or
encourage, directly or indirectly, any inquiries or the making of any proposal
or offer (including, without limitation, any proposal or offer to stockholders
of the Company) or furnish any non-public information to any third party, with
respect to a merger, consolidation, business combination or similar transaction
involving, or any tender offer, exchange offer or other purchase of all or any
significant portion of the assets or any equity securities of, the Company or
any of its subsidiaries (any such proposal or offer being hereinafter referred
to as an "Acquisition Proposal") or, unless the Board of Directors of the
Company receives an unsolicited written offer with respect to a merger,
consolidation or sale of all or substantially all of the Company's assets or an
unsolicited tender or exchange offer for the Shares is commenced, which the
Board of Directors of the Company determines in good faith (after receiving
advice of independent legal counsel that such action is required for the
discharge of their fiduciary duties) is more favorable to the stockholders of
the Company than the Offer (an "Alternative Transaction"), engage in any
negotiations concerning, or provide any confidential information or data to, or
have any discussions with, any person relating to an Acquisition Proposal, or
otherwise facilitate any effort or attempt to make or implement an Acquisition
Proposal. The Company will immediately cease and cause to be terminated any
existing activities, discussions or negotiations with any parties conducted
heretofore with respect to any of the foregoing. The Company will as promptly as
reasonably practicable (and in any event within 24 hours) notify Purchaser (i)
if any such inquiries or proposals are received by, any such information is
requested from, or any such negotiations or discussions are sought to be
initiated with the Company, (ii) of its receipt of an acquisition proposal and
(iii) of the existence of an Alternative Transaction. Prior to furnishing
nonpublic information to, or entering into discussions or negotiations with, any
other persons or entities, the
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Company shall obtain from such person or entity an executed confidentiality
agreement with terms no less favorable, taken as a whole, to the Company than
those contained in the Confidentiality Agreement, but which confidentiality
agreement shall not include any provision calling for an exclusive right to
negotiate with the Company, and the Company shall advise Purchaser of all such
nonpublic information delivered to such person concurrently with its delivery to
the requesting party.
7.3. Meetings of the Company's Stockholders. Except as set forth in
this Section 7.3, the Board of Directors of the Company shall recommend approval
of the Agreement and the Merger and the Company shall take all lawful action to
solicit such approval. If the Board of Directors of the Company receives an
unsolicited written offer embodying an Alternative Transaction, the Board of
Directors may so amend or withdraw its recommendation and such withdrawal or
recommendation shall not constitute a breach of this Agreement. The Company's
proxy or information statement with respect to such meeting of stockholders (the
"Proxy Statement"), at the date thereof and at the date of such meeting, will
not include an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading;
provided, however, that the foregoing shall not apply to the extent that any
such untrue statement of a material fact or omission to state a material fact
was made by the Company in reliance upon and in conformity with written
information concerning the Purchaser Companies and nominees, directors and
Affiliates of such Purchaser Companies furnished to the Company by Purchaser
specifically for use in the Proxy Statement. The Proxy Statement shall not be
filed, and no amendment or supplement to the Proxy Statement will be made by the
Company, without consultation with Purchaser and its counsel. None of the
written information concerning the Purchaser Companies and the nominees,
directors and Affiliates thereof furnished to the Company by Purchaser
specifically for use in the Proxy Statement, at the date thereof and at the date
of the stockholders' meeting, will include an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they
were made, not misleading.
7.4. Filings; Other Action. Subject to the terms and conditions herein
provided, the Company and Purchaser shall: (a) promptly make their respective
filings and thereafter make any other required submissions under the HSR Act,
the Securities Act, the Exchange Act, Blue Sky Laws and the NASDAQ with respect
to the Offer and the Merger; and (b) use their
reasonable best efforts to promptly take, or cause to be taken, all other action
and do, or cause to be done, all other things necessary, proper or appropriate
under applicable laws and regulations to consummate and make effective the
transactions contemplated by this Agreement.
7.5. Access. Upon reasonable notice, the Company shall (and shall cause
each of its subsidiaries to) afford Purchaser's officers, employees, counsel,
accountants and other authorized representatives ("Representatives") access,
during normal business hours throughout the period prior to the Effective Time,
to its and its subsidiaries' properties, books, contracts and records and,
during such period, the Company shall (and shall cause each of its subsidiaries
to) furnish promptly to Purchaser all information concerning its business,
properties and personnel as
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Purchaser or its Representatives may reasonably request, provided, that the
foregoing shall not require the Company to permit any inspection, or to disclose
any information, which in the reasonable judgment of the Company would result in
the disclosure of any trade secrets of third parties or violate any obligation
of the Company with respect to confidentiality All information obtained by
Purchaser and its Representatives pursuant to this Section 7.5 shall be treated
as "Evaluation Material" for all purposes of the Confidentiality Agreement.
7.6. Notification of Certain Matters. Each party shall give prompt
notice to the other parties of (i) the occurrence or failure to occur of any
event, which occurrence or failure would be likely to cause any representation
or warranty or on its part contained in this Agreement to be untrue or
inaccurate at any time from the date hereof to the Effective Time, and (ii) any
material failure of the party, or 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 hereunder.
7.7. Publicity. The initial press release shall be a joint press
release and thereafter, except as required by law, the Company and Purchaser
shall consult with each other prior to issuing any press releases or otherwise
making public statements with respect to the transactions contemplated hereby
and prior to making any filings with any Governmental Entity or with any
national securities exchange with respect thereto.
7.8. Benefits.
(a) Stock Options; Stock Purchase Plan. Not later than the Effective
Time and continuing for a period of at least one hundred twenty (120) days after
the Effective Time, Purchaser shall offer in writing to each holder of a vested
Company Stock Option (whether or not such Company Stock Option terminated
effective as of the Effective Time by virtue of the Merger or would have
terminated thereafter) the opportunity to have such Company Stock Option
canceled and to receive an amount in cash equal to the excess of the Merger
Consideration over the exercise price per Share of such Company Stock Option
multiplied by the number of Shares previously subject to such Company Stock
Option, less all applicable withholding taxes. Whether or not vested, any
Company Stock Options not tendered for cancellation pursuant to such offer shall
continue to be governed by the terms of such Company Stock Option and the
applicable Company Option Plan. The Company shall have the right to amend the
terms of any Company Stock Option outstanding on the date hereof so that it
would become vested immediately prior to the Effective Time. The Company shall
have the right to cause all funds held in the Company's Employee Stock Purchase
Plan to be used to purchase Shares so that such Shares will be converted into
the right to receive cash in the Merger; provided that the Employee Stock
Purchase Plan is thereupon terminated.
(b) Employee Benefits. (i) Purchaser shall cause the Surviving
Corporation to provide to employees of the Company and its subsidiaries, who are
employed by the Surviving Corporation or its subsidiaries following the
Effective Time ("Company Employees"), employee benefits which in the aggregate
are substantially comparable to or greater than those currently provided by the
Company to such employees.
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(ii) In the event that Company Employees are or
become eligible to participate in any plans maintained by the Purchaser or its
Subsidiaries ("Purchaser Benefit Plans"), Purchaser or its subsidiaries shall
grant such employees credit for purposes of eligibility, vesting and benefit
accrual, for all service credited for such purposes under comparable Company
Benefit Plans, provided, however, that, with respect to Purchaser's Retirement
Plan and such service with the Company shall be credited with respect to
eligibility and vesting only, but shall not be recognized for purposes of
determining the amount of retirement benefits, if any, under Purchaser's
Retirement Plan.
(iii) Any pre-existing condition exclusion under any
Purchaser Benefit Plan providing medical or dental benefits shall be no more
restrictive for any Company Employee who, immediately prior to commencing
participation in such Purchaser Benefit Plan, was participating in a Company
Benefit Plan providing medical or dental benefits and had satisfied any
pre-existing condition provision under such Company Benefit Plan. Any expenses
that were taken into account under a Company Benefit Plan providing medical or
dental benefits in which the Company Employee participated immediately prior to
commencing participation in a Purchaser Benefit Plan providing medical or dental
benefits shall be taken into account to the same extent under such Purchaser
Benefit Plan, in accordance with the terms of such Purchaser Benefit Plan, for
purposes of satisfying applicable deductible, coinsurance and maximum
out-of-pocket provisions and life-time benefit limits.
(c) Survivability. This Section 7.8 shall survive the
Effective Time, and is intended to be for the benefit of, and shall be
enforceable by, the Company Employees and the holders of Company Stock Options
and shall be binding on Purchaser and Purchaser Sub and the Surviving
Corporation and their respective successors and assigns.
Section 7.9. Indemnification; Directors' and Officers' Insurance.
(a) The Certificate of Incorporation of the Surviving
Corporation shall contain the provisions with respect to indemnification not
less favorable to the directors and officers than those set forth in the
Certificate of Incorporation of the Company on the date of this Agreement, which
provisions shall not be amended, repealed or otherwise modified for a period of
six years after the Effective Time in any manner that would adversely affect the
rights thereunder of individuals who at the Effective Time were directors or
officers of the Company in respect of actions or omissions occurring at or prior
to the Effective Time (including, without limitation, the transactions
contemplated by this Agreement), unless such modification is required by Law.
Purchaser shall guarantee the obligations of the Surviving Corporation under
this Section 7.9(a).
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(b) Purchaser shall cause the Surviving Corporation to use its
reasonable best efforts to maintain in effect for six years from the Effective
Time, if available, the coverage provided by the current directors' and
officers' liability insurance policies maintained by the Company (provided that
the Surviving Corporation may substitute therefor policies of at least the same
coverage containing terms and conditions which are not materially less
favorable) with respect to matters occurring prior to the Effective Time;
provided, however, that nothing contained herein shall require the Surviving
Corporation to incur any annual premium in excess of 200% of the last annual
aggregate premium paid prior to the date of this Agreement for all current
directors' and officers' liability insurance policies maintained by the Company
which the Company represents and warrants to be $150,000 (the "Current
Premium"). If such premiums for such insurance would at any time exceed 200% of
the Current Premium, then the Surviving Corporation shall cause to be maintained
policies of insurance which, in the Surviving Corporation's good faith
determination, provide the maximum coverage available at an annual premium equal
to 200% of the Current Premium.
(c) This Section 7.9 shall survive the Effective Time, and is
intended to be for the benefit of, and shall be enforceable by, the Indemnified
Parties and shall be binding on Purchaser and Purchaser Sub and the Surviving
Corporation and their respective successors and assigns.
7.10. Takeover Statute. If any "fair price", "moratorium", "control
share acquisition" or other form of anti-takeover statute or regulation is or
shall become applicable to the transactions contemplated hereby, the Company and
the members of the Board of Directors of the Company shall grant such approvals
and take such actions as are necessary so that the transactions contemplated
hereby may be consummated as promptly as practicable on the terms contemplated
hereby and otherwise act to eliminate or minimize the effects of such statute or
regulation on the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO THE MERGER
8.1. Conditions to Each Party's Obligation to Effect the Merger. The
respective obligation of each party to effect the Merger shall be subject to the
satisfaction or waiver, where permissible, prior to the Effective Time, of the
following conditions:
(a) Stockholder Approval. If approval of the Merger by the
holders of Shares is required by applicable law, the Merger shall have been
approved by the requisite vote of such holders;
(b) No Injunctions; Laws. No injunction or other order shall
have been issued or any law enacted which prohibits the consummation of the
Merger or makes such consummation
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<PAGE> 28
illegal; provided, however, that prior to either party invoking this provision,
such party shall have used its reasonable best efforts to have any such
injunction lifted; and
(c) Governmental and Regulatory Consents. The waiting period
applicable to the consummation of the Merger under the HSR Act shall have
expired or been terminated and all consents, approvals and authorizations
required to be obtained prior to the Effective Time by the Company from any
Governmental Entity in connection with the execution and delivery of this
Agreement by the Company and the consummation of the transactions contemplated
hereby by the Company, Purchaser and Purchaser Sub shall have been made or
obtained (as the case may be) except where the failure to obtain the same would
not have a Company Material Adverse Effect.
ARTICLE IX
TERMINATION
9.1. Termination by Mutual Consent. This Agreement may be terminated
and the Merger may be abandoned at any time prior to the Effective Time, before
or after the approval by holders of Shares, by the mutual consent of Purchaser
and the Company, by action of their respective Boards of Directors.
9.2. Termination by either Purchaser or the Company. This Agreement may
be terminated and the Merger may be abandoned by action of the Board of
Directors of either Purchaser or the Company if, (a) without fault of the
terminating party, the Merger shall not have been consummated by June 30, 1997
whether or not such date is before or after the approval by holders of Shares;
and (b) by Purchaser or the Company if any court of competent jurisdiction or
other governmental body located or having jurisdiction within the United States
or any country or economic region in which the Company or any of its
subsidiaries or Purchaser or any of its affiliates, directly or indirectly, has
material assets or operations, shall have issued an order, decree or ruling or
taken any other action restraining, enjoining or otherwise prohibiting the Offer
or the Merger and such order, decree, ruling or other action shall have become
final and non-appealable.
9.3. Termination by Purchaser. Until any Shares have been purchased
pursuant to the Offer, this Agreement may be terminated and the Merger may be
abandoned prior to the Effective Time, before or after the approval by holders
of Shares, by action of the Board of Directors of Purchaser, if (x) the Company
shall have failed to comply in any material respect with the covenants or
agreements contained in this Agreement to be complied with or performed by the
Company at or prior to such date of termination and, with respect to any such
failure that can be remedied, the failure is not remedied within fifteen days
after Purchaser has furnished the Company with written notice of such failure,
or (y) the Board of Directors of the Company shall have withdrawn or modified in
a manner materially adverse to Purchaser or Purchaser Sub its approval or
recommendation of the Offer, this Agreement or the Merger or shall have resolved
to do any of the foregoing.
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<PAGE> 29
9.4. Termination by the Company. This Agreement may be terminated and
the Merger may be abandoned prior to the Effective Time, before or after the
approval by holders of Shares by action of the Board of Directors of the
Company, if Purchaser or Purchaser Sub (or another Purchaser Company) (i) shall
have failed to comply in any material respect with the covenants or agreements
contained in this Agreement to be complied with or performed by Purchaser or
Purchaser Sub at or prior to such date of termination and, with respect to any
such failure that can be remedied, the failure is not remedied within fifteen
days after the Company has furnished Purchaser with written notice of such
failure, (ii) shall have failed to commence the Offer within the time required
in Section 1.1 or (iii) shall have terminated or withdrawn the Offer or amended
the Offer in any manner not expressly permitted by this Agreement.
9.5. Termination in the Event of an Alternative Transaction. This
Agreement may be terminated and the Merger abandoned prior to the Effective
Time:
(a) By either Purchaser or the Company, if that entity is not
material breach of any of the terms of this Agreement, not sooner than the third
business day after the Company's notice to the Purchaser (or Purchaser's
becoming aware) that the Company has entered into an agreement providing for an
Alternative Transaction; or
(b) By Parent, if the Board of Directors of the Company shall
have withdrawn or modified in any manner adverse to Purchaser or Purchaser Sub
its approval of the Offer, this Agreement and the Merger or its recommendation
that the Company's stockholders accept the Offer.
9.6. Effect of Termination and Abandonment.
(a) In the event of termination and abandonment of this
Agreement pursuant to Section 9.1, 9.2, 9.3 or 9.4, this Agreement shall
forthwith become void and have no further effect, other than the provisions of
Section 1.1(c), this Section 9.6 and Section 10.1. No such termination and
abandonment and nothing contained in this Section 9.6, shall relieve any party
from liability for any breach of this Agreement.
(b) If this Agreement is terminated pursuant to Section 9.5,
the Company shall pay Purchaser a non-refundable fee of $5,000,000, which amount
shall be paid by wire transfer of immediately available funds within two
business days after the date this Agreement is so terminated.
(c) If this Agreement is terminated after the commencement of
the Offer as a result of the Company's failure to provide Audited Fiscal 1996
Financial Statements meeting the standards set forth in the final sentence of
Section 6.1(f)(B) prior to the termination of the Offer (except where such
failure to meet such standards results solely from facts or circumstances
arising after October 31, 1996 reflected in the Audited Fiscal 1996 Financial
Statements in a manner that results in a difference from the information
referred to in said Section 6.1(f)(B) that
29
<PAGE> 30
constitutes a Company Material Adverse Effect), the Company shall pay Purchaser
a non-refundable fee of $75,000, which amount shall be paid by wire transfer of
immediately available funds within two business days after the date this
Agreement is so terminated.
ARTICLE X
MISCELLANEOUS AND GENERAL
10.1. Payment of Expenses. Subject to Section 9.6, whether or not the
Merger shall be consummated, each party hereto shall pay its own expenses
incident to preparing for, entering into and carrying out this Agreement and the
consummation of the Merger.
10.2. Survival. Except for Sections 7.8, 7.9, 9.6 and 10.1 and the
confidentiality obligations pursuant to Section 1.1(c), the representations,
warranties, agreements and covenants in this Agreement shall not survive the
consummation of the Merger or the termination of this Agreement.
10.3. Modification or Amendment. Subject to the applicable provisions
of the DGCL, at any time prior to the Effective Time, the parties hereto may
modify or amend this Agreement, by written agreement executed and delivered by
duly authorized officers of the respective parties.
10.4. Waiver of Conditions. The conditions to each of the parties'
obligations to consummate the Merger are for the sole benefit of such party and
may be waived by such party in whole or in part to the extent permitted by
applicable law.
10.5. Counterparts. For the convenience of the parties hereto, this
Agreement may be executed in any number of counterparts, each such counterpart
being deemed to be an original instrument, and all such counterparts shall
together constitute the same agreement.
10.6. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware, without giving effect to
the rules of such state respecting conflicts of laws.
10.7. Notices. All notices and other communications given or made
pursuant hereto shall be in writing and shall be deemed to have been duly given
or made as of the date delivered, mailed or transmitted, and shall be effective
upon receipt, if delivered personally, mailed by registered or certified mail
(postage prepaid, return receipt requested) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
changes of address) or sent by electronic transmission (provided that a
confirmation copy is sent by another approved means) to the telecopier number
specified below:
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(a) If to Purchaser or to Purchaser Sub:
Millipore Corporation
80 Ashby Road
Bedford, Massachusetts 01730
Attention: Geoffrey Nunes
Telephone No.: (617) 533-2209
Telecopier No.: (617) 533-3162
with a copy to:
David B. Walek
Ropes & Gray
One International Plaza
Boston, Massachusetts 02110
Telephone No.: (617) 951-7388
Telecopier No.: (617) 951-7050
(b) If to the Company:
Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
Attention: Chief Financial Officer
Telephone No.: (619) 618-1990
Telecopier No.: (619) 618-1992
with a copy to:
Cooley Godward Castro Huddleson & Tatum
4365 Executive Drive, Suite 1100
San Diego, California 92121-2128
Attention: D. Bradley Peck
Telephone No.: (619) 550-6000
Telecopier No.: (619) 453-3355
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<PAGE> 32
and
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Arthur Fleischer, Jr.
Telephone No.: (212) 859-8120
Telecopier No.: (212) 859-4000
and
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, California 90071
Attention: Edward S. Rosenthal
Telephone No.: (213) 473-2001
Telecopier No.: (213) 473-2222
10.8. Entire Agreement, etc. This Agreement together with the
Disclosure Schedules and any exhibits or Annexes hereto and the Confidentiality
Agreement (a) constitutes the entire agreement, and supersedes all other prior
agreements, understandings, representations and warranties both written and
oral, among the parties, with respect to the subject matter hereof, and (b)
shall not be assignable by operation of law or otherwise and is not intended to
create any obligations to, or rights in respect of, any persons other than the
parties hereto; provided, however, that Purchaser may designate, by written
notice to the Company, another wholly-owned direct or indirect subsidiary to be
a Constituent Corporation in lieu of Purchaser Sub, in the event of which, all
references herein to Purchaser Sub shall be deemed references to such other
subsidiary except that all representations and warranties made herein with
respect to Purchaser Sub as of the date of this Agreement shall be deemed
representations and warranties made with respect to such other subsidiary as of
the date of such designation.
10.9 Definition of "Affiliate" and "Associate". For purposes of this
Agreement, "Affiliate" and "Associate" shall have the respective meanings
ascribed to such terms in Rule 12b-2 under the Exchange Act as in effect on the
date of this Agreement (the term "registrant" in said Rule 12b-2 meaning in this
case the Company).
10.10. Definition of "Company Material Adverse Effect". For purposes of
this Agreement, "Company Material Adverse Effect" shall mean any material
adverse effect on the financial condition, properties, businesses or results of
operations of the Company and its subsidiaries taken as a whole.
10.11. Definition of "Continuing Director". For purposes of this
Agreement "Continuing Director" means any member of the Board of Directors of
the Company, while such person is a member of the Board of Directors of the
Company, who is not an Affiliate or Associate or
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<PAGE> 33
representative of the Purchaser or Purchaser Sub and was a member of the Board
of Directors of the Company prior to the date of this Agreement, and any
successor of a Continuing Director while such successor is a member of the Board
of Directors of the Company, who is not an Affiliate or Associate or
representative of the Purchaser or Purchaser Sub and is recommended or elected
to succeed the Continuing Director by a majority of Continuing Directors.
10.12. Definition of "Purchaser Material Adverse Effect". For purposes
of this Agreement, "Purchaser Material Adverse Effect" shall mean any material
adverse effect on the financial conditions properties, businesses or results of
operations of the Purchaser and its subsidiaries taken as a whole.
10.13. Definition of "subsidiary". When a reference is made in this
Agreement to a subsidiary of a party, the word "subsidiary" means any
corporation or other organization whether incorporated or unincorporated of
which at least a majority of the securities or interests having by the terms
thereof ordinary voting power to elect at least a majority of the board of
directors or others performing similar functions with respect to such
corporation or other organization is directly or indirectly owned or controlled
by such party or by any one or more of its subsidiaries, or by such party and
one or more of its subsidiaries.
10.14. Obligation of Purchaser. Whenever this Agreement requires
Purchaser Sub to take any action, such requirement shall be deemed also to
include an undertaking on the part of Purchaser to cause Purchaser Sub to take
such action.
10.15. Captions. The Article, Section and paragraph captions herein are
for convenience of reference only, do not constitute part of this Agreement and
shall not be deemed to limit or otherwise affect any of the provisions hereof.
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<PAGE> 34
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officers of the parties hereto on the date first
hereinabove written.
MILLIPORE CORPORATION
By: /s/ Geoffrey Nunes
----------------------------------
Name: Geoffrey Nunes
Title: Senior Vice President
MCTG ACQUISITION CORP.
By: /s/ Geoffrey Nunes
---------------------------------
Name: Geoffrey Nunes
Title: Senior Vice President
TYLAN GENERAL, INC.
By: /s/ David J. Ferran
---------------------------------
Name: David J. Ferran
Title: President and Chief
Executive Officer
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Annex A
Certain Conditions of the Offer. Notwithstanding any other provision of
the Offer and provided that Purchaser Sub shall not be obligated to accept for
payment any Shares until expiration of all applicable waiting periods under the
HSR Act, Purchaser Sub shall not be required to accept for payment or, subject
to any applicable rules and regulations of the Commission, including Rule
14e-1(c) promulgated under the Exchange Act (relating to the Purchaser's
obligation to pay for or return tendered Shares promptly after termination or
withdrawal of the Offer), pay for, or may delay the acceptance for payment of or
payment for, any tendered Shares, or may, in its sole discretion, terminate or
amend the Offer as to any Shares not then paid for if a majority of the total
Shares outstanding on a fully diluted basis and as will permit Purchaser Sub to
effect the Merger without the vote of any person other than Purchaser Sub shall
not have been properly and validly tendered pursuant to the Offer and not
withdrawn prior to the expiration of the Offer (the "Minimum Condition"), or, if
on or after the date of the Agreement, and at or before the time of payment for
any of such Shares (whether or not any of such Shares have theretofore been
accepted for payment), any of the following events shall occur:
(a) there shall have occurred (i) any general suspension of,
or limitation on trading in securities on the NYSE or in the over-the-counter
market (other than a shortening of trading hours or any coordinated trading halt
triggered solely as a result of a specified increase or decrease in a market
index), (ii) a declaration of a banking moratorium or any suspension of payments
in respect of banks in the United States or (iii) a commencement of a war or
armed hostilities involving the United States and continuing for at least three
business days and which has a Company Material Adverse Effect;
(b) the Company shall have breached or failed to perform in
any material respect its obligations, covenants or agreements under the
Agreement and, with respect to any such failure that can be remedied, the
failure is not remedied on or before the Closing Date, or any representation or
warranty of the Company set forth in the Agreement shall have been inaccurate or
incomplete in any respect except as would not have a Company Material Adverse
Effect;
(c) there shall be instituted or pending any action,
litigation, proceeding, investigation or other application (hereinafter, an
"Action") before any court of competent jurisdiction or other governmental
entity by any governmental entity that is reasonably likely to: (i) result in a
restriction or prohibition on the consummation of the transactions contemplated
by the Offer or the Merger; (ii) prohibit, or impose any material limitations on
Purchaser's or Purchaser Sub's ownership or operation of all or a material
portion of their or the Company's
A-1
<PAGE> 36
business or assets, or to compel Purchaser or Purchaser Sub to dispose of or
hold separate all or a material portion of Purchaser's or Purchaser Sub's or the
Company's business or assets; (iii) make the acceptance for payment of, purchase
of, or payment for, some or all of the Shares illegal or rendering Purchaser or
Purchaser Sub unable to, or restricting or prohibiting, the ability of Purchaser
or Purchaser Sub to accept for payment, purchase or pay for some or all of the
Shares; or (iv) impose material limitations on the ability of Purchaser or
Purchaser Sub effectively to acquire or hold or to exercise full rights of
ownership of the Shares including, without limitation, the right to vote the
Shares purchased by them on an equal basis with all other Shares on all matters
properly presented to the stockholders of the Company;
(d) any statute, rule, regulation, order or injunction shall
be enacted, promulgated, entered, enforced or deemed to or become applicable to
the Offer or the Merger that results in any of the consequences referred to in
clauses (i) through (iv) of paragraph (c) above;
(e) any person, entity or group shall have entered into a
definitive agreement or an agreement in principle with the Company with respect
to a tender offer or exchange offer for some portion or all of the Shares or a
merger, consolidation or other business combination with or involving the
Company;
(f) the Board of Directors of the Company shall have withdrawn
or amended, or modified in a manner materially adverse to the Purchaser or
Purchaser Sub, its recommendation of the Offer or the Merger, or shall have
approved or recommended any other Acquisition Proposal; or
(g) the Merger Agreement shall have been terminated by the
Company or Purchaser or Purchaser Sub in accordance with its terms or Purchaser
or Purchaser Sub shall have reached an agreement or understanding in writing
with the Company providing for termination or amendment of the Offer or delay in
payment for the Shares;
A-2
<PAGE> 1
Exhibit 99.12
VOTING AND SECURITIES PURCHASE AGREEMENT
THIS VOTING, OPTION AND SECURITIES PURCHASE AGREEMENT (the "Agreement")
is dated as of December 16, 1996, by and among each of the undersigned
securityholders (individually, a "Securityholder" and collectively, the
"Securityholders") of Tylan General, Inc., a Delaware corporation (the
"Company"), Millipore Corporation, a Massachusetts corporation ("Acquiror
Parent"), and MCTG Acquisition Corp., a Delaware corporation and wholly-owned
subsidiary of Acquiror Parent ("Acquiror").
RECITALS
A. Each Securityholder is the beneficial and record owner of the number
of shares, if any, of common stock, par value $.001 per share, of the Company
("Company Common Stock") set forth opposite such Securityholders' name on
Schedule A hereto.
B. Each Securityholder is the beneficial and record owner of such
options exercisable for Company Common Stock ("Company Option Securities"), if
any, (which under existing circumstances may be exercised for the number of
shares of Company Common Stock set forth opposite each such Securityholders'
name on Schedule A hereto) set forth opposite such Securityholder's name on
Schedule A hereto.
C. Acquiror, Acquiror Parent and the Company have concurrently herewith
entered into an Agreement and Plan of Merger (the "Merger Agreement"), pursuant
to which (i) Acquiror has agreed to make a cash tender offer (the "Offer") to
acquire all the issued and outstanding shares of Company Common Stock at $16.00
per share (the "Per Share Amount") and (ii) Acquiror will then be merged with
and into Company (the "Merger"), with the Company continuing as the surviving
corporation.
D. In consideration for the agreements contained herein, prior to the
date hereof, and prior to the time at and date on which Acquiror Parent or
Acquiror became an "interested stockholder" for purposes of Section 203 of the
DGCL, the board of directors of the Company has approved the agreements of the
Securityholders provided in this Agreement.
E. In order to induce Acquiror Parent and Acquiror to enter into the
Merger Agreement and to commence the Offer, the Securityholders wish to make
certain representations, warranties, covenants and agreements in connection with
the Offer and the Merger.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
<PAGE> 2
ARTICLE I
1.1. Definitions. Capitalized terms used herein (including in the
recitals) but not otherwise defined herein shall have the respective meanings
ascribed thereto in the Merger Agreement. The following terms shall have the
following meanings:
"beneficially own" shall have the meaning set forth in Rule
13d-3 under the Securities Exchange Act of 1934, as amended.
"Representatives" shall have the meaning set forth in Section
3.4.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
OF THE SECURITYHOLDERS
2.1. Representations and Warranties of the Securityholders. Each
Securityholder represents and warrants, severally but not jointly, to Acquiror
Parent and Acquiror as follows:
(a) Ownership of Company Securities. Such Securityholder is
the beneficial owner of the shares of the Company Common Stock and/or
Company Option Securities set forth opposite such Securityholder's name
on Schedule A, free and clear of all Encumbrances. There are no rights,
agreements, arrangements or commitments of any character to which such
Securityholder is a party relating to the pledge, disposition or voting
of any shares of capital stock of Company or any of its Subsidiaries
that are owned by such Securityholder or which may be issued to such
Securityholder upon exercise of Company Option Securities, and there
are no voting trusts or voting agreements with respect to any of such
shares or securities. The shares of Company Common Stock and Company
Option Securities set forth opposite such Securityholder's name on
Schedule A constitute all of the outstanding shares of capital stock of
Company and all Company Option Securities owned beneficially or of
record by such Securityholder and, except as disclosed in Schedule A,
such Securityholder does not own beneficially or of record any other
capital stock of Company or Company Option Securities.
(b) Authority to Execute and Perform Agreements. Such
Securityholder has the full legal right and power and all authority
required to enter into, execute and deliver this Agreement and to
perform fully such Securityholder's obligations hereunder. The
execution and delivery of this Agreement by such Securityholder have
been duly authorized by all requisite organizational action, if any, on
the part of such Securityholder. This Agreement has been duly executed
and delivered and constitutes the legal, valid and binding obligation
of such Securityholder enforceable against such
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<PAGE> 3
Securityholder in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now
or hereafter in effect generally affecting creditors' rights or by
general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(c) No Conflicts; Consents.
(i) The execution and delivery by such Securityholder
of this Agreement do not, and the consummation of the
transactions contemplated hereby will not, (A) conflict with
or result in any violation of or default (with or without
notice or lapse of time or both) under (I) the charter,
by-laws or similar documents of such Securityholder, (II) any
contractual obligation of such Securityholder, (III) any law,
regulation, ruling, decree or order applicable to such
Securityholder or (B) create or give rise to any Encumbrance
on any of the shares of Company Common Stock or Company Option
Securities set forth opposite such Securityholder's name on
Schedule A.
(ii) No governmental authorizations, consents,
approvals or filings are required to be obtained or made by
such Securityholder in connection with the execution and
delivery by such Securityholder of this Agreement or the
consummation of the transactions contemplated hereby (other
than clearance under the Hart-Scott-Rodino Antitrust
Improvement Act of 1976, if required).
(d) Information Supplied. None of the information specifically
supplied or to be supplied by such Securityholder with respect to such
Securityholder for inclusion or incorporation by reference in the Offer
Documents or Schedule 14D-9 will, at the date such documents are filed
with the Commission or are first published, sent or given to the
stockholders of Company, 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 were made, not misleading.
2.2. Representations and Warranties of Acquiror Parent and Acquiror.
Each of Acquiror Parent and Acquiror represents and warrants to the
Securityholders:
(a) Authority to Execute and Perform Agreements. Each of
Acquiror Parent and Acquiror has the full legal right and power and all
authority required to enter into, execute and deliver this Agreement
and to perform fully their obligations hereunder. The execution and
delivery of this Agreement by Acquiror Parent and Acquiror has been
duly authorized by all requisite organizational action, if any, on the
part of each of Acquiror Parent and Acquiror. This Agreement has been
duly executed and delivered and constitutes the legal, valid and
binding obligation of each of
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<PAGE> 4
Acquiror Parent and Acquiror enforceable against each of Acquiror
Parent's and Acquiror in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or similar laws now
or hereafter in effect generally affecting creditors' rights or by
general principles of equity, regardless of whether such enforceability
is considered in a proceeding in equity or at law.
(b) No Conflicts; Consents.
(i) The execution and delivery by each of Acquiror
Parent and Acquiror of this Agreement do not, and the
consummation of the transactions contemplated hereby and by
the Merger Agreement will not, conflict with or result in any
violation of or default (with or without notice or lapse of
time or both) under (A) the charter, by-laws or similar
documents of such person, (B) and contractual obligation of
such person or (C) any law, regulation, ruling, decree or
order applicable to such Securityholder.
(ii) No governmental authorizations, consents,
approvals or filings are required to be obtained or made by
such Securityholder of this Agreement or the consummation of
the transactions contemplated hereby or by the Merger
Agreement (other than clearance under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, if required).
ARTICLE III
COVENANTS
3.1. No Disposition of Securities. Each Securityholder agrees that such
Securityholder shall not, except pursuant to the Merger Agreement or this
Agreement, sell, transfer, pledge, hypothecate, encumber or otherwise dispose
of, or enter into any contract, option or other arrangement or understanding
with respect to the sale, transfer, pledge, hypothecation, encumbrance or other
disposition of, any of or any interest in any of the shares of Company Common
Stock or Company Option Securities, or shares of Company Common Stock issuable
upon exercise of any such Company Option Securities, set forth opposite such
Securityholder's name on Schedule A. Each Securityholder agrees that (a)
promptly after the date hereof, the certificates representing the shares of
Company Common Stock and Company Option Securities owned by such Securityholder
shall bear a legend indicating that such shares or securities, as the case may
be, are subject to this Agreement, which legend may be removed upon termination
of this Agreement, (b) any attempted or purported transfer of Company Common
Stock or Company Option Securities in violation of this Section 3.1 shall be
null and void and without effect, and (c) Company shall not be required to enter
in its stock or other records, or reflect, recognize or give effect to for any
purpose, any transfer of securities of
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Company in violation of this Agreement. Nothing in this Agreement shall restrict
exercise by any Securityholder of any option exercisable for Company Option
Securities; provided that all securities issued pursuant to any such exercise
shall be treated as Company Common Stock for all purposes under this Agreement.
3.2. Voting Arrangements. Each Securityholder agrees that, except
pursuant to this Agreement, it shall not grant any proxies, deposit any shares
of Company Common Stock into a voting trust or enter into any voting agreement
with respect to any shares of Company Common Stock now owned beneficially or of
record by such Securityholder, other than proxies to vote such shares at any
annual or special meeting of stockholders of Company on matters unrelated to the
matters set forth in Section 4.1 hereof.
3.3. Satisfaction of Conditions to the Offer and the Merger. Each
Securityholder agrees that, subject to the fiduciary duty of any Securityholder
serving as a director or officer of Company, such Securityholder, in its
capacity as such, shall assist and cooperate with the parties to the Merger
Agreement in doing all things necessary, proper or advisable under applicable
laws as promptly as practicable to consummate and make effective the Offer and
the Merger and the other transactions contemplated by the Merger Agreement. Each
Securityholder agrees that such Securityholder shall not take any action that
would or is reasonably likely to result in any of its representations and
warranties set forth in this Agreement being untrue as of the date made.
3.4. No Solicitation. Each Securityholder agrees that such
Securityholder shall not, nor shall it authorize or permit any of its partners,
officers, affiliates, employees, agents, investment bankers, attorneys,
financial advisors or other representatives (collectively, "Representatives")
to, directly or indirectly, solicit, initiate or continue or encourage
(including by way of furnishing information or assistance) or take other action
to facilitate any inquiries or the making of any proposal that constitutes or
may reasonably be expected to lead to, an Acquisition Proposal or an Alternative
Transaction from any Person other than Acquiror Parent and Acquiror, or engage
in any discussions or negotiations relating thereto or in furtherance thereof or
accept or enter into any agreement with respect to any Acquisition Proposal;
provided, however, that notwithstanding any other provision of this Agreement,
if such Securityholder is a director or officer of Company, such Securityholder
may take any action, including casting a vote or signing a written consent, in
such Person's capacity as a director or officer that the Board of Directors and
officers of Company would be permitted to take in accordance with Section 7.2 of
the Merger Agreement. Subject to the foregoing, such Securityholder shall
immediately cease and cause to be terminated any existing solicitation,
initiation, encouragement, activity, discussion or negotiation with any parties
conducted heretofore by such Securityholder or any of its Representatives with
respect to any of the foregoing.
3.5. Tender. Each Securityholder hereby agrees to validly tender (and
not withdraw) pursuant to and in accordance with the terms of the Offer, no
later than the tenth
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Business Day after commencement of the Offer pursuant to Section 1.1 of the
Merger Agreement and Rule 14d-2 under the Exchange Act, all shares of Company
Common Stock set forth opposite such Securityholder's name on Schedule A hereto.
Each Securityholder hereby acknowledges and agrees that the obligation of
Acquiror to accept for payment and pay for shares of Company Common Stock in the
Offer, including the shares of Company Common Stock owned by such
Securityholder, is subject to the terms and conditions of the Offer.
ARTICLE IV
PROXY;
WAIVER OF RIGHTS
4.1. Proxy. (a) Each Securityholder hereby agrees that, during the term
of this Agreement, at any meeting of the stockholders of Company, however
called, and at every adjournment thereof, and in any action by written consent
of the stockholders of Company, to (i) vote all of the shares of Company Common
Stock then owned by such Securityholder in favor of the adoption of the Merger
Agreement as in effect on the date hereof (as the Merger Agreement may be
amended (A) as contemplated by Section 10.3 of the Merger Agreement or (B) with
the consent of such Securityholder) and each of the other transactions
contemplated thereby and any action required in furtherance thereof, (ii) vote
such shares against any action or agreement that would result in a breach in any
material respect of any covenant, representation or warranty or any other
obligation of Company under the Merger Agreement, and (iii) vote such shares
against any Acquisition Proposal, Alternative Transaction or any other action or
agreement that, directly or indirectly, is inconsistent with or that would, or
is reasonably likely to, directly or indirectly, impede, interfere with or
attempt to discourage the Offer or the Merger or any other transaction
contemplated by the Merger Agreement, including but not limited to (I) any
extraordinary corporate transaction (other than the Offer and the Merger on the
terms set forth in the Merger Agreement), such as a merger, consolidation,
business combination, reorganization, recapitalization or liquidation involving
Company or any of its Subsidiaries, (II) a sale or transfer of a material amount
of assets of Company or any of its Subsidiaries, (III) any redemption of
securities of Company or any of its Subsidiaries, or (IV) any material change in
Company's capitalization, corporate structure or business; provided, however,
that, if such Securityholder is a director or officer of Company, nothing herein
shall be construed to obligate such Securityholder to act, in such
Securityholder's capacity as a director or officer, in any manner which
conflicts with such Person's fiduciary duties as a director or officer of
Company.
(b) In furtherance of the foregoing, (i) each Securityholder
hereby appoints Acquiror Parent and the officer of Acquiror Parent, and each of
them, with full power or substitution in the premises, its proxies to vote all
such Securityholder's shares of Company Common Stock now or hereafter owned
beneficially or of record by such Securityholder at any meeting, general or
special, of the stockholders of Company, and to execute one or more
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<PAGE> 7
written consents or other instruments from time to time in order to take such
action without the necessity of a meeting of the stockholders of Company, in
accordance with the provisions of the preceding paragraph and (ii) Acquiror
Parent hereby agrees to vote such shares or execute written consents or other
instruments in accordance with the provisions of the preceding paragraph.
(c) The proxy and power of attorney granted herein shall be
irrevocable during the term of this Agreement, shall be deemed to be coupled
with an interest and shall revoke all prior proxies granted by such
Securityholder. Such Securityholder shall not grant any proxy to any person
which conflicts with the proxy granted herein, and any attempt to do so shall be
void. The power of attorney granted herein is a durable power of attorney and
shall survive the disability or incompetence of such Securityholder.
4.2. Waiver of Appraisal Rights. Each Securityholder hereby waives its
rights to appraisal under Section 262 of the Delaware General Corporation Law
with respect to any shares of Company Common Stock owned by it or issuable to it
in connection with the transactions contemplated by the Merger Agreement.
4.3. Waiver of Certain Rights. Each Securityholder hereby waives and
agrees not to assert any claims or rights it may have against any director of
Company in respect of approval or adoption of the Merger Agreement or the
consummation of the Offer or the Merger or the other transactions contemplated
thereby.
ARTICLE V
MISCELLANEOUS
5.1. Termination. This Agreement shall terminate upon the earlier to
occur of (a) the mutual consent of Acquiror Parent, Acquiror and each of the
Securityholders, (b) the termination of the Merger Agreement and (c) the
Effective Time of the Merger.
5.2. Amendment. This Agreement may be amended only by a written
instrument executed by the parties or their respective successors or assigns.
5.3. Notices. All notices, requests, claims, demands and other
communications hereunder shall be in writing and shall be given (and shall be
deemed to have been duly given upon receipt) by delivery in person, by cable,
facsimile, telegram or telex or by registered or certified mail (postage
prepaid, return receipt requested) to the respective parties at the following
addresses (or at such other address for a party as shall be specified in a
notice given in accordance with this Section 6.3):
If to Acquiror Parent or Acquiror, at the addresses and to the
Persons (including the copies) set forth in the Merger
Agreement; and
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If to any of the Securityholders to:
David J. Ferran
Don E. Whitson
c/o Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
350 South Grand Avenue, 32nd Floor
Los Angeles, California 90071
Attention: Edward S. Rosenthal
and
Cooley Goodward LLP
4365 Executive Drive
Suite 1100
San Diego, California 92121
Attention: Brad Peck
5.4. Counterparts. This Agreement may be executed in one or more
counterparts and each counterpart shall be deemed to be an original, but all of
which shall constitute one and the same original.
5.5. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware without reference to
choice of law principles, including all matters of construction, validity and
performance.
5.6. Severability; Enforcement. The invalidity of any portion hereof
shall not affect the validity, force or effect of the remaining portions hereof.
If it is ever held that any restriction hereunder is too broad to permit
enforcement of such restriction to its fullest extent, each party agrees that a
court of competent jurisdiction may enforce such restriction to the maximum
extent permitted by law, and each party hereby consents and agrees that such
scope may be judicially modified accordingly in any proceeding brought to
enforce such restriction.
5.7. Further Assurances. Each party hereto shall execute and deliver
such additional documents as may be necessary or desirable to consummate the
transactions contemplated by this Agreement.
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5.8. Parties in Interest; Assignment. Neither this Agreement nor any of
the rights, interest or obligations hereunder shall be assigned by any of the
parties hereto without the prior written consent of the other parties; provided,
however, that the Acquiror may assign the Option to an Affiliate.
5.9. Entire Agreement. This Agreement and the Merger Agreement contain
the entire understanding of the parties hereto and thereto with respect to the
subject matter contained herein and therein, and supersede and cancel all prior
agreements, negotiations, correspondence, undertakings and communications of the
parties, oral or written, respecting such subject matter. There are no
restrictions, promises, representations, warranties, agreements or undertakings
of any party hereto or to the Merger Agreement with respect to the transactions
contemplated by this Agreement and the Merger Agreement other than those set
forth herein or therein or made hereunder or thereunder.
5.10. Specific Performance. The parties hereto agree that the remedy at
law for any breach of this Agreement will be inadequate and that any party by
whom this Agreement is enforceable shall be entitled to specific performance or
injunctive relief in addition to any other appropriate relief or remedy. Such
party may, in its sole discretion, apply to a court of competent jurisdiction
for specific performance or injunctive relief or such other relief as such court
may deemed just and proper in order to enforce this Agreement or prevent any
violation hereof and, to the extent permitted by applicable law, each party
waives any objection to the imposition of such relief or any requirement for the
posting of a bond or other collateral in connection therewith.
5.11. Headings; References. The section and paragraph headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. All references
herein to "Sections" or "Exhibits" shall be deemed to be references to Articles
or Sections hereof or Exhibits hereto unless otherwise indicated.
[remainder of page intentionally left blank]
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IN WITNESS WHEREOF, each of the parties hereto has caused this
Agreement to be duly executed and delivered as of the day and year first above
written.
MILLIPORE CORPORATION
By: /s/ Geoffrey Nunes
-------------------------------------
Name: Geoffrey Nunes
Title: Senior Vice President
MCTG ACQUISITION CORP.
By: /s/ Geoffrey Nunes
-------------------------------------
Name: Geoffrey Nunes
Title: Senior Vice President
SECURITYHOLDERS:
/s/ Don E. Whitson
----------------------------------------
Don E. Whitson
/s/ David J. Ferran
----------------------------------------
David J. Ferran
/s/ Timothy Brown
----------------------------------------
Timothy Brown
/s/ Robert J. Ferran
----------------------------------------
Robert J. Ferran
/s/ Dianne Ferran
----------------------------------------
Dianne Ferran
/s/ Dr. William B. and Mrs. Karen L.
Hawthorne
----------------------------------------
Dr. William B. and Mrs. Karen L.
Hawthorne
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<PAGE> 11
/s/ Ruth Ferran
________________________________________
Ruth Ferran
/s/ Leo Whitson
________________________________________
Leo Whitson
/s/ Marguerite Whitson
________________________________________
Marguerite Whitson
Tylan General, Inc., a Delaware corporation ("Company") hereby consents
to the foregoing Voting and Securities Purchase Agreement and hereby agrees that
it will not enter in its stock or other records, or reflect, recognize or give
effect to for any purpose, any transfer of securities of Company in violation of
Section 3.1 of the foregoing Voting, Option and Securities Purchase Agreement.
Company hereby waives any and all transfer restrictions applicable to any and
all Company Common Stock and Company Option Securities held by any of the
Securityholders in connection with the transfer thereof to Acquiror Parent or
Acquiror pursuant to the Option (as defined in the foregoing Voting, Option and
Securities Purchase Agreement).
TYLAN GENERAL, INC.
By: /s/ David J. Ferran
_____________________________________
Name: David J. Ferran
Title: President and Chief Executive
Officer
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Schedule A
<TABLE>
<CAPTION>
Company Company
Name of Securityholder Common Shares Option Securities
- ---------------------- ------------- -----------------
<S> <C> <C>
</TABLE>
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<PAGE> 1
EXHIBIT 99.13
[MILLIPORE LETTERHEAD]
December 16, 1996
Mr. David J. Ferran
Tylan General, Inc.
15330 Avenue of Science
San Diego, CA 92128
Dear David:
In furtherance of our prior discussions, Millipore hereby agrees with
you as follows:
(1) Millipore agrees that in connection with the change in your
position following the consummation of the transaction between Millipore and
Tylan General, Inc., Millipore will pay you one lump sum payment of $851,425.00
and will provide, at Millipore's expense, those medical, dental and
hospitalization benefits set forth in Section 3.1(b)(3), all as set forth in
the Severance Protection Agreement dated 22 July 1996 between you and Tylan
General, Inc.
(2) Further, we hereby confirm that Millipore will accelerate the
vesting schedule of all stock options held by current participants in the Tylan
General stock option plans; and
(3) Millipore hereby agrees simultaneous with the termination of your
employment, that it will enter into a Consulting Agreement with you upon terms
and conditions to be mutually agreed upon by the parties. Such Agreement shall
include the provision that Millipore will pay to you in one lump sum in the
amount of $1,702,850.00 for services rendered under the Agreement upon
termination of that Agreement.
Upon payment of the lump sum set forth in paragraph (1) above and upon
execution of the Consulting Agreement, you agree that any and all prior
agreements relating to your employment or the termination of your employment
that you have previously entered into with Vacuum General, Inc. or Tylan
General, Inc. shall be of no further force and effect.
If you agree to all of the above, please note your acceptance below.
Sincerely, Agreed to and Accepted:
MILLIPORE CORPORATION
/s/ Geoffrey Nunes /s/ David J. Ferran
- ---------------------- ------------------------------
Geoffrey Nunes David J. Ferran
Senior Vice President
<PAGE> 1
Exhibit 99.14
[LETTERHEAD OF GOLDMAN, SACHS & CO.]
PERSONAL AND CONFIDENTIAL
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December 16, 1996
Board of Directors
Tylan General, Inc.
15330 Avenue of Science
San Diego, California 92128
Gentlemen:
You have requested our opinion as to the fairness to the holders of the
outstanding shares of Common Stock, par value $.001 per share (the "Shares"),
of Tylan General, Inc. (the "Company") of the $16.00 per Share in cash proposed
to be paid by Millipore Corporation ("Millipore") in the Tender Offer and the
Merger (as defined below) pursuant to the Agreement and Plan of Merger dated as
of December 16, 1996 among Millipore, MCTG Acquisition Corp. ("MCTG"), a
wholly-owned subsidiary of Millipore, and the Company (the "Agreement").
The Agreement provides for a tender offer for all of the Shares (the "Tender
Offer") pursuant to which MCTG will pay $16.00 per Share in cash for each Share
accepted. The Agreement further provides that following completion of the
Tender Offer, MCTG will be merged into the Company (the "Merger") and each
outstanding Share (other than Shares already owned by Millipore) will be
converted into the right to receive $16.00 in cash.
Goldman, Sachs & Co., as part of its investment banking business, is
continually engaged in the valuation of businesses and their securities in
connection with mergers and acquisitions, negotiated underwritings, competitive
biddings, secondary distributions of listed and unlisted securities, private
placements and valuations for estate, corporate and other purposes. We are
familiar with the Company having acted as its financial advisor in connection
with, and having participated in certain negotiations leading to, the Agreement.
In connection with this opinion, we have reviewed, among other things, the
Agreement; audited financial statements and other financial data of the Company
for the fiscal years ended October 31, 1993 and October 31, 1994; Annual
Reports to Stockholders and Annual Reports on Form 10-K of the Company for the
fiscal year ended October 31, 1995; certain interim reports to stockholders and
Quarterly Reports on Form 10-Q; certain other communications from the Company
to its stockholders; and certain internal financial analyses and forecasts for
the Company prepared by its management. We also have held discussions with
members of the senior management of the Company regarding its past and current
business operations, financial condition and future prospects. In addition, we
have reviewed the reported price and trading activity for the Shares, compared
certain financial and stock market information for the Company with similar
information for certain other companies the securities of which are publicly
traded, reviewed the financial terms of
<PAGE> 2
Tylan General, Inc.
December 16, 1996
Page Two
certain recent business combinations in the industrial process controls and
semiconductor equipment manufacturing industries and performed such other
studies and analyses as we considered appropriate.
We have relied without independent verification upon the accuracy and
completeness of all of the financial and other information reviewed by us for
purposes of this opinion. For purposes of our analysis, and with your consent,
we have taken into account the risks and uncertainties associated with the
Company achieving management's projections in the amounts and at the times
indicated therein. In addition, we have not made an independent evaluation or
appraisal of the assets and liabilities of the Company or any of its
subsidiaries and we have not been furnished with any such evaluation or
appraisal. Our advisory services and the opinion expressed herein are provided
for the information and assistance of the Board of Directors of the Company in
connection with its consideration of the transaction contemplated by the
Agreement.
Based upon and subject to the foregoing and based upon such other matters as we
consider relevant, it is our opinion that as of the date hereof the $16.00 in
cash to be received by the holders of Shares in the Tender Offer and the
Merger, taken as a unitary transaction, is fair to such holders.
Very truly yours,
/s/ Goldman, Sachs & Co.
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GOLDMAN, SACHS & CO
