EXHIBIT 10.46

 

 

TRANSITION AGREEMENT

by and between

FSI INTERNATIONAL, INC.

and

METRON TECHNOLOGY N.V.

dated as of

OCTOBER 9, 2002

 

 

 

 

 

 

***  TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R. §§ 200.80(b)(4),

200.83 AND 240.24b-2

 

 

 

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TABLE OF CONTENTS

 

 

 

 

 

 

 

 

 

 

 

ARTICLE I DEFINITIONS; INTERPRETATION

 

1.1

 

Terms Defined in this Agreement

 

 

1.2

 

Interpretation

 

 

ARTICLE II PURCHASE OF DISTRIBUTION BUSINESS

 

2.1

 

Sale and Purchase

 

 

2.2

 

Consideration

 

 

2.3

 

Cash Advance; Note and Security Agreement

 

 

2.4

 

Payments on Closing

 

 

2.5

 

Final Purchase Price Payment

 

 

2.6

 

Offset

 

 

2.7

 

Single Payment

 

 

2.8

 

Termination of Distribution Agreements; Effectiveness of Israel Distribution
Agreement

 

 

ARTICLE III REPURCHASE OF INVENTORY AND EQUIPMENT

 

3.1

 

Repurchase of Inventory

 

 

3.2

 

Repurchase of Equipment

 

 

3.3

 

Limitations on Repurchase Obligations

 

 

3.4

 

Returns during Transition Period

 

 

3.5

 

Delivery to FSI

 

 

ARTICLE IV ASSUMPTION OF PURCHASE ORDERS AND AGREEMENTS

 

4.1

 

Purchase Orders for Products

 

 

4.2

 

System Start-Ups

 

 

4.3

 

Purchase Orders for Spare Parts

 

 

4.4

 

Assumption of Service and Support Contracts

 

 

4.5

 

Assumption of Parts and Labor Warranties

 

 

ARTICLE V ACCOUNTS RECEIVABLE AND INVOICES

 

5.1

 

Collection of Accounts Receivable

 

 

5.2

 

Payment of Open Invoices

 

 

ARTICLE VI EMPLOYEES

 

6.1

 

Employees of the Distribution Business

 

 

6.2

 

Metron Responsibilities

 

 

6.3

 

FSI Responsibilities

 

 

6.4

 

Employee Property

 

 

6.5

 

Applicability of Certain Provisions to Employees Located in France

 

 

6.6

 

Non-Solicitation

 

 

ARTICLE VII FACILITIES

 

ARTICLE VIII CLOSING AND CLOSING CONDITIONS

 

8.1

 

Closing

 

 

8.2

 

Metron’s Closing Conditions

 

 

8.3

 

FSI’s Closing Conditions

 

 

8.4

 

Metron Deliveries at Closing

 

 

8.5

 

FSI Deliveries at Closing

 

 

8.6

 

Efforts to Close

 

 

8.7

 

Failure to Close

 

 

 

 

 

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ARTICLE IX REPRESENTATIONS AND WARRANTIES

 

9.1

 

Representations and Warranties by Metron

 

 

9.2

 

Representations and Warranties by FSI

 

 

9.3

 

Survival of Representations and Warranties

 

 

ARTICLE X CONDUCT OF DISTRIBUTION BUSINESS DURING TRANSITION PERIOD

 

10.1

 

Operation of Distribution Business

 

 

ARTICLE XI ADDITIONAL COVENANTS

 

11.1

 

Non-Competition

 

 

11.2

 

Access to Properties, Books, Records, Etc.

 

 

11.3

 

Government Approvals

 

 

11.4

 

Registrations

 

 

11.5

 

Transition Plan

 

 

11.6

 

Performance under Distribution Agreements

 

 

11.7

 

Confidentiality

 

 

11.8

 

Announcements and Communications

 

 

11.9

 

Insurance

 

 

11.10

 

Contracts

 

 

11.11

 

Shareholder Approval

 

 

11.12

 

Expenses

 

 

11.13

 

UK Pensions

 

 

11.14

 

MTDC Inventory

 

 

ARTICLE XII INDEMNIFICATION

 

12.1

 

Indemnification by Metron

 

 

12.2

 

Indemnification by FSI

 

 

12.3

 

Deductible Amount

 

 

12.4

 

Notice of Indemnification

 

 

12.5

 

Indemnification Procedure for Third-Party Claims

 

 

ARTICLE XIII DISPUTE RESOLUTION; GOVERNING LAW

 

13.1

 

Arbitration

 

 

13.2

 

Governing Law

 

 

ARTICLE XIV GENERAL

 

14.1

 

Entire Agreement

 

 

14.2

 

Amendments

 

 

14.3

 

Waivers

 

 

14.4

 

Notices

 

 

14.5

 

Partial Invalidity

 

 

14.6

 

Governing Language

 

 

14.7

 

Assignment

 

 

14.8

 

Further Assurances

 

 

14.9

 

Counterparts

 

 

 

 

 

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EXHIBITS

 

Exhibit A

 

Metron Selling Affiliates and FSI Purchasing Affiliates

 

 

 

Exhibit B

 

Israel Distribution Agreement

 

 

 

Exhibit C

 

Metron Individuals with Knowledge

 

 

 

Exhibit D

 

FSI Individuals with Knowledge

 

 

 

Exhibit E

 

Note and Security Agreement

 

SCHEDULES

Schedule 3.1(b)

 

General Schedule of Product Inventory and the Spare Parts Inventory

 

 

 

Schedule 6.1

 

Transferred Employees***

 

 

 

Schedule 9.1(j)

 

Employee Benefits

 

 

 

Schedule 9.1(o)

 

MTDC Inventory

 

 

 

Schedule 11.1

 

Legacy Products

 

 

 

Schedule 11.4

 

Permits and Product Registrations

 

 

 

Schedule 11.5

 

Transition Plan

 

 

 

Schedule 11.10

 

Contracts Related to the Distribution Business

 

***  TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

UNDER 17 C.F.R. §§ 200.80(b)(4),

200.83 AND 240.24b-2

 

 

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TRANSITION AGREEMENT

This TRANSITION AGREEMENT, made and entered into as of this 9th day of October
2002, by and between FSI INTERNATIONAL, INC., a corporation organized and
existing under the laws of the state of Minnesota, United States of America
(“FSI”), and METRON TECHNOLOGY N.V., a company organized as a Naamloze
Vennootschap under the laws of the Netherlands (“Metron”).

PREAMBLE

WHEREAS, FSI and Metron have entered into and are parties to that certain
FSI/Metron Distribution Agreement, dated March 31, 1998 (as amended by the 2000
Distribution Agreement, the “1998 Distribution Agreement”), and that certain FSI
Surface Conditioning Division/Metron Distribution Agreement, dated July 10, 2000
(the “2000 Distribution Agreement” and, together with the 1998 Distribution
Agreement, the “Distribution Agreements”).

WHEREAS, pursuant to the terms of the 1998 Distribution Agreement, Metron has
been appointed as distributor for certain microlithography products of FSI for
the territories defined therein.

WHEREAS, pursuant to the terms of the 2000 Agreement, Metron has been appointed
as distributor for certain surface conditioning products of FSI and certain
immersion system products of FSI’s subsidiary, SCD Mountain View, Inc., for the
territories defined therein.

WHEREAS, FSI and Metron each desire to enter into this Agreement to provide for
the terms and conditions under which Metron and the Metron Selling Affiliates
(as defined below) will sell and transfer to FSI and the FSI Purchasing
Affiliates (as defined below), and FSI and the FSI Purchasing Affiliates will
purchase from Metron and the Metron Selling Affiliates, all distribution and
other rights granted to Metron under the Distribution Agreements for the
distribution and servicing of the FSI products in all areas of the world except
Israel.

WHEREAS, in connection with the transactions contemplated by this Agreement, FSI
and Metron have agreed to enter into a distribution agreement pursuant to which
FSI will appoint Metron its distributor for products of FSI for the territory of
Israel.

NOW, THEREFORE, in consideration of the premises, the respective covenants and
commitments of the parties set forth herein, and other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, FSI,
for and on behalf of itself and its Affiliates, and Metron, for and on behalf of
itself and its Affiliates, hereby agree as follows:

 

 

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ARTICLE I
DEFINITIONS; INTERPRETATION

1.1          Terms Defined in this Agreement.  For purposes of this Agreement,
where written with an initial capital letter, the following terms, words and
phrases shall have the following respective meanings:

“Additional Cash Advance” has the meaning given such term in Section 2.3(a).

“Affiliate” means, with respect to any Entity, any other Entity controlled by,
under common control with, or which controls such Entity through (i) the
ownership, either directly or indirectly, of more than 50% of the voting shares
or equity interests of such Entity, (ii) the right to elect the majority of the
directors or members of any similar managing body of such Entity (except by
reason of the occurrence of a contingency) or (iii) the right to manage and
control such Entity pursuant to contract; provided that, for purposes of this
Agreement, FSI Ltd shall not be an Affiliate of FSI.

“Aging Spare Parts Inventory” means Spare Parts held in inventory by Metron or
any Metron Selling Affiliate which, in the case of SCD/System Products parts,
were purchased more than one year prior to Closing Date and, in the case of
MLD/System Products Parts, were purchased more than two years prior to the
Closing Date.

“Agreement” and “this Agreement” means this Transition Agreement, including all
exhibits and schedules hereto.

“Base Cost” means, in the case of Products, Spare Parts and Demonstration
Equipment in Metron’s inventory and to be repurchased by FSI hereunder, the
original invoice price for such Products, Spare Parts and Demonstration
Equipment as converted into the relevant local currency, adjusted from time to
time for currency rate fluctuations and carried on the books and records of
Metron or the relevant Metron Selling Affiliate.

“Cash Advance” has the meaning given such term in Section 2.3(a).

“Closing” has the meaning given such term in Section 8.1.

“Closing Date” means the date on which the Closing is completed pursuant to the
terms of Section 8.1.

“Closing Date Product Purchase Orders” has the meaning given such term in
Section 4.1(c).

“Closing Date Service/Applications Support Contracts” has the meaning given such
term in Section 4.4(c).

“Closing Date Spare Parts Purchase Orders” has the meaning given such term in
Section 4.3(c).

“Closing Date System Start-Ups” has the meaning given such term in Section
4.2(a).

 

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“Closing Date Warranty Obligations” has the meaning given such term in Section
4.5(d).

“Common Parts” has the meaning given such term in Section 3.1(d).

“Confidential Information” has the meaning given such term in Section 11.7.

“Deductible Amount” has the meaning given such term in Section 12.3.

“Demonstration Equipment” has the meaning given such term in Section 3.2(b).

“Demonstration Equipment Listing” has the meaning given such term in Section
3.2(a).

“Demonstration Equipment Repurchase Price” has the meaning given such term in
Section 3.2(c).

“Distribution Agreements” has the meaning given such term in the Preamble to
this Agreement.

“Distribution Business” means the business of, and right in and to, the
distributing, marketing, selling and servicing of the Products under the
Distribution Agreements as carried on by Metron and its Affiliates.

“Effective Date” means the date of this Agreement.

“Employee Benefits” means any retirement, pension, profit sharing, bonus, stock
option, restricted stock, deferred compensation, holiday pay, bonus, commission,
health, hospitalization, disability, death, insurance or other employee or
fringe benefit plan, scheme, program or arrangement.

“Entity” means any association, corporation, partnership, limited liability
company, trust or other entity (excluding any natural person).

“Estimated Purchase Price” has the meaning given such term in Section 2.4(a).

“FSI” has the meaning given such term in the first paragraph of this Agreement.

“FSI Closing Date Payment” has the meaning given such term in Section 2.4(b).

“FSI Holdback Amount” has the meaning given such term in Section 2.4(b).

“FSI Indemnified Parties” has the meaning given such term in Section 12.1.

“FSI Purchasing Affiliates” means the Affiliates of FSI existing or to be
existing as of the Closing Date and listed on Exhibit A attached hereto which
will purchase inventory and equipment and assume contracts and service
obligations from the Metron Selling Affiliates, all as more particularly
described in Articles III and IV.

 

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“FSI Scheme” means the Group Personal Pension Scheme to be established by FSI or
its Affiliate in the United Kingdom as soon as reasonably practical after the
Closing Date for the benefit of FSI’s United Kingdom employees, including the
Transferred Employees in the United Kingdom.

“Indemnified Party” has the meaning given such term in Section 12.3.

“Indemnifying Party” has the meaning given such term in Section 12.3.

“Initial Cash Advance” has the meaning given such term in Section 2.3(a).

“Inventory and Equipment Payments” has the meaning given such term in Section
2.2.

“Inventory Repurchase Price” has the meaning given such term in Section 3.1(c).

“Israel Distribution Agreement” means the distribution agreement between FSI and
Metron which shall be executed at the Closing substantially in the form attached
hereto as Exhibit B.

“Israel Distribution Business” means, before the Closing Date, the business of
distributing, marketing, selling and servicing the Products in Israel under the
Distribution Agreements, and after the Closing Date, the business of
distributing, marketing, selling and servicing the Products in Israel under the
Israel Distribution Agreement.

“Knowledge of FSI” means the actual knowledge of one or more of the individuals
listed on Exhibit C, and the knowledge that such individuals should reasonably
be expected to have based upon the exercise of duties and responsibilities
consistent with their respective offices and areas of management responsibility.

“Knowledge of Metron” means the actual knowledge of one or more of the
individuals listed on Exhibit D, and the knowledge that such individuals should
reasonably be expected to have based upon the exercise of duties and
responsibilities consistent with their respective offices and areas of
management responsibility.

“Legacy Products” has the meaning given such term in Schedule 11.1 attached
hereto.

“Lien” means any mortgage, security interest, lien (including tax and
environmental liens), claim, charge, pledge, option, encumbrance, agreement,
voting trust, proxy or other arrangement, and all rights of third parties,
including any right of usufruct, restriction or limitation of any kind or nature
whatsoever, other than (i) liens for taxes not yet due and payable or which are
being contested in good faith, (ii) statutory liens arising in the ordinary
course of business such as landlords’ carriers’, warehousemens’, mechanics’,
materialmens’, suppliers’ and similar liens, and (iii) liens arising by
operation of law which are not material to the asset to which the lien attaches.

“Listing” means each of the Closing Date Service/Applications Support Contracts
Listing, the Demonstration Equipment Listing, the Products and Spare Parts
Inventory Listing, the Products Purchase Order Listing, the System Start-Up
Listing, the Spare Parts Purchase

 

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Order Listing, the Service/Applications Support Contract Listing and the
Warranty Listing and each update to such listings required to be delivered in
accordance with this Agreement.

“Losses” has the meaning given such term in Section 12.1.

“Metron” has the meaning given such term in the first paragraph of this
Agreement.

“Metron Closing Date Payment” has the meaning given such term in Section 2.4(c).

“Metron Indemnified Parties” has the meaning given such term in Section 12.2.

“Metron Scheme” means the Group Personal Pension Scheme maintained by Metron or
its Affiliate in the United Kingdom for employees of such Affiliate located in
the United Kingdom.

“Metron Selling Affiliates”  means the Affiliates of Metron listed on Exhibit A
attached hereto which will sell inventory and equipment and assign contracts and
service obligations to the FSI Purchasing Affiliates as more particularly
described in Articles III and IV.

“Metron Shares” has the meaning given such term in Section 2.4(b).

“Metron Shares Value” has the meaning given such term in Section 2.4(b).

“Metron Stock” means the common shares of Metron, par value EUR 0.44 per share,
of Metron.

“MTDC” means Metron Technology Distribution Corporation, a California
corporation and wholly owned subsidiary of Metron.

“MTDC Inventory” has the meaning given such term in Section 9.1(o).

“Net Invoice Price” means, with respect to a Closing Date Product Purchase Order
or a Closing Date Spare Parts Purchase Order, the amount payable by the customer
indicated on such purchase order less any amounts in respect of shipping,
handling, freight, customs, duties, value added taxes, sales taxes and other
similar taxes and payments.

“Note” has the meaning given such term in Section 2.3(a).

“Permits” has the meaning given such term in Section 9.1(h).

“Pre-Closing Accounts Receivable” has the meaning given such term in Section
5.1(a).

“Premium” has the meaning given such term in Section 2.2.

“Product Commission” has the meaning given such term in Section 4.1(c).

“Product Inventory” has the meaning given such term in Section 3.1(a).

“Product Purchase Order Listing” has the meaning given such term in Section
4.1(b).

 

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“Product Registrations” means registrations, permits, authorizations, approvals
and filings with any governmental authority required for the marketing,
distribution or sale of any Products or Spare Parts in connection with the
Distribution Business (excluding the Israel Distribution Business).

“Products” means the products subject to the Distribution Agreements (as the
term Products is defined in each of such Distribution Agreements).

“Products and Spare Parts Inventory Listing” has the meaning given such term in
Section 3.1(b).

“Purchase Price” has the meaning given such term in Section 2.2.

“Rules” has the meaning given such term in Section 13.1.

“Security Agreement” has the meaning given such term in Section 2.3(a).

“Service/Applications Support Compensation” has the meaning given such term in
Section 4.4(c).

“Service/Applications Support Contract” has the meaning given such term in
Section 4.4(a).

“Service/Applications Support Contract Listing” has the meaning given such term
in Section 4.4(b).

“Spare Parts” means the spare parts related to the Products subject to the
Distribution Agreements (as the term Spare Parts is defined in each of such
Distribution Agreements).

“Spare Parts Commission” has the meaning given such term in Section 4.3(c).

“Spare Parts Inventory” has the meaning given such term in Section 3.1(a).

“Spare Parts Purchase Order Listing” has the meaning given such term in Section
4.3(b).

“System Start-Up Listing” has the meaning given such term in Section 4.2(c).

“System Start-Up Compensation” has the meaning given such term in Section
4.2(c).

“Termination Date” has the meaning given such term in Section 9.3.

“Transfer Amount” means, in relation to an individual employee, the proceeds of
the policy in respect of the Metron Scheme.

“Transferred Employee Tools and Equipment Purchase Price” has the meaning given
such term in Section 6.4.

“Transferred Employees” has the meaning given such term in Section 6.1.

 

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“Transition Period” means the period commencing on the Effective Date and ending
on the Closing Date.

“Transition Plan” means the plan to be agreed by FSI and Metron in accordance
with Section 11.5 and thereafter attached hereto as Schedule 11.5 for
transitioning the Distribution Business from Metron to FSI during the Transition
Period.

“Warranty Compensation” has the meaning given such term in Section 4.5(d).

“Warranty Listing” has the meaning given such term in Section 4.5(c).

“1998 Distribution Agreement” has the meaning given such term in the Preamble to
this Agreement.

“2000 Distribution Agreement” has the meaning given such term in the Preamble to
this Agreement.

1.2          Interpretation.  Whenever used in this Agreement, the singular
shall be construed to include the plural and vice versa, where applicable, and
the use of the masculine, feminine or neuter gender shall include the other
genders.  The word “including” means “including without limitation”.  The
subject matter and language of this Agreement has been the subject of
negotiations between the parties and their respective counsel, and this
Agreement has been jointly prepared by their respective counsel.  Accordingly,
this Agreement shall not be construed against any party on the basis that this
Agreement was drafted by such party or its counsel.  References to Sections,
Articles, exhibits or schedules herein shall be to the Sections, Articles,
exhibits and schedules contained in or attached to this Agreement, unless
otherwise specified.

ARTICLE II

PURCHASE OF DISTRIBUTION BUSINESS

2.1          Sale and Purchase.  On the terms and subject to the conditions of
this Agreement, Metron agrees to sell and FSI agrees to purchase on the Closing
Date, all of Metron’s right, title and interest in the Distribution Business,
excluding the Israel Distribution Business.

2.2          Consideration.  The consideration for the early termination of the
Distribution Agreements in accordance with Section 2.8 shall be U.S. $2.75
million (the “Premium”).  The amount of (i) the Premium plus (ii) the payments
of the Inventory Repurchase Price (which shall be based on the Products and
Spare Parts Inventory Listing as of the Closing Date and subject to application
of the limitations on FSI inventory repurchase obligations in Section 3.3) and
the Demonstration Equipment Repurchase Price (which shall be based on the
Demonstration Equipment Listing as of the Closing Date) to be made by FSI in
respect of the repurchase of Product Inventory, Spare Parts Inventory and
Demonstration Equipment in accordance with Article III hereof (such payments,
the “Inventory and Equipment Payments”) plus (iii) any value added taxes
assessable on the Product Inventory, Spare Parts Inventory and Demonstration
Equipment, to the extent required by law, to be paid by FSI plus (iv) the
payment of the Transferred Employee Tools and Equipment Purchase Price to be
made by FSI in respect of the

 

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purchase of certain property used by the Transferred Employees in accordance
with Section 6.4 less (v) the System Start-Up Compensation (which shall be based
on the System Start-Up Listing as of the Closing Date and the parties’ agreement
as to the percentage completion for each Closing Date System Start-Up) to be
paid by Metron in accordance with Section 4.2 less (vi) the Service/Applications
Support Compensation (which shall be based on the Service/Applications Support
Contract Listing as of the Closing Date) to be paid by Metron in accordance with
Section 4.4 less (vii) the Warranty Compensation (which shall be based on the
Warranty Listing as of the Closing Date) to be paid by Metron in accordance with
Section 4.5(d) is referred to, collectively, as the “Purchase Price”.  Metron
and FSI each agree to cooperate in good faith to take such actions as the other
party may reasonably request (after consultation with its financial advisor) in
order to ensure that the payment of the Premium is exempt from value added taxes
under applicable law, including cooperating in such other party’s request (at
the expense of such other party) for a ruling from the appropriate taxing
authorities in The Netherlands that the payment of the Premium is exempt from
value added tax under the Laws of the Netherlands.

2.3          Cash Advance; Note and Security Agreement.

(A)            ON THE EFFECTIVE DATE, AS A PREPAYMENT OF A PORTION OF THE
PURCHASE PRICE TO BE PAID ON THE CLOSING DATE, FSI WILL MAKE AN ADVANCE PAYMENT
TO METRON IN AN INITIAL PRINCIPAL AMOUNT OF U.S. $3.0 MILLION (THE “INITIAL CASH
ADVANCE”) IN THE FORM OF A LOAN MADE PURSUANT TO THE NOTE, DATED THE EFFECTIVE
DATE, BY METRON TO FSI AND ATTACHED HERETO AS EXHIBIT E (THE “NOTE”) AND RELATED
SECURITY AGREEMENT, DATED THE EFFECTIVE DATE, BY AND BETWEEN MTDC AND FSI (THE
“SECURITY AGREEMENT”).  THE NOTE WILL PROVIDE THAT FSI WILL MAKE ADDITIONAL
ADVANCE PAYMENTS (EACH, AN “ADDITIONAL CASH ADVANCE”) AS PREPAYMENTS OF A
PORTION OF THE PURCHASE PRICE TO BE PAID ON THE CLOSING DATE IN AN AGGREGATE
AMOUNT UP TO U.S. $1.0 MILLION PURSUANT TO THE NOTE AND THE SECURITY AGREEMENT
UPON SATISFACTION OF THE CONDITIONS SET FORTH IN SECTION 2.3(B).  THE AMOUNT OF
THE INITIAL CASH ADVANCE AND THE AGGREGATE AMOUNT OF THE ADDITIONAL CASH
ADVANCES, THE “CASH ADVANCE”.

(B)           WITHIN THIRTY (30) DAYS AFTER THE EFFECTIVE DATE, FSI WILL USE ITS
COMMERCIALLY REASONABLE EFFORTS TO REVIEW AND EXAMINE, ON A COUNTRY BY COUNTRY
BASIS, THE PRODUCT INVENTORY AND THE SPARE PARTS INVENTORY THAT IS SUBJECT TO
REPURCHASE HEREUNDER TO DETERMINE THE ADEQUACY AND SUFFICIENCY OF SUCH INVENTORY
AS COLLATERAL FOR MAKING ADDITIONAL CASH ADVANCES.  IF, AFTER SUCH REVIEW AND
EXAMINATION, THE PRODUCT INVENTORY AND SPARE PARTS INVENTORY IN ANY COUNTRY IS
REASONABLY DETERMINED TO BE PRODUCT INVENTORY AND SPARE PARTS INVENTORY THAT
MEETS THE REQUIREMENTS OF SECTION 3.3 HEREUNDER FOR REPURCHASE BY FSI HEREUNDER,
FSI WILL MAKE AN ADDITIONAL CASH ADVANCE TO METRON UNDER THE NOTE BASED ON THE
GROSS BOOK VALUE OF THE AMOUNT OF SUCH PRODUCT INVENTORY AND SPARE PARTS
INVENTORY IN SUCH COUNTRY THAT WILL BE HELD BY METRON OR THE APPLICABLE METRON
SELLING AFFILIATE AS OF, AND BE TRANSFERRED TO FSI ON, THE CLOSING DATE (TAKING
INTO ACCOUNT HISTORICAL AND PROJECTED SALES AND REPLENISHMENT OF SUCH INVENTORY
IN THE APPLICABLE COUNTRY) UNDER THE TERMS OF THIS AGREEMENT.  TO THE EXTENT
THAT THE PRODUCT INVENTORY AND SPARE PARTS INVENTORY IN THE APPLICABLE COUNTRY
IS NOT SUBJECT TO A LIEN, FSI MAY REQUEST THAT ANY SUCH ADDITIONAL CASH ADVANCE
BE SUBJECT TO A FIRST PRIORITY LIEN IN FAVOR OF FSI ON SUCH PRODUCT INVENTORY
AND SPARE PARTS INVENTORY, AND METRON SHALL, AND SHALL CAUSE THE APPLICABLE
METRON SELLING AFFILIATE TO, COOPERATE IN THE EXECUTION AND DELIVERY OF
APPROPRIATE AGREEMENTS AND INSTRUMENTS TO EVIDENCE SUCH LIEN; PROVIDED, THAT
OBTAINING SUCH LIEN SHALL NOT BE A

 

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condition of FSI making an Additional Cash Advance, and any costs and expenses
incurred in obtaining such first priority Liens shall be paid by FSI.

2.4          Payments on Closing.

(A)            NO LATER THAN FIVE (5) BUSINESS DAYS PRIOR TO THE CLOSING DATE,
FSI AND METRON SHALL AGREE ON AN ESTIMATE OF THE AGGREGATE PURCHASE PRICE (THE
“ESTIMATED PURCHASE PRICE”) EQUAL TO (I) THE PREMIUM, (II) AN ESTIMATE OF THE
INVENTORY AND EQUIPMENT PAYMENTS (BASED ON THE MOST RECENT PRODUCTS AND SPARE
PARTS INVENTORY LISTING AND THE DEMONSTRATION EQUIPMENT LISTING DELIVERED BY
METRON IN ACCORDANCE WITH SECTIONS 3.1(B) AND 3.1(C) AND SUBJECT TO APPLICATION
OF THE LIMITATIONS ON FSI INVENTORY REPURCHASE OBLIGATIONS IN SECTION 3.3),
(III) AN ESTIMATE OF ANY VALUE ADDED TAXES ASSESSABLE ON THE PRODUCT INVENTORY,
SPARE PARTS INVENTORY AND DEMONSTRATION EQUIPMENT, TO THE EXTENT REQUIRED BY
LAW, (IV) AN ESTIMATE OF THE TRANSFERRED EMPLOYEE TOOLS AND EQUIPMENT PURCHASE
PRICE, (V) AN ESTIMATE OF THE SYSTEM START-UP COMPENSATION (BASED ON THE MOST
RECENT SYSTEM START-UP LISTING DELIVERED BY METRON IN ACCORDANCE WITH SECTION
4.2(B) AND THE PARTIES’ GOOD FAITH ESTIMATE OF CLOSING DATE SYSTEM START-UPS AND
RELATED PERCENTAGE COMPLETION), (VI) AN ESTIMATE OF THE SERVICE/APPLICATIONS
SUPPORT COMPENSATION (BASED ON THE MOST RECENT SERVICE/APPLICATIONS SUPPORT
CONTRACT LISTING DELIVERED BY METRON IN ACCORDANCE WITH SECTION 4.4(B)), AND
(VII) AN ESTIMATE OF THE WARRANTY COMPENSATION (BASED ON THE MOST RECENT
WARRANTY LISTING DELIVERED BY METRON IN ACCORDANCE WITH SECTION 4.5(C)).  EACH
SUCH LISTING, AND EACH SUCH ESTIMATE, SHALL BE SEPARATELY IDENTIFIED FOR EACH
METRON SELLING AFFILIATE LISTED IN EXHIBIT A.

(B)           ON THE CLOSING DATE, IF THE AMOUNT OF THE ESTIMATED PURCHASE PRICE
IS GREATER THAN THE AMOUNT OF THE CASH ADVANCE, FSI SHALL FOR ITSELF AND ON
BEHALF OF THE FSI PURCHASING AFFILIATES (I) PAY TO METRON, WHICH SHALL TAKE
RECEIPT FOR ITSELF AND ON BEHALF OF THE METRON SELLING AFFILIATES, AN AMOUNT
(THE “FSI CLOSING DATE PAYMENT”) IN UNITED STATES DOLLARS EQUAL TO THE ESTIMATED
PURCHASE PRICE LESS THE AMOUNT OF THE CASH ADVANCE AND LESS THE FSI HOLDBACK
AMOUNT AND (II) SHALL FORGIVE ALL AMOUNTS OUTSTANDING UNDER THE NOTE IN RESPECT
OF THE CASH ADVANCE.  FOR PURPOSES OF THIS AGREEMENT, THE “FSI HOLDBACK AMOUNT”
SHALL BE AN AMOUNT EQUAL TO THE LESSER OF (X) U.S. $750,000 AND (Y) THE
DIFFERENCE BETWEEN THE ESTIMATED PURCHASE PRICE AND THE AMOUNT OF THE CASH
ADVANCE.  SUBJECT TO OBTAINING THE REQUIRED RATIFICATION OR APPROVAL BY THE
SHAREHOLDERS OF METRON, A PORTION OF THE FSI CLOSING DATE PAYMENT IN AN AMOUNT
EQUAL TO U.S. $2,750,000 (THE “METRON SHARES VALUE”) SHALL BE MADE BY FSI’S
ASSIGNMENT AND TRANSFER TO METRON OR ITS DESIGNATED AGENT OF SHARE CERTIFICATES
REPRESENTING 1,154,492 SHARES OF METRON COMMON STOCK (THE “METRON SHARES”).  IN
THE EVENT THAT SUCH SHAREHOLDER RATIFICATION OR APPROVAL IS NOT OBTAINED PRIOR
TO THE CLOSING DATE, THE FSI CLOSING DATE PAYMENT SHALL CONSIST ENTIRELY OF
CASH.  IN ADDITION, IN THE EVENT THAT THE METRON SHARES VALUE EXCEEDS THE FSI
CLOSING DATE PAYMENT, THE NUMBER OF METRON SHARES SHALL BE REDUCED TO A NUMBER
REPRESENTING THE AMOUNT OF THE FSI CLOSING DATE PAYMENT.  THE CASH PORTION OF
THE FSI CLOSING DATE PAYMENT SHALL BE MADE BY WIRE TRANSFER OF IMMEDIATELY
AVAILABLE FUNDS TO AN ACCOUNT DESIGNATED IN WRITING BY METRON.

(C)            ON THE CLOSING DATE, IF THE ESTIMATED PURCHASE PRICE IS LESS THAN
THE AMOUNT OF THE CASH ADVANCE, (I) METRON SHALL PAY FSI AN AMOUNT (THE “METRON
CLOSING DATE PAYMENT”) IN UNITED STATES DOLLARS EQUAL TO THE CASH ADVANCE LESS
THE AMOUNT OF THE ESTIMATED PURCHASE PRICE AND (II) FSI SHALL FORGIVE ALL
AMOUNTS OUTSTANDING UNDER THE NOTE IN RESPECT OF THE CASH ADVANCE.

 

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The Metron Closing Date Payment shall be made by wire transfer of immediately
available funds to an account designated in writing by FSI.

2.5          Final Purchase Price Payment.

(A)            NO LATER THAN SIXTY (60) DAYS AFTER THE CLOSING DATE, THE PARTIES
SHALL AGREE ON THE PURCHASE PRICE FOR PURPOSES OF ADJUSTING THE FSI CLOSING DATE
PAYMENT OR THE METRON CLOSING DATE PAYMENT, AS APPLICABLE, MADE ON THE CLOSING
DATE.  IN DETERMINING THE PURCHASE PRICE THE PARTIES SHALL COOPERATE WITH EACH
OTHER AND PROVIDE EACH OTHER WITH REASONABLE ACCESS TO ALL BOOKS AND RECORDS
RELATING TO THE DISTRIBUTION BUSINESS IN THEIR RESPECTIVE POSSESSION NECESSARY
TO DETERMINE, REVIEW AND VERIFY THE COMPONENTS OF THE PURCHASE PRICE.  IF THE
PARTIES ARE NOT ABLE TO AGREE ON THE PURCHASE PRICE WITHIN ONE HUNDRED TWENTY
(120) DAYS AFTER THE CLOSING DATE, ANY DISPUTES RELATED THERETO SHALL BE
RESOLVED BY ARBITRATION IN ACCORDANCE WITH ARTICLE XIII.

(B)           IF FSI MADE THE FSI CLOSING DATE PAYMENT AND THE PURCHASE PRICE,
AS DETERMINED IN ACCORDANCE WITH THIS SECTION 2.5,

(I)            EXCEEDS THE ESTIMATED PURCHASE PRICE, FSI SHALL PAY TO METRON THE
AMOUNT OF SUCH EXCESS PLUS THE FSI HOLDBACK AMOUNT,

(II)           IS LESS THAN THE ESTIMATED PURCHASE PRICE BUT THE AMOUNT OF SUCH
SHORTFALL IS LESS THAN THE FSI HOLDBACK AMOUNT, FSI SHALL PAY TO METRON AN
AMOUNT EQUAL TO THE FSI HOLDBACK AMOUNT LESS THE AMOUNT OF SUCH SHORTFALL, OR

(III)          IS LESS THAN THE ESTIMATED PURCHASE PRICE AND THE AMOUNT OF SUCH
SHORTFALL EXCEEDS THE FSI HOLDBACK AMOUNT, METRON SHALL PAY TO FSI THE AMOUNT OF
SUCH SHORTFALL LESS THE FSI HOLDBACK AMOUNT; PROVIDED, HOWEVER, IN NO EVENT
SHALL METRON BE REQUIRED TO PAY AN AMOUNT THAT, TOGETHER WITH THE FSI HOLDBACK
AMOUNT, EXCEEDS U.S. $1.25 MILLION PLUS THE AMOUNT OF THE SYSTEM START-UP
COMPENSATION, THE SERVICE/APPLICATIONS SUPPORT COMPENSATION AND THE WARRANTY
COMPENSATION.

In the event that the number of Metron Shares was reduced in accordance with
Section 2.4(b) and subject to obtaining the required ratification or approval by
the shareholders of Metron, FSI may pay any amount owing under clauses (i) or
(ii) of this Section 2.5(b), or any portion of such amount, by FSI’s assignment
and transfer to Metron or its designated agent of Metron Shares so long as the
number of Metron Shares so assigned, together with any Metron Shares assigned
pursuant to Section 2.4(b) in respect of the FSI Closing Date Payment, do not
exceed the Metron Shares Value.  For the purposes of determining the number of
Metron Shares to be assigned and transferred, the value of each Metron Share
shall be the same as set forth in Section 2.4(b).  In the event such shareholder
ratification or approval is not obtained prior to the Closing Date, any amount
owing by FSI under clauses (i) or (ii) of this Section 2.5(b) shall be paid
entirely in cash.

(C)            IF METRON MADE THE METRON CLOSING DATE PAYMENT AND THE PURCHASE
PRICE, AS DETERMINED IN ACCORDANCE WITH THIS SECTION 2.5,

(I)            EXCEEDS THE ESTIMATED PURCHASE PRICE, FSI SHALL PAY TO METRON THE
AMOUNT OF SUCH EXCESS,

 

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(II)           IS LESS THAN THE ESTIMATED PURCHASE PRICE, METRON SHALL PAY TO
FSI THE AMOUNT OF SUCH SHORTFALL; PROVIDED, HOWEVER, IN NO EVENT SHALL METRON BE
REQUIRED TO PAY AN AMOUNT THAT, TOGETHER WITH THE METRON CLOSING DATE PAYMENT,
EXCEEDS U.S. $1.25 MILLION PLUS THE AMOUNT OF THE SYSTEM START-UP COMPENSATION,
THE SERVICE/APPLICATIONS SUPPORT COMPENSATION AND THE WARRANTY COMPENSATION.

2.6          Offset.  The parties agree that any amounts owed by a party
hereunder are subject to the right of such party to offset such amounts by
amounts owed to such party by the other party hereunder.  For the avoidance of
doubt, any amounts owed by FSI to Metron in respect of the Purchase Price may be
offset against amounts owed by Metron to FSI under the Note in respect of the
Cash Advance.  Except for offsets of amounts owed by FSI to Metron in respect of
the Purchase Price against amounts owed by Metron to FSI under the Note, all
offsets shall require the prior written approval of each of the Chief Financial
Officers of Metron and FSI.

2.7          Single Payment.  Metron and FSI agree that all cash payments
required to be made under this Agreement shall be made solely by FSI to Metron
in United States Dollars.  Payment under this Article II by  FSI to Metron shall
constitute payment in full by FSI and the FSI Purchasing Affiliates of all
amounts due and payable under this Article II, and neither FSI nor the relevant
FSI Purchasing Affiliates shall have any obligations to make any payments
directly to the Metron Selling Affiliates.  Metron undertakes to transfer to
each of the Metron Selling Affiliates such amounts of the Purchase Price to
which each such Affiliate may be entitled based on its ownership or possession
of Product Inventory, Spare Parts Inventory and/or Demonstration Equipment
transferred pursuant to Articles III and IV.

2.8          Termination of Distribution Agreements; Effectiveness of Israel
Distribution Agreement.

(A)            THE PARTIES AGREE ON BEHALF OF THEMSELVES AND THEIR RESPECTIVE
AFFILIATES THAT, AS OF THE CLOSING DATE, THE DISTRIBUTION AGREEMENTS SHALL
TERMINATE IN ACCORDANCE WITH THEIR TERMS BUT SUBJECT TO THE TERMS OF THIS
AGREEMENT.  EXCEPT AS EXPRESSLY PROVIDED IN THIS AGREEMENT, EACH PARTY AND SUCH
PARTY’S INSURERS, SUCCESSORS AND ASSIGNS, HEREBY RELEASES AND FOREVER
DISCHARGES, EFFECTIVE AS OF THE CLOSING DATE, THE OTHER PARTY HERETO AND ITS
AFFILIATES, SHAREHOLDERS, DIRECTORS, OFFICERS, EMPLOYEES, AGENTS, CONSULTANTS,
SUCCESSORS AND ASSIGNS FROM ANY AND ALL LIABILITIES, CLAIMS, DEMANDS AND CAUSES
OF ACTION, EITHER IN LAW OR IN EQUITY, KNOWN OR UNKNOWN, LIQUIDATED OR
UNLIQUIDATED, WHICH HAVE ARISEN OR MAY ARISE OUT OF OR ARE IN ANY WAY CONNECTED
WITH THE DISTRIBUTION AGREEMENTS ON ACCOUNT OF ANY ACT, OMISSION, EVENT,
OCCURRENCE, REPRESENTATION, WARRANTY, FAILURE, DEFAULT OR BREACH, ACTUAL OR
ASSERTED, OF ANY PARTY HERETO OR ITS OFFICERS, EMPLOYEES, AGENTS, CONSULTANTS ON
OR PRIOR TO THE CLOSING DATE; PROVIDED, HOWEVER, THE PARTIES AGREE THAT THE
FOREGOING SHALL NOT APPLY TO THOSE PROVISIONS OF THE DISTRIBUTION AGREEMENTS AND
ASSOCIATED REMEDIES THAT, IN ACCORDANCE WITH SECTION 5.6 OF EACH DISTRIBUTION
AGREEMENT, SURVIVE THE CLOSING DATE.  THE PARTIES FURTHER AGREE ON BEHALF OF
THEMSELVES AND THEIR RESPECTIVE AFFILIATES THAT, AS OF THE EFFECTIVE DATE, THEIR
RESPECTIVE RIGHTS TO TERMINATE THE DISTRIBUTION AGREEMENTS UNDER THE TERMS OF
SUCH AGREEMENTS SHALL BE SUSPENDED AND OF NO FORCE AND EFFECT UNTIL SUCH TIME AS
THIS AGREEMENT IS TERMINATED IN ACCORDANCE WITH ITS TERMS.

(B)           SUBJECT TO ALL OF THE TERMS AND CONDITIONS OF THIS AGREEMENT, ON
THE CLOSING DATE, METRON AND FSI SHALL EXECUTE THE ISRAEL DISTRIBUTION
AGREEMENT.

 

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ARTICLE III

REPURCHASE OF INVENTORY AND EQUIPMENT

3.1          Repurchase of Inventory.

(A)            SUBJECT TO FSI’S RIGHT OF INSPECTION AND APPROVAL PROVIDED IN
SECTION 3.3, ON THE CLOSING DATE, THE RELEVANT FSI PURCHASING AFFILIATES SHALL
REPURCHASE FROM THE RELEVANT METRON SELLING AFFILIATES (I) THE INVENTORY OF
PRODUCTS (SUCH INVENTORY, “PRODUCT INVENTORY”) AS OF THE CLOSING DATE AND (II)
SPARE PARTS INVENTORY (SUCH INVENTORY, “SPARE PARTS INVENTORY”) AS OF THE
CLOSING DATE, PROVIDED THAT IN EACH CASE SUCH INVENTORY WAS PURCHASED BY METRON
OR THE RELEVANT METRON SELLING AFFILIATE, WITH RESPECT TO SCD SYSTEM PRODUCTS,
WITHIN ONE (1) YEAR OF THE CLOSING DATE, AND, WITH RESPECT TO MLD SYSTEM
PRODUCTS, WITHIN TWO (2) YEARS OF THE CLOSING DATE.  THE FOREGOING SHALL EXCLUDE
PRODUCT INVENTORY AND SPARE PARTS INVENTORY HELD FOR SALE IN ISRAEL.

(B)           ON OR BEFORE THE EFFECTIVE DATE, METRON HAS PROVIDED FSI WITH A
TRUE AND CORRECT SUMMARY SCHEDULE OF THE PRODUCT INVENTORY AND THE SPARE PARTS
INVENTORY TOGETHER WITH ALL AGING SPARE PARTS INVENTORY HELD BY METRON OR THE
METRON SELLING AFFILIATES AS OF AUGUST 31, 2002, WHICH SCHEDULE IS ATTACHED
HERETO AS SCHEDULE 3.1(B).  NO LATER THAT THIRTY (30) DAYS FROM THE EFFECTIVE
DATE, METRON SHALL PROVIDE FSI WITH A DETAILED LIST (A “PRODUCTS AND SPARE PARTS
INVENTORY LISTING”) OF EACH OF THE PRODUCT INVENTORY AND THE SPARE PARTS
INVENTORY TOGETHER WITH ALL AGING SPARE PARTS INVENTORY HELD BY METRON OR THE
METRON SELLING AFFILIATES AS OF AUGUST 31, 2002.  WITHIN THIRTY (30) DAYS
FOLLOWING THE END OF EACH CALENDAR MONTH FROM THE EFFECTIVE DATE TO THE CLOSING
DATE, METRON SHALL PROVIDE FSI WITH AN UPDATED PRODUCTS AND SPARE PARTS
INVENTORY LISTING, AS OF THE END OF SUCH CALENDAR MONTH, INCLUDING A LISTING AS
OF THE CLOSING DATE; PROVIDED, THAT THE PRODUCTS AND SPARE PARTS INVENTORY
LISTING TO BE DELIVERED WITHIN THIRTY (30) DAYS FROM THE END OF OCTOBER 2002
SHALL INCLUDE PRODUCTS AND SPARE PARTS INVENTORY LISTINGS AS OF THE END OF
SEPTEMBER 2002 AND AS OF THE END OF OCTOBER 2002.  SUCH PRODUCTS AND SPARE PARTS
INVENTORY LISTINGS SHALL INDICATE THE RELEVANT METRON SELLING AFFILIATE OWNING
SUCH INVENTORY AND SHALL FURTHER SPECIFY THE LOCATION, COST AND PART OR PRODUCT
NUMBER OF EACH SPARE PART OR PRODUCT, AS THE CASE MAY BE.

(C)            THE PRICE TO BE PAID BY FSI TO METRON FOR RECEIPT ON BEHALF OF
ITSELF AND EACH METRON SELLING AFFILIATE ON THE CLOSING DATE FOR PRODUCT
INVENTORY AND SPARE PARTS INVENTORY AS OF THE CLOSING DATE (THE “INVENTORY
REPURCHASE PRICE”) SHALL BE EQUAL TO (I) THE GROSS BOOK VALUE OF SUCH PRODUCT
INVENTORY AND SPARE PARTS INVENTORY AS REFLECTED IN THE ACCOUNTS OF METRON AND
THE METRON SELLING AFFILIATES CONSISTING OF THE BASE COST, CUSTOMS DUTIES AND
FREIGHT, AS AND IF ADJUSTED FOR CURRENCY TRANSLATION PLUS (II) APPLICABLE VALUE
ADDED TAXES IF ASSESSABLE ON METRON’S BASE COST FOR SUCH PRODUCT INVENTORY AND
SPARE PARTS INVENTORY UNDER THE RELEVANT LAWS OF THE COUNTRY IN WHICH THE
PRODUCT INVENTORY AND SPARE PARTS INVENTORY IS REPURCHASED.  PAYMENT OF THE
INVENTORY REPURCHASE PRICE SHALL BE MADE IN ACCORDANCE WITH THE TERMS OF ARTICLE
II GOVERNING PAYMENT OF THE PURCHASE PRICE.  FOR PURPOSES OF REVIEWING AND
VERIFYING THE INVENTORY REPURCHASE PRICE, INCLUDING THE BASE COST, CUSTOMS
DUTIES AND FREIGHT, METRON SHALL PROVIDE FSI AT FSI’S REQUEST WITH REASONABLE
ACCESS TO THE BOOKS AND RECORDS OF METRON AND THE METRON SELLING AFFILIATES
RELATING TO THE COMPONENTS OF BASE COST, CUSTOMS AND FREIGHT FOR THE PRODUCT
INVENTORY AND SPARE PARTS INVENTORY TO BE PURCHASED BY FSI IN ACCORDANCE WITH
THIS SECTION 3.1.

 

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(D)           PRODUCT INVENTORY AND SPARE PARTS INVENTORY SHALL NOT INCLUDE ANY
INVENTORY OF COMMON PARTS, AND THE FSI PURCHASING AFFILIATES SHALL HAVE NO
OBLIGATION TO REPURCHASE ANY COMMON PARTS HELD BY THE METRON SELLING
AFFILIATES.  FOR PURPOSES OF THIS AGREEMENT, “COMMON PARTS” MEANS PARTS THAT
WERE NOT ORIGINALLY PURCHASED FROM FSI AND THAT ARE USED OR SOLD BY METRON BOTH
IN THE CONDUCT OF THE DISTRIBUTION BUSINESS AND IN THE CONDUCT OF OTHER
BUSINESSES IN WHICH METRON IS ENGAGED.

(E)            IF AND TO THE EXTENT THAT ANY METRON SELLING AFFILIATE POSSESSES
AGING SPARE PARTS INVENTORY IDENTIFIED IN THE PRODUCTS AND SPARE PARTS INVENTORY
LISTING,  FSI SHALL HAVE THE RIGHT, BUT NOT THE OBLIGATION, TO CAUSE THE
RELEVANT FSI PURCHASING AFFILIATE TO PURCHASE ALL OR ANY PART OF ANY SUCH AGING
SPARE PARTS INVENTORY ON THE CLOSING DATE ON THE TERMS SET FORTH IN SECTION
3.1(C) ABOVE.  IF AND TO THE EXTENT FSI DOES NOT CAUSE ITS AFFILIATES TO
PURCHASE ANY AMOUNT OF SUCH AGING SPARE PARTS INVENTORY OR ANY PRODUCT INVENTORY
OR SPARE PARTS INVENTORY IN ACCORDANCE WITH SECTION 3.3(A) AS OF THE CLOSING
DATE, METRON SHALL MAKE A WRITTEN OFFER TO FSI FOR THE SALE OF ALL SUCH AGING
SPARE PARTS INVENTORY, PRODUCT INVENTORY OR SPARE PARTS INVENTORY NOT PURCHASED
AT THE CLOSING WITHIN SIXTY (60) DAYS AFTER THE CLOSING DATE.  SUCH OFFER SHALL
SET FORTH A DETAILED LIST OF THE AGING SPARE PARTS INVENTORY, PRODUCT INVENTORY
OR SPARE PARTS INVENTORY TO BE PURCHASED TOGETHER WITH THE PRICE AND DELIVERY
TERMS FOR SUCH AGING SPARE PARTS INVENTORY, PRODUCT INVENTORY OR SPARE PARTS
INVENTORY.  SUCH LIST SHALL INDICATE THE RELEVANT METRON SELLING AFFILIATE
OWNING SUCH INVENTORY AND SHALL FURTHER SPECIFY, BY SPARE PART, THE QUANTITY,
LOCATION, PRICE, AND PART DESCRIPTION AND NUMBER.  FSI SHALL HAVE FIFTEEN (15)
DAYS IN WHICH TO ACCEPT OR REJECT SUCH OFFER.  IN THE EVENT FSI REJECTS THE
OFFER, METRON AND ITS AFFILIATES SHALL BE FREE TO SELL SUCH AGING SPARE PARTS
INVENTORY, PRODUCT INVENTORY AND SPARE PARTS INVENTORY  NOTWITHSTANDING THE
TERMS OF SECTION 11.1.

(F)            WITHIN THIRTY (30) DAYS OF THE EFFECTIVE DATE, METRON SHALL
PROVIDE FSI WITH (I) ITS CURRENT SPARE PARTS PRICE LIST AND THE METHODOLOGY IT
USES FOR DETERMINING THE PRICES METRON AND THE METRON SELLING AFFILIATES QUOTE
TO CUSTOMERS FOR SPARE PARTS AND (II) A LIST OF ANY SPARE PARTS, SERVICE SUPPORT
AND APPLICATIONS SUPPORT PRICE LISTS THAT ARE SPECIFIC TO ANY OF CUSTOMERS OF
METRON AND THE METRON SELLING AFFILIATES.

3.2          Repurchase of Equipment.

(A)            ON THE CLOSING DATE FSI SHALL REPURCHASE FROM METRON ITS
DEMONSTRATION EQUIPMENT USED FOR THE SALE OF PRODUCTS UNDER THE DISTRIBUTION
AGREEMENTS (EXCLUDING SUCH EQUIPMENT THAT IS USED FOR THE SALE OF PRODUCTS IN
ISRAEL) (SUCH EQUIPMENT, THE “DEMONSTRATION EQUIPMENT”) AS OF THE CLOSING DATE.

(B)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “DEMONSTRATION EQUIPMENT LISTING”) OF
THE DEMONSTRATION EQUIPMENT PURCHASED FROM FSI BY METRON AND HELD BY METRON OR
ITS AFFILIATES AS OF AUGUST 31, 2002.  SUCH DEMONSTRATION EQUIPMENT LISTING
SHALL INDICATE METRON OR THE RELEVANT METRON SELLING AFFILIATE OWNING OR
POSSESSING SUCH DEMONSTRATION EQUIPMENT AND SHALL FURTHER SPECIFY THE PRODUCT
NUMBER, LOCATION AND CURRENT BOOK VALUE OF EACH SUCH ITEM OF DEMONSTRATION
EQUIPMENT.  WITHIN THIRTY (30) DAYS FOLLOWING THE END OF EACH FISCAL QUARTER OF
METRON FROM THE EFFECTIVE DATE TO THE CLOSING DATE, OR AT SUCH OTHER TIMES AS
THE PARTIES MAY AGREE, METRON SHALL PROVIDE FSI WITH AN UPDATED DEMONSTRATION
EQUIPMENT LISTING, INCLUDING A LISTING AS OF CLOSING DATE.

 

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(C)            THE PRICE TO BE PAID BY FSI OR THE RELEVANT FSI PURCHASING
AFFILIATE TO METRON (FOR RECEIPT ON BEHALF OF ITSELF AND EACH RELEVANT METRON
SELLING AFFILIATE) ON THE CLOSING DATE FOR DEMONSTRATION EQUIPMENT AS OF THE
CLOSING DATE (THE “DEMONSTRATION EQUIPMENT REPURCHASE PRICE”) SHALL BE (I) THE
BOOK VALUE OF SUCH EQUIPMENT, PLUS (II) VALUE ADDED TAXES ASSESSABLE ON METRON’S
BASE COST FOR SUCH EQUIPMENT UNDER THE LAWS OF THE RELEVANT COUNTRY IN WHICH THE
EQUIPMENT IS REPURCHASED.  PAYMENT OF THE DEMONSTRATION EQUIPMENT REPURCHASE
PRICE SHALL BE MADE IN ACCORDANCE WITH THE TERMS OF ARTICLE II GOVERNING PAYMENT
OF THE PURCHASE PRICE.

3.3          Limitations on Repurchase Obligations.

(A)            NOTWITHSTANDING THE FOREGOING, FSI RESERVES THE RIGHT TO
REASONABLY REJECT AND SHALL HAVE NO OBLIGATION TO REPURCHASE PRODUCT INVENTORY
OR SPARE PARTS INVENTORY (I) WHICH IS NOT IN THE CONDITION (INCLUDING ORIGINAL
PACKAGING) AS ORIGINALLY DELIVERED TO METRON OR (II) WHICH DOES NOT MEET FSI’S
THEN CURRENT DESIGN STANDARDS.  IN ADDITION, FSI MAY REJECT, IN ITS SOLE
DISCRETION, AND FSI SHALL HAVE NO OBLIGATION TO REPURCHASE PRODUCT INVENTORY OR
SPARE PARTS INVENTORY THAT WAS PURCHASED BY METRON OR THE RELEVANT METRON
SELLING AFFILIATE, WITH RESPECT TO SCD SYSTEM PRODUCTS, MORE THAN ONE (1) YEAR
PRIOR TO THE CLOSING DATE, AND, WITH RESPECT TO MLD SYSTEM PRODUCTS, MORE THAN
TWO (2) YEARS PRIOR TO THE CLOSING DATE.

(B)           IN ORDER TO EXERCISE THE FOREGOING RIGHTS, FSI AND ITS AUTHORIZED
REPRESENTATIVES SHALL HAVE THE RIGHT DURING THE TRANSITION PERIOD TO REVIEW AND
INSPECT THE PRODUCT INVENTORY, SPARE PARTS INVENTORY AND AGING SPARE PARTS
INVENTORY IN ACCORDANCE WITH THE TERMS OF SECTION 11.2.

3.4          Returns during Transition Period.  During the Transition Period,
the parties agree that any returns of Products or Spare Parts shall be governed
by the terms of the Distribution Agreements.  The terms and conditions of FSI’s
then current Spare Parts policy in effect under the Distribution Agreement
(including the restrictions on repurchase of obsolete Spare Parts inventory)
shall otherwise apply to the repurchase of Spare Parts Inventory hereunder,
except to the extent such Spare Parts policy contradicts or is inconsistent with
the express terms and conditions in this Article III.

3.5          Delivery to FSI.  Metron shall and shall cause the Metron Selling
Affiliates to deliver the Product Inventory, Spare Parts Inventory and
Demonstration Equipment purchased by the FSI Purchasing Affiliates on the
Closing Date free and clear of all Liens in accordance with the Transition Plan
and the written instructions of FSI and pursuant to the documents and
instruments to be delivered by Metron pursuant to Section 8.4(b).  Any freight
and customs charges payable or value added taxes payable in connection with the
repurchase by FSI of the Product Inventory, Spare Parts Inventory and
Demonstration Equipment shall be paid by FSI and the FSI Purchasing Affiliates. 
FSI and the FSI Purchasing Affiliates shall specify the shipping terms in
writing to Metron no fewer than ten (10) days prior to the date of transfer
including the manner of shipment, the identity of the carrier and the shipment
destination.

 

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ARTICLE IV

ASSUMPTION OF PURCHASE ORDERS AND AGREEMENTS

4.1          Purchase Orders for Products.

(A)            ON THE CLOSING DATE, METRON SHALL, AND SHALL CAUSE THE METRON
SELLING AFFILIATES TO, TRANSFER TO THE DESIGNATED FSI PURCHASING AFFILIATES, AND
THE FSI PURCHASING AFFILIATES SHALL ASSUME, ALL REMAINING OBLIGATIONS
OUTSTANDING UNDER PURCHASE ORDERS FOR PRODUCTS OUTSTANDING AS OF THE CLOSING
DATE TO THE EXTENT PERMITTED BY THE TERMS OF EACH SUCH PURCHASE ORDER.  THE
RESPONSIBILITY FOR ACCEPTING ORDERS FOR PRODUCTS, INVOICING CUSTOMERS,
DISTRIBUTING PRODUCTS TO CUSTOMERS AND SERVICING CUSTOMERS SHALL TRANSFER FROM
METRON AND ITS AFFILIATES TO FSI OR ITS AFFILIATES ON THE CLOSING DATE.  THE
FOREGOING SHALL EXCLUDE PURCHASE ORDERS FOR THE SALE OF PRODUCTS IN ISRAEL.

(B)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “PRODUCT PURCHASE ORDER LISTING”) OF
EACH PURCHASE ORDER FOR PRODUCTS OUTSTANDING (I.E., REMAINING TO BE FULFILLED)
AS OF AUGUST 31, 2002 (EXCLUDING PURCHASE ORDERS FOR THE SALE OF PRODUCTS IN
ISRAEL).  THE PRODUCT PURCHASE ORDER LISTING SHALL INDICATE METRON OR THE
RELEVANT METRON SELLING AFFILIATE HOLDING EACH ORDER, THE APPLICABLE CUSTOMER,
CUSTOMER LOCATION, DATE OF ACCEPTANCE OF ORDER, PRODUCT DESCRIPTION, QUANTITY
AND VALUE OF PURCHASE ORDER AND ANY START-UP, INSTALLATION AND COMMISSIONING
OBLIGATIONS REMAINING TO BE FULFILLED.  WITHIN THIRTY (30) DAYS FOLLOWING THE
END OF EACH FISCAL QUARTER OF METRON FROM THE EFFECTIVE DATE TO THE CLOSING
DATE, OR AT SUCH OTHER TIMES AS THE PARTIES MAY AGREE, METRON SHALL PROVIDE FSI
WITH AN UPDATED PRODUCT PURCHASE ORDER LISTING, INCLUDING A LISTING AS OF THE
CLOSING DATE.

(C)            WITH RESPECT TO PURCHASE ORDERS FOR PRODUCTS THAT ARE OUTSTANDING
AS OF THE CLOSING DATE AND TRANSFERRED TO AND ASSUMED BY FSI OR THE FSI
PURCHASING AFFILIATES IN ACCORDANCE WITH SECTION 4.1(A) (“CLOSING DATE PRODUCT
PURCHASE ORDERS”), FSI, FOR ITSELF AND ON BEHALF OF THE FSI PURCHASING
AFFILIATES, AGREES TO PAY METRON, WHICH SHALL TAKE RECEIPT ON BEHALF OF ITSELF
AND THE METRON SELLING AFFILIATES, THE FOLLOWING COMMISSIONS (EACH, A “PRODUCT
COMMISSION”) ON SUCH CLOSING DATE PRODUCT PURCHASE ORDERS:

(I)            FOR CLOSING DATE PRODUCT PURCHASE ORDERS FOR THE PURCHASE OF SCD
SYSTEM PRODUCTS, A PRODUCT COMMISSION EQUAL TO [***] OF THE NET INVOICE PRICE,
AND

(II)           FOR CLOSING DATE PRODUCT PURCHASE ORDERS FOR THE PURCHASE OF MLD
SYSTEM PRODUCTS, A PRODUCT COMMISSION EQUAL TO [***] OF THE NET INVOICE PRICE.

Notwithstanding the foregoing, FSI shall have no obligation to pay the Product
Commission on Closing Date Product Purchase Orders with respect to which the
Products subject to the order do not ship within twelve (12) months from the
Closing Date, so long as such delay in shipment is at the request of the
customer or due to action on the part of the customer (including cancellation of
the Closing Date Product Purchase Order); provided, however, in the event that a
customer cancels a Closing Date Product Purchase Order after the Closing Date
and subsequently submits a purchase order for Products that is substantially
equivalent (including as to quantity, price, type

 

*Confidential Treatment Requested

 

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of Product and delivery location) to the cancelled Closing Date Product Purchase
Order and the Products subject to such new purchase order ship within twelve
(12) months from the Closing Date, FSI shall pay Metron the Product Commission
on such purchase order up to the amount that would have been paid in respect of
the Product Commission on the cancelled Closing Date Product Purchase Order. 
The parties agree to conduct their business in the ordinary course during the
Transition Period.  During the Transition Period, FSI agrees not to encourage
customers to either postpone the placement of orders until after March 1, 2003
or to cancel current orders with Metron, and Metron agrees not to encourage
customers to accelerate the placement of orders.  FSI shall pay amounts owed to
Metron in respect of the Product Commission within thirty (30) days after FSI’s
shipment of the Products.  Metron shall be responsible for transmitting to the
appropriate Metron Selling Affiliate any such commissions allocable to such of
Metron’s Affiliates.

(D)           DURING THE TRANSITION PERIOD, FSI AND METRON AGREE TO CONTINUE THE
DISCOUNT SHARING ARRANGEMENTS SET FORTH IN THE DISTRIBUTION AGREEMENTS.

(E)            NEITHER METRON NOR ANY OF THE METRON SELLING AFFILIATES SHALL
HAVE ANY RIGHT TO RECEIVE ANY COMMISSIONS ON OR OTHERWISE RECEIVE REMUNERATION
FOR PURCHASE ORDERS GENERATED OR RECEIVED AFTER THE CLOSING DATE FOR PRODUCTS OR
FOR ANY OTHER EQUIPMENT, WARRANTIES OR SERVICES OR AMOUNTS BILLED UNDER SUCH
PURCHASE ORDERS.

4.2          System Start-Ups.

(A)            ON THE CLOSING DATE, METRON SHALL, AND SHALL CAUSE THE RELEVANT
METRON SELLING AFFILIATES TO, TRANSFER TO FSI OR THE RELEVANT FSI PURCHASING
AFFILIATES, AND FSI OR THE FSI PURCHASING AFFILIATES SHALL ASSUME, ALL REMAINING
OUTSTANDING OBLIGATIONS FOR SYSTEM START-UP, INSTALLATION AND COMMISSIONING
UNDER PURCHASE ORDERS FOR PRODUCTS THAT HAVE BEEN SHIPPED BUT FOR WHICH THE
SYSTEM START-UP, INSTALLATION AND COMMISSIONING IS NOT COMPLETED AS OF THE
CLOSING DATE (COLLECTIVELY, THE “CLOSING DATE SYSTEM START-UPS”).  THE FOREGOING
SHALL EXCLUDE CLOSING DATE SYSTEM START-UPS FOR PRODUCTS IN ISRAEL.

(B)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “SYSTEM START-UP LISTING”) OF EACH
PURCHASE ORDER FOR WHICH FOR SYSTEM START-UP, INSTALLATION AND COMMISSIONING
REMAINS TO BE COMPLETED AS OF AUGUST 31, 2002.  THE SYSTEM START UP LISTING
SHALL INDICATE METRON OR THE RELEVANT METRON SELLING AFFILIATE RESPONSIBLE FOR
SUCH SYSTEM START-UP, THE APPLICABLE CUSTOMER, CUSTOMER LOCATION, DATE OF
ACCEPTANCE OF ORDER, SYSTEM START-UP, INSTALLATION AND COMMISSIONING TO BE
PERFORMED, AMOUNT IN THE PURCHASE ORDER ATTRIBUTABLE TO START-UP, INSTALLATION
AND COMMISSIONING THE START-UP, INSTALLATION AND COMMISSIONING OBLIGATIONS
REMAINING TO BE FULFILLED.  WITHIN THIRTY (30) DAYS FOLLOWING THE END OF EACH
FISCAL QUARTER OF METRON FROM THE EFFECTIVE DATE TO THE CLOSING DATE, OR AT SUCH
OTHER TIMES AS THE PARTIES MAY AGREE, METRON SHALL PROVIDE FSI WITH AN UPDATED
SYSTEM START-UP LISTING, INCLUDING A LISTING AS OF THE CLOSING DATE.

(C)            WITH RESPECT TO CLOSING DATE SYSTEM START-UPS ASSUMED BY FSI OR
THE FSI PURCHASING AFFILIATES PURSUANT TO SECTION 4.2(A), METRON SHALL
COMPENSATE FSI FOR THE WORK REMAINING TO COMPLETE ALL CLOSING DATE SYSTEM
START-UPS.  THE AMOUNT OF COMPENSATION TO BE PAID BY METRON IN RESPECT OF SUCH
CLOSING DATE SYSTEM START-UPS (THE “SYSTEM START-UP

 

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Compensation”) shall be determined by the parties by multiplying the remaining
percentage completion for each Closing Date System Start-Up by the standard fee
charged for start-up, installation and commissioning for similar customers
purchasing similar Products (or if the fee for start-up, installation and
commissioning is separately indicated in the purchase order, by such fee).  The
parties determination of percentage completion shall be computed by dividing the
number of hours provided by Metron’s service engineers as of the Closing Date by
the standard total number of service engineer hours provided by Metron for
start-up, installation and commissioning for similar customers purchasing
similar Products.  Payment of the System Start-Up Compensation shall be made in
accordance with the terms of Article II governing payment of the Purchase Price.

4.3          Purchase Orders for Spare Parts.

(A)            ON THE CLOSING DATE, METRON SHALL, AND SHALL CAUSE THE METRON
SELLING AFFILIATES TO, TRANSFER TO FSI OR THE RELEVANT FSI PURCHASING
AFFILIATES, AND FSI OR THE FSI PURCHASING AFFILIATES SHALL ASSUME, ALL REMAINING
OBLIGATIONS OUTSTANDING UNDER PURCHASE ORDERS FOR SPARE PARTS OUTSTANDING AS OF
THE CLOSING DATE, TO THE EXTENT PERMITTED BY THE TERMS OF EACH SUCH PURCHASE
ORDER.  THE RESPONSIBILITY FOR ACCEPTING ORDERS FOR SPARE PARTS, INVOICING
CUSTOMERS, DISTRIBUTING SPARE PARTS TO CUSTOMERS AND SERVICING CUSTOMERS SHALL
TRANSFER FROM METRON OR ITS AFFILIATES TO FSI OR ITS AFFILIATES ON THE CLOSING
DATE.  THE FOREGOING SHALL EXCLUDE PURCHASE ORDERS FOR THE SALE OF SPARE PARTS
IN ISRAEL.

(B)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “SPARE PARTS PURCHASE ORDER LISTING”)
OF EACH PURCHASE ORDER FOR SPARE PARTS OUTSTANDING (I.E., REMAINING TO BE
FULFILLED) AS OF AUGUST 31, 2002 (EXCLUDING PURCHASE ORDERS FOR THE SALE OF
SPARE PARTS IN ISRAEL).  THE SPARE PARTS PURCHASE ORDER LISTING SHALL INDICATE
METRON OR THE RELEVANT METRON SELLING AFFILIATE HOLDING EACH SUCH ORDER, THE
APPLICABLE CUSTOMER, CUSTOMER LOCATION, DATE OF ACCEPTANCE OF ORDER, SPARE PARTS
DESCRIPTION AND QUANTITY AND VALUE OF PURCHASE ORDER.  WITHIN THIRTY (30) DAYS
FOLLOWING THE END OF EACH FISCAL QUARTER OF METRON FROM THE EFFECTIVE DATE TO
THE CLOSING DATE, OR AT SUCH OTHER TIMES AS THE PARTIES MAY AGREE, METRON SHALL
PROVIDE FSI WITH AN UPDATED SPARE PARTS PURCHASE ORDER LISTING, INCLUDING A
LISTING AS OF THE CLOSING DATE.

(C)            WITH RESPECT TO PURCHASE ORDERS FOR SPARE PARTS THAT ARE
OUTSTANDING AS OF THE CLOSING DATE AND TRANSFERRED TO AND ASSUMED BY FSI OR ITS
AFFILIATES IN ACCORDANCE WITH SECTION 4.3(A) (“CLOSING DATE SPARE PARTS PURCHASE
ORDERS”), FSI FOR ITSELF AND ON BEHALF OF THE FSI PURCHASING AFFILIATES, AGREES
TO PAY METRON WHICH SHALL TAKE RECEIPT ON BEHALF OF ITSELF AND THE METRON
SELLING AFFILIATES, A COMMISSION EQUAL TO [***] OF THE NET INVOICE PRICE (THE
“SPARE PARTS COMMISSION”).  NOTWITHSTANDING THE FOREGOING, FSI SHALL HAVE NO
OBLIGATION TO PAY THE SPARE PARTS COMMISSION ON CLOSING DATE SPARE PARTS
PURCHASE ORDERS WITH RESPECT TO WHICH THE SPARE PARTS SUBJECT TO THE ORDER DO
NOT SHIP WITHIN TWELVE (12) MONTHS FROM THE CLOSING DATE, SO LONG AS SUCH DELAY
IN SHIPMENT IS AT THE REQUEST OF THE CUSTOMER OR DUE TO ACTION ON THE PART OF A
CUSTOMER (INCLUDING CANCELLATION OF THE CLOSING DATE SPARE PARTS PURCHASE
ORDER); PROVIDED, HOWEVER, IN THE EVENT THAT A CUSTOMER CANCELS A CLOSING DATE
SPARE PARTS PURCHASE ORDER AFTER THE CLOSING DATE AND SUBSEQUENTLY SUBMITS A
PURCHASE ORDER FOR SPARE PARTS THAT IS SUBSTANTIALLY

 

*Confidential Treatment Requested

 

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equivalent (including as to quantity, price, type of Spare Part and delivery
location) to the cancelled Closing Date Spare Parts Purchase Order and the Spare
Parts subject to such new purchase order ship within twelve (12) months from the
Closing Date, FSI shall pay Metron the Spare Parts Commission on such purchase
order up to the amount that would have been paid in respect of the Spare Parts
Commission on the cancelled Closing Date Spare Parts Purchase Order.  FSI shall
pay amounts owed to Metron in respect of the Spare Parts Commission within
thirty (30) days after FSI’s shipment of the Spare Parts.  Metron shall be
responsible for transmitting to the appropriate Metron Selling Affiliate any
such commissions allocable to such of Metron’s Affiliates.

(D)           NEITHER METRON NOR ANY OF THE METRON SELLING AFFILIATES SHALL HAVE
ANY RIGHT TO RECEIVE ANY COMMISSIONS ON OR OTHERWISE RECEIVE REMUNERATION FOR
PURCHASE ORDERS GENERATED OR RECEIVED AFTER THE CLOSING DATE FOR SPARE PARTS OR
FOR ANY OTHER EQUIPMENT, WARRANTIES OR SERVICES OR AMOUNTS BILLED UNDER SUCH
PURCHASE ORDERS.

4.4          Assumption of Service and Support Contracts.

(A)            ON THE CLOSING DATE, METRON SHALL, AND SHALL CAUSE THE METRON
SELLING AFFILIATE TO, TRANSFER TO FSI OR THE RELEVANT FSI PURCHASING AFFILIATES,
AND FSI OR THE FSI PURCHASING AFFILIATES SHALL ASSUME, ALL REMAINING OBLIGATIONS
INCURRED IN THE ORDINARY COURSE OF BUSINESS AND OUTSTANDING UNDER SERVICE
CONTRACTS, PREVENTATIVE MAINTENANCE AND APPLICATION SUPPORT CONTRACTS FOR
PRODUCTS OR FOR SPARE PARTS ENTERED INTO IN THE ORDINARY COURSE OF BUSINESS BY
METRON OR THE METRON SELLING AFFILIATES WITH CUSTOMERS PURCHASING PRODUCTS OR
SPARE PARTS (EACH SUCH CONTRACT, A “SERVICE/APPLICATIONS SUPPORT CONTRACT”)
OUTSTANDING AS OF THE CLOSING DATE TO THE EXTENT PERMITTED BY THE TERMS OF EACH
SUCH CONTRACT.  THE FOREGOING SHALL EXCLUDE SERVICE/APPLICATIONS SUPPORT
CONTRACT FOR PRODUCTS AND SPARE PARTS IN ISRAEL.

(B)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “SERVICE/APPLICATIONS SUPPORT CONTRACT
LISTING”) OF EACH SERVICE/APPLICATIONS SUPPORT CONTRACT ENTERED INTO WITH
RESPECT TO PRODUCTS OR SPARE PARTS THAT IS STILL IN EFFECT AS OF AUGUST 31, 2002
(EXCLUDING CONTRACTS WITH CUSTOMERS IN ISRAEL).  THE SERVICE/APPLICATIONS
SUPPORT CONTRACT LISTING SHALL INDICATE METRON OR THE RELEVANT METRON SELLING
AFFILIATE WHICH IS A PARTY TO EACH SUCH CONTRACT OR COMMITMENT, THE APPLICABLE
CUSTOMER, CUSTOMER LOCATION, DATE AND DURATION OF THE CONTRACT AND DESCRIPTION
OF THE CONTRACT, AND THE IDENTITY OF THE METRON SERVICE TECHNICIAN PRINCIPALLY
RESPONSIBLE FOR SUCH SUPPORT.  METRON SHALL ALSO PROVIDE A COMPLETE AND CORRECT
COPY OF EACH SUCH SERVICE/APPLICATIONS SUPPORT CONTRACT.  WITHIN THIRTY (30)
DAYS FOLLOWING THE END OF EACH FISCAL QUARTER OF METRON FROM THE EFFECTIVE DATE
TO THE CLOSING DATE, OR AT SUCH OTHER TIMES AS THE PARTIES MAY AGREE, METRON
SHALL PROVIDE FSI WITH AN UPDATED SERVICE/APPLICATIONS SUPPORT CONTRACT LISTING,
INCLUDING A LISTING AS OF THE CLOSING DATE.

(C)            WITH RESPECT TO SERVICE/APPLICATIONS SUPPORT CONTRACTS THAT ARE
OUTSTANDING AS OF THE CLOSING DATE (“CLOSING DATE SERVICE/APPLICATIONS SUPPORT
CONTRACTS”) ASSUMED BY FSI OR THE FSI PURCHASING AFFILIATES PURSUANT TO SECTION
4.4(A), IF CUSTOMERS HAVE PRE-PAID ANY AMOUNTS PAYABLE UNDER SUCH CONTRACTS,
METRON SHALL COMPENSATE FSI (FOR RECEIPT ON BEHALF OF ITSELF AND THE FSI
PURCHASING AFFILIATES) FOR THE ASSUMPTION OF THE REMAINING OBLIGATIONS UNDER
SUCH CONTRACTS.  THE AMOUNT OF COMPENSATION TO BE PAID BY METRON IN RESPECT OF
SUCH CLOSING DATE

 

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Service/Applications Support Contracts (the “Service/Applications Support
Compensation”) shall be determined by the parties based upon the percentage
completion of each Closing Date Service/Applications Support Contract.  Payment
of the Service/Applications Support Compensation shall be made in accordance
with the terms of Article II governing payment of the Purchase Price.

(D)           METRON SHALL AND SHALL CAUSE THE RELEVANT METRON SELLING
AFFILIATES TO USE COMMERCIALLY REASONABLE EFFORTS TO ASSIGN TO FSI OR ITS
AFFILIATES THE CLOSING DATE SERVICE/APPLICATIONS SUPPORT CONTRACTS, INCLUDING
USING COMMERCIALLY REASONABLE EFFORTS TO CAUSE CUSTOMERS TO APPROVE AND ACCEPT
THE ASSIGNMENT OF SUCH CONTRACTS TO FSI OR THE FSI PURCHASING AFFILIATES.  IN
THE EVENT THAT A CUSTOMER DOES NOT ACCEPT OR APPROVE THE ASSIGNMENT OF ITS
CLOSING DATE SERVICE/APPLICATIONS SUPPORT CONTRACT TO FSI OR THE RELEVANT FSI
PURCHASING AFFILIATE, METRON SHALL OR SHALL CAUSE ITS AFFILIATES TO CONTINUE TO
PERFORM ITS OBLIGATIONS UNDER SUCH CONTRACT AND, UPON METRON’S REASONABLE
REQUEST AND IN CONNECTION THEREWITH, FSI WILL MAKE AVAILABLE TO METRON THE
SERVICES OF FSI’S SERVICE TECHNICIANS AND SPARE PARTS TO PERFORM THE SERVICES
REASONABLY NECESSARY TO THE PERFORMANCE OF SUCH OBLIGATIONS.  FSI SHALL MAKE
SUCH SERVICE TECHNICIANS AND SPARE PARTS AVAILABLE TO METRON UPON TERMS AND
CONDITIONS TO BE MUTUALLY AGREED BY FSI AND METRON.  IN THE EVENT FSI PROVIDES
SERVICE TECHNICIANS OR SPARE PARTS TO FULFILL A SERVICE/APPLICATIONS SUPPORT
CONTRACT RETAINED BY METRON OR A METRON SELLING AFFILIATE, METRON SHALL OR SHALL
CAUSE THE RELEVANT METRON SELLING AFFILIATE TO PAY OVER TO FSI THE FULL AMOUNT
OF ALL PAYMENTS RECEIVED FROM THE CUSTOMER UNDER SUCH CONTRACT, INCLUDING THE
PROFIT MARGIN, LESS 10% TO BE RETAINED BY METRON.

(E)            NEITHER METRON NOR ANY OF THE METRON SELLING AFFILIATES SHALL
HAVE ANY RIGHT TO RECEIVE ANY COMMISSIONS ON OR OTHERWISE RECEIVE REMUNERATION
IN CONNECTION WITH THE ASSIGNMENT OF CLOSING DATE SERVICE/APPLICATIONS SUPPORT
CONTRACTS TO FSI OR THE FSI PURCHASING AFFILIATES, INCLUDING ANY RIGHT TO
RECEIVE ANY REMUNERATION FOR AMOUNTS RECEIVED BY FSI OR THE FSI PURCHASING
AFFILIATES FOR THE PERFORMANCE UNDER SUCH ASSIGNED CONTRACTS.

4.5          Assumption of Parts and Labor Warranties.

(A)            WITH RESPECT TO PRODUCTS AND SPARE PARTS PURCHASED BY METRON
PRIOR TO THE CLOSING DATE, FSI SHALL RETAIN ALL OBLIGATIONS IN RESPECT OF
WARRANTY PARTS IN ACCORDANCE WITH THE TERMS AND CONDITIONS OF FSI’S STANDARD
WARRANTIES SET FORTH IN THE DISTRIBUTION AGREEMENTS.  IN THE EVENT THAT METRON
HAS PROVIDED ANY EXTENSION OF SUCH PARTS WARRANTY BEYOND SUCH STANDARD TERMS AND
CONDITIONS AND SUCH EXTENSION REMAINS IN EFFECT AFTER THE CLOSING DATE, METRON
SHALL REIMBURSE FSI FOR ASSUMING ANY OBLIGATIONS UNDER SUCH EXTENSION OF FSI’S
STANDARD PARTS WARRANTY.  THE AMOUNT TO BE REIMBURSED SHALL BE AGREED BY THE
PARTIES BASED ON THE PARTIES’ WARRANTY EXPERIENCE FOR THE PRODUCTS SUBJECT TO
SUCH EXTENDED WARRANTY.

(B)           WITH RESPECT TO PRODUCTS AND SPARE PARTS PURCHASED BY METRON PRIOR
TO THE CLOSING DATE, FSI AGREES TO ASSUME OR CAUSE THE FSI PURCHASING AFFILIATES
TO ASSUME ALL OBLIGATIONS OF METRON OR ITS AFFILIATES IN RESPECT OF ANY LABOR
WARRANTY REMAINING IN EFFECT AS OF THE CLOSING DATE.  METRON SHALL REIMBURSE FSI
FOR ASSUMING ANY OBLIGATIONS UNDER SUCH ANY SUCH LABOR WARRANTY.  THE AMOUNT TO
BE REIMBURSED SHALL BE AGREED BY THE PARTIES BASED ON THE PARTIES’ WARRANTY
EXPERIENCE FOR THE PRODUCTS AND ON METRON’S AVERAGE COST FOR SERVICE TECHNICIANS
(IT BEING UNDERSTOOD THAT THE AVERAGE COST PER HOUR SHALL BE CALCULATED BY
DIVIDING THE SALARY AND

 

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benefits for the service technician by the customary number of hours worked in
the relevant jurisdiction) multiplied by the average number of hours required to
satisfy labor warranty claims for Products.

(C)            NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE FSI WITH A DETAILED LIST (A “WARRANTY LISTING”) OF ALL OUTSTANDING
PARTS AND LABOR WARRANTIES FOR PRODUCTS OR SPARE PARTS SOLD UNDER THE
DISTRIBUTION AGREEMENT (EXCLUDING WARRANTIES WITH FOR PRODUCTS OR SPARE PARTS
SOLD IN ISRAEL).  THE WARRANTY LISTING SHALL INDICATE METRON OR THE RELEVANT
METRON SELLING AFFILIATE OBLIGATED TO PERFORM SUCH WARRANTY, THE APPLICABLE
CUSTOMER, CUSTOMER LOCATION, PRODUCT AND DATE OF SALE, WARRANTY OBLIGATION
DESCRIPTION (INCLUDING WHETHER IT IS A STANDARD FSI WARRANTY OR NON-STANDARD
WARRANTY), REMAINING WARRANTY TERM AND ESTIMATED COST OF THE OUTSTANDING
WARRANTY OBLIGATION.  WITHIN THIRTY (30) DAYS FOLLOWING THE END OF EACH FISCAL
QUARTER OF METRON FROM THE EFFECTIVE DATE TO THE CLOSING DATE, OR AT SUCH OTHER
TIMES AS THE PARTIES MAY AGREE, METRON SHALL PROVIDE FSI WITH AN UPDATED
WARRANTY LISTING, INCLUDING A LISTING AS OF THE CLOSING DATE.

(D)           WITH RESPECT TO PARTS AND LABOR WARRANTIES FOR PRODUCTS OR SPARE
PARTS THAT ARE OUTSTANDING AS OF THE CLOSING DATE (“CLOSING DATE WARRANTY
OBLIGATIONS”) ASSUMED BY FSI OR THE FSI PURCHASING AFFILIATES PURSUANT TO
SECTIONS 4.5(A) AND 4.5(B), METRON SHALL COMPENSATE FSI FOR THE ASSUMPTION OF
SUCH WARRANTIES.  THE AMOUNT OF COMPENSATION TO BE PAID BY METRON IN RESPECT OF
SUCH CLOSING DATE WARRANTY OBLIGATIONS (THE “WARRANTY COMPENSATION”) SHALL BE
DETERMINED BY THE PARTIES BASED ON THE WARRANTY LISTING AND IN ACCORDANCE WITH
SECTIONS 4.5(A) AND 4.5(B).  PAYMENT OF THE WARRANTY COMPENSATION SHALL BE MADE
IN ACCORDANCE WITH THE TERMS OF ARTICLE II GOVERNING PAYMENT OF THE PURCHASE
PRICE.

(E)            IN THE EVENT THAT A CUSTOMER DOES NOT ACCEPT OR APPROVE THE
ASSUMPTION OF ITS PARTS AND LABOR WARRANTY BY FSI OR THE RELEVANT FSI PURCHASING
AFFILIATE, METRON SHALL OR SHALL CAUSE ITS AFFILIATES TO CONTINUE TO PERFORM ITS
OBLIGATIONS UNDER SUCH WARRANTY AND, UPON METRON’S REASONABLE REQUEST AND IN
CONNECTION THEREWITH, FSI SHALL MAKE AVAILABLE TO METRON THE SERVICES OF FSI’S
SERVICE TECHNICIANS AND SPARE PARTS TO PERFORM THE SERVICES REASONABLY NECESSARY
TO THE PERFORMANCE OF SUCH OBLIGATIONS.  METRON SHALL REIMBURSE FSI FOR
PROVIDING SUCH SERVICE TECHNICIANS AND SPARE PARTS.  THE AMOUNT TO BE REIMBURSED
IN RESPECT OF SERVICE TECHNICIANS SHALL BE BASED ON FSI’S COST PER HOUR FOR
SERVICE TECHNICIANS (IT BEING UNDERSTOOD THAT THE COST PER HOUR SHALL BE
CALCULATED BASED ON THE SALARY AND BENEFITS FOR THE SERVICE TECHNICIAN)
MULTIPLIED BY THE ACTUAL NUMBER OF HOURS WORKED BY THE SERVICE TECHNICIAN TO
SATISFY THE WARRANTY OBLIGATION.  THE AMOUNT TO BE REIMBURSED IN RESPECT OF
SPARE PARTS SHALL, UNLESS THE SPARE PART IS SUBJECT TO AN FSI WARRANTY, BE FSI’S
COST FOR THE SPARE PART.  IF THE SPARE PART IS SUBJECT TO AN FSI WARRANTY,
METRON SHALL HAVE NO OBLIGATION TO REIMBURSE FSI FOR THE SPARE PART.

ARTICLE V

ACCOUNTS RECEIVABLE AND INVOICES

5.1          Collection of Accounts Receivable.

(A)            METRON SHALL RETAIN ALL ACCOUNTS RECEIVABLE OUTSTANDING IN
CONNECTION WITH THE DISTRIBUTION BUSINESS AS OF THE CLOSING DATE (THE
“PRE-CLOSING ACCOUNTS RECEIVABLE”), AND, EXCEPT AS PROVIDED BELOW, SHALL BE
RESPONSIBLE FOR ALL COLLECTION ACTIVITIES FOR SUCH PRE-CLOSING

 

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Accounts Receivable.  Subject to Section 5.1(c), in the event that FSI or any of
its Affiliates receives a payment in respect of any Pre-Closing Account
Receivable, FSI shall within thirty (30) days of receipt of such payment pay
over such payment to Metron.  In the event that Metron or any of its Affiliates
receives a payment in respect of any an account receivable generated by FSI with
respect to the Distribution Business (excluding the Israel Distribution
Business) after the Closing Date, Metron shall within thirty (30) days of
receipt of such payment pay over such payment to FSI.

(B)           ON THE CLOSING DATE, METRON SHALL PROVIDE FSI WITH A LISTING, AS
OF FEBRUARY 28, 2003, OF ALL PRE-CLOSING ACCOUNTS RECEIVABLE RELATED TO SCD
SYSTEM PRODUCTS AND MLD SYSTEM PRODUCTS.  FSI AND METRON SHALL COOPERATE IN GOOD
FAITH IN ORDER TO FACILITATE THE PROMPT PAYMENT BY CUSTOMERS TO METRON OR ITS
AFFILIATES OF ALL SUCH PRODUCT PRE-CLOSING ACCOUNTS RECEIVABLE.

(C)            IN THE EVENT THAT ANY PRODUCT PRE-CLOSING ACCOUNT RECEIVABLE IS
MORE THAN SIXTY (60) DAYS OUTSTANDING ON THE CLOSING DATE OR BECOMES MORE THAN
SIXTY (60) DAYS OUTSTANDING AT ANY TIME AFTER THE CLOSING DATE AND THE REASON
FOR NON-PAYMENT BY THE CUSTOMER IS NOT THE RESULT OF ANY DISPUTE WITH A CUSTOMER
STEMMING FROM A FAILURE OF THE RELEVANT PRODUCT OR ANY DEFICIENCY IN RESPECT OF
ANY POST-CLOSING SERVICES ASSUMED AND RENDERED BY FSI OR ITS AFFILIATES IN
ACCORDANCE WITH THIS AGREEMENT, FSI SHALL, IN EXCHANGE FOR METRON’S ASSIGNMENT
OF SUCH PRE-CLOSING ACCOUNT RECEIVABLE TO FSI, PAY METRON IN FULL FOR THE AMOUNT
OUTSTANDING UNDER SUCH PRE-CLOSING ACCOUNT RECEIVABLE AND, UPON SUCH ASSIGNMENT,
SHALL ASSUME RESPONSIBILITY FOR ALL COLLECTION ACTIVITIES FOR SUCH PRE-CLOSING
ACCOUNT RECEIVABLE.  FOR THE AVOIDANCE OF DOUBT, THE PARTIES AGREE THAT FSI
SHALL HAVE NO OBLIGATION TO ASSUME RESPONSIBILITY FOR THE COLLECTION OF ANY SUCH
PRODUCT PRE-CLOSING ACCOUNT RECEIVABLE IF METRON’S FAILURE TO COLLECT IS DUE TO
A CREDIT ISSUE WITH THE CUSTOMER, THE CUSTOMER’S CASH FLOW PROBLEMS OR ANY
DISPUTES OVER PROPER INVOICING OR SHIPMENT OF PRODUCTS MADE BY METRON OR ITS
AFFILIATES PRIOR TO CLOSING.

5.2          Payment of Open Invoices.  Metron shall continue to be responsible,
in accordance with the Distribution Agreements, for the payment of all amounts
owed to FSI under the Distribution Agreements accrued up to the Closing Date in
accordance with the prices and terms and conditions of sale of FSI that were in
effect as of the date of the sale, including all amounts under any invoices
issued by FSI to Metron for purchase of Products or Spare Parts under the
Distribution Agreements.

ARTICLE VI

EMPLOYEES

6.1          Employees of the Distribution Business.  Schedule 6.1 sets forth a
list of ninety-two (92) employees of Metron or its Affiliates who are employed
in the sales, marketing, support or servicing of Products as part of the
Distribution Business to be acquired by FSI pursuant to this Agreement and
includes each such employee’s job title, country of residence and Metron
Affiliate which is such employee’s employer.  Metron and FSI agree that, as of
the Closing Date, the number of employees to be transferred to FSI shall be the
ninety-two (92) employees set forth on Schedule 6.1, less any number of such
employees who resign or retire from the employ of Metron or its Affiliates or
who die or become disabled prior to the Closing Date (the employees so
transferred, the “Transferred Employees”).  Metron shall provide FSI with
updates to the list included on Schedule 6.1 from time to time up to and
including the Closing Date to

 

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reflect any changes in the list of such employees.  No later that thirty (30)
days from the Effective Date, Metron shall provide FSI with (i) an update to
Schedule 6.1 to include a brief summary of the employment terms for each such
employee, including compensation, salary, bonus and commission arrangements,
notice entitlement, date of birth and length of service and (ii) an update to
Schedule 9.1(j) to include all Employee Benefits to which each such employee is
entitled (other than Employee Benefit plans and arrangements that are imposed by
statute).  Metron shall not, prior to the Closing Date, increase any
compensation, modify any Employee Benefits or otherwise alter the terms of
employment of any of the Transferred Employees, except for (x) compensation
increases approved in advance and in writing by FSI, (y) currently planned merit
salary increases for a selected number of Transferred Employees not to exceed
[***] of salary and (z) such modifications to Employee Benefits or employment
terms as are required by law.

6.2          Metron Responsibilities.  Metron shall have the following
responsibilities and liabilities with respect to employees:

(A)            METRON SHALL BE RESPONSIBLE FOR UNDERTAKING ALL NOTIFICATIONS AND
CONSULTATIONS WITH THE APPROPRIATE REPRESENTATIVES OF ANY EMPLOYEES OF METRON
WHO MIGHT BE DEEMED TO BE EMPLOYED BY THE DISTRIBUTION BUSINESS AS OF THE
EFFECTIVE DATE.

(B)           METRON SHALL BE RESPONSIBLE FOR AND SHALL PAY OR CAUSE ITS
AFFILIATES TO PAY ANY AND ALL SEVERANCE OR REDUNDANCY COSTS TOGETHER WITH ALL
AWARDS FOR UNFAIR DISMISSAL OR FAILURE OF METRON TO COMPLY WITH RELEVANT LAWS
AND REGULATIONS RELATING TO THE TRANSFER OF EMPLOYEES, INCLUDING ANY
CONSULTATION AND NOTIFICATION OBLIGATIONS, WHICH MAY BECOME DUE AND OWING TO ANY
PERSON OTHER THAN A PERSON WHO, IMMEDIATELY AFTER THE CLOSING, IS ONE OF THE
TRANSFERRED EMPLOYEES.  METRON SHALL FURTHER PAY OR REIMBURSE FSI FOR ALL
AMOUNTS ACCRUED AND DUE AND OWING TO ANY TRANSFERRED EMPLOYEES AS OF THE CLOSING
DATE UNDER EMPLOYEE BENEFIT PLANS WHICH WILL BE CONTINUED BY FSI AFTER THE
CLOSING.

(C)            METRON SHALL INDEMNIFY AND HOLD HARMLESS FSI FROM AND AGAINST ALL
CLAIMS, COSTS, LIABILITIES AND DAMAGES ARISING OUT OF ANY CLAIM BY ANY PERSON,
INCLUDING ANY TRANSFERRED EMPLOYEE, FOR PAYMENT OF SALARY, BONUS OR COMMISSIONS,
FOR A BREACH OF APPLICABLE LAWS OR REGULATIONS RELATING TO THE TRANSFER OF
EMPLOYEES, FOR UNFAIR DISMISSAL, OR FOR PAYMENT OF SEVERANCE AMOUNTS OR
REDUNDANCY PAYMENTS ARISING PRIOR TO OR AFTER THE CLOSING BASED SOLELY ON THE
ACTS OR OMISSIONS OF METRON PRIOR TO THE CLOSING.  IN ADDITION, METRON SHALL
INDEMNIFY AND HOLD HARMLESS FSI FROM AND AGAINST ALL CLAIMS, COSTS, LIABILITIES
AND DAMAGES BASED ON A CLAIM FOR PAYMENT OF SEVERANCE AMOUNTS AND REDUNDANCY
COSTS OR UNFAIR DISMISSAL BY ANY METRON EMPLOYEE BY REASON OF CONSTRUCTIVE
TERMINATION OF EMPLOYMENT ARISING OUT OF OR BASED ON THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.  IN THE EVENT THAT THE EMPLOYMENT
OF ANY EMPLOYEE OF METRON, OTHER THAN A TRANSFERRED EMPLOYEE, IS DEEMED TO
TRANSFER TO FSI, WHETHER BY OPERATION OF LAW OR OTHERWISE, FSI SHALL HAVE THE
RIGHT TO TERMINATE SUCH EMPLOYEE PROMPTLY, AND METRON SHALL INDEMNIFY AND HOLD
HARMLESS FSI FROM AND AGAINST ALL CLAIMS, COSTS (INCLUDING REASONABLE ATTORNEYS
FEES), LIABILITIES AND DAMAGES ARISING OUT OF ANY CLAIM BY ANY SUCH PERSON FOR
PAYMENT OF SALARY, BONUS OR COMMISSIONS, FOR A BREACH OF APPLICABLE LAWS OR
REGULATIONS RELATING TO THE TRANSFER OF EMPLOYEES, FOR UNFAIR DISMISSAL OR FOR
THE

 

*Confidential Treatment Requested

 

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payment of severance amounts or redundancy payments arising, directly or
indirectly from the employment transferred to FSI or its termination by FSI; in
exercising the foregoing rights, FSI shall use commercially reasonable efforts
so as to minimize the amount of any claims by such employee for payment of
salary, bonuses or commissions, for damages for unfair dismissal or for the
payment of severance and redundancy amounts.

(D)           NO LATER THAN THIRTY (30) DAYS FROM THE EFFECTIVE DATE, METRON
SHALL PROVIDE TO FSI ALL DOCUMENTS DESCRIBING OR CONSTITUTING EMPLOYEE BENEFITS
PLANS OR ARRANGEMENTS APPLICABLE TO THE TRANSFERRED EMPLOYEES THAT ARE DISCLOSED
IN THE UPDATE TO SCHEDULE 9.1(J) TO BE DELIVERED AFTER THE EFFECTIVE DATE IN
ACCORDANCE WITH SECTION 6.1.

(E)            METRON SHALL PAY TO THE TRANSFERRED EMPLOYEES ALL SALARIES,
BONUSES, COMMISSIONS, VACATION PAY, EXPENSES CLAIMS, SICK PAY AND SIMILAR
COMPENSATION DUE AND PAYABLE TO THE TRANSFERRED EMPLOYEES THROUGH AND INCLUDING
THE CLOSING DATE.  IN ADDITION, METRON OR THE RELEVANT METRON SELLING AFFILIATE
SHALL PAY TO THE TRANSFERRED EMPLOYEES ALL COMMISSIONS ARISING IN RESPECT OF
CLOSING DATE PRODUCT PURCHASE ORDERS AND CLOSING DATE SPARE PARTS PURCHASE
ORDERS IN ACCORDANCE WITH ANY COMMISSION PLANS OR PROGRAMS IN EFFECT AT METRON
FOR SUCH TRANSFERRED EMPLOYEES.  ALL SUCH AMOUNTS REFERRED TO ABOVE SHALL BE
PAID TO THE TRANSFERRED EMPLOYEES ON OR BEFORE THE CLOSING DATE.

(F)            METRON SHALL ASSIGN OR SHALL CAUSE ITS RELEVANT AFFILIATES TO
ASSIGN TO FSI OR ITS DESIGNATED AFFILIATES ALL AUTO LEASES HELD BY METRON OR ITS
AFFILIATES ON THE CLOSING DATE FOR AUTOMOBILES USED BY ANY OF THE TRANSFERRED
EMPLOYEES IN THE DISTRIBUTION BUSINESS, SUBJECT TO THE CONSENT OF THE LESSORS,
IF NECESSARY.  IN THE EVENT METRON OR ITS AFFILIATES ARE UNABLE TO SECURE THE
CONSENT OF ANY OF THE LESSOR TO THE ASSIGNMENT OF SUCH LEASES, METRON SHALL OR
SHALL CAUSE ITS AFFILIATES TO CONTINUE TO MAKE ALL LEASE AND INSURANCE PAYMENTS
IN RESPECT OF SUCH AUTOS FOR THE REMAINDER OF THE LEASE TERM.  METRON SHALL
INVOICE FSI FOR ALL SUCH AUTO LEASE AND INSURANCE PAYMENTS ON A MONTHLY BASIS,
WHICH INVOICES SHALL BE PAID BY FSI WITHIN THIRTY (30) DAYS OF THE DATE OF
INVOICE.

6.3          FSI Responsibilities.  FSI shall have the following
responsibilities and liabilities with respect to Transferred Employees:

(A)            FSI SHALL CONSULT WITH METRON AND PROVIDE METRON WITH ALL
RELEVANT INFORMATION, IN GOOD FAITH, CONCERNING FSI’S PLANS FOR THE DISTRIBUTION
BUSINESS IN ORDER TO ENABLE METRON TO FULFILL ITS OBLIGATIONS TO THE EMPLOYEES
OF THE DISTRIBUTION BUSINESS AS PROVIDED IN SECTION 6.2(A) ABOVE.  FSI SHALL
FURTHER PARTICIPATE WITH METRON IN SUCH CONSULTATIONS WITH EMPLOYEES AS AND TO
THE EXTENT REASONABLY REQUESTED BY METRON.

(B)           FSI SHALL CONTINUE THE EMPLOYMENT OF ALL OF THE TRANSFERRED
EMPLOYEES IN ACCORDANCE WITH THEIR TERMS OF EMPLOYMENT AS SUCH TERMS OF
EMPLOYMENT EXIST ON THE CLOSING DATE, AND SHALL PAY TO THE TRANSFERRED EMPLOYEES
ALL SALARIES, BONUSES, COMMISSIONS, VACATION PAY, EXPENSES CLAIMS, SICK PAY AND
SIMILAR COMPENSATION TO THE TRANSFERRED EMPLOYEES ARISING AFTER THE CLOSING
DATE.

(C)            FSI SHALL CONTINUE ALL EMPLOYEE BENEFITS PLANS OR REPLACE SUCH
EMPLOYEE BENEFITS PLANS WITH NEW OR EXISTING FSI PLANS WHICH ARE SUBSTANTIALLY
THE SAME AS THE EMPLOYEE BENEFITS

 

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plans maintained by Metron for the benefit of the Transferred Employees on the
Closing Date, and shall pay to the Transferred Employees all amounts arising
under such Employee Benefit plans after the Closing Date.

(D)           FSI SHALL INDEMNIFY AND HOLD HARMLESS METRON FROM AND AGAINST ALL
CLAIMS, COSTS, LIABILITIES AND DAMAGES ARISING OUT OF ANY CLAIM BY A TRANSFERRED
EMPLOYEE FOR PAYMENT OF SALARY, BONUS OR COMMISSIONS, FOR UNFAIR DISMISSAL OR
FOR PAYMENT OF SEVERANCE AMOUNTS OR REDUNDANCY PAYMENTS IN THE EVENT FSI
TERMINATES SUCH TRANSFERRED EMPLOYEE AFTER THE CLOSING DATE.

(E)            FSI SHALL INDEMNIFY AND HOLD HARMLESS METRON FROM AND AGAINST ALL
CLAIMS, COSTS, LIABILITIES AND DAMAGES RELATED TO THE AUTOMOBILES AND AUTOMOBILE
LEASES REFERRED TO IN SECTION 6.2(F) ARISING AFTER THE CLOSING, SUBJECT TO
METRON’S OBLIGATION TO MAKE LEASE PAYMENTS AND INSURANCE PAYMENTS UNDER SECTION
6.2(F) IF THE CONSENT OF A LESSOR TO ASSIGNMENT OF AN AUTOMOBILE LEASE IS NOT
OBTAINED AND TO ANY RECOVERY OBTAINED BY METRON UNDER INSURANCE POLICIES IT
MAINTAINS WITH RESPECT TO SUCH AUTOMOBILES AND AUTOMOBILE LEASES.

6.4          Employee Property.  If and to the extent any of the Transferred
Employees utilize laptop computers, cell phones, pagers, calculators or similar
equipment in connection with their employment in the Distribution Business,
Metron shall permit the Transferred Employees to retain such equipment and FSI
shall compensate Metron at the rate of $1,000 for each Transferred Employee
possessing such equipment.  FSI shall have no obligation to compensate Metron
with respect to any Transferred Employee who does not possess or use such
equipment in his or her employment.  In addition, to the extent that any of the
Transferred Employees utilize tools or training manuals and tools in the course
of providing support services for Products in the Distribution Business, Metron
shall permit such Transferred Employees to retain such tools and training
materials, and FSI shall compensate Metron for such equipment at the net book
value of such items.  The aggregate amount of the compensation payable by FSI to
Metron under this Section 6.4 shall be referred to as the “Transferred Employee
Tools and Equipment Purchase Price.”  On or before the Closing Date, Metron
shall provide FSI with a list of those Transferred Employees possessing such
computers, cell phones, pagers, calculators, tools and training tools, together
with a list, by Transferred Employee, of all such equipment and items.

6.5          Applicability of Certain Provisions to Employees Located in
France.  The parties agree that the provisions of Sections 6.1, 6.2, 6.3 and 6.4
shall not be binding upon Metron or its Affiliate in France and shall have no
force or effect with respect to employees of Metron or its Affiliate in France
who are located in France unless and until (a) either Metron or its Affiliate in
France has informed and consulted with its Affiliate’s works council in France
regarding the transactions contemplated by this Agreement in accordance with
applicable laws and regulations relating to the transfer of employees located in
France, and (b) to the extent legally required as a result of such consultations
under applicable laws and regulations, such provisions have been amended by
mutual agreement of the parties with respect their application to employees of
Metron or its Affiliate in France who are located in France.

6.6          Non-Solicitation.  Metron agrees that it will not and will not
permit its Affiliates to directly or indirectly solicit any FSI employee,
including any of the Transferred Employees, to become an employee, director,
consultant or contractor with or for Metron or any of its Affiliates

 

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or to enter into any agreement with any FSI employee in any of the foregoing
capacities for a period of one (1) year from the Closing Date.  FSI agrees that
it will not and will not permit any of its Affiliates to directly or indirectly
solicit any Metron employee to become an employee, director, consultant or
contractor with or for FSI or any of its Affiliates or to enter into any
agreement with a Metron employee in any of the foregoing capacities for a period
of one (1) year from the Closing Date.  Notwithstanding the foregoing, nothing
in this Section 6.6 shall preclude either party from soliciting or employing any
employee of the other party or the other party’s Affiliates who resigns from or
is terminated by the other party or the other party’s Affiliates or from
soliciting or employing any employee of the other party or the other party’s
Affiliates who contacts the first party or its Affiliates regarding potential
employment or who responds to an advertisement for a position with the first
party or any of its Affiliates.

ARTICLE VII

FACILITIES

In the event that, as a result of the sale of the Distribution Business to FSI,
Metron expects to have excess facilities capacity immediately following the
Closing Date, Metron may notify FSI in writing no later than January 1, 2003 of
the identity, location and nature of such excess capacity.  FSI shall determine
its anticipated need for facilities in order to operate the Distribution
Business no later than January 31, 2003 and shall notify Metron of its
determination.  In the event that FSI determines in its sole discretion that it
has a need for all or some of the excess facilities capacity of Metron, the
parties shall negotiate in good faith with respect to one or more sub-leases of
such facilities as the parties may agree, and on such terms as the parties may
agree, which shall in all cases be arm’s length and fair market terms.

ARTICLE VIII

CLOSING AND CLOSING CONDITIONS

8.1          Closing.  Subject to the satisfaction or waiver of the conditions
set forth in Sections 8.2 and 8.3 (but no such waiver of a condition shall
constitute a waiver of any rights or remedies otherwise available to a party
hereunder, including indemnification under Article XII for a breach of any
representation or warranty or covenant of the other party hereunder), the
closing of the transactions contemplated by this Agreement (the “Closing”) shall
take place at the offices of Dorsey & Whitney LLP in Minneapolis, Minnesota on
March 1, 2003 (the “Closing Date”) or at such other place and on such other
earlier or later date as may be mutually agreed by FSI and Metron, in which case
“Closing Date” means the date so agreed.  The Closing will be effective as of
the close of business on the Closing Date.  The parties agree that all steps to
be taken at the Closing of the transactions contemplated by this Agreement are
interdependent with each other and, accordingly, each step taken at the Closing
shall have no effect until the consummation of all the transactions and
agreements contemplated in this Agreement in accordance with their respective
terms and conditions.

 

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8.2          Metron’s Closing Conditions.  The obligation of Metron to take the
actions required to be taken by it at the Closing is subject to the satisfaction
or waiver, in whole or in part, in Metron’s sole discretion, of each of the
following conditions at or prior to the Closing:

(A)            REPRESENTATIONS AND WARRANTIES OF FSI.  THE REPRESENTATIONS AND
WARRANTIES OF FSI SET FORTH IN SECTION 9.2 SHALL HAVE BEEN TRUE AND CORRECT IN
ALL MATERIAL RESPECTS AS OF THE EFFECTIVE DATE, AND SHALL BE TRUE AND CORRECT IN
ALL RESPECTS AS OF THE CLOSING DATE AS IF MADE AT AND AS OF THE CLOSING DATE,
EXCEPT THAT (I) ANY SUCH REPRESENTATION AND WARRANTY THAT BY ITS TERMS SPEAKS
ONLY AS TO A SPECIFIED DATE (OTHER THAN THE DATE HEREOF) SHALL ONLY NEED TO BE
TRUE AND CORRECT AS OF SUCH DATE AND (II) ANY INACCURACIES IN SUCH
REPRESENTATIONS AND WARRANTIES AS OF THE CLOSING DATE SHALL BE DISREGARDED (A)
IF THE CIRCUMSTANCES GIVING RISE TO ALL SUCH INACCURACIES (CONSIDERED
COLLECTIVELY) DO NOT HAVE AND WOULD NOT REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT ON METRON’S ABILITY TO REAP THE BENEFITS OF THE
TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (IT BEING UNDERSTOOD THAT, FOR THE
PURPOSES OF DETERMINING THE ACCURACY OF SUCH REPRESENTATIONS AND WARRANTIES AS
OF THE CLOSING DATE, ALL MATERIALITY QUALIFICATIONS CONTAINED IN SUCH
REPRESENTATIONS AND WARRANTIES SHALL BE DISREGARDED) OR (B) IF THE CIRCUMSTANCES
GIVING RISE TO SUCH INACCURACIES ARE THE RESULT OF ANY ACTION TAKEN OR NOT TAKEN
PURSUANT TO THE TERMS OF THIS AGREEMENT.

(B)           COVENANTS OF FSI.  FSI SHALL HAVE PERFORMED AND COMPLIED IN ALL
MATERIAL RESPECTS WITH EACH OF ITS COVENANTS AND AGREEMENTS CONTAINED IN THIS
AGREEMENT AND REQUIRED TO BE PERFORMED OR COMPLIED WITH BY FSI PRIOR TO THE
CLOSING.

(C)            CONSENTS AND APPROVALS.  ALL MATERIAL CONSENTS AND APPROVALS
NECESSARY FOR THE COMPLETION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
INCLUDING ALL GOVERNMENTAL AND REGULATORY CONSENTS AND APPROVALS, SHALL HAVE
BEEN OBTAINED, EXCEPT WHERE THE FAILURE TO OBTAIN SUCH CONSENTS OR APPROVALS
WOULD NOT HAVE OR WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON METRON’S ABILITY TO REAP THE BENEFITS OF THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.

(D)           ADVERSE LAWS OR PROCEEDINGS.  NO LAW SHALL HAVE BEEN ENACTED OR
PROMULGATED, AND NO JUDGMENT, ORDER, RULING OR DECREE OF ANY COURT, ARBITRATOR
OR OTHER JUDICIAL OR GOVERNMENTAL AUTHORITY SHALL HAVE BEEN ISSUED AND SHALL
REMAIN IN EFFECT, WHICH RESTRAINS OR ENJOINS OR OTHERWISE PROHIBITS THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND NO ACTION,
SUIT OR PROCEEDING BY ANY PERSON OR ENTITY OR ANY GOVERNMENTAL AUTHORITY SHALL
HAVE BEEN COMMENCED WHICH CHALLENGES OR SEEKS TO PREVENT THE COMPLETION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

(E)            DELIVERABLES.  ALL OF THE DOCUMENTS REQUIRED UNDER SECTION 8.5 TO
BE EXECUTED AND DELIVERED BY FSI PRIOR TO OR AT THE CLOSING PURSUANT TO THIS
AGREEMENT SHALL HAVE BEEN EXECUTED AND DELIVERED BY FSI.

 

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8.3          FSI’s Closing Conditions.  The obligation of FSI to take the
actions required to be taken by it at the Closing is subject to the satisfaction
or waiver, in whole or in part, in FSI’s sole discretion, of each of the
following conditions at or prior to the Closing:

(A)            REPRESENTATIONS AND WARRANTIES OF METRON.  THE REPRESENTATIONS
AND WARRANTIES OF METRON SET FORTH IN SECTION 9.1 SHALL HAVE BEEN TRUE AND
CORRECT IN ALL MATERIAL RESPECTS AS OF THE EFFECTIVE DATE, AND SHALL BE TRUE AND
CORRECT IN ALL RESPECTS AS OF THE CLOSING DATE AS IF MADE AT AND AS OF THE
CLOSING DATE, EXCEPT THAT (I) ANY SUCH REPRESENTATION AND WARRANTY THAT BY ITS
TERMS SPEAKS ONLY AS TO A SPECIFIED DATE (OTHER THAN THE DATE HEREOF) SHALL ONLY
NEED TO BE TRUE AND CORRECT AS OF SUCH DATE AND (II) ANY INACCURACIES IN SUCH
REPRESENTATIONS AND WARRANTIES SHALL BE DISREGARDED IF (A) THE CIRCUMSTANCES
GIVING RISE TO ALL SUCH INACCURACIES (CONSIDERED COLLECTIVELY) DO NOT CONSTITUTE
AND WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE
DISTRIBUTION BUSINESS OR HAVE A MATERIAL ADVERSE EFFECT UPON FSI’S ABILITY TO
REAP THE BENEFITS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT (IT BEING
UNDERSTOOD THAT, FOR THE PURPOSES OF DETERMINING THE ACCURACY OF SUCH
REPRESENTATIONS AND WARRANTIES AS OF THE CLOSING DATE, ALL MATERIALITY
QUALIFICATIONS CONTAINED IN SUCH REPRESENTATIONS AND WARRANTIES SHALL BE
DISREGARDED) OR (B) IF THE CIRCUMSTANCES GIVING RISE TO SUCH INACCURACIES ARE AS
A RESULT OF ANY ACTION TAKEN OR NOT TAKEN PURSUANT TO THE TERMS OF THIS
AGREEMENT.

(B)           COVENANTS OF METRON.  METRON SHALL HAVE PERFORMED AND COMPLIED IN
ALL MATERIAL RESPECTS WITH EACH OF ITS COVENANTS AND AGREEMENTS CONTAINED IN
THIS AGREEMENT  AND REQUIRED TO BE PERFORMED OR COMPLIED WITH BY METRON PRIOR TO
THE CLOSING.

(C)            CONSENTS AND APPROVALS.  ALL MATERIAL CONSENTS AND APPROVALS
NECESSARY FOR THE COMPLETION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT,
INCLUDING ALL GOVERNMENTAL AND REGULATORY CONSENTS AND APPROVALS, SHALL HAVE
BEEN OBTAINED, EXCEPT WHERE THE FAILURE TO OBTAIN SUCH CONSENTS OR APPROVALS
WOULD NOT HAVE OR WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON THE DISTRIBUTION BUSINESS.

(D)           ADVERSE LAWS OR PROCEEDINGS.  NO LAW SHALL HAVE BEEN ENACTED OR
PROMULGATED, AND NO JUDGMENT, ORDER, RULING OR DECREE OF ANY COURT, ARBITRATOR
OR OTHER JUDICIAL OR GOVERNMENTAL AUTHORITY SHALL HAVE BEEN ISSUED AND SHALL
REMAIN IN EFFECT, WHICH RESTRAINS OR ENJOINS OR OTHERWISE PROHIBITS THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, AND NO ACTION,
SUIT OR PROCEEDING BY ANY PERSON OR ENTITY OR ANY GOVERNMENTAL AUTHORITY SHALL
HAVE BEEN COMMENCED WHICH CHALLENGES OR SEEKS TO PREVENT THE COMPLETION OF THE
TRANSACTIONS CONTEMPLATED HEREBY.

(E)            DELIVERABLES.  ALL OF THE DOCUMENTS REQUIRED UNDER SECTION 8.4 TO
BE EXECUTED AND DELIVERED BY METRON PRIOR TO OR AT THE CLOSING PURSUANT TO THIS
AGREEMENT SHALL HAVE BEEN EXECUTED AND DELIVERED METRON.

8.4          Metron Deliveries at Closing.  Subject to the conditions set forth
in this Agreement, on the Closing Date, Metron shall deliver to FSI or cause to
be delivered to FSI:

(A)            METRON CLOSING CERTIFICATE.  METRON SHALL CAUSE TO BE DELIVERED A
CERTIFICATE OF THE APPROPRIATE OFFICERS OF METRON, DATED AS OF THE CLOSING DATE,
IN WHICH SUCH OFFICERS SHALL CERTIFY THAT THE CONDITIONS SET FORTH IN SECTION
8.3(A) AND (B) HAVE BEEN FULFILLED.

 

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(B)           METRON BILLS OF SALE, ETC.  METRON SHALL, AND SHALL CAUSE THE
RELEVANT METRON SELLING AFFILIATE TO, EXECUTE AND DELIVER SUCH BILLS OF SALE,
NOTARIAL DEEDS AND/OR OTHER INSTRUMENTS OF TRANSFER (TOGETHER WITH EVIDENCE OF
THE TERMINATION AND RELEASE OF ALL LIENS ON THE PRODUCT INVENTORY, SPARE PARTS
INVENTORY, DEMONSTRATION EQUIPMENT AND ANY OTHER ASSETS OF THE DISTRIBUTION
BUSINESS TO BE TRANSFERRED OR ASSIGNED TO FSI PURSUANT TO THIS AGREEMENT) AS FSI
OR THE FSI PURCHASING AFFILIATES MAY REASONABLY REQUEST IN ORDER TO CONVEY,
TRANSFER, ASSIGN AND DELIVER TO FSI OR THE RELEVANT FSI PURCHASING AFFILIATE
FREE AND CLEAR OF ALL LIENS, THE PRODUCT INVENTORY, SPARE PARTS INVENTORY,
DEMONSTRATION EQUIPMENT AND OTHER ASSETS OF THE DISTRIBUTION BUSINESS SOLD TO
FSI AND THE FSI PURCHASING AFFILIATES PURSUANT TO THIS AGREEMENT.

(C)            PERMITS AND PRODUCT REGISTRATIONS.  METRON SHALL, AND SHALL CAUSE
THE RELEVANT METRON SELLING AFFILIATE TO, ASSIGN AND DELIVER TO FSI OR THE
RELEVANT FSI PURCHASING AFFILIATE ALL PERMITS, INCLUDING PRODUCT REGISTRATIONS,
TO THE EXTENT THEY ARE ASSIGNABLE, EXCEPT WHERE THE FAILURE TO ASSIGN AND
DELIVER SUCH PERMITS OR PRODUCT REGISTRATIONS WOULD NOT HAVE OR WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON THE DISTRIBUTION
BUSINESS.

(D)           DELIVERY OF RECORDS.  SUBJECT TO THE  TERMS OF THE TRANSITION
PLAN, METRON SHALL, AND SHALL CAUSE THE RELEVANT METRON SELLING AFFILIATE TO,
DELIVER TO FSI OR THE RELEVANT FSI PURCHASING AFFILIATE ALL FILES (INCLUDING,
BUT NOT LIMITED TO, THE ALL WARRANTY FILES FOR EACH SYSTEM IN THE POSSESSION OF
METRON OR ANY METRON SELLING AFFILIATE), RECORDS AND OTHER RELEVANT SUPPORTING
DOCUMENTATION RELATING PRIMARILY TO THE DISTRIBUTION BUSINESS (INCLUDING RECORDS
AND DOCUMENTATION IN THE POSSESSION OF METRON OR ANY METRON SELLING AFFILIATE
THAT RELATE TO LABOR AND WARRANTY OBLIGATIONS, SERVICE/APPLICATIONS SUPPORT
CONTRACTS, CLOSING DATE PRODUCT PURCHASE ORDERS AND CLOSING DATE SPARE PARTS
PURCHASE ORDERS ASSUMED BY FSI AND THE FSI PURCHASING AFFILIATE PURSUANT TO THIS
AGREEMENT) (OTHER THAN DUPLICATE COPIES THEREOF THAT ARE MAINTAINED BY METRON
FOR GENERAL CORPORATE, TAX AND ACCOUNTING PURPOSES).

(E)            METRON CLOSING DATE PAYMENT.  METRON SHALL MAKE THE METRON
CLOSING DATE PAYMENT IN ACCORDANCE WITH SECTION 2.4(C), IF APPLICABLE.

(F)            OTHER METRON DELIVERABLES.  METRON SHALL DELIVER SUCH OTHER
CERTIFICATES, DOCUMENTS AND INSTRUMENTS THAT FSI REASONABLY REQUESTS FOR THE
PURPOSE FACILITATING THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT, EXCEPT WHERE THE FAILURE TO DELIVER SUCH DOCUMENTS OR INSTRUMENTS
WOULD NOT HAVE OR WOULD NOT REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE
EFFECT ON THE DISTRIBUTION BUSINESS.

8.5          FSI Deliveries at Closing.  Subject to the conditions set forth in
this Agreement, on the Closing Date, FSI shall deliver to Metron or cause to be
delivered to Metron:

(A)            FSI CLOSING CERTIFICATE.  FSI SHALL CAUSE TO BE DELIVERED A
CERTIFICATE OF THE APPROPRIATE OFFICERS OF FSI, DATED AS OF THE CLOSING DATE, IN
WHICH SUCH OFFICERS SHALL CERTIFY THAT THE CONDITIONS SET FORTH IN SECTION
8.2(A) AND (B) HAVE BEEN FULFILLED.

(B)           FSI CLOSING DATE PAYMENT.  FSI SHALL MAKE THE FSI CLOSING DATE
PAYMENT IN ACCORDANCE WITH SECTION 2.4(B), IF APPLICABLE.

(C)            METRON SHARES.  FSI SHALL DELIVER THE METRON SHARES (OR PORTION
THEREOF) BY DELIVERING TO METRON OR ITS DESIGNATED AGENT THE SHARE CERTIFICATES
REPRESENTING THE METRON SHARES,

 

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together with such instruments and endorsements necessary under applicable law
to transfer such certificates and ownership in the Metron Shares to Metron in
accordance with Section 2.4(b), if applicable.

(D)           OTHER FSI DELIVERABLES.  FSI SHALL EXECUTE SUCH DOCUMENTS ASSUMING
THE SERVICE AND WARRANTY OBLIGATIONS OF METRON AND THE METRON SELLING AFFILIATES
AS REQUIRED BY ARTICLE IV AND SHALL DELIVER SUCH OTHER CERTIFICATES, DOCUMENTS
AND INSTRUMENTS THAT METRON REASONABLY REQUESTS FOR THE PURPOSE FACILITATING THE
CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, EXCEPT WHERE
THE FAILURE TO DELIVER SUCH DOCUMENTS OR INSTRUMENTS WOULD NOT HAVE OR WOULD NOT
REASONABLY BE EXPECTED TO HAVE A MATERIAL ADVERSE EFFECT ON METRON’S ABILITY TO
REAP THE BENEFITS OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.

8.6          Efforts to Close.  FSI and Metron shall each use its commercially
reasonable efforts to take, or cause to be taken, all actions, and to do, or
cause to be done, all things necessary, proper or advisable (subject to all
applicable laws) to cause the conditions in Sections 8.2 and 8.3, respectively,
to be satisfied on a timely basis and to consummate and make effective the
transactions contemplated by this Agreement by the Closing Date.

8.7          Failure to Close.  Notwithstanding anything else contained in this
Agreement, in the event that for any reason the Closing does not occur on or
prior to the Closing Date, FSI and Metron shall have the following rights and
remedies:

(A)            FAILURE OF CONDITION OUTSIDE THE CONTROL OF THE PARTIES.  IF THE
REASON THAT THE CLOSING HAS NOT OCCURRED IS THE RESULT OF THE FAILURE TO SATISFY
ANY OF A CONDITIONS SET FORTH IN SECTION 8.2(A) (“REPRESENTATIONS AND WARRANTIES
OF FSI”) (WITH RESPECT TO THE ACCURACY OF THE REPRESENTATIONS AND WARRANTIES OF
FSI SET FORTH IN SECTIONS 9.2(D) AND (E) AS OF THE CLOSING DATE), SECTION 8.2(C)
(“CONSENTS AND APPROVALS”), SECTION 8.2(D) (“ADVERSE LAWS OR PROCEEDINGS”),
SECTION 8.3(A) (“REPRESENTATIONS AND WARRANTIES OF METRON”) (WITH RESPECT TO THE
ACCURACY OF THE REPRESENTATIONS AND WARRANTIES OF METRON SET FORTH IN SECTIONS
9.1(D) AND (E) AS OF THE CLOSING DATE), SECTION 8.3(C) (“CONSENTS AND
APPROVALS”) OR SECTION 8.3(D) (“ADVERSE LAWS OR PROCEEDINGS”), THEN EITHER FSI
OR METRON MAY TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO THE OTHER PARTY, AND
NO PARTY SHALL HAVE THE RIGHT TO REQUEST SPECIFIC PERFORMANCE OF THIS AGREEMENT
AND NO PARTY SHALL BE LIABLE FOR DAMAGES TO ANY OTHER PARTY TO THIS AGREEMENT
EXCEPT TO THE EXTENT THAT THE FAILURE TO CLOSE IS ATTRIBUTABLE TO THE MATERIAL
DEFAULT BY ONE OF THE PARTIES HERETO.

(B)           FAILURE OF CONDITION WITHIN THE CONTROL OF METRON.  IF THE REASON
THAT THE CLOSING HAS NOT OCCURRED IS NOT BY REASON OF SECTION 8.7(A) BUT IS THE
RESULT OF THE FAILURE TO SATISFY ANY OF THE CONDITIONS SET FORTH IN SECTION
8.3(A) (“REPRESENTATIONS AND WARRANTIES OF METRON”) (OTHER THAN WITH RESPECT TO
THE ACCURACY OF THE REPRESENTATIONS AND WARRANTIES OF METRON SET FORTH IN
SECTIONS 9.1(D) AND (E) AS OF THE CLOSING DATE), SECTION 8.3(B) (“COVENANTS OF
METRON”), SECTION 8.4(A) (“METRON CLOSING CERTIFICATE”), SECTION 8.4(B) (“METRON
BILLS OF SALE, ETC.”), SECTION 8.4(C) (“PERMITS AND PRODUCT REGISTRATIONS”),
SECTION 8.4(E) (“METRON CLOSING DATE PAYMENT”) AND SECTION 8.4(F) (“OTHER METRON
DELIVERABLES”), AND IF FSI IS NOT IN MATERIAL DEFAULT UNDER THIS AGREEMENT, FSI
MAY, UPON AT LEAST TEN (10) DAYS NOTICE TO METRON, ELECT TO EITHER (I)
CONSUMMATE THE TRANSACTIONS SET FORTH HEREIN AND SEEK SPECIFIC PERFORMANCE OF
THIS AGREEMENT DESPITE THE NONFULFILLMENT OF THE RELEVANT CONDITION OR
CONDITIONS OR DEFAULT OR (II) TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO
METRON.  IN EITHER CASE, FSI SHALL BE FURTHER ENTITLED TO PURSUE ANY CLAIMS OR

 

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cause of action it may have, if any, against Metron at law or in equity arising
out of the material breach by Metron of any material covenant, representation or
warranty hereunder.

(C)            FAILURE OF CONDITION WITHIN THE CONTROL OF FSI.  IF THE REASON
THAT THE CLOSING HAS NOT OCCURRED IS NOT BY REASON OF SECTION 8.7(A) BUT IS THE
RESULT OF THE FAILURE TO SATISFY ANY OF THE CONDITIONS SET FORTH IN SECTION
8.2(A) (“REPRESENTATIONS AND WARRANTIES OF FSI”) (OTHER THAN WITH RESPECT TO THE
ACCURACY OF THE REPRESENTATIONS AND WARRANTIES OF FSI SET FORTH IN SECTIONS
9.2(D) AND (E) AS OF THE CLOSING DATE), SECTION 8.2(B) (“COVENANTS OF FSI”),
SECTION 8.5(A) (“FSI CLOSING CERTIFICATE”), SECTION 8.5(B) (“FSI CLOSING DATE
PAYMENT”), SECTION 8.5(C) (“METRON SHARES”) AND SECTION 8.5(D) (“OTHER FSI
DELIVERABLES”), AND IF METRON IS NOT IN MATERIAL DEFAULT UNDER THIS AGREEMENT,
METRON MAY, UPON AT LEAST TEN (10) DAYS NOTICE TO FSI, ELECT TO EITHER (I)
CONSUMMATE THE TRANSACTIONS SET FORTH HEREIN AND SEEK SPECIFIC PERFORMANCE OF
THIS AGREEMENT DESPITE THE NONFULFILLMENT OF THE RELEVANT CONDITION OR
CONDITIONS OR DEFAULT OR (II) TERMINATE THIS AGREEMENT BY WRITTEN NOTICE TO
FSI.  IN EITHER CASE, METRON SHALL BE FURTHER ENTITLED TO PURSUE ANY CLAIMS OR
CAUSE OF ACTION IT MAY HAVE, IF ANY, AGAINST FSI AT LAW OR IN EQUITY ARISING OUT
OF THE MATERIAL BREACH BY FSI OF ANY MATERIAL COVENANT, REPRESENTATION OR
WARRANTY HEREUNDER.

ARTICLE IX

REPRESENTATIONS AND WARRANTIES

9.1          Representations and Warranties by Metron.  Metron, on behalf of
itself and it’s the Metron Selling Affiliates, represents and warrants to FSI as
follows:

(A)            DUE ORGANIZATION; CORPORATE POWER.  METRON IS A PUBLIC LIMITED
LIABILITY COMPANY (NAAMLOZE VENNOOTSCHAP) DULY ORGANIZED AND VALIDLY EXISTING
UNDER THE LAWS OF THE NETHERLANDS AND HAS THE CORPORATE POWER AND AUTHORITY TO
CARRY ON (THROUGH ITSELF AND THE METRON SELLING AFFILIATES) THE DISTRIBUTION
BUSINESS AS NOW BEING CONDUCTED, EXECUTE AND DELIVER THIS AGREEMENT AND
CONSUMMATE THE TRANSACTIONS CONTEMPLATED HEREBY.

(B)           CONFLICTING AGREEMENTS.  THE EXECUTION AND DELIVERY BY METRON OF
THIS AGREEMENT, THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT, AND THE OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS CONTEMPLATED
HEREBY, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND
THE PERFORMANCE OR OBSERVANCE BY METRON AND THE METRON SELLING AFFILIATES OF ANY
OF THE TERMS OR CONDITIONS HEREOF OR THEREOF, WILL NOT MATERIALLY CONFLICT WITH,
OR RESULT IN A MATERIAL BREACH OR VIOLATION OF THE TERMS OR CONDITIONS OF, OR
CONSTITUTE A DEFAULT UNDER, OR RESULT IN THE CREATION OF ANY LIEN ON ANY OF THE
ASSETS OF METRON OR ANY METRON SELLING AFFILIATE PURSUANT TO, (I) THE ARTICLES
OF ASSOCIATION OR SHAREHOLDER RESOLUTIONS OF METRON OR ANY METRON SELLING
AFFILIATE THAT ARE PRESENTLY IN FORCE, (II) ANY AWARD OF ANY ARBITRATOR OR
JUDGE, OR (III) ANY INDENTURE, CONTRACT OR AGREEMENT (INCLUDING ANY AGREEMENT
WITH SHAREHOLDERS), INSTRUMENT, ORDER, JUDGMENT, DECREE, STATUTE, LAW, RULE OR
REGULATION TO WHICH METRON OR ANY METRON SELLING AFFILIATE OR THE ASSETS OF
METRON OR ANY METRON SELLING AFFILIATE IS SUBJECT.

(C)            CORPORATE AUTHORITY.  THE EXECUTION AND DELIVERY BY METRON OF
THIS AGREEMENT, THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT, AND THE OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS CONTEMPLATED
HEREBY, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION.  THIS AGREEMENT,
THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY AGREEMENT, AND ALL
OTHER

 

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agreements, documents and instruments required hereby to be executed and
delivered by Metron are, or when delivered will be, legal, valid and binding
obligations of Metron, enforceable in accordance with their respective terms,
subject in each case to (i) laws of general application relating to bankruptcy,
insolvency and the relief of debtors and (ii) general principles of equity.

(D)           ACTIONS, SUITS, PROCEEDINGS.  THERE ARE NO REQUESTS, NOTICES,
INVESTIGATIONS, CLAIMS, DEMANDS, ACTIONS, SUITS OR OTHER LEGAL OR ADMINISTRATIVE
PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF METRON, THREATENED AGAINST METRON OR
ANY METRON SELLING AFFILIATE OR ANY OF THEIR RESPECTIVE PROPERTIES IN ANY COURT
OR ARBITRATION TRIBUNAL OR BEFORE ANY FEDERAL, LOCAL OR OTHER GOVERNMENTAL
AGENCY WHICH (I) SEEK TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR OBTAIN ANY DAMAGES IN CONNECTION THEREWITH, (II) IN ANY WAY
CALL INTO QUESTION THE VALIDITY OF THIS AGREEMENT, THE ISRAEL DISTRIBUTION
AGREEMENT, THE NOTE AND THE SECURITY AGREEMENT, OR ANY OTHER AGREEMENT, DOCUMENT
OR INSTRUMENT CONTEMPLATED HEREBY OR (III) COULD REASONABLY BE EXPECTED TO HAVE
A MATERIAL ADVERSE EFFECT ON THE DISTRIBUTION BUSINESS OR ON THE ABILITY OF
METRON OR ANY METRON SELLING AFFILIATE TO CONSUMMATE THE TRANSACTIONS
CONTEMPLATED BY THIS AGREEMENT.

(E)            GOVERNMENTAL AUTHORITIES, CONSENTS.  NEITHER METRON NOR ANY
METRON SELLING AFFILIATE IS REQUIRED TO SUBMIT ANY NOTICE, REPORT OR OTHER
FILING WITH OR TO ANY GOVERNMENTAL AUTHORITY IN CONNECTION WITH THE EXECUTION OR
DELIVERY BY METRON OF THIS AGREEMENT OR THE CONSUMMATION OF THE TRANSACTIONS
CONTEMPLATED HEREBY AND, NO CONSENT, APPROVAL OR AUTHORIZATION OF ANY
GOVERNMENTAL OR REGULATORY AUTHORITY IS REQUIRED TO BE OBTAINED BY METRON OR ANY
METRON SELLING AFFILIATE IN CONNECTION WITH METRON’S EXECUTION, DELIVERY AND
PERFORMANCE OF THIS AGREEMENT.

(F)            OWNERSHIP OF ASSETS OF THE DISTRIBUTION BUSINESS.  AS OF THE
CLOSING, EITHER METRON OR A METRON SELLING AFFILIATE WILL HAVE GOOD AND
MARKETABLE TITLE TO EACH OF THE PRODUCTS, SPARE PARTS, DEMONSTRATION EQUIPMENT
AND OTHER ASSETS OF THE DISTRIBUTION BUSINESS FREE AND CLEAR OF ALL LIENS.

(G)           CONTRACTS RELATED TO THE DISTRIBUTION BUSINESS.  SCHEDULE 11.4(A),
TO BE DELIVERED IN ACCORDANCE WITH SECTION 11.4, WILL SET FORTH, AS OF THE
CLOSING DATE  A TRUE AND COMPLETE LIST OF ALL CONTRACTS, COMMITMENTS AND
ARRANGEMENTS (OTHER THAN PURCHASE ORDERS TO BE FULFILLED WITHIN SIXTY (60) DAYS
AND OTHER THAN THE DISTRIBUTION AGREEMENTS AND THE ISRAEL DISTRIBUTION
AGREEMENT) TO WHICH METRON OR ANY AFFILIATE OF METRON IS A PARTY OR BY WHICH IT
IS BOUND, THAT ARE CURRENTLY IN EFFECT AND THAT RELATE TO THE CONDUCT OF THE
DISTRIBUTION BUSINESS.

(H)           COMPLIANCE WITH LAWS; PRODUCT REGISTRATIONS.  METRON AND THE
METRON SELLING AFFILIATES ARE CONDUCTING AND HAVE CONDUCTED THE DISTRIBUTION
BUSINESS IN COMPLIANCE IN ALL MATERIAL RESPECTS WITH ALL LAWS, REGULATIONS AND
ORDERS APPLICABLE TO METRON AND THE DISTRIBUTION BUSINESS.  METRON HAS, IN FULL
FORCE AND EFFECT, ALL LICENSES, PERMITS AND CERTIFICATES, FROM FEDERAL, STATE,
LOCAL AND FOREIGN GOVERNMENTAL AUTHORITIES (INCLUDING ALL PRODUCT REGISTRATIONS)
NECESSARY FOR THE CONDUCT OF THE DISTRIBUTION BUSINESS (COLLECTIVELY, THE
“PERMITS”).  SCHEDULE 11.4(A), TO BE DELIVERED IN ACCORDANCE WITH SECTION 11.4,
WILL SET FORTH, AS OF THE CLOSING DATE, A CORRECT AND COMPLETE LIST OF ALL THE
PERMITS (INCLUDING PRODUCT REGISTRATIONS).  THE PERMITS, INCLUDING THE PRODUCT
REGISTRATIONS, CONSTITUTE ALL OF THE LICENSES, PERMITS AND CERTIFICATES THAT ARE
REQUIRED FOR THE CONDUCT OF THE DISTRIBUTION BUSINESS (EXCLUDING THE ISRAEL
DISTRIBUTION BUSINESS) AND METRON

 

 

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has conducted the Distribution Business in compliance with all material terms
and conditions of the Permits.

(I)             EMPLOYEES.  AS OF THE CLOSING DATE, THE TRANSFERRED EMPLOYEES
SET FORTH ON SCHEDULE 6.1 HERETO, AS SUCH LIST IS UPDATED BY METRON FROM TIME TO
TIME IN ACCORDANCE WITH SECTION 6.1, SHALL BE EMPLOYED BY METRON AND THE METRON
SELLING AFFILIATES IN CONNECTION WITH THE DISTRIBUTION BUSINESS.  NEITHER METRON
NOR ANY METRON SELLING AFFILIATES HAS AS OF THE EFFECTIVE DATE AND WILL HAVE AS
OF THE CLOSING DATE OFFERED ANY CONTRACT OF EMPLOYMENT, CONSULTING CONTRACT OR
OTHER CONTRACT FOR SERVICES TO ANY OF THE TRANSFERRED EMPLOYEES.  METRON HAS NOT
OFFERED, PROMISED OR AGREED TO AT ANY TIME AFTER THE EFFECTIVE DATE AMEND ANY OF
THE TERMS AND CONDITIONS OF EMPLOYMENT OF THE TRANSFERRED EMPLOYEES, WHETHER IN
WRITING OR ORALLY, INCLUDING TERMS RELATING TO SALARIES, BONUSES, COMMISSIONS,
JOB DESCRIPTION OR LOCATION.  SCHEDULE 6.1 SETS FORTH A COMPLETE AND ACCURATE
LIST OF ALL OF THE TRANSFERRED EMPLOYEES INCLUDING THEIR JOB TITLE, COUNTRY OF
RESIDENCE AND METRON AFFILIATE WHICH IS SUCH EMPLOYEE’S EMPLOYER.  AS OF THE
CLOSING, SCHEDULE 6.1, AS UPDATED IN ACCORDANCE WITH SECTION 6.1, WILL ALSO SET
FORTH, FOR EACH TRANSFERRED EMPLOYEE, A COMPLETE AND ACCURATE SUMMARY OF THE
EMPLOYMENT TERMS FOR EACH SUCH EMPLOYEE, INCLUDING SALARY, BONUS AND COMMISSION
ARRANGEMENTS, NOTICE ENTITLEMENT, DATE OF BIRTH AND LENGTH OF SERVICE.  AS OF
THE CLOSING DATE, METRON WILL HAVE DISCHARGED ALL OBLIGATIONS OWED TO THE
TRANSFERRED EMPLOYEES, INCLUDING THE PAYMENT OF ALL SALARIES ACCRUED AND OWING
TOGETHER WITH ALL EXPENSE CLAIMS, VACATION PAY, SICK PAY, BONUSES, COMMISSIONS
AND THE LIKE.

(J)             EMPLOYEE BENEFITS.  SCHEDULE 9.1(J)  SETS FORTH A COMPLETE AND
ACCURATE LIST OF ALL MATERIAL EMPLOYEE BENEFITS (OTHER THAN EMPLOYEE BENEFIT
PLANS AND ARRANGEMENTS THAT ARE IMPOSED BY STATUTE) PROVIDED TO EMPLOYEES BY THE
METRON AFFILIATES IN EACH OF THE JURISDICTIONS WHERE TRANSFERRED EMPLOYEES ARE
EMPLOYED.  AS OF THE CLOSING, SCHEDULE 9.1(J), AS UPDATED IN ACCORDANCE WITH
SECTION 6.1, WILL ALSO SET FORTH, ALL EMPLOYEE BENEFIT PLANS OR ARRANGEMENTS IN
WHICH THE TRANSFERRED EMPLOYEES ARE ENTITLED TO PARTICIPATE OR WHICH APPLY TO
THE TRANSFERRED EMPLOYEES (OTHER THAN EMPLOYEE BENEFIT PLANS AND ARRANGEMENT
THAT ARE IMPOSED BY STATUTE).  METRON HAS NOT PROPOSED  AND IS NOT PROPOSING TO
INTRODUCE ANY BONUS, PROFIT SHARING, STOCK OPTION, STOCK INCENTIVE, PENSION
PLAN, ANNUITY OR LIKE FORM OF BENEFIT PLAN FOR THE TRANSFERRED EMPLOYEES.

(K)            STATUTORY OBLIGATIONS.  METRON HAS COMPLIED WITH ALL STATUTORY
AND REGULATORY OBLIGATIONS IN ALL COUNTRIES IN WHICH THE DISTRIBUTION BUSINESS
IS OPERATED WITH RESPECT TO INCOME TAX WITHHOLDING AND SOCIAL SECURITY OR
NATIONAL INSURANCE DEDUCTIONS WITH RESPECT TO THE TRANSFERRED EMPLOYEES AND HAS
DEDUCTED AND PAID ALL REQUISITE AMOUNTS TO THE RELEVANT TAX AUTHORITIES IN
ACCORDANCE WITH SUCH STATUTORY OR REGULATORY OBLIGATIONS UP TO AND INCLUDING THE
CLOSING DATE.

(L)             INSURANCE.  METRON HAS AT ALL TIMES DURING THE TERM OF THE
DISTRIBUTION AGREEMENTS MAINTAINED THE INSURANCE POLICIES REQUIRED BY THE TERMS
OF THE DISTRIBUTION AGREEMENTS IN THE AMOUNTS REQUIRED FOR EACH OF SUCH
POLICIES.  AS OF THE EFFECTIVE DATE, SUCH INSURANCE POLICIES ARE IN FULL FORCE
AND EFFECT.

(M)           UK PENSIONS.  THE METRON SCHEME IS FULLY APPROVED BY THE UK INLAND
REVENUE UNDER THE INCOME AND CORPORATION TAXES ACT 1988.  THE MANAGER OF THE
METRON SCHEME HAS THE POWER TO PAY THE TRANSFER AMOUNT TO THE TRUSTEE OR MANAGER
OF THE FSI SCHEME.  METRON OR THE

 

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relevant Metron Affiliate has duly complied in all material respects with its
obligations under the Metron Scheme and all amounts due to be paid to the Metron
Scheme by Metron or the relevant Metron Affiliate and the employees covered by
the Metron Scheme have been paid and the Metron Scheme is fully funded.  Except
for the Metron Scheme, Metron is not under any legal liability or obligation to
pay (or contribute to any arrangement, past or present, relating to) any
pensions, gratuities, superannuation allowances or the like to or in respect of
any of the Transferred Employees located in the United Kingdom.  The assets,
policies or investments relating to the Metron Scheme are sufficient to satisfy
the obligations and liabilities (both current and contingent) which the Metron
Scheme has to its members at the Effective Date and shall be sufficient to
satisfy the obligations and liabilities (both current and contingent) which it
will have to its members at Closing.  Metron and the Metron Scheme have complied
with all applicable legislation, rules and regulations and have obtained all
necessary consents, approvals and permissions for the past, present and future
operation of the Metron Scheme.  To the Knowledge of Metron, there are no facts
or circumstances that may result in any loss, liability or damage to FSI or the
Metron Scheme (or its assets, policies or investments) or the withdrawal of any
necessary consent, approval (including, without limitation, the approval of the
UK Inland Revenue under the Income and Corporation Taxes Act 1988) by virtue of
the execution of this Agreement, the Closing or the payment of the Transfer
Amount.

(N)           LISTINGS.  EACH OF THE LISTINGS, INCLUDING ALL UPDATES THERETO,
PROVIDED BY METRON TO FSI CONTAINS ALL INFORMATION REQUIRED TO BE INCLUDED IN
SUCH LISTING AND SUCH INFORMATION IS COMPLETE AND CORRECT AS OF THE DATE OF SUCH
LISTING.

(O)           MTDC AND MTDC INVENTORY.  MTDC IS A CORPORATION DULY ORGANIZED AND
VALIDLY EXISTING UNDER THE LAWS OF THE STATE OF CALIFORNIA AND HAS THE CORPORATE
POWER AND AUTHORITY TO OWN ITS PROPERTIES, INCLUDING THE MTDC INVENTORY, CARRY
ON ITS BUSINESS AS NOW BEING CONDUCTED, EXECUTE AND DELIVER THE SECURITY
AGREEMENT AND CONSUMMATE THE TRANSACTIONS CONTEMPLATED THEREBY.  THE EXECUTION
AND DELIVERY BY MTDC OF THE SECURITY AGREEMENT, THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREBY, AND THE PERFORMANCE OR OBSERVANCE BY MTDC OF
ANY OF THE TERMS OR CONDITIONS THEREOF, WILL NOT MATERIALLY CONFLICT WITH, OR
RESULT IN A MATERIAL BREACH OR VIOLATION OF THE TERMS OR CONDITIONS OF, OR
CONSTITUTE A DEFAULT UNDER, OR RESULT IN THE CREATION OF ANY LIEN ON ANY OF THE
ASSETS OF MTDC, INCLUDING THE MTDC INVENTORY, PURSUANT TO, (I) THE ARTICLES OF
INCORPORATION, BY-LAWS OR SHAREHOLDER RESOLUTIONS OF MTDC THAT ARE PRESENTLY IN
EFFECT, (II) ANY AWARD OF ANY ARBITRATOR OR JUDGE OR (III) ANY INDENTURE,
CONTRACT OR AGREEMENT (INCLUDING ANY AGREEMENT WITH SHAREHOLDERS), INSTRUMENT,
ORDER, JUDGMENT, DECREE, STATUTE, LAW, RULE OR REGULATION TO WHICH MTDC OR THE
ASSETS OF MTDC, INCLUDING THE MTDC INVENTORY, IS SUBJECT.  THE EXECUTION AND
DELIVERY BY MTDC OF THE SECURITY AGREEMENT, AND THE CONSUMMATION OF THE
TRANSACTIONS CONTEMPLATED THEREBY, HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY
CORPORATE ACTION.  THE SECURITY AGREEMENT IS THE LEGAL, VALID AND BINDING
OBLIGATION OF MTDC, ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, SUBJECT TO (I)
LAWS OF GENERAL APPLICATION RELATING TO BANKRUPTCY, INSOLVENCY AND THE RELIEF OF
DEBTORS AND (II) GENERAL PRINCIPLES OF EQUITY.  SCHEDULE 9.1(O) SETS FORTH A
TRUE AND COMPLETE LIST OF THE INVENTORY BY MAJOR CATEGORY HELD BY MTDC AS OF
AUGUST 31, 2002 AND THE GROSS INVENTORY CARRYING VALUE OF SUCH INVENTORY, AS
REFLECTED ON MTDC’S BALANCE SHEET DATED AS OF AUGUST 31, 2001 (WHICH BALANCE
SHEET IS BASED UPON THE BOOKS AND RECORDS OF THE MTDC AND FAIRLY PRESENTS THE
ASSETS OF MTDC AS OF THE DATE THEREOF) (SUCH INVENTORY, AS THE SAME MAY ADJUSTED
IN THE ORDINARY COURSE OF BUSINESS TO REFLECT SALES THEREOF AFTER SUCH DATE AND
PURCHASES OF SIMILAR INVENTORY AFTER SUCH DATE, THE “MTDC INVENTORY”).  MTDC
OWNS THE MTDC INVENTORY FREE AND CLEAR OF ALL

 

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Liens (except for a Lien in favor of Silicon Valley Bank with respect to which
the underlying obligation of Metron and MTDC has been satisfied in full).

9.2          Representations and Warranties by FSI.  FSI, on behalf of itself
and the FSI Purchasing Affiliates, represents and warrants to Metron as follows:

(A)            DUE ORGANIZATION; CORPORATE POWER.  FSI IS A CORPORATION DULY
ORGANIZED AND VALIDLY EXISTING UNDER THE LAWS OF THE STATE OF MINNESOTA AND HAS
THE CORPORATE POWER AND AUTHORITY TO OWN ITS PROPERTIES, CARRY ON ITS BUSINESS
AS NOW BEING CONDUCTED, EXECUTE AND DELIVER THIS AGREEMENT AND CONSUMMATE THE
TRANSACTIONS CONTEMPLATED HEREBY.

(B)           CONFLICTING AGREEMENTS.  THE EXECUTION AND DELIVERY BY FSI OF THIS
AGREEMENT, THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT, AND THE OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS CONTEMPLATED
HEREBY, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, AND
THE PERFORMANCE OR OBSERVANCE BY FSI AND THE FSI PURCHASING AFFILIATES OF ANY OF
THE TERMS OR CONDITIONS HEREOF OR THEREOF, WILL NOT CONFLICT WITH, OR RESULT IN
A BREACH OR VIOLATION OF THE TERMS OR CONDITIONS OF, OR CONSTITUTE A DEFAULT
UNDER, OR RESULT IN THE CREATION OF ANY LIEN ON ANY OF THE ASSETS OF FSI OR ANY
FSI PURCHASING AFFILIATE PURSUANT TO, (I) THE ARTICLES OF INCORPORATION, BY-LAWS
OR SHAREHOLDER RESOLUTIONS OF FSI OR THE ARTICLES OF ASSOCIATION, OTHER
ORGANIZATIONAL DOCUMENTS OR SHAREHOLDER RESOLUTIONS OF ANY FSI PURCHASING
AFFILIATE, (II) ANY AWARD OF ANY ARBITRATOR OR JUDGE OR (III) ANY INDENTURE,
CONTRACT OR AGREEMENT (INCLUDING ANY AGREEMENT WITH SHAREHOLDERS), INSTRUMENT,
ORDER, JUDGMENT, DECREE, STATUTE, LAW, RULE OR REGULATION TO WHICH FSI OR ANY
FSI PURCHASING AFFILIATE OR THE ASSETS OF FSI OR ANY PURCHASING AFFILIATE IS
SUBJECT.

(C)            CORPORATE AUTHORITY.  THE EXECUTION AND DELIVERY BY FSI OF THIS
AGREEMENT, THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY
AGREEMENT, AND THE OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS CONTEMPLATED
HEREBY, AND THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY,
HAVE BEEN DULY AUTHORIZED BY ALL NECESSARY CORPORATE ACTION.  THIS AGREEMENT,
THE ISRAEL DISTRIBUTION AGREEMENT, THE NOTE AND THE SECURITY AGREEMENT, AND ALL
OTHER AGREEMENTS, DOCUMENTS AND INSTRUMENTS REQUIRED HEREBY TO BE EXECUTED AND
DELIVERED BY FSI ARE, OR WHEN DELIVERED WILL BE, LEGAL, VALID AND BINDING
OBLIGATIONS OF FSI, ENFORCEABLE IN ACCORDANCE WITH THEIR RESPECTIVE TERMS,
SUBJECT IN EACH CASE TO (I) LAWS OF GENERAL APPLICATION RELATING TO BANKRUPTCY,
INSOLVENCY AND THE RELIEF OF DEBTORS AND (II) GENERAL PRINCIPLES OF EQUITY.

(D)           ACTIONS, SUITS, PROCEEDINGS.  THERE ARE NO REQUESTS, NOTICES,
INVESTIGATIONS, CLAIMS, DEMANDS, ACTIONS, SUITS OR OTHER LEGAL OR ADMINISTRATIVE
PROCEEDINGS PENDING OR, TO THE KNOWLEDGE OF FSI, THREATENED AGAINST FSI OR ANY
FSI PURCHASING AFFILIATE OR ANY OF THEIR RESPECTIVE PROPERTIES IN ANY COURT OR
ARBITRATION TRIBUNAL OR BEFORE ANY FEDERAL, LOCAL OR OTHER GOVERNMENTAL AGENCY
WHICH (I) SEEK TO RESTRAIN OR PROHIBIT THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR OBTAIN ANY DAMAGES IN CONNECTION THEREWITH, (II) IN ANY WAY CALL
INTO QUESTION THE VALIDITY OF THIS AGREEMENT, THE ISRAEL DISTRIBUTION AGREEMENT,
THE NOTE AND THE SECURITY AGREEMENT, OR ANY OTHER AGREEMENT, DOCUMENT OR
INSTRUMENT CONTEMPLATED HEREBY OR (III) COULD REASONABLY BE EXPECTED TO HAVE A
MATERIAL ADVERSE EFFECT ON THE DISTRIBUTION BUSINESS OR ON THE ABILITY OF FSI OR
ANY FSI PURCHASING AFFILIATE TO CONSUMMATE THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT.

(E)            GOVERNMENTAL AUTHORITIES, CONSENTS.  NEITHER FSI NOR ANY FSI
PURCHASING AFFILIATE IS REQUIRED TO SUBMIT ANY NOTICE, REPORT OR OTHER FILING
WITH OR TO ANY GOVERNMENTAL

 

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authority in connection with the execution or delivery by FSI of this Agreement
or the consummation of the transactions contemplated hereby and, no consent,
approval or authorization of any governmental or regulatory authority is
required to be obtained by FSI or any FSI Purchasing Affiliate in connection
with FSI’s execution, delivery and performance of this Agreement.

(F)            OWNERSHIP OF METRON SHARES.  FSI IS THE OWNER OF THE METRON
SHARES, FREE AND CLEAR OF ALL LIENS.

9.3          Survival of Representations and Warranties.  Notwithstanding any
investigation made by or on behalf of any of the parties hereto or the results
of any such investigation and notwithstanding the participation of such party in
the Closing, the representations and warranties contained herein and in any
certificates or other document delivered or to be delivered pursuant to the
terms of this Agreement shall survive the Closing Date until August 31, 2003
(the “Termination Date”), at which time such representations and warranties
shall terminate and expire and shall cease to be of any force or effect, and all
liability of the parties with respect to such representations and warranties
shall thereupon be extinguished; provided that if, prior to the Termination
Date, either party shall have duly delivered a claim notice, then the specific
indemnification claim set forth in such claim notice shall survive the
Termination Date (and shall not be extinguished thereby).

ARTICLE X

CONDUCT OF DISTRIBUTION BUSINESS DURING TRANSITION PERIOD

10.1        Operation of Distribution Business.  During the Transition Period,
unless FSI shall otherwise agree in writing, or as otherwise expressly
contemplated or permitted by other provisions of this Agreement, Metron shall,
and shall cause its Affiliates to, observe the following provisions up to and
including the Closing Date:

(A)            THE DISTRIBUTION BUSINESS SHALL BE CONDUCTED ONLY IN, AND METRON
SHALL NOT TAKE ANY ACTION EXCEPT IN, THE ORDINARY COURSE OF BUSINESS ON AN
ARM’S-LENGTH BASIS AND IN ACCORDANCE WITH ALL APPLICABLE LAWS, THIS AGREEMENT
AND THE DISTRIBUTION AGREEMENTS.

(B)           METRON SHALL NOT:

(I)             SUBJECT THE ASSETS OF THE DISTRIBUTION BUSINESS TO ANY LIEN
(OTHER THAN LIENS THAT EXIST AS OF THE EFFECTIVE DATE, WHICH LIENS ARE TO BE
RELEASED AT OR PRIOR TO THE CLOSING) AND SHALL CAUSE MTDC NOT TO SUBJECT THE
MTDC INVENTORY TO ANY LIEN;

(II)            MAKE OR GRANT ANY BONUS OR ANY WAGE, SALARY OR COMPENSATION
INCREASE OR SEVERANCE OR TERMINATION PAYMENT TO, OR PROMOTE ANY TRANSFERRED
EMPLOYEE, OR ENTER INTO OR AMEND ANY EMPLOYMENT CONTRACT WITH ANY TRANSFERRED
EMPLOYEE; PROVIDED HOWEVER, THAT THE FOREGOING SHALL NOT APPLY TO (X)
COMPENSATION INCREASES APPROVED IN ADVANCE AND IN WRITING BY FSI, (Y) CURRENTLY
PLANNED MERIT SALARY INCREASES FOR A SELECTED NUMBER OF

 

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Transferred Employees not to exceed [***] of salary and (z) such modifications
to Employee Benefits or employment terms as are required by law;

(III)           MAKE OR GRANT ANY INCREASE IN THE BENEFITS PAYABLE UNDER ANY
EMPLOYEE BENEFIT PLAN OR ARRANGEMENT APPLICABLE TO ANY TRANSFERRED EMPLOYEES,
AMEND OR TERMINATE ANY EXISTING EMPLOYEE BENEFIT PLAN OR ARRANGEMENT APPLICABLE
TO ANY TRANSFERRED EMPLOYEE OR ADOPT ANY NEW EMPLOYEE BENEFIT PLAN OR
ARRANGEMENT APPLICABLE TO ANY TRANSFERRED EMPLOYEE, EXCEPT AS REQUIRED BY LAW;
OR

(IV)           TERMINATE, AMEND OR ENTER INTO ANY CONTRACT, COMMITMENT OR
ARRANGEMENT OUTSIDE THE ORDINARY COURSE OF BUSINESS RELATING TO THE DISTRIBUTION
BUSINESS (EXCLUDING PURCHASE ORDERS TO BE FULFILLED WITHIN SIXTY (60) DAYS AND
CONTRACTS, COMMITMENTS OR ARRANGEMENTS THAT WOULD NOT BE BINDING ON FSI OR AN
FSI PURCHASING AFFILIATE AFTER THE CLOSING DATE).

(C)            METRON SHALL USE COMMERCIALLY REASONABLE EFFORTS TO CAUSE ITS
CURRENT INSURANCE POLICIES RELATING TO THE DISTRIBUTION BUSINESS NOT TO BE
CANCELED, OR TERMINATED OR ANY OF THE COVERAGE THEREUNDER TO LAPSE, UNLESS
SIMULTANEOUSLY WITH SUCH TERMINATION, CANCELLATION OR LAPSE, REPLACEMENT
POLICIES PROVIDING COVERAGE SUBSTANTIALLY EQUAL TO THE COVERAGE UNDER THE
CANCELED, TERMINATED OR LAPSED POLICIES ARE IN FULL FORCE AND EFFECT.

(D)           METRON SHALL USE COMMERCIALLY REASONABLE EFFORTS TO PRESERVE
INTACT ITS BUSINESS ORGANIZATION AND GOODWILL RELATING TO THE DISTRIBUTION
BUSINESS, INCLUDING THE GOODWILL OF CUSTOMERS AND OTHERS HAVING BUSINESS
RELATIONSHIPS WITH METRON RELATED TO THE DISTRIBUTION BUSINESS, AND TO KEEP
AVAILABLE THE SERVICES OF THE TRANSFERRED EMPLOYEES AS A GROUP AND PRESERVE
INTACT ITS MATERIAL CONTRACTS, COMMITMENTS AND ARRANGEMENTS.

ARTICLE XI
ADDITIONAL COVENANTS

11.1        Non-Competition.  At any and all times from and after the Closing
Date until the first anniversary thereof, Metron agrees that it shall not and
shall not permit its subsidiaries to directly or indirectly, sell or sell for,
render services to or act as agent or distributor for, products that compete
with the Products of FSI in any of the territories in which Metron or its
subsidiaries operated the Distribution Business prior to the Closing Date;
provided, that (a) nothing shall preclude Metron or its subsidiaries from acting
as an agent or distributor or marketing, selling or rendering services with
respect to the Legacy Products described in Schedule 11.1 attached hereto, (b)
nothing shall preclude Metron or its subsidiaries from marketing or selling any
Products or Spare Parts that are held by Metron or any Metron Selling Affiliate
as of the Closing Date and are not repurchased by FSI in accordance with this
Agreement and (c) nothing shall preclude Metron or its subsidiaries from
fulfilling its obligations under any Service/Applications Support Contract that
is not assigned to or any warranty obligation that is not assumed by FSI or an
FSI Selling Affiliate as of the Closing Date.  If the final judgment of an
arbitrator or court of competent jurisdiction declares any term or provision of
this Section 11.1 to be invalid or unenforceable, the parties agree that the
arbitrator or court making the determination of invalidity

 

*Confidential Treatment Requested

 

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or unenforceability shall have the power to amend or otherwise modify the
offending term or provision so that it is valid and enforceable and is closest
to expressing the intention of the unenforceable term or provision and this
Agreement shall be enforceable as so modified.

11.2        Access to Properties, Books, Records, Etc.  Between the date hereof
and the Closing Date, Metron shall afford to FSI and its authorized
representatives access at reasonable times and upon reasonable notice to the
offices, properties, books, records, officers, employees and other items of the
Distribution Business, and, with the consent of Metron (which consent shall not
be unreasonably withheld), to conduct such inspections and reviews as FSI may
deem necessary, and otherwise provide such assistance as is reasonably requested
by FSI in connection with the matters contemplated by this Agreement.

11.3        Government Approvals.  As promptly as practicable after the
execution of this Agreement, each of Metron and FSI shall make or cause to be
made all filings and submissions required under any laws or regulations
applicable to the Distribution Business or Metron and FSI or their respective
Affiliates) for the consummation of the transactions contemplated herein. 
Metron and FSI will coordinate and cooperate with each other in exchanging such
information, will not make any such filing without providing to the other a
final copy thereof for its review and consent at least ten (10) business days in
advance of the proposed filing and will provide such reasonable assistance as
Buyer may request in connection with all of the foregoing.

11.4        Registrations.

(A)            WITHIN THIRTY (30) DAYS OF THE EFFECTIVE DATE, METRON SHALL
PROVIDE FSI WITH SCHEDULE 11.4(A), WHICH WILL SET FORTH A CORRECT AND COMPLETE
LIST OF ALL THE PERMITS (INCLUDING PRODUCT REGISTRATIONS).

(B)           IN THE EVENT THAT ANY PERMIT, INCLUDING ANY PRODUCT REGISTRATION,
IS NOT ASSIGNABLE TO FSI OR THE RELEVANT FSI PURCHASING AFFILIATE IN CONNECTION
WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT, METRON AND FSI SHALL USE
THEIR RESPECTIVE COMMERCIALLY REASONABLE EFFORTS TO ENTER IN ANY REASONABLE
ARRANGEMENT DESIGNED TO PROVIDE FSI OR THE RELEVANT FSI PURCHASING AFFILIATE
WITH THE BENEFITS OF SUCH PERMIT INTENDED TO BE ASSIGNED TO FSI OR SUCH FSI
PURCHASING AFFILIATE UNTIL SUCH TIME AS FSI OR SUCH FSI PURCHASING AFFILIATE IS
ABLE TO OBTAIN A NEW OR SUBSTITUTE PERMIT.

(C)            IN THE EVENT THAT METRON OR ANY OF ITS AFFILIATES HAS, EITHER
DIRECTLY OR INDIRECTLY, REGISTERED OR OTHERWISE FILED WITH ANY GOVERNMENTAL
AGENCY OR AUTHORITY ANYWHERE IN THE WORLD (EXCLUDING ISRAEL), OR SUBMITTED FOR
THE APPROVAL OF ANY SUCH GOVERNMENTAL AGENCY OR AUTHORITY, (I) EITHER
DISTRIBUTION AGREEMENT, (II) ANY COMMERCIAL AGENCY RELATIONSHIP BETWEEN FSI AND
METRON ARISING UNDER THE DISTRIBUTION AGREEMENTS, (III) METRON’S RIGHTS TO SELL
AND DISTRIBUTE PRODUCTS OR (IV) ANY OTHER RIGHTS OR OBLIGATIONS OF FSI OR ITS
AFFILIATES ARISING UNDER EITHER DISTRIBUTION AGREEMENT, THEN METRON SHALL, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, AT ITS EXPENSE AND ON OR BEFORE THE
CLOSING DATE, ASSIGN AND TRANSFER SUCH REGISTRATION, FILING OR APPROVAL, TO FSI
OR ITS DESIGNATED AFFILIATE.  IF SUCH ASSIGNMENT AND TRANSFER IS NOT PERMITTED
UNDER APPLICABLE LAW, METRON SHALL OR SHALL CAUSE ITS AFFILIATES TO, AT METRON’S
EXPENSE, TERMINATE AND WITHDRAW SUCH REGISTRATION, FILING OR APPROVAL IN A
MANNER REASONABLY SATISFACTORY TO FSI.

 

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11.5        Transition Plan.  On or before the Effective Date, Metron and FSI
shall each designate no fewer than six (6) representatives to a transition
working group, and the representatives so designated shall represent all
material functions or departments within the business organization of each of
FSI and Metron.  Within thirty (30) days of the Effective Date, the transition
working group shall prepare the Transition Plan which shall identify the key
transition issues to be addressed by the parties and the respective
responsibilities of the parties to ensure the smooth and effective transition of
the Distribution Business (other than the Israel Distribution Business) from
Metron to FSI.  Upon completion of the Transition Plan, the plan shall be
attached to this Agreement as Schedule 11.5.

11.6        Performance under Distribution Agreements.  During the Transition
Period, Metron and FSI shall each continue to perform all of its respective
obligations under the Distribution Agreements.

11.7        Confidentiality.

(A)            FOR PURPOSES OF THIS AGREEMENT, THE TERM “CONFIDENTIAL
INFORMATION” SHALL MEAN, WITH RESPECT TO EACH OF THE PARTIES, INCLUDING EACH OF
THEIR RESPECTIVE AFFILIATES, INFORMATION THAT IS PROPRIETARY TO IT, INCLUDING
PATENTS, KNOW-HOW, DESIGNS, FORMULAS, PROCESSES, TECHNOLOGY, PLANS, DATA, TRADE
SECRETS, INVENTIONS, DISCOVERIES, IMPROVEMENTS AND IDEAS OR WORKS OF AUTHORSHIP
OR OTHER INFORMATION RELATING TO ITS BUSINESS; INFORMATION CONCERNING ANY OF ITS
PAST, CURRENT OR POSSIBLE FUTURE PRODUCTS OR PROJECTS; INFORMATION ABOUT ITS
RESEARCH, DEVELOPMENT, PURCHASING, ACCOUNTING, MARKETING, OR SELLING OF PRODUCTS
OR SERVICES; AND INFORMATION CONCERNING ANY OF ITS PAST, CURRENT OR POSSIBLE
FUTURE CUSTOMERS OR BUSINESS PROSPECTS.  CONFIDENTIAL INFORMATION SHALL NOT
INCLUDE (I) ANY INFORMATION LAWFULLY IN ANY PARTY’S POSSESSION PRIOR TO THE DATE
OF DISCLOSURE THEREOF BY ANY OTHER PARTY BOUND HEREBY, (II) ANY INFORMATION
WHICH IS IN THE PUBLIC DOMAIN OR HEREAFTER BECOMES A PART THEREOF THROUGH NO
FAULT OF THE PARTY TO WHOM SUCH CONFIDENTIAL INFORMATION HAS BEEN DISCLOSED,
(III) ANY INFORMATION THAT BECOMES AVAILABLE TO A PARTY ON A NON-CONFIDENTIAL
AND LAWFUL BASIS FROM A SOURCE OTHER THAN ANY OTHER ENTITY BOUND HEREBY, OR (IV)
ANY INFORMATION DISCLOSED FROM ONE PARTY BOUND HEREBY TO ANOTHER THAT IS
EXPRESSED IN WRITING BY THE DISCLOSING PARTY TO BE NON-CONFIDENTIAL.

(B)           EXCEPT AS OTHERWISE MAY BE SPECIFICALLY PROVIDED HEREIN, EACH OF
THE PARTIES HERETO AGREES THAT ALL PROPRIETARY INFORMATION OBTAINED FROM THE
OTHER PARTY DURING THE TERM OF THIS AGREEMENT WILL BE PRESUMED TO CONSTITUTE
CONFIDENTIAL INFORMATION (UNLESS IT FALLS WITHIN ANY CATEGORY DESCRIBED IN ANY
OF SUBSECTIONS (I) THROUGH (IV) SET FORTH ABOVE IN THE DEFINITION OF
CONFIDENTIAL INFORMATION), AND WILL BE HELD IN THE STRICTEST CONFIDENCE BY EACH
SUCH PARTY AS WELL AS BY ITS RESPECTIVE AFFILIATES AND REPRESENTATIVES,
INCLUDING ITS LEGAL COUNSEL, ACCOUNTANTS AND FINANCIAL ADVISORS WHO HAVE A NEED
TO KNOW SUCH INFORMATION.  ANYTHING TO THE CONTRARY HEREIN NOTWITHSTANDING, EACH
OF THE PARTIES SHALL IMMEDIATELY NOTIFY EACH OTHER PARTY IF IT IS REQUIRED BY
LAW OR JUDICIAL AUTHORITY TO DISCLOSE ANY OF SUCH CONFIDENTIAL INFORMATION.  THE
TERMS AND PROVISIONS OF THIS SECTION 11.7 SHALL SURVIVE FOR A PERIOD OF ONE (1)
YEAR AFTER THE CLOSING DATE.

11.8        Announcements and Communications.  Neither FSI or Metron, nor any of
their Affiliates, shall make any public statements, including any press
releases, with respect to this Agreement and the transactions contemplated
hereby without the prior written consent of the other party (which consent shall
not be unreasonably withheld), except as may be required by

 

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any law applicable to them or their Affiliates.  The parties shall mutually
agree upon a communications plan regarding this Agreement and the transactions
contemplated herein, and shall fully cooperate in implementing such plan.

11.9        Insurance.  Metron shall, upon the request of FSI, provide FSI with
copies of all insurance policies it maintains relating to the Distribution
Business, including the insurance policies required by the terms of the
Distribution Agreements.

11.10      Contracts.  Within thirty (30) days of the Effective Date, Metron
shall provide FSI with Schedule 11.10, which will set forth a true and complete
list of all contracts, commitments and arrangements (other than purchase orders
to be fulfilled or system start-up contracts and service and support contracts
to be completed and parts and labor warranty agreements that expire within sixty
(60) days and other than the Distribution Agreements and the Israel Distribution
Agreement) to which Metron or any Affiliate of Metron is a party or by which it
is bound, that are currently in effect and that relate to the conduct of the
Distribution Business.

11.11      Shareholder Approval.  Metron shall, in accordance with its articles
of association, use its commercially reasonable efforts to obtain, as promptly
as practicable after the Effective Date, any required ratification or approval
by the shareholders of Metron to enable FSI to pay a portion of the Premium by
assigning and transferring the Metron Shares to Metron.  In connection with
obtaining such ratification or approval, the management board and the
supervisory board of Metron shall take such actions as may be necessary or
appropriate to obtain the  ratification and approval of Metron shareholders of
such payment of a portion of the Premium by the assignment and transfer of the
Metron Shares to Metron and any other provision of this Agreement that requires
the ratification or approval of the shareholders of Metron, including calling
and holding a shareholders meeting, recommending such ratification and approval
to shareholders and contacting shareholders holding a significant percentage of
Metron shares directly to recommend that they vote in favor of such ratification
and approval.

11.12      Expenses.  Except as otherwise agreed by the parties, each party
shall each bear its own respective costs and expenses relating to the
transactions contemplated hereby, including,  fees and expenses of legal
counsel, accountants, finders and brokers, printers, consultants and other
representatives retained by them in connection with the proposed transactions
contemplated hereby including the obtaining of all necessary consents and
approvals.

11.13      UK Pensions.  Prior to the Closing, Metron shall not and shall not
permit any Metron Affiliate to make any changes to the Metron Scheme without the
prior written consent of FSI, which consent shall not be unreasonably withheld.

11.14      MTDC Inventory.  Within fifteen (15) days of the Effective Date,
Metron shall provide FSI with an updated Schedule 9.1(o), which will set forth,
as of the Effective Date or such other date as close to the Effective Date as
reasonably practicable, the part number, quantity and inventory carrying value
of the MTDC Inventory, as reflected on MTDC’s most recent balance sheet (which
balance sheet will be based upon the books and records of the MTDC and will
fairly present the assets of MTDC as of the date thereof).  Within ten (10) days
of the Effective Date, Metron shall, and shall cause MTDC to, take all actions
necessary to provide FSI with a perfected first priority Lien on the MTDC
Inventory, including filing UCC termination

 

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statements in all appropriate jurisdictions to cause any UCC financing
statements relating to Liens in favor of Silicon Valley Bank on the MTDC
Inventory to be terminated.

ARTICLE XII

INDEMNIFICATION

12.1        Indemnification by Metron.  Metron agrees to indemnify in full FSI
and the Affiliates of FSI, and their respective officers, directors, employees,
agents and shareholders (collectively, the “FSI Indemnified Parties”) and to
defend and hold them harmless against any loss, liability, deficiency, damage,
expense or cost (including reasonable legal expenses) (collectively, “Losses”)
which the FSI Indemnified Parties may suffer, sustain or become subject to, as a
result of (i) any breach of the representations and warranties of Metron or its
Affiliates contained in this Agreement, the Note or the Security Agreement, or
in any certificates or other documents delivered or to be delivered by or on
behalf of Metron or its Affiliates pursuant to the terms of this Agreement, (ii)
any breach of or failure to perform any covenant or agreement of Metron or its
Affiliates contained in this Agreement, the Note and the Security Agreement, or
in any certificates or other documents, (iii) all activities related to the
conduct of the Distribution Business by Metron prior to the Closing Date (except
to the extent expressly assumed by FSI hereunder) and (iv) actions, suits,
proceedings and claims relating to the foregoing.

12.2        Indemnification by FSI.  FSI agrees to indemnify in full Metron and
the Affiliates of Metron, and their respective officers, directors, employees,
agents and shareholders (collectively, the “Metron Indemnified Parties”) and to
defend and hold them harmless against any Losses which the Metron Indemnified
Parties may suffer, sustain or become subject to, as a result of (i) any breach
of the representations and warranties of FSI or its Affiliates contained in this
Agreement, the Note and the Security Agreement, or in any certificates or other
documents delivered or to be delivered by or on behalf of FSI or its Affiliates
pursuant to the terms of this Agreement, (ii) any breach of or failure to
perform any covenant or agreement of FSI or its Affiliates contained in this
Agreement, the Note and the Security Agreement, or in any certificates or other
documents, (iii) all activities related to the conduct of the Distribution
Business by FSI after the Closing Date and (iv) actions, suits, proceedings and
claims relating to the foregoing.

12.3        Deductible Amount.  Without limiting the effect of any of the other
limitations set forth herein, neither party shall be required to make any
indemnification payment hereunder with respect to any breach of any of its
representations and warranties, except to the extent that the cumulative amount
of the Losses to which the Indemnified Party is entitled to indemnification
under the terms of this Article XII as a result of all such breaches of such
representations and warranties exceeds the Deductible Amount; and the
Indemnifying Party shall only be required to pay, and shall only be liable for,
the amount by which the cumulative amount of such Losses resulting from all such
breaches of such representations and warranties exceeds the Deductible Amount. 
The “Deductible Amount” shall be U.S. $100,000.

12.4        Notice of Indemnification.  As used herein, “Indemnified Party”
shall refer to a “Metron Indemnified Party,” or “FSI Indemnified Party,” as
applicable, and “Indemnifying Party” shall refer to the party obligated to
indemnify under this Article XII.  In the event any legal proceeding shall be
threatened or instituted or any claim or demand shall be asserted by any

 

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person in respect of which payment may be sought by an Indemnified Party from an
Indemnifying Party under the provisions of this Article XII, the Indemnified
Party shall promptly cause written notice of the assertion of any such claim of
which it has knowledge which is covered by this indemnity to be forwarded to the
Indemnifying Party.

12.5        Indemnification Procedure for Third-Party Claims.  In the event of
the initiation of any legal proceeding against an Indemnified Party by a third
party, the Indemnifying Party shall have the absolute right after the receipt of
notice, at its option and at its own expense, to be represented by counsel of
its choice, and to defend against, negotiate, settle (as provided below) or
otherwise deal with any proceeding, claim, or demand which relates to any loss,
liability or damage indemnified against hereunder; provided, however, that the
Indemnified Party may participate in any such proceeding with counsel of its
choice and at its expense.  The Indemnifying Party shall not effect any
settlement without the consent of the Indemnified Party other than for the
payment of money damages in a single lump sum in exchange for a full release of
the Indemnified Party with respect to the claim in question without the
requirement of any admission of liability or wrongdoing.  To the extent the
Indemnifying Party elects not to defend such proceeding, claim or demand, and
the Indemnified Party defends against or otherwise deals with any such
proceeding, claim or demand, the Indemnified Party may retain counsel, at the
expense of the Indemnifying Party, and control the defense of such proceeding. 
To the extent the Indemnifying Party fails or elects not to defend such
proceeding, claim or demand and the Indemnified Party defends against or
otherwise deals with any proceeding, claim or demand, the Indemnified Party will
act reasonably and in accordance with its good faith business judgment, and
shall not effect any settlement without the consent of Indemnifying Party, which
consent shall not be unreasonably withheld. The parties to this Agreement agree
to cooperate fully with each other in connection with the defense, negotiation
or settlement of any legal proceeding, claim or demand pursuant to this Article
XII.  After any final judgment or award shall have been rendered by a court,
arbitration board or administrative agency of competent jurisdiction and the
time in which to appeal therefrom has expired, or a settlement shall have been
consummated, or the Indemnified Party and the Indemnifying Party shall arrive at
a mutually binding agreement with respect to each separate matter alleged to be
indemnified by the Indemnifying Party hereunder, the Indemnified Party shall
forward to the Indemnifying Party notice of any sums due and owing by it with
respect to such matter and the Indemnifying Party shall pay all of the sums so
owing to the Indemnified Party by wire transfer, certified or bank cashier’s
check within thirty (30) days after the date of such notice.

ARTICLE XIII

DISPUTE RESOLUTION; GOVERNING LAW

13.1        Arbitration.  Any controversy or claim arising out of or relating to
this Agreement shall be determined by arbitration in accordance with the
International Arbitration Rules (the “Rules”) of the International Centre for
Dispute Resolution of the American Arbitration Association.  Such arbitration
shall be conducted before an arbitral tribunal consisting of three (3)
arbitrators appointed in accordance with the Rules.  The arbitration shall be
conducted in the English language.  The place of arbitration shall be Denver,
Colorado, United States of America.  Any decision rendered by the arbitration
tribunal shall be final and binding on the parties, and judgment thereon may be
entered by any court of competent

 

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jurisdiction.  The parties expressly agree that the arbitration tribunal shall
be empowered to award and order equitable or injunctive relief with respect to
matters brought before it.

13.2        Governing Law.  This Agreement shall be construed and enforced in
accordance with the laws of the State of Minnesota, United States of America,
without regard to its principles of conflicts of law.

ARTICLE XIV

GENERAL

14.1        Entire Agreement.  This Agreement, together with the Distribution
Agreements (as amended hereby and until terminated in accordance with the terms
hereof) and the Israel Distribution Agreement, the Note and the Security
Agreement, and the exhibits and schedules hereto, constitutes the entire
agreement and understanding among the parties with regard to the subject matter
hereof, and there are no other prior  written or oral agreements, undertakings,
promises, warranties, or covenants respecting such subject matter not expressly
set forth herein.

14.2        Amendments.  This Agreement may be amended only by a written
agreement executed by the parties hereto.

14.3        Waivers.  No waiver of any provision or condition of this Agreement
by any party shall be valid unless set forth in a writing signed by such party. 
No such waiver shall be deemed to be a waiver of any other or similar provision
or condition, or of any future event, act, breach or default.

14.4        Notices.  All notices required or permitted to be given hereunder
shall be deemed to have been effectively given when delivered personally to an
officer of the applicable party, or when first sent by facsimile transmission
during normal business hours in the recipient’s time zone with a confirmation
copy sent by a reputable international courier service or registered mail,
return receipt requested, addressed to the applicable party at its address set
forth below, or at such other address as such party may hereafter designate in
accordance with this Section 14.4 as the appropriate address for the receipt of
such notice:

 

If to FSI:

 

 

 

 

 

 

 

FSI International, Inc.

 

 

 

322 Lake Hazeltine Drive

 

 

 

Chaska, Minnesota 55318

 

 

 

U.S.A.

 

 

 

Attention:  Benno Sand

 

 

 

Facsimile:  (952) 448-1300

 

 

 

 

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With a copy to:

 

 

 

 

 

 

 

 

 

Dorsey & Whitney LLP

 

 

 

 

50 South Sixth Street

 

 

 

 

Minneapolis, Minnesota 55402

 

 

 

 

U.S.A.

 

 

 

 

Attention:  James F. Pedersen, Esq.

 

 

 

 

Facsimile:  (612) 340-8840

 

 

 

 

 

 

 

If to Metron:

 

 

 

 

 

 

 

 

 

 

Metron Technology N.V.

1350 Old Bayshore Highway, Suite 360

Burlingame, California 94010

U.S.A.

Attention:  Chief Financial Officer

Facsimile:  (650) 373-1135

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

With a copy to:

 

 

 

 

 

 

 

 

 

Cooley Godward LLP

 

 

 

 

Five Palo Alto Square

 

 

 

 

3000 El Camino Real

 

 

 

 

Palo Alto, CA  94306

 

 

 

 

U.S.A

 

 

 

 

Attention:  Suzanne Sawochka Hooper, Esq.

 

 

 

 

Facsimile:  (650) 849-7400

 

 

14.5        Partial Invalidity.  In the event that any provision of this
Agreement shall be found invalid or unenforceable, in whole or in part, by a
court of competent jurisdiction or an arbitration tribunal, such provision shall
be limited to the minimum extent necessary to render the same valid and
enforceable, or shall be excised from this Agreement, as circumstances may
require, and this Agreement shall be construed as if the provision had been
incorporated herein as so limited, or as if the provision had not been included
herein, as the case may be, and enforced to the maximum extent permitted by
applicable law.

14.6        Governing Language.  This Agreement has been executed in the English
language which is the official language of this Agreement.  In the event of any
conflict of interpretation between any foreign language translation and this
English language version, this English language version shall prevail.

14.7        Assignment.  This Agreement shall be binding upon and shall inure to
the benefit of the parties, and their respective successors and assigns;
provided, however, that no party may assign its right or delegate its duties
hereunder without the express prior written consent of each other party hereto,
which consent may be granted or withheld in the sole and absolute discretion of
each such other party.

14.8        Further Assurances.  At the request of any party from time to time
on and after the Closing Date hereunder, each other party shall, without further
consideration, execute and

 

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deliver (and, if appropriate, file) and cause its Affiliates to execute and
deliver (and, if appropriate, file) to or as directed by the requesting party
such documents and instruments, and take such other actions, as the requesting
party may reasonably request in order to consummate more effectively the
transactions provided for herein.

14.9        Counterparts.  This Agreement may be executed in multiple identical
counterparts, any of which may contain the signatures of less than all of the
parties, and all of which together shall constitute a single agreement.

 

[The remainder of this page left blank intentionally.  Signature page follows.]

 

 

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IN WITNESS WHEREOF, each party has executed this Agreement by its duly
authorized officers as of the day and year first above written.

FSI INTERNATIONAL, INC.

 

METRON TECHNOLOGY N.V..

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

/s/  BENNO G. SAND

 

By:

/s/  EDWARD D. SEGAL

Name:

Benno G. Sand

 

Name:

Edward D. Segal

Title:

Executive Vice President,

 

Title:

Chief Executive Officer

 

Business Development

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

By:

 

 

 

 

Name:

 

 

 

 

Title:

 

 

 

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EXHIBIT A

Metron Selling Affiliates/FSI Purchasing Affiliates

Metron Selling Affiliates:

 

MT Benelux
MT France
MT Germany
MT Italy
MT UK
MT Asia
MT Korea
MT Singapore

MT Taiwan

 

 

FSI Purchasing Affiliates:

 

                                                After the Effective Date, FSI
will establish FSI Purchasing Affiliates in the following countries:

 

FSI Germany

FSI Netherlands

FSI France

FSI Italy

FSI United Kingdom

FSI Singapore

FSI Taiwan

FSI China

FSI Malaysia

FSI Korea

 

--------------------------------------------------------------------------------

 

EXHIBIT B

 

Israel Distribution Agreement

[TO COME]

 

--------------------------------------------------------------------------------

 

EXHIBIT C

FSI Individuals with Knowledge

Dean Duffy

Patricia M. Hollister

Donald S. Mitchell

Benno G. Sand

 

--------------------------------------------------------------------------------

 

EXHIBIT D

Metron Individuals with Knowledge

Gregory M. Claeys

Peter V. Leigh

Keith E. Reidy

Dennis R. Riccio

Charles Roffey

Edward D. Segal

 

--------------------------------------------------------------------------------

 

EXHIBIT E

Note and Security Agreement

 

PROMISSORY NOTE

U.S.$4,000,000

October 9, 2002

 

FOR VALUE RECEIVED, the undersigned, Metron Technology N.V., organized and
existing under the laws of the Netherlands (the “Maker”), hereby promises to pay
to the order of FSI International, Inc., a corporation organized and existing
under the laws of the state of Minnesota, United States of America (the “Payee”,
which term includes any subsequent holder hereof) at 3455 Lyman Boulevard,
Chaska, Minnesota, USA 55318 or at such other place as the Payee may from time
to time hereafter designate to the Maker in writing the principal sum of up to
U.S. Four Million Dollars (US$4,000,000).

In the case of any conflict between the terms of this Note and the Transition
Agreement with respect to the making of any advance, the terms of the Transition
Agreement (as defined below)shall prevail.  Capitalized terms used herein and
not defined shall have the meanings assigned to them in the Transition
Agreement.  The Initial Cash Advance of U.S. Three Million Dollars
(US$3,000,000) is made under this note as of the date hereof.  The Additional
Cash Advances shall not exceed $1,000,000 and shall be made only upon
satisfaction of the conditions set forth in Section 2.3(b) of the Transition
Agreement.  Any request by the Maker for an Additional Cash Advance shall be in
writing or by telephone and must be given so as to be received by the Payee not
later than three days before the requested Additional Cash Advance date..  Each
request for an Additional Cash Advance shall be deemed a representation by the
Payee that on the requested Additional Cash Advance date and after giving effect
to such Additional Cash Advance the applicable conditions specified in Section
2.3(b) of the Transition Agreement have been and will continue to be satisfied. 
Payee shall not be required to make any Additional Cash Advance until such time
as Maker determines that the requirements of Section 2.3(b) of the Transition
Agreement have been satisfied.

Except as otherwise provided in the next sentence, the unpaid principal balance
hereof from time to time outstanding shall bear no interest.  Upon the happening
of any Event of Default, this Note shall bear interest until paid in full at a
rate of 12% per annum.  Interest shall be computed on the basis of actual days
elapsed and a year of 360 days.

The principal hereof is payable in full on March 1, 2003.   As long as no Event
of Default has occurred and is outstanding, the principal hereof may be paid as
set forth in Section 2.4(b) or 2.4(c) of the Transition Agreement.

This note may be prepaid by the Maker at any time in whole or from time to time
in part.

 

--------------------------------------------------------------------------------

 

This Note is issued pursuant to a Transition Agreement dated as of even date
herewith (as the same may hereafter be amended, modified or supplement, or any
agreement entered into in substitution or replacement thereof, the “Transition
Agreement”) between the Maker and the Payee.   This Note is secured by a
Security Agreement dated as of even date herewith (as the same may hereafter be
amended, modified or supplemented, or any agreement entered into in substitution
or replacement therefor, the “Security Agreement”) given by Metron Technology
Distribution Corporation to the Payee.

The occurrence of any one or more of the following events shall constitute an
Event of Default, and upon the occurrence of any Event of Default the Payee may
declare this Note to be, and the same shall forthwith become, immediately due
and payable and the Payee may exercise all rights and remedies under the
Security Agreement and as may otherwise be allowed by law:

(1)                                  THE MAKER SHALL FAIL TO MAKE ANY PAYMENT OF
PRINCIPAL OR INTEREST HEREON WHEN DUE.

(2)                                  THE MAKER SHALL GENERALLY NOT PAY ITS DEBTS
AS THEY MATURE OR SHALL APPLY FOR, SHALL CONSENT TO, OR SHALL ACQUIESCE IN THE
APPOINTMENT OF A CUSTODIAN, TRUSTEE OR RECEIVER FOR THE MAKER OR FOR A
SUBSTANTIAL PART OF THE PROPERTY THEREOF OR, IN THE ABSENCE OF SUCH APPLICATION,
CONSENT OR ACQUIESCENCE, A CUSTODIAN, TRUSTEE OR RECEIVER SHALL BE APPOINTED FOR
THE MAKER OR FOR A SUBSTANTIAL PART OF THE PROPERTY THEREOF; OR ANY BANKRUPTCY,
REORGANIZATION, DEBT ARRANGEMENT OR OTHER PROCEEDINGS UNDER ANY BANKRUPTCY OR
INSOLVENCY LAW SHALL BE INSTITUTED BY OR AGAINST THE MAKER AND, IF INSTITUTED
AGAINST THE MAKER, SHALL HAVE BEEN CONSENTED TO OR ACQUIESCED IN BY THE MAKER OR
SHALL REMAIN UNDISMISSED FOR 45 DAYS, OR AN ORDER FOR RELIEF SHALL HAVE BEEN
ENTERED AGAINST THE MAKER.

(3)                                  ANY DEFAULT SHALL OCCUR UNDER THE TERMS OF
THE SECURITY AGREEMENT AND SHALL CONTINUE FOR MORE THAN THE PERIOD OF GRACE, IF
ANY, APPLICABLE THERETO.

(4)                                  ANY EXECUTION OR ATTACHMENT SHALL BE ISSUED
WHEREBY ANY SUBSTANTIAL PART OF THE PROPERTY OF THE MAKER SHALL BE TAKEN OR
ATTEMPTED TO BE TAKEN AND THE SAME SHALL NOT HAVE BEEN VACATED OR STAYED WITHIN
30 DAYS AFTER THE ISSUANCE THEREOF.

THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE GOVERNED BY
THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT
OF LAWS PRINCIPLES THEREOF.

AT THE OPTION OF THE PAYEE THIS NOTE MAY BE ENFORCED IN ANY FEDERAL COURT OR
MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA; AND THE MAKER
CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT
THAT THE VENUE IN SUCH FORUMS IS NOT CONVENIENT.  IF THE MAKER COMMENCES ANY
ACTION IN ANOTHER JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY
ARISING DIRECTLY OR INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS NOTE, THE
PAYEE AT ITS OPTION SHALL

 

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BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR, IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.

The Maker hereby waives presentment for payment, notice of dishonor, protest and
notice of protest.

If this Note is not paid when due, the Maker shall pay all of the Payee’s costs
of collection including reasonable attorneys’ fees.

 

 

MAKER:

 

 

 

 

 

METRON TECHNOLOGY N.V.

 

 

 

 

 

By

/s/  EDWARD D. SEGAL

 

 

Its

Chief Executive Officer

 

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SECURITY AGREEMENT

 

 

THIS SECURITY AGREEMENT (this “Agreement”), dated as of October 9, 2002, is made
and given by Metron Technology Distribution Corporation , a corporation
organized under the laws of the State of California (the “Grantor”), to FSI
International, Inc., a corporation organized and existing under the laws of the
State of Minnesota, USA (the “Secured Party”).

RECITALS

 

A.  Metron Technology N.V., a corporation organized and existing under the laws
of The Netherlands (the “Debtor”), will or may become, or is now, indebted to
the Secured Party under that certain promissory note in the amount of up to
$4,000,000, dated as of October 9, 2002 (the “Note”).

B.  The Secured Party has requested that the Grantor execute and deliver this
Security Agreement to secure payment of any such indebtedness, and the Grantor
has agreed to do so.

C.  The Grantor is a wholly owned subsidiary of the Debtor.

D.  The Grantor expects to derive benefits from the extension of credit
accommodations to the Debtor by the Secured Party and finds it advantageous,
desirable and in its best interests to execute and deliver this Security
Agreement to the Secured Party.

NOW, THEREFORE, in consideration of the premises and in order to induce the
Secured Party to extend or continue credit accommodations to the Debtor, the
Grantor hereby agrees with the Secured Party for the Secured Party’s benefit as
follows:

Section 1.               Defined Terms.

1(a)         As used in this Agreement, the following terms shall have the
meanings indicated:

“Account”  means a right to payment of a monetary obligation, whether or not
earned by performance, (i) for property that has been or is to be sold, leased,
licensed, assigned, or otherwise disposed of, (ii) for services rendered or to
be rendered, (iii) for a policy of insurance issued or to be issued, or (iv) for
a secondary obligation incurred.

“Account Debtor” shall mean a Person who is obligated on or under any Account,
Chattel Paper, Instrument or General Intangible.

“Chattel Paper” shall mean a record or records that evidence both a monetary
obligation and a security interest in specific goods, a security interest in
specific goods and software used in the goods, a security interest in specific
goods and license of software used in the goods, a lease of specific goods, or a
lease of specific goods and license of software used in the goods.

 

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“Collateral” shall mean all property and rights in property now owned or
hereafter at any time acquired by the Grantor in or upon which a Security
Interest is granted to the Secured Party by the Grantor under this Agreement.

“Event of Default” shall have the meaning given to such term in Section 16
hereof.

“Financing Statement” shall have the meaning given to such term in Section 3
hereof.

“Inventory” shall mean goods, other than farm products, which are leased by a
person as lessor, are held by a person for sale or lease or to be furnished
under a contract of service, are furnished by a person under a contract of
service, or consist of raw materials, work in process, or materials used or
consumed in a business or incorporated or consumed in the production of any of
the foregoing and supplies, in each case wherever the same shall be located,
whether in transit, on consignment, in retail outlets, warehouses, terminals or
otherwise, and all property the sale, lease or other disposition of which has
given rise to an Account and which has been returned to the Grantor or
repossessed by the Grantor or stopped in transit.

“Lien” shall mean any security interest, mortgage, pledge, lien, charge,
encumbrance, title retention agreement or analogous instrument or device
(including the interest of the lessors under capitalized leases), in, of or on
any assets or properties of the Person referred to.

“Note” shall have the meaning indicated in Recital A.

“Obligations” shall mean (a) all principal of, and interest on, the Note and any
extension, renewal or replacement thereof, (b) all liabilities of the Grantor
under this Agreement, and (c) in all of the foregoing cases whether due or to
become due, and whether now existing or hereafter arising or incurred.

“Person” shall mean any individual, corporation, partnership, limited
partnership, limited liability company, joint venture, firm, association, trust,
unincorporated organization, government or governmental agency or political
subdivision or any other entity, whether acting in an individual, fiduciary or
other capacity.

“Security Interest” shall have the meaning given such term in Section 2 hereof.

1(B)         ALL OTHER TERMS USED IN THIS AGREEMENT THAT ARE NOT SPECIFICALLY
DEFINED HEREIN SHALL HAVE THE MEANING ASSIGNED TO SUCH TERMS IN ARTICLE 9 OF THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF MINNESOTA.

1(C)         UNLESS THE CONTEXT OF THIS AGREEMENT OTHERWISE CLEARLY REQUIRES,
REFERENCES TO THE PLURAL INCLUDE THE SINGULAR, THE SINGULAR, THE PLURAL AND “OR”
HAS THE INCLUSIVE MEANING REPRESENTED BY THE PHRASE “AND/OR.”  THE WORDS
“INCLUDE,” “INCLUDES” AND “INCLUDING” SHALL BE DEEMED TO BE FOLLOWED BY THE
PHRASE “WITHOUT LIMITATION.”  THE WORDS “HEREOF,” “HEREIN,”

 

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“hereunder” and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement.  References to
Sections are references to Sections in this Security Agreement unless otherwise
provided.

Section 2.               Grant of Security Interest.  As security for the
payment and performance of all of the Obligations, the Grantor hereby grants to
the Secured Party a security interest (the “Security Interest”) in all of the
Grantor’s right, title, and interest in and to the following, whether now or
hereafter owned, existing, arising or acquired and wherever located:

2(A)         ALL INVENTORY.

2(B)         TO THE EXTENT NOT OTHERWISE INCLUDED IN THE FOREGOING, ALL BOOKS,
CORRESPONDENCE, CREDIT FILES, RECORDS, INVOICES, BILLS OF LADING, AND OTHER
DOCUMENTS RELATING TO ANY OF THE FOREGOING, INCLUDING, WITHOUT LIMITATION, ALL
TAPES, CARDS, DISKS, COMPUTER SOFTWARE, COMPUTER RUNS, AND OTHER PAPERS AND
DOCUMENTS IN THE POSSESSION OR CONTROL OF THE GRANTOR OR ANY COMPUTER BUREAU
FROM TIME TO TIME ACTING FOR THE GRANTOR; ALL ACCESSIONS AND ADDITIONS TO, PARTS
AND APPURTENANCES OF, SUBSTITUTIONS FOR AND REPLACEMENTS OF ANY OF THE
FOREGOING; AND ALL PROCEEDS (INCLUDING INSURANCE PROCEEDS) AND PRODUCTS THEREOF.

Section 3.               Title to Collateral.  The Grantor has (or will have at
the time it acquires rights in Collateral hereafter acquired or arising) and
will maintain so long as the Security Interest may remain outstanding, title to
each item of Collateral (including the proceeds and products thereof), free and
clear of all Liens except the Security Interest.  The Grantor will not license
any Collateral.  The Grantor will defend the Collateral against all claims or
demands of all Persons (other than the Secured Party) claiming the Collateral or
any interest therein.  As of the date of execution of this Security Agreement,
no effective financing statement or other similar document used to perfect and
preserve a security interest under the laws of any jurisdiction (a ‘‘Financing
Statement’’) covering all or any part of the Collateral is on file in any
recording office, except such as may have been filed in favor of the Secured
Party relating to this Agreement.

Section 4.               Disposition of Collateral.  The Grantor will not sell,
lease or otherwise dispose of, or discount or factor with or without recourse,
any Collateral, except for sales of items of Inventory in the ordinary course of
business.

 

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Section 5.               Names, Offices, Locations, Jurisdiction of
Organization.  The Grantor’s legal name (as set forth in its constituent
documents filed with the appropriate governmental official or agency) is as set
forth in the opening paragraph hereof.  The jurisdiction of organization of the
Grantor is the state of California and the organizational number of the Grantor
is set forth on the signature page of this Agreement.  The Grantor will from
time to time at the request of the Secured Party provide the Secured Party with
current good standing certificates and/or state-certified constituent documents
from the appropriate governmental officials.  The chief place of business and
chief executive office of Grantor are located at its address set forth on the
signature page hereof.  The Grantor will not locate or relocate any item of
Collateral into any jurisdiction in which an additional Financing Statement
would be required to be filed to maintain the Secured Party’s perfected security
interest in such Collateral, provided however that nothing herein shall prohibit
sales of items of Inventory in the ordinary course of business. The Grantor will
not change its name, the location of its chief place of business and chief
executive office or its corporate structure (including without limitation, its
jurisdiction of organization) unless the Secured Party has been given at least
30 days prior written notice thereof and the Grantor has executed and delivered
to the Secured Party such Financing Statements and other instruments required or
appropriate to continue the perfection of the Security Interest.

Section 6.               Further Assurances; Attorney-in-Fact.

6(A)         THE GRANTOR AGREES THAT FROM TIME TO TIME, AT ITS EXPENSE, IT WILL
PROMPTLY EXECUTE AND DELIVER ALL FURTHER INSTRUMENTS AND DOCUMENTS, AND TAKE ALL
FURTHER ACTION, THAT MAY BE NECESSARY OR THAT THE SECURED PARTY MAY REASONABLY
REQUEST, IN ORDER TO PERFECT AND PROTECT THE SECURITY INTEREST GRANTED OR
PURPORTED TO BE GRANTED HEREBY OR TO ENABLE THE SECURED PARTY TO EXERCISE AND
ENFORCE ITS RIGHTS AND REMEDIES HEREUNDER WITH RESPECT TO ANY COLLATERAL (BUT
ANY FAILURE TO REQUEST OR ASSURE THAT THE GRANTOR EXECUTE AND DELIVER SUCH
INSTRUMENT OR DOCUMENTS OR TO TAKE SUCH ACTION SHALL NOT AFFECT OR IMPAIR THE
VALIDITY, SUFFICIENCY OR ENFORCEABILITY OF THIS AGREEMENT AND THE SECURITY
INTEREST, REGARDLESS OF WHETHER ANY SUCH ITEM WAS OR WAS NOT EXECUTED AND
DELIVERED OR ACTION TAKEN IN A SIMILAR CONTEXT OR ON A PRIOR OCCASION).  WITHOUT
LIMITING THE GENERALITY OF THE FOREGOING, THE GRANTOR WILL, PROMPTLY AND FROM
TIME TO TIME AT THE REQUEST OF THE SECURED PARTY:  (I) EXECUTE AND FILE SUCH
FINANCING STATEMENTS OR CONTINUATION STATEMENTS IN RESPECT THEREOF, OR
AMENDMENTS THERETO, AND SUCH OTHER INSTRUMENTS OR NOTICES (INCLUDING FIXTURE
FILINGS WITH ANY NECESSARY LEGAL DESCRIPTIONS AS TO ANY GOODS INCLUDED IN THE
COLLATERAL WHICH THE SECURED PARTY DETERMINES MIGHT BE DEEMED TO BE FIXTURES,
AND INSTRUMENTS AND NOTICES WITH RESPECT TO VEHICLE TITLES), AS MAY BE NECESSARY
OR DESIRABLE, OR AS THE SECURED PARTY MAY REQUEST, IN ORDER TO PERFECT AND
PRESERVE THE SECURITY INTEREST GRANTED OR PURPORTED TO BE GRANTED HEREBY; (II)
OBTAIN FROM ANY BAILEE HOLDING ANY ITEM OF COLLATERAL AN ACKNOWLEDGEMENT, IN
FORM SATISFACTORY TO THE SECURED PARTY THAT SUCH BAILEE HOLDS SUCH COLLATERAL
FOR THE BENEFIT OF THE SECURED PARTY; (III) OBTAIN FROM ANY SECURITIES
INTERMEDIARY, OR OTHER PARTY HOLDING ANY ITEM OF COLLATERAL, CONTROL AGREEMENTS
IN FORM SATISFACTORY TO THE SECURED PARTY; AND (IV) USE BEST EFFORTS TO OBTAIN
WAIVERS, IN FORM SATISFACTORY TO THE SECURED PARTY, OF ANY CLAIM TO ANY
COLLATERAL FROM ANY LANDLORDS OR MORTGAGEES OF ANY PROPERTY WHERE ANY INVENTORY
IS LOCATED.

6(B)         THE GRANTOR HEREBY AUTHORIZES THE SECURED PARTY TO FILE ONE OR MORE
FINANCING STATEMENTS OR CONTINUATION STATEMENTS IN RESPECT THEREOF, AND
AMENDMENTS THERETO,

 

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RELATING TO ALL OR ANY PART OF THE COLLATERAL WITHOUT THE SIGNATURE OF THE
GRANTOR WHERE PERMITTED BY LAW.  THE GRANTOR IRREVOCABLY WAIVES ANY RIGHT TO
NOTICE OF ANY SUCH FILING.  A PHOTOCOPY OR OTHER REPRODUCTION OF THIS AGREEMENT
OR ANY FINANCING STATEMENT COVERING THE COLLATERAL OR ANY PART THEREOF SHALL BE
SUFFICIENT AS A FINANCING STATEMENT WHERE PERMITTED BY LAW.

6(C)         THE GRANTOR WILL FURNISH TO THE SECURED PARTY FROM TIME TO TIME
STATEMENTS AND SCHEDULES FURTHER IDENTIFYING AND DESCRIBING THE COLLATERAL AND
SUCH OTHER REPORTS IN CONNECTION WITH THE COLLATERAL AS THE SECURED PARTY MAY
REASONABLY REQUEST, ALL IN REASONABLE DETAIL AND IN FORM AND SUBSTANCE
REASONABLY SATISFACTORY TO THE SECURED PARTY.

6(D)         IN FURTHERANCE, AND NOT IN LIMITATION, OF THE OTHER RIGHTS, POWERS
AND REMEDIES GRANTED TO THE SECURED PARTY IN THIS AGREEMENT, THE GRANTOR HEREBY
APPOINTS THE SECURED PARTY THE GRANTOR’S ATTORNEY-IN-FACT, WITH FULL AUTHORITY
IN THE PLACE AND STEAD OF GRANTOR AND IN THE NAME OF GRANTOR OR OTHERWISE, FROM
TIME TO TIME IN THE SECURED PARTY’S GOOD FAITH DISCRETION, TO TAKE ANY ACTION
(INCLUDING THE RIGHT TO COLLECT ON ANY COLLATERAL) AND TO EXECUTE ANY INSTRUMENT
THAT THE SECURED PARTY MAY REASONABLY BELIEVE IS NECESSARY OR ADVISABLE TO
ACCOMPLISH THE PURPOSES OF THIS AGREEMENT, IN A MANNER CONSISTENT WITH THE TERMS
HEREOF.

Section 7.               Taxes and Claims.  The Grantor will promptly pay all
taxes and other governmental charges levied or assessed upon or against any
Collateral or upon or against the creation, perfection or continuance of the
Security Interest, as well as all other claims of any kind (including claims for
labor, material and supplies) against or with respect to the Collateral, except
to the extent (a) such taxes, charges or claims are being contested in good
faith by appropriate proceedings, (b) such proceedings do not involve any
material danger of the sale, forfeiture or loss of any of the Collateral or any
interest therein and (c) such taxes, charges or claims are adequately reserved
against on the Grantor’s books in accordance with generally accepted accounting
principles.

Section 8.               Books and Records.  The Grantor will keep and maintain
at its own cost and expense satisfactory and complete records of the Collateral.

Section 9.               Inspection, Reports.  The Grantor will at all
reasonable times permit the Secured Party or its representatives to examine or
inspect any Collateral, any evidence of Collateral and the Grantor’s books and
records concerning the Collateral, wherever located.

Section 10.             Notice of Loss.  The Grantor will promptly notify the
Secured Party of any loss of or material damage to any material item of
Collateral or of any substantial adverse change, known to Grantor, in any
material item of Collateral or the prospect of payment or performance thereof.

 

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Section 11.             Insurance.  The Grantor will keep the Inventory insured
against “all risks” for the full replacement cost thereof and with an insurance
company or companies satisfactory to the Secured Party, the policies to protect
the Secured Party as its interests may appear, with such policies or
certificates with respect thereto to be delivered to the Secured Party at its
request.  Each such policy or the certificate with respect thereto shall provide
that such policy shall not be canceled or allowed to lapse unless at least 30
days prior written notice is given to the Secured Party.

Section 12.             Lawful Use; Fair Labor Standards Act. The Grantor will
use and keep the Collateral, and will require that others use and keep the
Collateral, only for lawful purposes, without violation of any federal, state or
local law, statute or ordinance.  All Inventory of the Grantor as of the date of
this Agreement that was produced by the Grantor or with respect to which the
Grantor performed any manufacturing  or assembly process was produced by the
Grantor (or such manufacturing or assembly process was conducted) in compliance
in all material respects with all requirements of the Fair Labor Standards Act,
and all Inventory produced, manufactured or assembled by the Grantor after the
date of this Agreement will be so produced, manufactured or assembled, as the
case may be.

Section 13.             Action by the Secured Party.  If the Grantor at any time
fails to perform or observe any of the foregoing agreements, the Secured Party
shall have (and the Grantor hereby grants to the Secured Party) the right, power
and authority (but not the duty) to perform or observe such agreement on behalf
and in the name, place and stead of the Grantor (or, at the Secured Party’s
option, in the Secured Party’s name) and to take any and all other actions which
the Secured Party may reasonably deem necessary to cure or correct such failure
(including, without limitation, the payment of taxes, the satisfaction of Liens,
the procurement and maintenance of insurance, the execution of assignments,
security agreements and Financing Statements, and the endorsement of
instruments); and the Grantor shall thereupon pay to the Secured Party on demand
the amount of all monies expended and all costs and expenses (including
reasonable attorneys’ fees and legal expenses) incurred by the Secured Party in
connection with or as a result of the performance or observance of such
agreements or the taking of such action by the Secured Party, together with
interest thereon from the date expended or incurred at the highest lawful rate
then applicable to any of the Obligations, and all such monies expended, costs
and expenses and interest thereon shall be part of the Obligations secured by
the Security Interest.

 

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Section 14.             Insurance Claims.  As additional security for the
payment and performance of the Obligations, the Grantor hereby collaterally
assigns to the Secured Party any and all monies (including proceeds of insurance
and refunds of unearned premiums) due or to become due under, and all other
rights of the Grantor with respect to, any and all policies of insurance now or
at any time hereafter covering the Collateral or any evidence thereof or any
business records or valuable papers pertaining thereto.  At any time, whether
before or after the occurrence of any Event of Default, the Secured Party may
(but need not), in the Secured Party’s name or in Grantor’s name, execute and
deliver proofs of claim, receive all such monies, indorse checks and other
instruments representing payment of such monies, and adjust, litigate,
compromise or release any claim against the issuer of any such policy. 
Notwithstanding any of the foregoing, so long as no Event of Default exists the
Grantor shall be entitled to all insurance proceeds with respect to Inventory
provided that such proceeds are applied to the cost of replacement Inventory.

Section 15.             The Secured Party’s Duties.  The powers conferred on the
Secured Party hereunder are solely to protect its interest in the Collateral and
shall not impose any duty upon it to exercise any such powers.  The Secured
Party shall be deemed to have exercised reasonable care in the safekeeping of
any Collateral in its possession if such Collateral is accorded treatment
substantially equal to the safekeeping which the Secured Party accords its own
property of like kind.  Except for the safekeeping of any Collateral in its
possession and the accounting for monies and for other properties actually
received by it hereunder, the Secured Party shall have no duty, as to any
Collateral, as to ascertaining or taking action with respect to calls,
conversions, exchanges, maturities, tenders or other matters relative to any
Collateral, whether or not the Secured Party has or is deemed to have knowledge
of such matters, or as to the taking of any necessary steps to preserve rights
against any Persons or any other rights pertaining to any Collateral.  The
Secured Party will take action in the nature of exchanges, conversions,
redemptions, tenders and the like requested in writing by the Grantor with
respect to the Collateral in the Secured Party’s possession if the Secured Party
in its reasonable judgment determines that such action will not impair the
Security Interest or the value of the Collateral, but a failure of the Secured
Party to comply with any such request shall not of itself be deemed a failure to
exercise reasonable care with respect to the taking of any necessary steps to
preserve rights against any Persons or any other rights pertaining to any
Collateral.

 

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Section 16.             Default.  Each of the following occurrences shall
constitute an Event of Default under this Agreement:  (a) the failure of the
Debtor to pay when due any of the Obligations; (b) the failure of the Grantor to
perform any agreement of the contained herein or in any other agreement with the
Secured Party; (c) any statement, representation or warranty of the Grantor made
herein or at any time furnished to the Secured Party is untrue in any respect as
of the date made; (d) the entry of any judgment against the Debtor or the
Grantor in an amount in excess of $250,000; (e) the Debtor or the Grantor is
generally not paying its debts as they become due; (f) the appointment of or
assignment to a custodian, as that term is defined in the United States
Bankruptcy Code, for any property of the Debtor or the Grantor, or encumbrance,
levy, seizure or attachment of any portion of the Collateral; (g) the
commencement of any proceeding or the filing of a petition by or against the
Debtor or the Grantor under the provisions of the United States Bankruptcy Code
for liquidation, reorganization or adjustment of debts or under any insolvency
law or other statute or law providing for the modification or adjustment of the
rights of creditors and, if instituted against the Debtor or Grantor, shall have
been consented to or acquiesced in by the Debtor or Grantor or shall remain
undismissed for 45 days, or an order for relief shall have been entered against
the Debtor or Grantor; or (h) dissolution, consolidation, or merger, or transfer
of a substantial part of the property of the Debtor or the Grantor.

Section 17.             Remedies on Default.  Upon the occurrence of an Event of
Default and at any time thereafter:

17(A)       THE SECURED PARTY MAY EXERCISE AND ENFORCE ANY AND ALL RIGHTS AND
REMEDIES AVAILABLE UPON DEFAULT TO A SECURED PARTY UNDER ARTICLE 9 OF THE
UNIFORM COMMERCIAL CODE AS IN EFFECT IN THE STATE OF MINNESOTA.

17(B)       THE SECURED PARTY SHALL HAVE THE RIGHT TO ENTER UPON AND INTO AND
TAKE POSSESSION OF ALL OR SUCH PART OR PARTS OF THE PROPERTIES OF THE GRANTOR,
INCLUDING LANDS, PLANTS, BUILDINGS, EQUIPMENT, INVENTORY AND OTHER PROPERTY AS
MAY BE NECESSARY OR APPROPRIATE IN THE JUDGMENT OF THE SECURED PARTY TO PERMIT
OR ENABLE THE SECURED PARTY TO  MANUFACTURE, PRODUCE, PROCESS, STORE OR SELL OR
COMPLETE THE  MANUFACTURE, PRODUCTION, PROCESSING, STORING OR SALE OF ALL OR ANY
PART OF THE COLLATERAL, AS THE SECURED PARTY MAY ELECT, AND TO USE  AND OPERATE
SAID PROPERTIES FOR SAID PURPOSES AND FOR SUCH LENGTH OF TIME AS THE SECURED
PARTY MAY DEEM NECESSARY OR APPROPRIATE FOR SAID PURPOSES WITHOUT THE PAYMENT OF
ANY COMPENSATION TO GRANTOR THEREFOR.  THE SECURED PARTY MAY REQUIRE THE GRANTOR
TO, AND THE GRANTOR HEREBY AGREES THAT IT WILL, AT ITS EXPENSE AND UPON REQUEST
OF THE SECURED PARTY FORTHWITH, ASSEMBLE ALL OR PART OF THE COLLATERAL AS
DIRECTED BY THE SECURED PARTY AND MAKE IT AVAILABLE TO THE SECURED PARTY AT A
PLACE OR PLACES TO BE DESIGNATED BY THE SECURED PARTY.

17(C)       ANY DISPOSITION OF COLLATERAL MAY BE IN ONE OR MORE PARCELS AT
PUBLIC OR PRIVATE SALE, AT ANY OF THE SECURED PARTY’S OFFICES OR ELSEWHERE, FOR
CASH, ON CREDIT, OR FOR FUTURE DELIVERY, AND UPON SUCH OTHER TERMS AS THE
SECURED PARTY MAY REASONABLY BELIEVE ARE COMMERCIALLY REASONABLE.  THE SECURED
PARTY SHALL NOT BE OBLIGATED TO DISPOSE OF COLLATERAL REGARDLESS OF NOTICE OF
SALE HAVING BEEN GIVEN, AND THE SECURED PARTY MAY ADJOURN ANY PUBLIC OR PRIVATE
SALE FROM TIME TO TIME BY ANNOUNCEMENT MADE AT THE TIME AND PLACE FIXED
THEREFOR, AND SUCH DISPOSITION MAY, WITHOUT FURTHER NOTICE, BE MADE AT THE TIME
AND PLACE TO WHICH IT WAS SO ADJOURNED.

 

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17(D)       THE SECURED PARTY IS HEREBY GRANTED A LICENSE OR OTHER RIGHT TO USE,
WITHOUT CHARGE, ALL OF THE GRANTOR’S PROPERTY, INCLUDING, WITHOUT LIMITATION,
ALL OF THE GRANTOR’S LABELS, TRADEMARKS, COPYRIGHTS, PATENTS AND ADVERTISING
MATTER, OR ANY PROPERTY OF A SIMILAR NATURE, AS IT PERTAINS TO THE COLLATERAL,
IN COMPLETING PRODUCTION OF, ADVERTISING FOR SALE AND SELLING ANY COLLATERAL,
AND THE GRANTOR’S RIGHTS UNDER ALL LICENSES AND ALL FRANCHISE AGREEMENTS SHALL
INURE TO THE SECURED PARTY’S BENEFIT UNTIL THE OBLIGATIONS ARE PAID IN FULL.

17(E)       IF NOTICE TO THE GRANTOR OF ANY INTENDED DISPOSITION OF COLLATERAL
OR ANY OTHER INTENDED ACTION IS REQUIRED BY LAW IN A PARTICULAR INSTANCE, SUCH
NOTICE SHALL BE DEEMED COMMERCIALLY REASONABLE IF GIVEN IN THE MANNER SPECIFIED
FOR THE GIVING OF NOTICE IN SECTION 22 HEREOF AT LEAST TEN CALENDAR DAYS PRIOR
TO THE DATE OF INTENDED DISPOSITION OR OTHER ACTION, AND THE SECURED PARTY MAY
EXERCISE OR ENFORCE ANY AND ALL OTHER RIGHTS OR REMEDIES AVAILABLE BY LAW OR
AGREEMENT AGAINST THE COLLATERAL, AGAINST THE GRANTOR, OR AGAINST ANY OTHER
PERSON OR PROPERTY.  THE SECURED PARTY (I) MAY DISPOSE OF THE COLLATERAL IN ITS
THEN PRESENT CONDITION OR FOLLOWING SUCH PREPARATION AND PROCESSING AS THE
SECURED PARTY DEEMS COMMERCIALLY REASONABLE, (II) SHALL HAVE NO DUTY TO PREPARE
OR PROCESS THE COLLATERAL PRIOR TO SALE, (III) MAY DISCLAIM WARRANTIES OF TITLE,
POSSESSION, QUIET ENJOYMENT AND THE LIKE, AND (IV) MAY COMPLY WITH ANY
APPLICABLE STATE OR FEDERAL LAW REQUIREMENTS IN CONNECTION WITH A DISPOSITION OF
THE COLLATERAL AND NONE OF THE FOREGOING ACTIONS SHALL BE DEEMED TO ADVERSELY
AFFECT THE COMMERCIAL REASONABLENESS OF THE DISPOSITION OF THE COLLATERAL.

17(F)        NOTWITHSTANDING ANYTHING HEREIN OR IN ARTICLE 9 OF THE UNIFORM
COMMERCIAL CODE AS IN EFFECT IN THE STATE OF MINNESOTA TO THE CONTRARY, SECURED
PARTY AGREES THAT  ITS SOLE RECOURSE AGAINST GRANTOR SHALL BE AGAINST ALL OF
GRANTOR’S RIGHTS, TITLE AND INTEREST IN, TO AND UNDER THE COLLATERAL.

Section 18.             Application of Proceeds.   All cash proceeds received by
the Secured Party in respect of any sale of, collection from, or other
realization upon all or any part of the Collateral may, in the discretion of the
Secured Party, be held by the Secured Party as collateral for, or then or at any
time thereafter be applied in whole or in part by the Secured Party against, all
or any part of the Obligations (including, without limitation, reasonable
expenses of the Secured Party payable pursuant to Section 19 hereof).

 

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Section 19.             Costs and Expenses; Indemnity.  The Grantor will pay or
reimburse the Secured Party on demand for all reasonable out–of–pocket expenses
(including in each case all filing and recording fees and taxes and all
reasonable fees and expenses of counsel and of any experts and agents) incurred
by the Secured Party in connection with the creation, perfection, protection,
satisfaction, foreclosure or enforcement of the Security Interest and the
preparation, administration, continuance, amendment or enforcement of this
Agreement, and all such costs and expenses shall be part of the Obligations
secured by the Security Interest.  The Grantor shall indemnify and hold the
Secured Party harmless from and against any and all claims, losses and
liabilities (including reasonable attorneys’ fees) growing out of or resulting
from this Agreement and the Security Interest hereby created (including
enforcement of this Agreement) or the Secured Party’s actions pursuant hereto,
except claims, losses or liabilities resulting from the Secured Party’s gross
negligence or willful misconduct as determined by a final judgment of a court of
competent jurisdiction.  Any liability of the Grantor to indemnify and hold the
Secured Party harmless pursuant to the preceding sentence shall be part of the
Obligations secured by the Security Interest.  The obligations of the Grantor
under this Section shall survive any termination of this Agreement.

Section 20.             Waivers; Remedies; Marshalling.  This Agreement can be
waived, modified, amended, terminated or discharged, and the Security Interest
can be released, only explicitly in a writing signed by the Secured Party.  A
waiver so signed shall be effective only in the specific instance and for the
specific purpose given.  Mere delay or failure to act shall not preclude the
exercise or enforcement of any rights and remedies available to the Secured
Party.  All rights and remedies of the Secured Party shall be cumulative and may
be exercised singly in any order or sequence, or concurrently, at the Secured
Party’s option, and the exercise or enforcement of any such right or remedy
shall neither be a condition to nor bar the exercise or enforcement of any
other.  The Grantor hereby waives all requirements of law, if any, relating to
the marshalling of assets which would be applicable in connection with the
enforcement by the Secured Party of its remedies hereunder, absent this waiver.

--------------------------------------------------------------------------------

 

Section 21.             Waiver of Defenses.  The Grantor waives the benefit of
any and all defenses and discharges available to a guarantor, surety, indorser
or accommodation party, dependent on its character as such.  Without limiting
the generality of the foregoing, the Grantor (in such capacity) waives
presentment, demand for payment, and notice of nonpayment or protest of the Note
or any other instrument evidencing any of the Obligations; and the Grantor
agrees that its obligations hereunder and the Security Interest hereby created
shall not be affected or impaired in any way by any of the following acts and
things (which the Secured Party may do from time to time without notice to the
Grantor): (a) by any sale, pledge, renewal, extension, indulgence, alteration,
substitution, exchange, change in, modification, or other disposition of any of
the Obligations or any evidence thereof or any collateral therefor, (b) by any
acceptance or release of  guarantors of any of the Obligations, (c) by any
failure, neglect or omission to realize upon or protect any of Debtor’s
obligations under the Note, or to obtain, perfect, enforce or realize upon any
collateral therefor, or to exercise any Lien upon or right of appropriation of
any moneys, credits or property toward the liquidation of any of the
Obligations, or (d) by any partial application of payments or credits upon any
of the Obligations.  The Secured Party shall not be required, before exercising
its rights under this Agreement, to first resort for payment of any of the
Obligations to the Debtor or any other Persons, its or their properties or
estates, or any collateral, property, Liens or other rights or remedies
whatsoever.  The Grantor agrees not to exercise any right of contribution,
recourse, subrogation or reimbursement available to the Grantor against the
Debtor or any other Person or property, unless and until all Obligations and all
other debts, liabilities and obligations owed by the Debtor and the Grantor to
the Secured Party have been paid and discharged.  The Grantor expects to derive
benefits from the transactions resulting in the creation of the Obligations. 
The Secured Party may rely conclusively on the continuing warranty, hereby made,
that the Grantor continues to be benefitted by the Secured Party’s extension of
credit accommodations to the Debtor and the Secured Party shall have no duty to
inquire into or confirm the receipt of any such benefits, and this Agreement
shall be effective and enforceable by the Secured Party without regard to the
receipt, nature or value of any such benefits.

Section 22.             Notices.  Any notice or other communication to any party
in connection with this Agreement shall be in writing and shall be sent by
manual delivery, facsimile transmission, overnight courier or United States mail
(postage prepaid) addressed to such party at the address specified on the
signature page hereof, or at such other address as such party shall have
specified to the other party hereto in writing.  All periods of notice shall be
measured from the date of delivery thereof if manually delivered, from the date
of sending thereof if sent by facsimile transmission, from the first business
day after the date of sending if sent by overnight courier, or from four days
after the date of mailing if mailed.

Section 23.             Grantor Acknowledgments.  The Grantor hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement, (b) the Secured Party has no fiduciary
relationship to the Grantor, the relationship being solely that of debtor and
creditor, and (c) no joint venture exists between the Grantor and the Secured
Party.

Section 24.             Representations and Warranties.  The Grantor hereby
represents and warrants to the Secured Party that:

 

--------------------------------------------------------------------------------

 

24(A)       THE GRANTOR IS A CORPORATION DULY ORGANIZED, VALIDLY EXISTING AND IN
GOOD STANDING UNDER THE LAWS OF THE JURISDICTION OF ITS ORGANIZATION AND HAS THE
CORPORATE POWER AND AUTHORITY AND THE LEGAL RIGHT TO OWN AND OPERATE ITS
PROPERTIES AND TO CONDUCT THE BUSINESS IN WHICH IT IS CURRENTLY ENGAGED.

24(B)       THE GRANTOR HAS THE POWER AND AUTHORITY AND THE LEGAL RIGHT TO
EXECUTE AND DELIVER, AND TO PERFORM ITS OBLIGATIONS UNDER, THIS AGREEMENT AND
HAS TAKEN ALL NECESSARY CORPORATE ACTION TO AUTHORIZE SUCH EXECUTION, DELIVERY
AND PERFORMANCE.

24(C)       THIS AGREEMENT CONSTITUTES A LEGAL, VALID AND BINDING OBLIGATION OF
THE GRANTOR ENFORCEABLE IN ACCORDANCE WITH ITS TERMS, EXCEPT AS ENFORCEABILITY
MAY BE LIMITED BY APPLICABLE BANKRUPTCY, INSOLVENCY, REORGANIZATION, MORATORIUM
OR SIMILAR LAWS AFFECTING THE ENFORCEMENT OF CREDITORS’ RIGHTS GENERALLY AND BY
GENERAL EQUITABLE PRINCIPLES (WHETHER ENFORCEMENT IS SOUGHT BY PROCEEDINGS IN
EQUITY OR AT LAW).

24(D)       THE EXECUTION, DELIVERY AND PERFORMANCE OF THIS AGREEMENT WILL NOT
(I) VIOLATE ANY PROVISION OF ANY LAW, STATUTE, RULE OR REGULATION OR ANY ORDER,
WRIT, JUDGMENT, INJUNCTION, DECREE, DETERMINATION OR AWARD OF ANY COURT,
GOVERNMENTAL AGENCY OR ARBITRATOR PRESENTLY IN EFFECT HAVING APPLICABILITY TO
THE GRANTOR, (II) VIOLATE OR CONTRAVENE ANY PROVISION OF THE ARTICLES OF
INCORPORATION OR BYLAWS OF THE GRANTOR, OR (III) RESULT IN A BREACH OF OR
CONSTITUTE A DEFAULT UNDER ANY INDENTURE, LOAN OR CREDIT AGREEMENT OR ANY OTHER
AGREEMENT, LEASE OR INSTRUMENT TO WHICH THE GRANTOR IS A PARTY OR BY WHICH IT OR
ANY OF ITS PROPERTIES MAY BE BOUND OR RESULT IN THE CREATION OF ANY LIEN
THEREUNDER.  THE GRANTOR IS NOT IN DEFAULT UNDER OR IN VIOLATION OF ANY SUCH
LAW, STATUTE, RULE OR REGULATION, ORDER, WRIT, JUDGMENT, INJUNCTION, DECREE,
DETERMINATION OR AWARD OR ANY SUCH INDENTURE, LOAN OR CREDIT AGREEMENT OR OTHER
AGREEMENT, LEASE OR INSTRUMENT IN ANY CASE IN WHICH THE CONSEQUENCES OF SUCH
DEFAULT OR VIOLATION COULD HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS,
OPERATIONS, PROPERTIES, ASSETS OR CONDITION (FINANCIAL OR OTHERWISE) OF THE
GRANTOR.

24(E)       EXCEPT FOR FILINGS, RECORDINGS AND REGISTRATIONS TO PERFECT THE
SECURITY INTEREST, NO ORDER, CONSENT, APPROVAL, LICENSE, AUTHORIZATION OR
VALIDATION OF, OR FILING, RECORDING OR REGISTRATION WITH, OR EXEMPTION BY, ANY
GOVERNMENTAL OR PUBLIC BODY OR AUTHORITY IS REQUIRED ON THE PART OF THE GRANTOR
TO AUTHORIZE, OR IS REQUIRED IN CONNECTION WITH THE EXECUTION, DELIVERY AND
PERFORMANCE OF, OR THE LEGALITY, VALIDITY, BINDING EFFECT OR ENFORCEABILITY OF,
THIS AGREEMENT.

24(F)        THERE ARE NO ACTIONS, SUITS OR PROCEEDINGS PENDING OR, TO THE
KNOWLEDGE OF THE GRANTOR, THREATENED AGAINST OR AFFECTING THE GRANTOR OR ANY OF
ITS PROPERTIES BEFORE ANY COURT OR ARBITRATOR, OR ANY GOVERNMENTAL DEPARTMENT,
BOARD, AGENCY OR OTHER INSTRUMENTALITY WHICH, IF DETERMINED ADVERSELY TO THE
GRANTOR, WOULD HAVE A MATERIAL ADVERSE EFFECT ON THE BUSINESS, OPERATIONS,
PROPERTY OR CONDITION (FINANCIAL OR OTHERWISE) OF THE GRANTOR OR ON THE ABILITY
OF THE GRANTOR TO PERFORM ITS OBLIGATIONS HEREUNDER.

 

--------------------------------------------------------------------------------

 

Section 25.             Continuing Security Interest.  This Agreement shall (a)
create a continuing security interest in the Collateral and shall remain in full
force and effect until payment in full of the Obligations and the expiration of
the obligations, if any, of the Secured Party to extend credit accommodations to
the Debtor, (b) be binding upon the Grantor, its successors and assigns, and (c)
inure to the benefit of, and be enforceable by, the Secured Party and its
successors, transferees, and assigns.

Section 26.             Termination of Security Interest.  Upon payment in full
of the Obligations and the expiration of any obligation of the Secured Party to
extend credit accommodations to the Debtor, the Security Interest granted hereby
shall terminate.  Upon any such termination, the Secured Party will return to
the Grantor such of the Collateral then in the possession of the Secured Party
as shall not have been sold or otherwise applied pursuant to the terms hereof
and execute and deliver to the Grantor such documents as the Grantor shall
reasonably request to evidence such termination.  Any reversion or return of
Collateral upon termination of this Agreement and any instruments of transfer or
termination shall be at the expense of the Grantor and shall be without warranty
by, or recourse on, the Secured Party.  As used in this Section, “Grantor”
includes any assigns of Grantor, any Person holding a subordinate security
interest in any of the Collateral or whoever else may be lawfully entitled to
any part of the Collateral.

Section 27.             Governing Law and Construction.  THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF MINNESOTA, WITHOUT GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES
THEREOF, EXCEPT TO THE EXTENT THAT THE VALIDITY OR PERFECTION OF THE SECURITY
INTEREST HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR
COLLATERAL ARE MANDATORILY GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE
STATE OF MINNESOTA.   Whenever possible, each provision of this Agreement and
any other statement, instrument or transaction contemplated hereby or relating
hereto shall be interpreted in such manner as to be effective and valid under
such applicable law, but, if any provision of this Agreement or any other
statement, instrument or transaction contemplated hereby or relating hereto
shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement or any other statement, instrument or
transaction contemplated hereby or relating hereto.

 

--------------------------------------------------------------------------------

 

Section 28.             Consent to Jurisdiction.  AT THE OPTION OF THE SECURED
PARTY, THIS AGREEMENT MAY BE ENFORCED IN ANY FEDERAL COURT OR MINNESOTA STATE
COURT SITTING IN HENNEPIN COUNTY; AND THE GRANTOR CONSENTS TO THE JURISDICTION
AND VENUE OF ANY SUCH COURT AND WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS
NOT CONVENIENT.  IN THE EVENT THE GRANTOR COMMENCES ANY ACTION IN ANOTHER
JURISDICTION OR VENUE UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR
INDIRECTLY FROM THE RELATIONSHIP CREATED BY THIS AGREEMENT, THE SECURED PARTY AT
ITS OPTION SHALL BE ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE
JURISDICTIONS AND VENUES ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE
ACCOMPLISHED UNDER APPLICABLE LAW, TO HAVE SUCH CASE DISMISSED WITHOUT
PREJUDICE.

Section 29.             Waiver of Notice and Hearing.  THE GRANTOR HEREBY WAIVES
ALL RIGHTS TO A JUDICIAL HEARING OF ANY KIND PRIOR TO THE EXERCISE BY THE
SECURED PARTY OF ITS RIGHTS TO POSSESSION OF THE COLLATERAL WITHOUT JUDICIAL
PROCESS OR OF ITS RIGHTS TO REPLEVY, ATTACH, OR LEVY UPON THE COLLATERAL WITHOUT
PRIOR NOTICE OR HEARING.  THE GRANTOR ACKNOWLEDGES THAT IT HAS BEEN ADVISED BY
COUNSEL OF ITS CHOICE WITH RESPECT TO THIS PROVISION AND THIS AGREEMENT.

Section 30.             Waiver of Jury Trial.  EACH OF THE GRANTOR AND THE
SECURED PARTY, BY ITS ACCEPTANCE OF THIS AGREEMENT, IRREVOCABLY WAIVES ANY AND
ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

Section 31.             Counterparts.  This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, but all such counterparts together shall constitute but one
and the same instrument.

Section 32.             General.  All representations and warranties contained
in this Agreement or in any other agreement between the Grantor and the Secured
Party shall survive the execution, delivery and performance of this Agreement
and the creation and payment of the Obligations.  The Grantor waives notice of
the acceptance of this Agreement by the Secured Party.  Captions in this
Agreement are for reference and convenience only and shall not affect the
interpretation or meaning of any provision of this Agreement.

 

--------------------------------------------------------------------------------

 

IN WITNESS WHEREOF, the Grantor has caused this Security Agreement to be duly
executed and delivered by its officer thereunto duly authorized as of the date
first above written.

 

 

 

METRON TECHNOLOGY DISTRIBUTION CORPORATION

 

 

 

 

By

/s/  EDWARD D. SEGAL

 

 

 

 

Title

Chief Executive Officer

 

Address for Grantor:

 

Metron Technology Distribution Corporation

1350 Old Bayshore Highway, #210

Burlingame, CA 94010

Fax

 

 

 

Address for the Secured Party:

3455 Lyman Boulevard

MS4-8448

Chaska, MN 55318-3052

Fax  952-448-1300

 

--------------------------------------------------------------------------------

 

Schedule 3.1(b)

General Schedule of Product Inventory and the Spare Parts Inventory

Metron Technology

 

Mandarin Inventory

 

As of August 31, 2002

 

 

Entity

 

Organized in

 

Location of Inventory

 

Gross Value ($000)

 

Subject to security interest

 

 

 

 

 

 

 

 

 

Europe

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MT Benelux

 

Netherlands

 

Netherlands

 

488

 

Yes

 

 

 

 

 

 

 

 

 

MT France

 

France

 

France

 

574

 

Yes

 

 

 

 

 

 

 

 

 

MT Germany

 

Germany

 

Germany

 

762

 

Yes

 

 

 

 

 

 

 

 

 

MT Italy

 

Italy

 

Italy

 

501

 

Yes

 

 

 

 

 

 

 

 

 

MT UK

 

England

 

UK

 

904

 

Yes

 

 

 

 

 

 

 

 

 

Asia

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

MT Asia

 

Hong Kong

 

tbd

 

251

 

 

 

 

 

 

 

 

 

 

 

MT Korea

 

Korea

 

Korea

 

500

 

 

 

 

 

 

 

 

 

 

 

MT Singapore

 

Singapore

 

Singapore

 

1,126

 

Yes

 

 

 

 

 

 

 

 

 

MT Taiwan

 

Taiwan

 

Taiwan

 

1,014

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

6,120

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

Schedule 6.1

Transferred Employees

 

 

Name

 

Region

 

Country

 

Function

1

 

[***]

 

Asia

 

[***]

 

Applications Engineer

2

 

[***]

 

Asia

 

[***]

 

[***]

3

 

[***]

 

Asia

 

[***]

 

Service Technician

4

 

[***]

 

Asia

 

[***]

 

Service Technician

5

 

[***]

 

Asia

 

[***]

 

Service Technician

6

 

[***]

 

Asia

 

[***]

 

Applications Engineer

7

 

[***]

 

Asia

 

[***]

 

[***]

8

 

[***]

 

Asia

 

[***]

 

[***]

9

 

[***]

 

Asia

 

[***]

 

Service Technician

10

 

[***]

 

Asia

 

[***]

 

Service Technician

11

 

[***]

 

Asia

 

[***]

 

Service Technician

12

 

[***]

 

Asia

 

[***]

 

Applications Engineer

13

 

[***]

 

Asia

 

[***]

 

SCD Service

14

 

[***]

 

Asia

 

[***]

 

[***]

15

 

[***]

 

Asia

 

[***]

 

[***]

16

 

[***]

 

Asia

 

[***]

 

Service Technician

17

 

[***]

 

Asia

 

[***]

 

Service Technician

18

 

[***]

 

Asia

 

[***]

 

Service Technician

19

 

[***]

 

Asia

 

[***]

 

Service Technician

20

 

[***]

 

Asia

 

[***]

 

Applications Engineer

21

 

[***]

 

Asia

 

[***]

 

[***]

22

 

[***]

 

Asia

 

[***]

 

[***]

23

 

[***]

 

Asia

 

[***]

 

[***]

24

 

[***]

 

Asia

 

[***]

 

Service Technician

25

 

[***]

 

Asia

 

[***]

 

Service Technician

26

 

[***]

 

Asia

 

[***]

 

Service Technician

27

 

[***]

 

Asia

 

[***]

 

Service Technician

28

 

[***]

 

Asia

 

[***]

 

Service Technician

29

 

[***]

 

Asia

 

[***]

 

Service Technician

30

 

[***]

 

Asia

 

[***]

 

Service Technician

31

 

[***]

 

Asia

 

[***]

 

Service Technician

32

 

[***]

 

Europe

 

[***]

 

Applications Engineer

33

 

[***]

 

Europe

 

[***]

 

[***]

34

 

[***]

 

Europe

 

[***]

 

SCD Service

35

 

[***]

 

Europe

 

[***]

 

SCD Service

36

 

[***]

 

Europe

 

[***]

 

SCD Service

37

 

[***]

 

Europe

 

[***]

 

SCD Service

38

 

[***]

 

Europe

 

[***]

 

SCD Service

39

 

[***]

 

Europe

 

[***]

 

SCD Service

 

 

*Confidential Treatment Requested

 

--------------------------------------------------------------------------------

 

 

 

40

 

[***]

 

Europe

 

[***]

 

SCD Service

41

 

[***]

 

Europe

 

[***]

 

SCD Service

42

 

[***]

 

Europe

 

[***]

 

SCD Service

43

 

[***]

 

Europe

 

[***]

 

SCD Service

44

 

[***]

 

Europe

 

[***]

 

[***]

45

 

[***]

 

Europe

 

[***]

 

Applications Engineer

46

 

[***]

 

Europe

 

[***]

 

Applications Engineer

47

 

[***]

 

Europe

 

[***]

 

[***]

48

 

[***]

 

Europe

 

[***]

 

MLD Service

49

 

[***]

 

Europe

 

[***]

 

MLD Service

50

 

[***]

 

Europe

 

[***]

 

MLD Service

51

 

[***]

 

Europe

 

[***]

 

MLD Service

52

 

[***]

 

Europe

 

[***]

 

[***]

53

 

[***]

 

Europe

 

[***]

 

SCD Service

54

 

[***]

 

Europe

 

[***]

 

SCD Service

55

 

[***]

 

Europe

 

[***]

 

SCD Service

56

 

[***]

 

Europe

 

[***]

 

SCD Service

57

 

[***]

 

Europe

 

[***]

 

SCD Service

58

 

[***]

 

Europe

 

[***]

 

SCD Service

59

 

[***]

 

Europe

 

[***]

 

[***]

60

 

[***]

 

Europe

 

[***]

 

[***]

61

 

[***]

 

Europe

 

[***]

 

service eng

62

 

[***]

 

Europe

 

[***]

 

SCD apps

63

 

[***]

 

Europe

 

[***]

 

SCD Service

64

 

[***]

 

Europe

 

[***]

 

SCD Service

65

 

[***]

 

Europe

 

[***]

 

SCD Service

66

 

[***]

 

Europe

 

[***]

 

SCD Service

67

 

[***]

 

Europe

 

[***]

 

SCD Service

68

 

[***]

 

Europe

 

[***]

 

SCD Service

69

 

[***]

 

Europe

 

[***]

 

[***]

70

 

[***]

 

Europe

 

[***]

 

MLD Service

71

 

[***]

 

Europe

 

[***]

 

MLD Service

72

 

[***]

 

Europe

 

[***]

 

MLD Service

73

 

[***]

 

Europe

 

[***]

 

MLD Service

74

 

[***]

 

Europe

 

[***]

 

[***]

75

 

[***]

 

Europe

 

[***]

 

SCD Service

76

 

[***]

 

Europe

 

[***]

 

SCD Service

77

 

[***]

 

Europe

 

[***]

 

Applications Engineer

78

 

[***]

 

Europe

 

[***]

 

[***]

79

 

[***]

 

Europe

 

[***]

 

[***]

80

 

[***]

 

Europe

 

[***]

 

[***]

81

 

[***]

 

Europe

 

[***]

 

Applications Engineer

82

 

[***]

 

Europe

 

[***]

 

MLD Service

83

 

[***]

 

Europe

 

[***]

 

MLD Service

84

 

[***]

 

Europe

 

[***]

 

MLD Service

85

 

[***]

 

Europe

 

[***]

 

MLD Service

86

 

[***]

 

Europe

 

[***]

 

SCD Service

87

 

[***]

 

Europe

 

[***]

 

SCD Service

88

 

[***]

 

Europe

 

[***]

 

SCD Service

89

 

[***]

 

Europe

 

[***]

 

SCD Service

90

 

[***]

 

Europe

 

[***]

 

Service

91

 

[***]

 

Europe

 

[***]

 

Service Eng

92

 

[***]

 

Europe

 

[***]

 

Service

 

*Confidential Treatment Requested

 

-2-

--------------------------------------------------------------------------------

Schedule 9.1(j)

Employee Benefits

Employee benefits

 

 

 

 

 

 

 

 

MT Benelux

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

13.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

mbo/dis

 

discretionary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

y

 

y

 

n

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

 

 

n

 

n

 

n

Kilometer allowance

 

 

 

n

 

n

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

6%

 

 

 

 

 

 

employee contribution

 

4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life assurance

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Employee savings scheme

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PC prive project

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

--------------------------------------------------------------------------------

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of 10-40% (typically 10 or 20% for
applications engineers, 20 or 25% for product managers, 15% for csm’s and 40%
for European csm’s) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0 - 0.5 - 1) of base monthly salary.

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT France

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

36 or 41

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

 

 

12

 

13

 

13

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

mbo/dis

 

dis

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

y

 

y

 

n

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Kilometer allowance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

9,6 % of gross salary

 

 

 

 

 

 

employee contribution

 

2,4 % of gross salary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

 

 

 

 

 

 

 

Permanent health insurance

 

80% of premium

 

 

 

 

 

 

 

 

20% of premium

 

 

 

 

 

 

Life assurance

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legal profit share (statutory benefit)

 

y

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of 10-40% (typically 10 or 20% for
applications engineers, 20 or 25% for product managers, 15% for csm’s and 40%
for European csm’s) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0 - 0.5 - 1) of base monthly salary.

 

 

-2-

--------------------------------------------------------------------------------

 

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT Germany

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

30

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

13.5

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

mbo/dis

 

dis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

y

 

y

 

n

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

n

 

 

 

 

 

 

Kilometer allowance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

Euro 1,742 annually

 

 

 

 

 

 

employee contribution

 

0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

y

 

 

 

 

 

 

employer contribution

 

50% of premium

 

 

 

 

 

 

employee contribution

 

50% of premium

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life insurance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Bavarian holidays

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vermögenswirksame Leistung

 

y

 

 

 

 

 

 

employer contribution

 

Euro 40 p.m.

 

 

 

 

 

 

employee contribution

 

0

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of 10-40% (typically 10 or 20% for
applications engineers, 20 or 25% for product managers, 15% for csm’s and 40%
for European csm’s) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0 - 0.5 - 1) of base monthly salary.

 

 

 

-3-

--------------------------------------------------------------------------------

 

 

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT Italy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

35

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

mbo/dis

 

discretionary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

y

 

y

 

n

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

n

 

 

 

 

 

 

Kilometer allowance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

(note: part of total social taxes)                                     

 

 

 

 

 

 

 

 

employer contribution

 

30.78%

 

 

 

 

 

 

I.e. mandatory

 

 

 

 

 

 

 

 

employee contribution

 

8.89%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

 

 

 

 

 

 

 

employee contribution

 

 

 

1.20%

 

3.35%

 

0.50%

 

 

 

 

 

 

 

 

 

Life assurance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential  of 10-40% (typically 10 or 20% for
applications engineers, of 10-40% (typically 10 or 20% for applications
engineers, of 10-40% (typically 10 or 20% for applications engineers, and 40%
for European csm’s) of base salary

 

 

 

-4-

--------------------------------------------------------------------------------

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0 - 0.5 - 1) of base monthly salary.

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT UK

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

mbo/dis

 

dis

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

y

 

y

 

n

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

y

 

 

 

 

 

 

Kilometer allowance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

6%

 

 

 

 

 

 

employee contribution

 

4%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life assurance

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-5-

--------------------------------------------------------------------------------

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of 10-40% (typically 10 or 20% for
applications engineers, 20 or 25% for product managers, 15% for csm’s and 40%
for European csm’s) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0 - 0.5 - 1) of base monthly salary.

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT Korea

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

10

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

Yes

 

No

 

No

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

No

 

discretionary

 

discretionary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

 

 

N

 

N

 

N

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

y

 

 

 

 

 

 

Kilometer allowance

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

4.50%

 

 

 

 

 

 

employee contribution

 

4.50%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life assurance

 

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

Meal allowance (KRW 100,000 per month)

 

Y

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of xx% (typically 10-20%) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0.5 - 2) of base monthly salary.

 

 

 

-6-

--------------------------------------------------------------------------------

 

 

 

Employee benefits

 

 

 

 

 

 

 

 

 

MT Singapore

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

15-22

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

13

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

y

 

n

 

n

 

 

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

n

 

discretionary

 

discretionary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

 

 

y

 

y

 

n

 

Kilometer allowance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

 

employer contribution

 

16%

 

 

 

 

 

 

CPF

employee contribution

 

20%

 

 

 

 

 

 

CPF

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

n

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life assurance

 

y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of xx% (typically 10-20%) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0.5 - 2) of base monthly salary.

 

 

 

-7-

--------------------------------------------------------------------------------

 

 

Employee benefits

 

 

 

 

 

 

 

 

MT Taiwan

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Service

 

Sales

 

Sales

 

 

All

 

engineers

 

engineers

 

support

 

 

 

 

 

 

 

 

 

Number of days annual vacation

 

10~15

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Monthly salary paid x times

 

14

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales Commission

 

 

 

Y

 

N

 

N

 

 

 

 

 

 

 

 

 

Bonus scheme

 

 

 

N

 

discretionary

 

discretionary

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car lease

 

N

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Car allowance — flat

 

 

 

Y

 

Y

 

N

Kilometer allowance

 

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Defined contribution pension plan

 

 

 

 

 

 

 

 

employer contribution

 

2%

 

 

 

 

 

 

employee contribution

 

none

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Private health insurance contributions

 

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Permanent health insurance

 

N

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Life assurance

 

Y

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

other — please specify:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

mbo = Individual management by objective incentive plan agreed on a year-by-year
basis, subject a maximum potential of xx% (typically 10-20%) of base salary

 

dis = Discretionary bonus paid to all staff and expressed as a multiple
(typically 0.5 - 2) of base

 

 

-8-

--------------------------------------------------------------------------------

Schedule 9.1(o)

 

MTDC Inventory

METRON TECHNOLOGY DISTRIBUTION CORPORATION

SUMMARY OF INVENTORY

 

 

 

 

AT AUGUST 31, 2002

(ACTUAL)

 

 

 

 

 

 

 

Demo

 

 

 

Spare Parts

 

Work In

 

Freight/Duty

 

 

PRINCIPAL

 

Equipment

 

Equip

 

Spare Parts

 

Offset (1)

 

Process

 

On Inventory

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AG

 

1,070,918.92

 

50,000.00

 

5,140,726.47

 

(3,366,250.13

)

25,604.97

 

 

 

2,921,000.23

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APCO

 

 

 

 

 

1,368.00

 

 

 

 

 

 

 

1,368.00

Seiko

 

 

 

 

 

965,847.45

 

 

 

 

 

57,950.85

 

1,023,798.30

Sigma

 

 

 

 

 

425,845.26

 

 

 

 

 

25,550.72

 

451,395.98

Varian

 

 

 

 

 

329,575.00

 

 

 

 

 

26,222.65

 

355,797.65

Zeiss

 

248,641.85

 

682,489.38

 

212,908.62

 

 

 

 

 

39,450.22

 

1,183,490.07

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,319,560.77

 

732,489.38

 

7,076,270.80

 

(3,366,250.13

)

25,604.97

 

149,174.44

 

5,936,850.23

 

 

AT OCTOBER 9, 2002

(PRELIMINARY)

 

 

 

 

 

 

 

Demo

 

 

 

Spare Parts

 

Work In

 

Freight/Duty

 

 

PRINCIPAL

 

Equipment

 

Equip

 

Spare Parts

 

Offset (1)

 

Process

 

On Inventory

 

TOTAL

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

AG

 

1,071,602.48

 

50,000.00

 

5,567,663.11

 

(3,334,233.42

)

3,365.80

 

 

 

3,358,397.97

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

APCO

 

 

 

 

 

1,368.00

 

 

 

 

 

 

 

1,368.00

Seiko

 

 

 

 

 

951,261.65

 

 

 

 

 

56,999.57

 

1,008,261.22

Sigma

 

 

 

 

 

346,234.65

 

 

 

 

 

20,774.08

 

367,008.73

Varian

 

 

 

 

 

325,498.00

 

 

 

 

 

29,837.94

 

355,335.94

Zeiss

 

188,695.61

 

570,932.01

 

287,358.08

 

 

 

 

 

39,208.69

 

1,086,194.39

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,260,298.09

 

620,932.01

 

7,479,383.49

 

(3,334,233.42

)

3,365.80

 

146,820.28

 

6,176,566.25

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

-9-

--------------------------------------------------------------------------------

 

Schedule 11.1

Legacy Products

                Any product that meets one or more of the following criteria
shall be deemed to be a “Legacy Product”:

1.             Products for which Metron has purchased or licensed the rights to
manufacturing and is manufacturing at one of its facilities.

2.             Products that have been purchased or licensed and are no longer
being manufactured by the original equipment manufacturer.

3.             Products that do not compete with the current generation of FSI
products, including the MAGELLAN™, ANTARES®, ZETA®, MERCURY®, POLARIS® product
offerings.

 

--------------------------------------------------------------------------------

 

Schedule 11.4

Permits and Product Registrations

To be attached hereto after the Effective Date in accordance with Section 11.4.

 

--------------------------------------------------------------------------------

 

Schedule 11.5

Transition Plan

To be agreed by FSI and Metron and attached hereto

after the Effective Date in accordance with Section 11.5.

 

--------------------------------------------------------------------------------

 

Schedule 11.10

Contracts related to Distribution Business

To be attached hereto after the Effective Date in accordance with Section 11.10.

 

--------------------------------------------------------------------------------