Document:

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                                                                    Exhibit 10.1

                               AMENDMENT NO. 2 TO
                           LOAN AND SECURITY AGREEMENT

     AMENDMENT NO. 2 TO LOAN AND SECURITY AGREEMENT ("Amendment No. 2") dated
April 4, 2003 by and among J. Crew Operating Corp., a Delaware corporation
("Operating"), J. Crew Inc., a New Jersey corporation ("J. Crew "), Grace
Holmes, Inc., a Delaware corporation doing business as J. Crew Retail
("Retail"), H.F.D. No. 55, Inc., a Delaware corporation doing business as J.
Crew Factory ("Factory", and together with Operating, J. Crew and Retail, each
individually a "Borrower" and collectively, "Borrowers"), J. Crew Group, Inc., a
New York corporation ("Parent") and J. Crew International, Inc. ("JCI" and
together with Parent, each individually a "Guarantor" and collectively,
"Guarantors"), the parties from time to time to the Loan Agreement (as
hereinafter defined) as lenders (each individually, a "Lender" and collectively,
"Lenders") and Congress Financial Corporation, a Delaware corporation, in its
capacity as administrative and collateral agent for Lenders pursuant to the Loan
Agreement (in such capacity, "Agent").

                              W I T N E S S E T H :

     WHEREAS, Agent, Lenders, Borrowers and Guarantors have entered into
financing arrangements pursuant to which Agent and Lenders have made and may
make loans and advances and provide other financial accommodations to Borrowers
as set forth in the Loan and Security Agreement, dated December 23, 2002, by and
among Agent, Lenders, Wachovia Bank, National Association, in its capacity as
arranger pursuant to the Loan Agreement, Borrowers and Guarantors, as amended by
Amendment No. 1 to Loan and Security Agreement, dated February 7, 2003 (as the
same now exists and may hereafter be further amended, modified, supplemented,
extended, renewed, restated or replaced, the "Loan Agreement") and the
agreements, documents and instruments at any time executed and/or delivered in
connection therewith or related thereto (collectively, together with the Loan
Agreement, the "Financing Agreements");

     WHEREAS, in connection with the offer to exchange the New Notes (as
hereinafter defined) for the Senior Discount Debentures, Borrowers and
Guarantors have requested that Agent and Lenders (a) consent to the formation of
a wholly-owned, direct subsidiary of parent ("Intermediate", as hereinafter
further defined), (b) include Intermediate as an additional Guarantor, subject
to the provisions set forth herein and in the Loan Agreement, (c) consent to the
New Note Offering (as hereinafter defined), (d) consent to the capitalization of
Intermediate by the contribution to it of the Capital Stock of Operating, and
(e) make certain amendments to the Loan Agreement; and

     WHEREAS, Agent and Required Lenders are willing to provide such consents
and to make such amendments to the extent and subject to terms and conditions
set forth herein.

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     NOW, THEREFORE, in consideration of the mutual conditions and agreements
and covenants set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:

Section 1. Definitions.

     1.1 Additional Definitions. As used herein, the following terms shall have
the respective meanings given to them below and the Loan Agreement shall be
deemed and is hereby amended to include, in addition and not in limitation of,
each of the following definitions:

         (a) "Amendment No. 2" shall mean this Amendment No. 2 to Loan and
Security Agreement by and among Agent, Lenders, Borrowers, Guarantors and
Intermediate, as the same now exists and may hereafter be further amended,
modified, supplemented, extended, renewed, restated or replaced.

         (b) "Consummation Date" shall mean the date on which the Senior
Discount Debentures shall be exchanged for New Notes pursuant to and in
accordance with the New Note Agreements.

         (c) "Contingent Principal" shall mean any principal amounts additional
to the face amount of the New Notes which, under certain circumstances set forth
in the New Note Indenture, may be added to the accreted amount, or principal
amount at maturity, as applicable, of the New Notes.

         (d) "Exchange Offer Documents" shall mean, individually and
collectively, each and all of the following (as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced): (i) Confidential Offering Circular and Consent Solicitation Statement
with respect to the Offer to Exchange 16.0% Senior Discount Contingent Principal
Notes due 2008 of J. Crew Intermediate LLC for Outstanding 13 1/8% Senior
Discount Debentures due 2008 of J. Crew Group, Inc. and (ii) all other
agreements, documents and instruments related thereto.

         (e) "Existing Guarantors" shall mean, collectively, the following
(together with their respective successors and assigns): (i) J. Crew Group,
Inc., a New York corporation; and (ii) J. Crew International, Inc., a Delaware
corporation; each sometimes being referred to herein individually as a
"Guarantor".

         (f) "Intermediate" shall mean J. Crew Intermediate LLC, a Delaware
limited liability company, together with its successors and assigns; sometimes
referred to in Amendment No. 2 as the "New Guarantor".

         (g) "New Note Agreements" shall mean: (i) the Exchange Offer Documents,
(ii) the New Notes (iii) the New Note Indenture, and (iv) all other agreements,
documents and instruments now or at any time hereafter executed and/or delivered
by Intermediate or any other

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person in connection with the New Note Offering, as the same now exist or may
hereafter be amended, modified, supplemented, extended, renewed, restated or
replaced.

         (h) "New Note Indenture" shall mean the Indenture, dated on or about
the Consummation Date, between Intermediate, as issuer and New Note Trustee,
with respect to the New Notes, as the same now exists or may hereafter be
amended, modified, supplemented, extended, renewed, restated or replaced.

         (i) "New Note Offering" shall mean the offer of Intermediate to
exchange the Senior Discount Debentures for New Notes pursuant to the Exchange
Offer Documents.

         (j) "New Notes" shall mean, collectively, the 16.0% Senior Discount
Contingent Principal Notes due 2008 containing such terms as are contemplated by
the Exchange Offer Documents as in effect on the date hereof, to be issued by
Intermediate pursuant to the New Note Indenture in the aggregate initial
principal amount equal to the Senior Discount Debentures exchanged pursuant to
the New Note Offering and accrued and unpaid interest thereon at a rate of 16.0%
per annum from October 15, 2002 through and including the Consummation Date (as
the same shall exist on the Consummation Date or may thereafter be amended,
modified, supplemented, extended, renewed, restated or replaced).

         (k) "New Note Trustee" shall mean U.S. Bank National Association, and
its successors and assigns, and any replacement trustee permitted pursuant to
the terms and conditions of the New Note Indenture.

         (l) "Securities Laws" shall mean the Securities Act of 1933, as
amended, the Securities Exchange Act of 1934, as amended, and all rules,
regulations and interpretations issued pursuant thereto or in connection
therewith, and all state and local statutes, rules and regulations issued in
connection therewith or related thereto, as the same now exist or may hereafter
be amended, modified, interpreted, recodified or supplemented.

     1.2 Amendment to Definitions.

         (a) The definition of "EBITDA" is hereby amended such that the
determination thereof for purposes of Section 9.18 of the Loan Agreement shall
be made without giving effect to a one-time charge in respect of non-current
inventory taken by Borrowers as of February 1, 2003, in the aggregate amount of
$9,000,000.

         (b) All references to the term "Financing Agreements" in the Loan
Agreement and the other Financing Agreements shall be deemed and each such
reference is hereby amended to include, in addition and not in limitation, this
Amendment No. 2, and all other agreements documents and instruments at any time
executed and/or delivered by any Obligor or any other person in connection with
any of the foregoing.

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         (c) The definitions of "Guarantor" and "Guarantors" set forth in the
Loan Agreement are hereby amended to include, in addition and not in limitation,
Intermediate, within such definition.

         (d) All references in the Loan Agreement and the other Financing
Agreements to "any or all of Guarantors", "any of Guarantors", "any Guarantor",
"all Guarantors" or any other similar phrase shall be deemed amended so that
Intermediate is included therein, together with JCI and Parent.

     1.3 Interpretation. For purposes of this Amendment No. 2, all terms used
herein, including those terms used or defined in the recitals hereto, shall have
the respective meanings assigned thereto in the Loan Agreement.

Section 2. Consent. Notwithstanding anything to the contrary set forth in the
Loan Agreement or any of the other Financing Agreements and subject to the terms
and conditions contained herein, Agent and Required Lenders hereby consent to:

         (a) the formation by Parent of Intermediate as a wholly-owned
subsidiary of Parent and the capitalization of Intermediate by the contribution
to it of the Capital Stock of Operating; and

         (b) the New Note Offering pursuant to and in accordance with the terms
of the Exchange Offer Documents as in effect on the date hereof.

Section 3. Assumption of Obligations; Amendments to Guarantee and Financing
Agreements.

     3.1 Intermediate hereby expressly (a) assumes and agrees to be directly
liable to Agent and Lenders, jointly and severally with the other Borrowers and
Guarantors, for all Obligations under, contained in, or arising pursuant to the
Loan Agreement or any of the other Financing Agreements applicable to any or all
Borrowers or Guarantors and as applied to Intermediate as a Guarantor, (b)
agrees to perform, comply with and be bound by all terms, conditions and
covenants of the Loan Agreement and the other Financing Agreements applicable to
any or all Guarantors and as applied to Intermediate, with the same force and
effect as if Intermediate had originally executed and been an original Guarantor
party signatory to the Loan Agreement and the other Financing Agreements, (c)
Intermediate is deemed to make, and is, in all respects, bound by all
representations and warranties made by the other Borrowers and Guarantors to
Agent and Lenders set forth in the Loan Agreement or in any of the other
Financing Agreements, and (d) agrees that Agent and Lenders shall have all
rights, remedies and interests, including security interests in and to the
Collateral granted pursuant to Section 4 hereof, the Loan Agreement and the
other Financing Agreements, with respect to Intermediate and its properties and
assets with the same force and effect as Agent has, for the benefit of Lenders,
with respect to the other Guarantors and their assets and properties, as if
Intermediate had originally executed and had been an original Guarantor party
signatory to the Loan Agreement and the other Financing Agreements.

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     3.2 Each of the Borrowers, in their capacities as guarantors of the payment
and performance of the Obligations of the other Borrowers and Existing
Guarantors hereby agrees that the Guarantee, dated December 23, 2002, by the
Borrowers and Existing Guarantors in favor of Agent, for the benefit of Lenders,
is hereby amended to include Intermediate as an additional guarantor party
signatory thereto, and Intermediate by its execution below hereby agrees that
the Guarantee is hereby amended to include Intermediate as an additional
guarantor party signatory thereto. Intermediate hereby expressly (a) assumes and
agrees to be directly liable to Agent and Lenders, jointly and severally with
the Borrowers and the Existing Guarantors, for payment and performance of all
Obligations, (b) agrees to perform, comply with and be bound by all terms,
conditions and covenants of the Guarantee with the same force and effect as if
Intermediate had originally executed and been an original party signatory to the
Guarantee as a Guarantor, and (c) agrees that Agent and Lenders shall have all
rights, remedies and interests with respect to Intermediate and its property
under the Guarantee with the same force and effect as if Intermediate had
originally executed and been an original party signatory as a Guarantor to the
Guarantee.

     3.3 Each Borrower and Guarantor, including without limitation,
Intermediate, in its capacity as a guarantor under the Guarantee, hereby
expressly and specifically ratifies, restates and confirms the terms and
conditions of the Guarantee in favor of Agent, for the benefit of Lender, and
its liability for all of the Obligations, and other obligations, liabilities,
agreements and covenants thereunder.

Section 4. Collateral of Intermediate. Without limiting the provisions of
Section 3 hereof, the Loan Agreement and the other Financing Agreements, as
collateral security for the prompt payment and performance when due of all of
the Obligations of Intermediate to Agent and Lenders, Intermediate hereby grants
to Agent, for the benefit of Lenders, a continuing security interest in, lien
upon, and right of setoff against, and Intermediate hereby pledges and assigns
to Agent, for the benefit of Lenders, all now owned and hereafter acquired and
arising assets and properties of Intermediate, all of which shall be included in
the definition of Collateral as set forth in the Loan Agreement, including
without limitation, the following:

          (a) all Accounts;

          (b) all general intangibles, including, without limitation, all
Intellectual Property;

          (c) all goods, including, without limitation, Inventory and Equipment;

          (d) all Real Property subject to the Mortgages and fixtures;

          (e) all chattel paper, including, without limitation, all tangible and
electronic chattel paper;

          (f) all instruments, including, without limitation, all promissory
notes;

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          (g) all documents;

          (h) all deposit accounts;

          (i) all letters of credit, banker's acceptances and similar
instruments and including all letter-of-credit rights;

          (j) all supporting obligations and all present and future liens,
security interests, rights, remedies, title and interest in, to and in respect
of Receivables and other Collateral, including (A) rights and remedies under or
relating to guaranties, contracts of suretyship, letters of credit and credit
and other insurance related to the Collateral, (B) rights of stoppage in
transit, replevin, repossession, reclamation and other rights and remedies of an
unpaid vendor, lienor or secured party, (C) goods described in invoices,
documents, contracts or instruments with respect to, or otherwise representing
or evidencing, Receivables or other Collateral, including returned, repossessed
and reclaimed goods, and (D) deposits by and property of account debtors or
other persons securing the obligations of account debtors;

          (k) all (A) investment property (including securities, whether
certificated or uncertificated, securities accounts, security entitlements,
commodity contracts or commodity accounts) and (B) monies, credit balances,
deposits and other property of Intermediate now or hereafter held or received by
or in transit to Agent, any Lender or its Affiliates or at any other depository
or other institution from or for the account of Intermediate, whether for
safekeeping, pledge, custody, transmission, collection or otherwise;

          (l) all commercial tort claims, including, without limitation, those
identified in the Information Certificate;

          (m) to the extent not otherwise described above, all Receivables;

          (n) all Records; and

          (o) all products and proceeds of the foregoing, in any form, including
insurance proceeds and all claims against third parties for loss or damage to or
destruction of or other involuntary conversion of any kind or nature of any or
all of the other Collateral.

Notwithstanding anything to the contrary set forth above, the types or items of
Collateral described in this Section 4 shall not include any rights or interests
in any contract, lease, permit, license, charter or license agreement covering
real or personal property, as such, if under the terms of such contract, lease,
permit, license, charter or license agreement, or applicable law with respect
thereto, the valid grant of a security interest or lien therein to Agent is
prohibited and such prohibition has not been or is not waived or the consent of
the other party to such contract, lease, permit, license, charter or license
agreement has not been or is not otherwise obtained or under applicable law such
prohibition cannot be waived; provided, that, the foregoing exclusion shall in
no way be construed (i) to apply if any such prohibition is unenforceable under
Sections 9-406, 9-407 or 9-408 of the UCC or other applicable law or (ii) so as
to limit, impair or

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otherwise affect Agent's unconditional continuing security interests in and
liens upon any rights or interests of Intermediate in or to monies due or to
become due under any such contract, lease, permit, license, charter or license
agreement (including any Receivables).

Section 5. Indebtedness.

          (a) Section 9.9 of the Loan Agreement is hereby amended by adding the
following new subsection (q) at the end thereof:

          "(q) Indebtedness of Intermediate evidenced by the New Notes as in
          effect on the Consummation Date or as permitted to be amended pursuant
          to the terms hereof, provided, that:

               (i)   the aggregate amount of such Indebtedness shall not exceed
          $154,500,000, plus Contingent Principal, less the aggregate amount of
          all repayments or redemptions, whether optional or mandatory, in
          respect thereof, plus interest thereon at the rate provided for in the
          New Note Agreements as in effect on the Consummation Date,

               (ii)  the Credit Facility is and shall at all times continue to
          be the "New Credit Facility" as such term is defined in the New Note
          Indenture as in effect on the date hereof and is and shall be entitled
          to all of the rights and benefits thereof, if any, under the New Note
          Indenture as in effect on the Consummation Date,

               (iii) Borrowers and Guarantors shall not, directly or indirectly,
          make any payments in respect of such Indebtedness, except that they
          may make regularly scheduled payments of interest by capitalizing such
          interest and adding such capitalized amount to the outstanding
          principal amount of such Indebtedness, and fees, if any, in respect of
          such Indebtedness when due in accordance with the terms of the New
          Notes and the New Note Indenture, in each case in accordance with the
          terms of the Exchange Offer Documents as in effect on the date hereof
          and any reasonable and customary fees required to be paid to holders
          of the New Notes in connection with a consent solicitation, it being
          understood and agreed that in no event shall the provisions of the New
          Notes and the New Note Indenture with respect thereto, vary from the
          provisions of the Exchange Offer Documents,

               (iv)  Borrowers and Guarantors shall not, directly or indirectly,
          amend, modify, alter or change, in each case, in any material respect
          any terms of such Indebtedness or any of the New Notes, the New Note
          Indenture or any related agreements, documents and instruments, except
          that Borrowers and Guarantors may, after prior written notice to
          Agent, amend, modify, alter or change the terms thereof so as to

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          extend the maturity thereof or defer the timing of any payments in
          respect thereof, or to forgive or cancel any portion of such
          Indebtedness other than pursuant to payments thereof, or to reduce the
          interest rate or any fees in connection therewith, or to eliminate any
          covenants contained therein, or make any such covenants less
          restrictive or otherwise more favorable to any Borrower or Guarantor,
          and

               (v)   Borrowers and Guarantors shall not, directly or indirectly,
          redeem, retire, defease, purchase or otherwise acquire all or any part
          of such Indebtedness other than at maturity (as set forth in the New
          Note Indenture as in effect on the Consummation Date or as extended
          after such date), or set aside or otherwise deposit or invest any sums
          for such purpose, except that

                     (A) Borrowers or Guarantors may redeem, retire, defease,
          purchase or otherwise acquire all or any part of such Indebtedness
          with Refinancing Indebtedness with respect thereto to the extent
          permitted under Section 9.9(o) hereof,

                     (B) Borrowers or Guarantors may redeem, retire, defease,
          purchase or otherwise acquire all or any portion of such Indebtedness
          with the net proceeds of the issuance and sale of Capital Stock of
          Parent or Operating permitted hereunder received by such Borrower or
          Guarantor in cash or other immediately available funds; provided,
          that, as of the date of any such redemption or purchase or any payment
          in respect thereof and after giving effect thereto, (1) Borrowers and
          Guarantors shall have complied with all of the requirements of
          Sections 9.7(b)(iii)(A), (B), (C) and (E) with respect to such
          issuance and sale of Capital Stock and in addition to such
          requirements, the notice provided to Agent pursuant thereto shall
          specify that the proceeds are to be used for the redemption,
          retirement, defeasance, purchase or acquisition of all or any part all
          of such Indebtedness (and shall specify which of the foregoing is
          intended), the maximum amount that Borrowers and Guarantors will pay
          in respect thereof and the range of the principal amount of the New
          Notes that Borrowers and Guarantors anticipate will be so redeemed,
          retired, defeased, purchased or otherwise acquired, (2) the
          redemption, retirement, defeasance, repurchase or acquisition of all
          or any part of such Indebtedness shall be substantially
          contemporaneous with the issuance and sale of the Capital Stock of
          Parent or Operating subject to such notice provided to Agent, (3) as
          of the date of any such payment and after giving effect thereto, there
          shall be Excess Availability, and (4) as of the date of any such
          payment and after giving effect thereto, no Default or Event of
          Default shall exist or have occurred and be continuing, and

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               (C)    Borrowers or Guarantors may redeem or repurchase such
          Indebtedness in cash or other immediately available funds (other than
          with proceeds of the issuance and sale of Capital Stock of Parent or
          Operating as provided in clause (B) above); provided, that, (1)
          Borrower Agent shall have provided to Agent not less than ten (10)
          Business Days' notice of the intention of such Borrower or Guarantor
          to redeem or purchase such Indebtedness (specifying the amount to be
          paid by Borrowers or Guarantors and the principal amount of the New
          Notes that Borrowers and Guarantors anticipate will be so redeemed or
          repurchased), (2) for each of the immediately preceding thirty (30)
          consecutive days, Excess Availability shall have been not less than
          $50,000,000 and as of the date of any such payment and after giving
          effect thereto, Excess Availability shall be not less than $50,000,000
          and (3) as of the date of such payment and after giving effect
          thereto, no Default or Event of Default shall exist or have occurred
          and be continuing;"

          (b) Section 9.9(o) of the Loan Agreement is hereby amended by adding
the clause "and Section 9.9(g)" after the reference therein to "Section 9.9 (j)
and 9.9(k)".

Section 6. Loans, Investments, Etc.

          (a) Section 9.10(g) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:

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               "(g) loans by Operating to any Subsidiary of Operating (other
          than an Inactive Subsidiary) or by Intermediate or any Subsidiary of
          Operating to Operating or any other Subsidiary of Operating (other
          than an Inactive Subsidiary); provided, that, as to all of such loans,
          the Indebtedness arising pursuant to any such loan shall not be
          evidenced by a promissory note or other instrument, unless the single
          original of such note or other instrument is promptly delivered to
          Agent upon its request to hold as part of the Collateral, with such
          endorsement and/or assignment by the payee of such note or other
          instrument as Agent may require,"

          (b) 9.10 of the Loan Agreement is hereby amended by adding the
following new subsection (k) at the end thereof:

          "(k) the formation by Parent of Intermediate in connection with the
     New Note Offering; provided, that, each of the following conditions is
     satisfied: (i) the only assets of Intermediate upon its initial
     capitalization shall be Capital Stock of Operating and Intermediate shall
     not engage in any business or commercial activity other than the making of
     loans to Operating in accordance with Section 9.10(g) hereof or own or hold
     any other assets or properties other than: (A) such Capital Stock, (B) an
     initial capital contribution by Parent of a cash amount not to exceed
     $25,000 and (C) Senior Discount Debentures, and (ii) Parent shall (A)
     execute and deliver to Agent, a pledge and security agreement, in form and
     substance satisfactory to Agent, granting to Agent a first pledge of and
     lien on all of the issued and outstanding membership interests in
     Intermediate, and (B) deliver the share certificates, if any, evidencing
     such membership interests, or such other evidence as may be issued,
     together with all transfer documents or otherwise take such actions as
     Agent shall require with respect to Agent's security interest therein."

Section 7. Restricted Payments.

          Section 9.11(f) of the Loan Agreement is hereby deleted in its
entirety and the following is substituted therefor:

          "(f) Operating may declare and pay a dividend to Parent (directly, or
     by payment of such dividend to Intermediate), and Intermediate may declare
     and pay a dividend to Parent, from time to time, in each case, in the
     amount equal to any payment by Parent of cash interest permitted to be made
     by Parent pursuant to Section 9.9(j) hereof in respect of the Senior
     Discount Debentures, the proceeds of which shall be used by Parent only to
     make a payment of the interest then due payable in accordance with the
     terms of the Senior Discount Debentures as in effect on the date hereof;
     provided, that, any such dividend shall not be paid more than ninety (90)
     days prior to the date such payment of interest is due and payable and if
     such dividend is paid by Operating to Parent or Intermediate prior to the
     date that such interest is due and payable, all such funds shall be held in
     an investment account subject to an Investment Property Control Agreement
     in favor of Agent, ad duly authorized, executed and delivered by the
     financial intermediary where such funds are held, Parent and Agent."

Section 8. Minimum EBITDA.

          (a) Provided that as of the Consummation Date not less than an
aggregate principal amount of $94,500,000 of Senior Discount Debentures shall
have been tendered pursuant to the Exchange Offer and such tender not withdrawn
("Exchanged"), then Schedule 9.18 to the Loan Agreement shall be deleted in its
entirety and the revised Schedule 9.18 appended hereto as Exhibit A substituted
therefor.

          (b) In the event, however, that less than $94,500,000 of Senior
Discount Debentures shall have been Exchanged as of the Consummation Date, then
Schedule 9.18 of the Loan Agreement shall be deleted in its entirety and the
revised Schedule 9.18 appended hereto as Exhibit A substituted therefor;
provided, however, that the dollar amount indicated in the "EBITDA" column
thereon shall be deemed increased and shall be revised to reflect the increase
thereof by an amount equal to one-twelfth (1/12) of thirteen and one-eighth
(13 1/8%) percent of the Shortfall (as hereinafter defined), with respect to the
first month indicated on such revised

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Schedule (such amount being hereinafter referred to as the "Increase"). In each
succeeding month, the dollar amount indicated in the "EBIDTA" column of Schedule
9.18 shall be increased by an amount equal to the sum of (i) the Increase, plus
(ii) each Increase previously applied with respect to each prior month on such
Schedule. For purposes hereof, the "Shortfall" shall mean the positive
difference, if any, between $94,500,000 and the aggregate principal amount of
the Senior Discount Debentures which are Exchanged as of the Consummation Date.

     Section 9. Supplemental Loans. Notwithstanding anything to the contrary set
forth in the Loan Agreement or any of the other Financing Agreements, no
Borrower or Guarantor shall request, and no Lender shall make, any Supplemental
Loans during the Supplemental Loan Period occurring in 2003.

     Section 10. Representations, Warranties and Covenants. In addition to the
continuing representations, warranties and covenants heretofore or hereafter
made by Borrowers and Guarantors to Agent and Lenders pursuant to the other
Financing Agreements, each of Borrowers and Guarantors (including Intermediate),
jointly and severally, hereby represents, warrants and covenants with and to
Agent and Lenders as follows (which representations, warranties and covenants
are continuing and shall survive the execution and delivery hereof and shall be
incorporated into and made a part of the Financing Agreements):

     10.1 This Amendment No. 2 has been duly executed and delivered by all
necessary action on the part of Borrowers and Guarantors (including
Intermediate) and, if necessary, their respective stockholders, and is in full
force and effect as of the date hereof and the agreements and obligations of
Borrowers and Guarantors (including Intermediate) contained herein constitute
legal, valid and binding obligations of Borrowers and Guarantors (including
Intermediate) enforceable against Borrowers and Guarantors (including
Intermediate) in accordance with their respective terms.

     10.2 No Default or Event of Default exists or has occurred and is
continuing.

     10.3 No action of, or filing with, or consent of any governmental
authority, and no approval or consent of any other party, is required to
authorize, or is otherwise required in connection with, the execution, delivery
and performance of this Amendment No. 2.

     10.4 All of the representations and warranties set forth in the Loan
Agreement and the other Financing Agreements, each as amended hereby, are true
and correct on and as of the date hereof.

     10.5 Intermediate is a Delaware limited liability company, duly organized
and validly existing in good standing under the laws of the State of Delaware
and has all requisite power and authority to own, lease and operate its
properties, if any, and to carry on its business as it is now being conducted
and will be conducted in the future.

     10.6 All of the outstanding membership interests in Intermediate have been
duly authorized, validly issued and are fully paid and non-assessable, free and
clear of all claims,

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liens, pledges and encumbrances of any kind. Prior to or on the Consummation
Date, Parent shall be the beneficial and direct owner of record of one hundred
(100%) percent of the issued and outstanding membership interests in
Intermediate. There is no debt outstanding that is convertible into such
membership interests in Intermediate, and there are no outstanding rights,
options or warrants to acquire any membership interests in or debt convertible
into membership interests in Intermediate.

     10.7 Neither the execution or delivery of the New Notes or any of the other
New Note Agreements, nor the consummation of the transactions contemplated by
the New Note Agreements, nor compliance with the provisions thereof, shall
result in the creation nor imposition of any lien, charge or incumbrance upon
any of the Collateral as amended hereby.

     10.8 On or prior to the Consummation Date, the New Notes shall have been
duly authorized, issued and delivered by Intermediate pursuant to the Note
Indenture and the other New Note Agreements, and the transactions contemplated
thereunder shall have been performed in accordance with their terms by the
respective parties thereto in all respects, including the fulfillment (not
merely the waiver) of all conditions precedent set forth therein.

     10.9 On or prior to the Consummation Date, all actions and proceedings
required by the New Notes and the other New Note Agreements, applicable law or
regulations, including, without limitation, all Securities Laws, shall have been
taken, and the transactions required thereunder shall have been (or will be when
required to under the New Note Agreements or applicable law) duly and validly
taken and consummated.

     10.10 Neither the execution and delivery of the New Notes or any of the
other New Note Agreements nor the consummation of the transactions therein
contemplated, nor compliance with the provisions thereof (a) has violated or
will violate any of the Securities Laws or any other law or regulation or any
order or decree of any court or governmental instrumentality in any respect, or
(b) after giving effect to the consents hereunder, does or shall conflict with
or result in the breach of, or constitute a default in any respect under, any
indenture, mortgage, deed of trust, security agreement, agreement or instrument
to which any Borrower or Guarantor is a party or by which it or any of its
assets may be bound, or (c) violate any provision of the Certificate of
Incorporation, By-Laws, Articles of Formation or Operating Agreement of any
Borrower or Guarantor.

     10.11 Borrower Agent has delivered to Agent true, complete and correct
copies of each of the Exchange Offer Documents.

Section 11. Conditions. The effectiveness of the consents, terms and conditions
contained herein shall be subject to the satisfaction of each of the following
conditions, in form and substance satisfactory to Agent:

     11.1 Agent shall have received a true, complete and correct copy of each of
the Exchange Offer Documents;

                                       12

<PAGE>

     11.2 Agent shall have received from Parent a first pledge of and lien on
all of the issued and outstanding membership interests in Intermediate, pursuant
to a pledge and security agreement, in form and substance satisfactory to Agent,
duly executed and delivered by Parent, together with share certificates or such
other evidence as may be issued with respect thereto and will transfer documents
as may be required with respect to Agents security interest therein;

     11.3 Agent shall have received evidence that all corporate and limited
liability company proceedings with respect to the New Note Offering have been
taken by Borrowers, Guarantors and their Affiliates, as appropriate;

     11.4 Agent shall have received, in form and substance satisfactory to
Agent, from Intermediate, Manager's Certificate of Members' and Managers'
Resolutions, Incumbency and Members' Consent evidencing the adoption and
subsistence of the limited liability company resolutions approving the
execution, delivery and performance by Intermediate of this Amendment No. 2 and
the agreements, documents and instruments to be delivered pursuant to this
Amendment including the transactions contemplated by the New Note Agreements;

     11.5 Agent shall have received original good standing certificates (or its
equivalent) from the Secretary of State (or comparable official) from each
jurisdiction where Intermediate conducts business;

     11.6 Agent shall have received UCC, Federal and State tax lien and judgment
searches against Intermediate in all relevant jurisdictions, as determined by
Agent;

     11.7 Agent shall have received a revised Information Certificate of
Borrowers and Guarantors, including revised schedules thereto, reflecting the
addition of Intermediate as a Guarantor;

     11.8 Agent shall have received evidence of insurance and loss payee
endorsements required under the Loan Agreement and under the other Financing
Agreements with respect to Intermediate, in form and substance satisfactory to
Agent, and certificates of insurance policies and/or endorsements naming Agent
as loss payee;

     11.9 Agent shall have received and original of this Amendment No. 2, duly
authorized, executed and delivered by Borrowers and Guarantors;

     11.10 Agent shall have received all consents of Lenders required for the
amendments provided for herein;

     11.11 the Consummation Date shall be not later than May 14, 2003;and

     11.12 as of the Consummation Date, holders of not less than fifty-one (51%)
percent of the Senior Discount Debentures shall have tendered such Senior
Discount Debentures in exchange for New Notes pursuant to the New Note Offering
in accordance with the Exchange Offer Documents as in effect on the date hereof,
and not withdrawn such tender.

                                       13

<PAGE>

     11.13 not less than ten (10) days prior to the Consummation Date, Lender
shall have received true, complete and correct copies of the New Note Agreements
not delivered on the date hereof.

Section 12. Registration Rights Agreement. In the event that any Obligor
registers the New Notes pursuant to a Registration Rights Agreement in
accordance with the Securities Laws, Borrowers shall deliver to Agent any
registration statement, notice or other filing with the Securities and Exchange
Commission related thereto and shall enter into an amendment to the Loan
Agreement providing for, among other things, the agreement by Borrowers to
deliver to Agent all filings, notices or other documents required by Borrowers
to be delivered to the Securities and Exchange Commission pursuant to the
Securities Laws upon the effective date of the transactions contemplated by such
Registration Rights Agreement.

Section 13. Amendment Fee. In consideration of the amendments set forth herein,
Borrowers shall pay to Agent for the ratable account of Lenders, and Agent may,
at its option, charge the account of Borrowers maintained by Agent, a fee in the
amount of $450,000, which fee shall constitute part of the Obligations and is
fully earned as of the date hereof and which shall be payable $225,000 on the
date hereof and $225,000 on the first anniversary of the date hereof.

Section 14. Miscellaneous.

     14.1 Effect of this Amendment. Except as modified pursuant hereto, no other
changes or modifications to the Financing Agreements are intended or implied,
and in all other respects, the Financing Agreements are hereby specifically
ratified, restated and confirmed by all parties hereto as of effective date
hereof. The Loan Agreement and this Amendment No. 2 shall be read and construed
as one agreement. To the extent of conflict between the terms of this Amendment
and the other Financing Agreements, the terms of this Amendment No. 2 shall
control.

     14.2 Further Assurances. The parties hereto shall execute and deliver such
additional documents and take such additional actions as may be necessary to
effectuate the provisions and purposes of this Amendment No. 2.

     14.3 Governing Law. The rights and obligations hereunder of each of the
parties hereto shall be governed by and interpreted and determined in accordance
with the laws of the State of New York without regard to principals of conflicts
of law or other rule of law that would result in the application of the law of
any jurisdiction other than the laws of the State of New York.

     14.4 Binding Effect. This Amendment No. 2 shall be binding upon and inure
to the benefit of each of the parties hereto and their respective successors and
assigns.

     14.5 Counterparts. This Amendment No. 2 may be executed in any number of
counterparts, but all of such counterparts shall together constitute but one and
the same agreement. In making proof of this Amendment No. 2, it shall not be
necessary to produce or account for more than one counterpart thereof signed by
each of the parties thereto. This Amendment No. 2 may be executed in any number
of counterparts, but all of such counterparts

                                       14

<PAGE>

shall together constitute but one and the same agreement. In making proof of
this Amendment, it shall not be necessary to produce or account for more than
one counterpart thereof signed by each of the parties hereto. Delivery of an
executed counterpart of this Amendment No. 2 by telefacsimile shall have the
same force and effect as delivery of an original executed counterpart of this
Amendment No. 2. Any party delivering an executed counterpart of this Amendment
No. 2 by telefacsimile also shall deliver an original executed counterpart of
this Amendment No. 2, but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and binding effect of
this Amendment No. 2 as to such party or any other party.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

                                       15

<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment No. 2 to
be duly executed and delivered by their authorized officers as of the date and
year first above written.

                                      CONGRESS FINANCIAL CORPORATION,
                                        as Agent and as Lender

                                      By: /s/ Carmen Caporrino
                                         --------------------------
                                      Title: Vice President
                                            -----------------------

                                      J. CREW OPERATING CORP.

                                      By: /s/ Nicholas Lamberti
                                         --------------------------
                                      Title: VP, Controller
                                            -----------------------

                                      J. CREW INC.

                                      By: /s/ Nicholas Lamberti
                                         --------------------------
                                      Title: VP, Controller
                                            -----------------------

                                      GRACE HOLMES, INC. d/b/a J. CREW RETAIL

                                      By: /s/ Nicholas Lamberti
                                         --------------------------
                                      Title: VP, Controller
                                            -----------------------

                                      H.F.D. NO. 55, INC. d/b/a J. CREW
                                       FACTORY

                                      By: /s/ Nicholas Lamberti
                                         --------------------------
                                      Title: VP, Controller
                                            -----------------------

                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]

                                       16

<PAGE>

                     [SIGNATURES CONTINUED FROM PRIOR PAGE]

                                     J. CREW GROUP, INC.

                                     By: /s/ Nicholas Lamberti
                                         --------------------------
                                     Title: VP, Controller
                                            -----------------------

                                     J. CREW INTERNATIONAL, INC.

                                     By: /s/ Nicholas Lamberti
                                         --------------------------
                                     Title: VP, Controller
                                            -----------------------

                                     J. CREW INTERMEDIATE LLC

                                     By: /s/ Nicholas Lamberti
                                         --------------------------
                                     Title: VP, Controller
                                            -----------------------

                                       17

<PAGE>

                                    EXHIBIT A

                                  SCHEDULE 9.18
                                       TO
                           LOAN AND SECURITY AGREEMENT

                                 Minimum EBITDA

<TABLE>
<CAPTION>
                Month Ending On Or About                 EBITDA/1/
                ------------------------                 ---------
<S>                                                    <C>
               January 31, 2003                        $ 42,300,000

               February 28, 2003                         40,000,000

               March 31, 2003                            37,000,000

               April 30, 2003                            36,000,000

               May 31, 2003                              36,000,000

               June 30, 2003                             35,000,000

               July 31, 2003                             34,000,000

               August 31, 2003                           29,000,000

               September 30, 2003                        24,000,000

               October 31, 2003                          21,000,000

               November 30, 2003                         19,000,000

               December 31, 2003                         16,000,000

               January 31, 2004                          15,000,000

               February 29, 2004                         15,000,000

               March 31, 2004                            15,000,000

               April 30, 2004                            15,000,000

               May 31, 2004                              17,000,000

               June 30, 2004                             20,000,000

               July 31, 2004                             22,000,000

               August 31, 2004                           27,000,000
</TABLE>

                                 Schedule 9.18-1

<PAGE>

<TABLE>
<CAPTION>
                Month Ending On Or About                 EBITDA/1/
                ------------------------                 ---------
<S>                                                   <C>
               September 30, 2004                      29,000,000

               October 31, 2004                        31,000,000

               November 30, 2004                       34,000,000

               December 31, 2004                       45,000,000

               January 31, 2005                        45,000,000

               February 28, 2005                       45,000,000

               March 31, 2005                          46,000,000

               April 30, 2005                          47,000,000

               May 31, 2005                            48,000,000

               June 30, 2005                           49,000,000

               July 31, 2005                           50,000,000

               August 31, 2005                         51,000,000

               September 30, 2005                      53,000,000

               October 31, 2005                        55,000,000

               November 30, 2005                       58,000,000

               December 31, 2005                       64,000,000

               January 31, 2006                        63,000,000
</TABLE>

1. EBITDA with respect to twelve (12) month periods ending on January 31 of any
fiscal year of Parent and its Subsidiaries will be determined using the audited
financial statements of Parent and its Subsidiaries for the applicable period;
with respect to twelve (12) month periods ending on the last day of other
months, EBITDA will be determined using the most recent internal financial
statements of Parent and its Subsidiaries for the applicable period.

                                 Schedule 9.18-2exv10w32

 

Exhibit 10.32

TRANSITION AGREEMENT

by and between

FSI INTERNATIONAL, INC.

and

METRON TECHNOLOGY N.V.

dated as of

OCTOBER 9, 2002

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	
ARTICLE I DEFINITIONS; INTERPRETATION
	 	2
	 	 	 	 	 
	1.1	 	
Terms Defined in this Agreement
	 	2
	1.2	 	
Interpretation
	 	7
	 	 	 	 	 
	
ARTICLE II PURCHASE OF DISTRIBUTION BUSINESS
	 	7
	 	 	 	 	 
	2.1	 	
Sale and Purchase
	 	7
	2.2	 	
Consideration
	 	7
	2.3	 	
Cash Advance; Note and Security Agreement
	 	8
	2.4	 	
Payments on Closing
	 	9
	2.5	 	
Final Purchase Price Payment
	 	10
	2.6	 	
Offset
	 	11
	2.7	 	
Single Payment
	 	11
	2.8	 	
Termination of Distribution Agreements; Effectiveness of Israel
Distribution Agreement
	 	11
	 	 	 	 	 
	
ARTICLE III REPURCHASE OF INVENTORY AND EQUIPMENT
	 	12
	 	 	 	 	 
	3.1	 	
Repurchase of Inventory
	 	12
	3.2	 	
Repurchase of Equipment
	 	13
	3.3	 	
Limitations on Repurchase Obligations
	 	14
	3.4	 	
Returns during Transition Period
	 	14
	3.5	 	
Delivery to FSI
	 	14
	 	 	 	 	 
	
ARTICLE IV ASSUMPTION OF PURCHASE ORDERS AND AGREEMENTS
	 	15
	 	 	 	 	 
	4.1	 	
Purchase Orders for Products
	 	15
	4.2	 	
System Start-Ups
	 	16
	4.3	 	
Purchase Orders for Spare Parts
	 	17
	4.4	 	
Assumption of Service and Support Contracts
	 	18
	4.5	 	
Assumption of Parts and Labor Warranties
	 	19
	 	 	 	 	 
	
ARTICLE V ACCOUNTS RECEIVABLE AND INVOICES
	 	20
	 	 	 	 	 
	5.1	 	
Collection of Accounts Receivable
	 	20
	5.2	 	
Payment of Open Invoices
	 	21
	 	 	 	 	 
	
ARTICLE VI EMPLOYEES
	 	21
	 	 	 	 	 
	6.1	 	
Employees of the Distribution Business
	 	21
	6.2	 	
Metron Responsibilities
	 	22
	6.3	 	
FSI Responsibilities
	 	23
	6.4	 	
Employee Property
	 	24
	6.5	 	
Applicability of Certain Provisions to Employees Located in France
	 	24

 

 

	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	6.6	 	
Non-Solicitation
	 	24
	 	 	 	 	 
	
ARTICLE VII FACILITIES
	 	25
	 	 	 	 	 
	
ARTICLE VIII CLOSING AND CLOSING CONDITIONS
	 	25
	 	 	 	 	 
	8.1	 	
Closing
	 	25
	8.2	 	
Metron’s Closing Conditions
	 	25
	8.3	 	
FSI’s Closing Conditions
	 	26
	8.4	 	
Metron Deliveries at Closing
	 	27
	8.5	 	
FSI Deliveries at Closing
	 	28
	8.6	 	
Efforts to Close
	 	28
	8.7	 	
Failure to Close
	 	29
	 	 	 	 	 
	
ARTICLE IX REPRESENTATIONS AND WARRANTIES
	 	30
	 	 	 	 	 
	9.1	 	
Representations and Warranties by Metron
	 	30
	9.2	 	
Representations and Warranties by FSI
	 	33
	9.3	 	
Survival of Representations and Warranties
	 	34
	 	 	 	 	 
	
ARTICLE X CONDUCT OF DISTRIBUTION BUSINESS DURING TRANSITION PERIOD
	 	35
	 	 	 	 	 
	10.1	 	
Operation of Distribution Business
	 	35
	 	 	 	 	 
	
ARTICLE XI ADDITIONAL COVENANTS
	 	36
	 	 	 	 	 
	11.1	 	
Non-Competition
	 	36
	11.2	 	
Access to Properties, Books, Records, Etc
	 	36
	11.3	 	
Government Approvals
	 	36
	11.4	 	
Registrations
	 	37
	11.5	 	
Transition Plan
	 	37
	11.6	 	
Performance under Distribution Agreements
	 	37
	11.7	 	
Confidentiality
	 	37
	11.8	 	
Announcements and Communications
	 	38
	11.9	 	
Insurance
	 	38
	11.10	 	
Contracts
	 	38
	11.11	 	
Shareholder Approval
	 	38
	11.12	 	
Expenses
	 	39
	11.13	 	
UK Pensions
	 	39
	11.14	 	
MTDC Inventory
	 	39
	 	 	 	 	 
	
ARTICLE XII INDEMNIFICATION
	 	39
	 	 	 	 	 
	12.1	 	
Indemnification by Metron
	 	39
	12.2	 	
Indemnification by FSI
	 	40
	12.3	 	
Deductible Amount
	 	40
	12.4	 	
Notice of Indemnification
	 	40

 

 

	 	 	 	 	 
	 	 	 	 	Page
	 	 	 	 	

	12.5	 	
Indemnification Procedure for Third-Party Claims
	 	40
	 	 	 	 	 
	
ARTICLE XIII DISPUTE RESOLUTION; GOVERNING LAW
	 	41
	 	 	 	 	 
	13.1	 	
Arbitration
	 	41
	13.2	 	
Governing Law
	 	41
	 	 	 	 	 
	
ARTICLE XIV GENERAL
	 	41
	 	 	 	 	 
	14.1	 	
Entire Agreement
	 	41
	14.2	 	
Amendments
	 	41
	14.3	 	
Waivers
	 	42
	14.4	 	
Notices
	 	42
	14.5	 	
Partial Invalidity
	 	43
	14.6	 	
Governing Language
	 	43
	14.7	 	
Assignment
	 	43
	14.8	 	
Further Assurances
	 	43
	14.9	 	
Counterparts
	 	43

 

 

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

 

 

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:

 

 

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, m.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).

 - 2 - 

 

     “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.

 - 3 - 

 

     “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

 - 8 - 

 

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.

 - 9 - 

 

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,

 - 10 - 

 

		
	 	     (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.

 - 12 - 

 

     (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.

 - 13 - 

 

     (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 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

 - 15 - 

 

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 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,

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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 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

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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 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

 - 18 - 

 

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 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.

 - 19 - 

 

     (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 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

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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 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

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(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 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.

 - 22 - 

 

     (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 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

 - 23 - 

 

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 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

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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.

     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

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(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.

     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)

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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.

     (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.

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     (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, 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

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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 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

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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 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

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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 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

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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 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

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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 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

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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 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

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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 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,

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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 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.

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     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.

     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

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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 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

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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 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.

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     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 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

 - 40 - 

 

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 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.

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     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

          
             
             
            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

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     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 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.]

 - 43 - 

 

     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/ Ed Segal
		

Name:  Benno G. Sand

Title: Executive Vice President,

Business Development	 	 	

Name:   Ed Segal

Title:  Chief Executive Officer

 - 44 - 

 

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

See attached.

not available yet

 

 

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 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
 
Its	 /s/ Ed Segal

 Chief Executive Officer

- 2 -

 

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.

 

 

		
	 	     “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,”

 

 

“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.

 

 

     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,

 

 

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.

 

 

     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.

 

 

     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.

 

 

     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.

 

 

               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).

 

 

     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/ Ed Segal

	 
	 	 	
Title
	 	CEO

	 
	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

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Location of	 	Gross Value	 	Subject to
	 	 	Entity	 	Organized in	 	Inventory	 	($000)	 	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
	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

 

 

Schedule 9.1(j)

Employee benefits

MT Benelux

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sales	 	Service	 	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 to 40% (typically 10 or 20% for application 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

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Sales	 	Service	 	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 to 40% (typically 10 or 20% for application 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 Germany

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sales	 	Service	 	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 to 40% (typically 10 or 20% for application 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 Italy

	 	 	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	 	 	Sales	 	Service	 	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	 	 	 	 	 	 	 

 

 

Employee benefits

MT UK

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sales	 	Service	 	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:	 	 	 	 	 	 	 	 	 	 

mbo = Individual management by objective incentive plan agreed on a year-by-year basis, subject a maximum
potential of 10 to 40% (typically 10 or 20% for application 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

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Sales	 	Service	 	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.

 

 

Employee benefits

MT Singapore

	 	 	 	 	 	 	 	 	 	 	 
	 	 	 	 	Sales	 	Service	 	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.

 

 

Employee benefits

MT Taiwan

	 	 	 	 	 	 	 	 	 
	 	 	 	 	Sales	 	Service	 	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 monthly salary.

 

 

	 	 	 
	METRON TECHNOLOGY DISTRIBUTION CORPORATION	 	
Schedule 9.1(o)
	SUMMARY OF INVENTORY	 	 

AT AUGUST 31, 2002

(ACTUAL)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRINCIPAL	 	Equipment	 	 	Demo	 	 	Spare Parts	 	 	Spare Parts	 	 	Work In	 	 	Freight/Duty	 	 	TOTAL	 
				 	 	Equip	 				 	Offset (1)	 		Process	 	 	On Inventory	 		 	
	
	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	

	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)

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	PRINCIPAL	 	Equipment	 	 	Demo	 	 	Spare Parts	 	 	Spare Parts	 	 	Work In	 	 	Freight/Duty	 	 	TOTAL	 
				 	 	Equip	 				 	Offset (1)	 		Process	 	 	On Inventory	 		 	
	
	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	

	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	 
	 
	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 	 	
	 

	(1)	 	Represents the difference between the value of the spare parts purchased from AG at current standard cost and actual purchase price.

 

 

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 MAGELLANTM, 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.

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00050-of-00352.parquet"}]]