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EXHIBIT 3
Eaton Corporation
Eaton Center
Cleveland, Ohio 44114-2584
216/523-5000
FAX: 216/523-4767
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APRIL 7, 1997
Mr. Leslie S. Levine
President And Chief Executive Officer
Fusion Systems Corporation
7600 Standish Place
Rockville, MD 20855-2798
RE: CONFIDENTIALITY AGREEMENT
Dear Mr. Levine:
Eaton Corporation ("Eaton") and Fusion Systems Corporation (the "Company") have
initiated discussions regarding possible business arrangements between the
Company and Eaton, including the possibility of Eaton acquiring certain
ownership interests in or assets of the Company, and intend to continue with
those discussions (collectively, the "Discussions"). In order to protect the
relative interests of Eaton and the Company, the parties hereby agree as
follows:
All information heretofore or hereafter disclosed or transmitted by Eaton to the
Company or its Authorized Representatives (as defined below), including, but not
limited to, all written and oral financial information, marketing information,
customer and supplier information, technical information, and intellectual
property, and all corresponding information transmitted by the Company to Eaton
or its Authorized Representatives, together with all information and all
analyses, compilations, studies or other documents or records prepared by the
receiving party which contain or otherwise reflect or are generated from such
disclosed information (collectively, "Confidential Information"), (i) shall be
maintained in confidence by the receiving party; (ii) shall be protected from
disclosure to others using at least the same degree of care as it normally
exercises to protect its own proprietary information of a similar nature, but,
in any case, using no less than a high degree of care; (iii) shall not be used
in any way detrimental to the delivery party; (iv) shall not be utilized by the
receiving party for any purpose other than for conducting the Discussions; and
(v) shall in no event whatsoever be disclosed to any third
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April 7, 1997
Page 2
party or entity; provided, however, that the obligations imposed by this
Agreement shall not cover disclosed or transmitted information which the
receiving party can show:
(a) to have been in its possession prior to receipt from the delivering party
hereunder;
(b) to have been available to the public at the time of receipt from the
delivering party hereunder;
(c) became available to the receiving party or the public subsequent to receipt
from the delivering party hereunder without any fault whatsoever by the
receiving party or its Authorized Representatives; or
(d) was developed by the receiving party, or others, independently of and
without reference to the Confidential Information.
The receiving party shall be responsible for any improper use of the
Confidential Information by its Authorized Representatives. The term "Authorized
Representatives" includes only those employees, officers, directors, attorneys
and accountants of the receiving party who are participating in the Discussions,
but excludes all other outside advisors or agents of the receiving party, unless
previously authorized in writing by an officer of the delivering party.
The parties hereto agree that they will not disclose the fact that the
Discussions are being conducted, any terms, conditions, or other facts regarding
the Discussions or the status thereof, unless the parties agree to such
disclosure or unless otherwise required by law.
It is further agreed that, if in the opinion of counsel, either party is
required to disclose Confidential Information or the Discussions in or before
any court, governmental agency, or tribunal, they may disclose such information
to the extent so required. In the event the receiving party is required by law,
regulation, or court order to disclose any of the Confidential Information or
the Discussions, the receiving party will promptly notify the delivering party
prior to making any such disclosure in order to facilitate the delivering party
seeking a protective order or other appropriate remedy from the proper
authority. The receiving party agrees to cooperate with the delivering party in
seeking such order or other remedy. The receiving party further agrees that if
the delivering party is not successful in precluding the requesting legal body
from requiring the disclosure of the Confidential Information or the
Discussions, it will furnish only that portion of the Confidential Information
which is legally required and will exercise all reasonable efforts to obtain
reliable assurances that confidential treatment will be accorded that
Information. Notwithstanding the foregoing, disclosure of the Confidential
Information or the
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Page 3
Discussions may be made which, in the reasonable opinion of the disclosing
party's counsel, is required under the Securities Act of 1933, as amended (the
"1933 Act") or the Securities Exchange Act of 1934, as amended (the "1934 Act"),
or by applicable stock exchange rules and regulations, and then only after the
disclosing party shall first give the other party an opportunity to review and
comment, if done in a timely fashion, on the proposed disclosure and the basis
therefor, and the disclosing party shall consider in good faith the other
party's comments relating thereto and reflect any such reasonable comments in
such disclosure.
At the request of either party or if either of the parties should terminate the
Discussions, all Confidential Information and other information which a party
involved herein has obtained from the other shall be returned promptly, and all
memoranda, notes, and other material prepared by or for the parties based on or
reflecting any Confidential Information will be destroyed promptly, and such
destruction shall be certified in writing to the delivering party by the person
authorized to supervise such destruction. Any oral Confidential Information will
continue to be held subject to the terms of this Agreement. Notwithstanding the
above, one copy of the Confidential Information and all such memoranda, notes,
and other material based on Confidential Information may be retained in the law
department of the receiving party for archival purposes, which shall remain
subject to the terms of this Agreement.
Except as modified by a formal agreement between Eaton and the Company, the
foregoing obligations, which are imposed by this Agreement, shall remain in
effect for a period of three (3) years from the date hereof regardless of
whether or not any business arrangement is consummated.
The parties will not initiate any communications concerning the Discussions with
any employee or customer, supplier, or distributor of the other party (other
than the Chairman of the Board, the President, Chief Financial Officer, Senior
Vice President, or any other officer or manager designated by the other party)
without the other party's prior written consent.
For a period of three (3) years from the date hereof, the parties agree not to
solicit for hire as an employee or independent contractor any person who is at
that time employed by the other party who becomes known to a party as a result
of the Discussions; provided, however, that this provision shall not prevent
hiring any such person who responds to an advertisement or to a non-direct
search inquiry or who makes an unsolicited contract for employment.
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Unless specifically approved in advance by the Company, for the period
commencing on the date hereof and ending on the date three (3) years from the
date hereof, Eaton, its affiliates, representatives, and agents will not: (a)
acquire, announce an intention to acquire, offer to acquire, solicit an offer to
sell, or agree to acquire, directly or indirectly, alone or in concert with
others, any interest in any securities or assets of the Company or rights,
warrants, or options to acquire any securities or assets of the Company (other
than ordinary course commercial dealings); (b) make or participate in, directly
or indirectly, alone or in concert with others, any solicitations of proxies
from the stockholders of the Company, become a participant in any election
contest with respect to the Board of Directors of the Company, solicit or
execute any written consent in lieu of a meeting of holders of voting securities
of the Company or seek to have called any meeting of the stockholders of the
Company; (c) propose or seek to effect, alone or in concert, with any other
person, any business combination transaction, restructuring, recapitalization,
or similar transaction with respect to the Company or any tender offer, takeover
bid, or exchange offer for any securities of the Company; or (d) announce an
intention to do any of the actions restricted under Clauses (a) through (c) of
this paragraph. The foregoing provisions of this paragraph do not apply to
purchases of Company, securities by any Eaton pension or other retirement fund,
provided that such purchase shall not have been specifically requested or
directed by Eaton. Nothing in this paragraph shall prohibit discussions between
Eaton, its representatives, and agents and the Company, its representatives, and
agents pertaining to a business arrangement as described in the first paragraph
of this Agreement.
This Agreement shall be binding on and inure to the benefit of the parties
hereto and their respective successors and assigns. It is understood that each
party may institute appropriate proceedings against the other party to enforce
its rights hereunder. Each party acknowledges that the other party may not have
an adequate remedy in the event that this Agreement is breached and that the
other party may suffer irreparable damage and injury in such event, and,
accordingly, the other party may be entitled to specific performance and
injunctive relief as remedies for any violation. These remedies shall not be
deemed to be the exclusive remedies or a violation of the terms of this
Agreement but shall be in addition to all other remedies available at law or
equity.
Neither party shall be deemed to have made any representation or warranty
concerning the accuracy or completeness of any Confidential Information
furnished by it to the other party, except to the extent that such a
representation or warranty may be expressly set forth later in a definitive
agreement between the parties. Unless and until a definitive agreement regarding
a business arrangement has been executed, neither party will be under any legal
obligation with respect to a business arrangement by virtue of this Agreement
except for the express undertakings set forth herein.
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This Agreement shall be governed and construed in accordance with the laws of
the State of Delaware without giving effect to the conflicts of law provisions
thereof.
This Agreement constitutes the entire understanding between the parties hereto
as to the Confidential Information and other covenants herein and merges all
prior discussions between them relating thereto.
If the foregoing represents an acceptable description of the Confidentiality
Agreement between Eaton and the Company, please execute your acceptance on both
copies of this letter and return one to me at the above address.
EATON CORPORATION
By /s/ Brian R. Bachman
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Brian R. Bachman
Senior Vice President -- Semiconductor and
Specialty Systems
FUSION SYSTEMS CORPORATION
By /s/ Leslie S. Levine, Pres. And CEO
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Date April 9, 1997
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