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Exhibit 4
[Ferrofluidics Corporation Letterhead]
August 10, 1999
Ferrotec Corporation
5-24-8
Higashi-Ueno
Taito-ku
Tokyo, Japan 110-0015
Attn: Akira Yamamura
Ladies and Gentlemen:
In connection with our mutual consideration of a potential transaction
involving a business combination or a strategic alliance (the "Proposed
Transaction") between Ferrofluidics Corporation, a Massachusetts corporation
("FFC"), on the one hand, and Ferrotec Corporation, a corporation formed under
the laws of Japan ("Ferrotec"), on the other hand, Ferrotec has requested
certain information concerning FFC, and FFC, in turn, has requested certain
information concerning Ferrotec. This information is confidential and
proprietary to the respective parties and not otherwise available. Each party
agrees that, in consideration of, and as a condition to, furnishing such
information, it will abide by the following:
1. Confidentiality Agreement. Each of FFC and Ferrotec, as applicable
(each, a "Receiving Party"), hereby agrees to treat all information, whether
written or oral, concerning Ferrotec or FFC, as applicable (each a "Disclosing
Party"), or any of their respective affiliates, subsidiaries or divisions, which
the Disclosing Party or any directors, officers, employees, partners, agents or
representatives (collectively, the "Representatives") of the Disclosing Party
furnishes, whether before or after the date of this agreement, to the Receiving
Party or its Representatives, together with all originals or copies of all
reports, analyses, compilations, data, studies and other materials which contain
or otherwise reflect or are generated from such information (collectively, the
"Evaluation Material"), confidential and in accordance with the provisions of
this agreement. Notwithstanding the foregoing, the term "Evaluation Material"
shall not for the purposes of this agreement include any information which (a)
at the time of disclosure or thereafter is generally available to and known by
the public other than as a result of a disclosure by the Receiving Party or its
Representatives, (b) was or becomes available to the Receiving Party on a
nonconfidential basis from a source other than the Disclosing Party or any of
its Representatives, provided that such source is not bound by a confidentiality
agreement with, or other contractual, legal or fiduciary obligation to, the
Disclosing Party, or (c) has been independently acquired by the Receiving Party
without violating any of the obligations of the Receiving Party or its
Representatives under this agreement or any other confidentiality agreement, or
under any other contractual, legal or fiduciary obligations of the Receiving
Party or its Representatives. The fact that information
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included in the Evaluation Material is or becomes otherwise available to the
Receiving Party or its Representatives under clauses (a), (b) or (c) above shall
not relieve the Receiving Party or its Representatives of the prohibitions or
other confidentiality provisions of this agreement.
2. Use of Evaluation Material and Confidentiality.
(a) Subject to paragraph (b) below, the Evaluation Material will be
kept confidential by the Receiving Party and its Representatives and will not,
without the prior written consent of the Disclosing Party, be disclosed, in
whole or in part, to any third party by the Receiving Party or any of its
Representatives in any manner whatsoever, and will not be used by the Receiving
Party or any of its Representatives, directly or indirectly, for any purpose
other than in connection with the Receiving Party's evaluation of the Proposed
Transaction or in any way directly or indirectly detrimental to the Disclosing
Party or any of its subsidiaries. In addition, the Receiving Party hereby agrees
to disclose that the Receiving Party is evaluating the Proposed Transaction and
to transmit Evaluation Material to only those of its Representatives who need to
know the information for the purpose of evaluating the Proposed Transaction and
are informed by the Receiving Party of the confidential nature of the
information. The Receiving Party agrees not to make any such disclosure or
transmission unless the Receiving Party is satisfied that its Representatives
will act in accordance herewith. The Receiving Party agrees that it will be
responsible for any breach of any of the provisions of this agreement by any of
its Representatives and the Receiving Party agrees to take, at its sole expense,
all necessary measures to restrain its Representatives from prohibited or
unauthorized disclosure or use of the Evaluation Material (including, without
limitation, the initiation of court proceedings).
(b) In the event that the Receiving Party or any of its
Representatives are requested or required (by oral questions, interrogatories,
requests for information or documents, subpoena, civil investigative demand or
similar process) to disclose (a) any Evaluation Material, (b) any information
relating to the opinion, judgment or recommendation of any such person
concerning the Disclosing Party, its affiliates or subsidiaries, or (c) any
other information supplied to the Receiving Party in the course of the Receiving
Party's, or its Representatives', dealings with the Disclosing Party, the
Receiving Party will promptly notify the Disclosing Party of such request or
requirement so that the Disclosing Party may seek an appropriate protective
order or waive compliance with the provisions of this agreement, and/or take any
other mutually agreed action. If, in the absence of a protective order or the
receipt of a waiver hereunder, the Receiving Party or any of its Representatives
are, in the reasonable written opinion of such person's counsel, compelled to
disclose information or else stand liable for contempt or suffer other censure
or significant penalty, the Receiving Party or such Representative may disclose
that portion of the requested information which such person's counsel advises
such person in writing that such person is compelled to disclose. In any event,
the Receiving Party and its Representatives will furnish only that portion of
the information which is legally required and will exercise its best efforts to
obtain reliable assurance that confidential treatment will be accorded the
information. In addition, neither the Receiving Party nor any of its
Representatives will oppose action by the Disclosing Party to obtain an
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appropriate protective order or other reliable assurance that such confidential
treatment will be so accorded and the Receiving Party and its Representatives
shall cooperate with the Disclosing Party to obtain such order or other
assurance.
3. Nondisclosure of Negotiations. Except as otherwise expressly permitted
hereby, without the prior written consent of the Disclosing Party, the Receiving
Party will not, and will direct its Representatives not to, disclose to any
person the fact that any discussions (or any other discussions between or
involving the Receiving Party and the Disclosing Party) with respect to the
matters contemplated hereby are taking, have taken or are proposed to take place
or other facts with respect to such discussions, including the status thereof,
or the fact (if such becomes the case) that any Evaluation Material has been
made available to the Receiving Party, nor otherwise make any public disclosure,
whether written or oral, with respect to this agreement or the actions or
transactions contemplated hereby; provided, however, that a party may, without
the prior consent of the other party, issue such press release or make such
public statement as may be required by law or the applicable rules of any stock
exchange or Nasdaq if it has used its reasonable best efforts to consult with
the other party prior to issuing such release or making such public statement
and to obtain such party's prior consent, but has been unable to do so in a
timely manner. Subject to the second to last paragraph of Section 6, no request
or proposal to amend, modify or waive any provision of this agreement shall be
made or solicited except in a non-public and confidential manner. The term
"person" as used in this agreement shall be broadly interpreted to include,
without limitation, any corporation, company, partnership or individual.
4. Access to Employees; No Solicitation. For two years from the date of
this agreement, the Receiving Party agrees not to initiate or maintain contact
(except for those contacts made in the ordinary course of business) with any
officer, director or employee of the Disclosing Party regarding the business,
operations, prospects or finances of the Disclosing Party, except with the
express permission of the Disclosing Party, or as contemplated in this
agreement. Unless otherwise agreed to by FFC in writing, all (a) communications
regarding any possible transaction, (b) requests for additional information, (c)
requests for facility tours or management meetings and (d) discussions or
questions regarding procedures, timing and terms, will be submitted or directed
to Paul F. Avery, Jr. Unless otherwise agreed to by Ferrotec in writing, all (a)
communications regarding any possible transaction, (b) requests for additional
information, (c) requests for facility tours or management meetings and (d)
discussions or questions regarding procedures, timing and terms, will be
submitted or directed to Akira Yamamura of Ferrotec or Hide Takahashi of Knox &
Co. The Receiving Party agrees that, for a period of one year from the date
hereof, it will not solicit for employment any individual currently serving as a
director, officer, employee or agent of the Disclosing Party without obtaining
the prior written consent of the Disclosing Party.
5. Federal Securities Laws. The Receiving Party hereby acknowledges that
it and its Representatives (a) are aware that the United States securities laws
and the Japanese securities laws prohibit any person who has material,
non-public information concerning a company from purchasing or selling
securities of such company or from communicating such
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information to any other person under circumstances in which it is reasonably
foreseeable that such person is likely to purchase or sell such securities, (b)
are familiar with the Securities Exchange Act of 1934, as amended, and the rules
and regulations promulgated thereunder (collectively, the "Exchange Act"), and
that it and its Representatives will neither use, nor cause any third party to
use, any Evaluation Material in contravention of such Exchange Act, including,
without limitation, Rule 10b-5 thereunder, and (c) will neither use, nor cause
any third party to use, any Evaluation Material in contravention of such
Japanese securities laws, including, without limitation, any applicable rules
and regulations promulgated thereunder.
6. Standstill. The Receiving Party hereby acknowledges that the Evaluation
Material is being furnished to it in consideration of its agreement that neither
it nor any person or entity directly or indirectly, through one or more
intermediaries, controlling it or controlled by it or under common control with
it, acting alone or as part of any group, will, for a period of two years from
the date of this agreement, directly or indirectly, unless specifically
requested to do so in writing in advance by the Disclosing Party:
(a) acquire or agree, offer, seek or propose to acquire, or cause to
be acquired, ownership (including, but not limited to, beneficial
ownership as defined in Rule 13d-1 under the Exchange Act) of any of the
assets or businesses of the Disclosing Party or any of its subsidiaries or
of any securities of the Disclosing Party or any of its subsidiaries, or
any rights or options to acquire any such ownership (including from a
third party), or
(b) make, or in any way participate in, any "solicitation" of
"proxies" (as such terms are used in the Exchange Act) to vote or seek to
advise or influence in any manner whatsoever any person or entity with
respect to the voting of any securities of the Disclosing Party or any of
its subsidiaries, or
(c) form, join, or in any way participate in a "group" (within the
meaning of Section 13d(3) of the Exchange Act) with respect to any voting
securities of the Disclosing Party or any of its subsidiaries, or
(d) arrange, or in any way participate in, any financing for the
purchase of any voting securities or securities convertible or
exchangeable into or exercisable for any voting securities or assets of
the Disclosing Party or any of its subsidiaries, or
(e) otherwise act, whether alone or in concert with others, to seek
to propose to the Disclosing Party or any of its stockholders any merger,
business combination, restructuring, recapitalization or similar
transaction to or with the Disclosing Party or any of its subsidiaries or
otherwise act, whether alone or in concert with others, to seek to
control, change or influence the management, Board of Directors or
policies of the Disclosing Party, or nominate any person as a Director of
the Disclosing Party who is not nominated by the then incumbent Directors,
or propose any matter to be voted upon by the stockholders of the
Disclosing Party, or
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(f) solicit, negotiate with, or provide any information to, any
person with respect to a merger, exchange offer or liquidation of the
Disclosing Party or any of its subsidiaries or any other acquisition of
the Disclosing Party or any of its subsidiaries, any acquisition or voting
securities of or all or any portion of the assets of the Disclosing Party
or any of its subsidiaries, or any other similar transaction, or
(g) announce an intention to, or enter into any discussion,
negotiations, arrangements or understandings with any third party with
respect to, any of the foregoing, or
(h) disclose any intention, plan or arrangement inconsistent with
the foregoing, or
(i) advise, assist or encourage any other person in connection with
any of the foregoing.
In addition, the Receiving Party also agrees during such two-year period
not to (i) request the Disclosing Party (or any of its Representatives),
directly or indirectly, to amend or waive any provision of this Paragraph 6
(including this sentence) or (ii) take any action that might require the
Disclosing Party to make a public announcement regarding a possible transaction.
If at any time during such two-year period the Receiving Party is
approached by any third party concerning its or their participation in a
transaction involving the assets or businesses of the Disclosing Party or any of
its subsidiaries or securities issued by the Disclosing Party or any of its
subsidiaries, the Receiving Party will promptly inform the Disclosing Party of
the nature of such transaction and the parties thereto.
7. Return of Evaluation Material. The Receiving Party and its
Representatives will keep a written record of the location of the Evaluation
Material and will, promptly upon the request of the Disclosing Party and, in any
event, if the Receiving Party and the Disclosing Party do not enter into an
agreement with respect to the Proposed Transaction within 90 days of the date
hereof (or such longer time period as may be mutually agreed to by the parties
hereto), will return to the Disclosing Party all copies of the Evaluation
Material furnished to the Receiving Party and in its possession or in the
possession of its Representatives, without retaining a copy thereof. The
Receiving Party and its Representatives will destroy any analyses, compilations,
studies or other documents prepared by or for the Receiving Party's, or its
Representatives', internal use which include, utilize or reflect the Evaluation
Material. Such destruction will be confirmed by the Receiving Party upon
request, in writing. Notwithstanding the return or destruction of the Evaluation
Material, the Receiving Party and its Representatives will continue to be bound
by its obligations of confidentiality hereunder.
8. No Definitive Agreement/Freedom to Change Process. The Receiving Party
agrees that unless and until a definite agreement between the Disclosing Party
and the
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Receiving Party with respect to the Proposed Transaction has been executed and
delivered, neither the Disclosing Party nor the Receiving Party will be under
any legal obligation of any kind whatsoever with respect to any such transaction
by virtue of this or any written or oral expression with respect to such a
transaction by any of the Receiving Party's or the Disclosing Party's respective
Representatives except, in the case of this agreement, for the matters
specifically agreed to herein. Ferrotec further acknowledges and agrees that FFC
reserves the right, in its sole discretion, to reject any and all proposals made
by Ferrotec or any of its Representatives with regard to the Proposed
Transaction, and to terminate discussions and negotiations with Ferrotec at any
time. Ferrotec further understands that (a) FFC and its Representatives shall be
free to conduct any process for any transaction involving FFC, if and as if in
its sole discretion shall determine (including, without limitation, negotiating
with any other interested parties and entering into a definitive agreement
without prior notice to Ferrotec or any other person), (b) FFC may change any
procedures relating to such process or transaction at any time without notice to
Ferrotec or any other person, and (c) as a consequence of any actions taken by
FFC pursuant to the foregoing clauses (a) and (b), Ferrotec shall have no claims
whatsoever against FFC, its Representatives or any of their respective
directors, officers, stockholders, owners, affiliates or agents arising out of
or relating to any such transaction involving FFC.
9. Accuracy of Evaluation Material. The Receiving Party hereby
acknowledges that although the Disclosing Party has endeavored to include in the
Evaluation Material information known to the Disclosing Party and that it
believes to be relevant to the Receiving Party's evaluation, the Receiving Party
understands that neither the Disclosing Party nor any of its Representatives
makes any representation or warranty as to the accuracy or completeness of the
Evaluation Material. The Receiving Party agrees that it shall assume full
responsibility for all conclusions it derives from the Evaluation Material and
that neither the Disclosing Party nor any of its Representatives shall have any
liability with respect to the Evaluation Material or any use thereof. The
Receiving Party further acknowledges that it is not entitled to rely on the
accuracy or completeness of the Evaluation Material.
10. Remedies. The Receiving Party agrees that money damages would not be a
sufficient remedy for any breach of this agreement by the Receiving Party or any
of its Representatives, and that in addition to all other remedies, the
Disclosing Party shall be entitled to specific performance and injunctive or
other equitable relief as a remedy for any such breach, and the Receiving Party
further agrees waive and to use its best efforts to cause its Representatives to
waive, any requirement for the securing or posting of any bond in connection
with any such remedy. In the event of litigation relating to this agreement, if
a court of competent jurisdiction determines that the Receiving Party or any of
its Representatives has breached this agreement, it shall be liable for and pay
to the Disclosing Party on demand the legal fees and expenses incurred by the
Disclosing Party in connection with such litigation, including any appeal
therefrom.
11. Waiver and Amendment. The Receiving Party understands and agrees that
no failure or delay by the Disclosing Party or any of its Representatives in
exercising any right,
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power or privilege hereunder will operate as a waiver thereof, nor will any
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any right, power or privilege hereunder. The
agreements set forth herein may only be waived or modified by an agreement in
writing signed on behalf of the parties hereto.
12. Successors and Assigns. This agreement shall inure to the benefit of
and by enforceable by the Disclosing Party and its successors.
13. Severability. In case provisions of this agreement shall be invalid,
illegal or unenforceable, the validity, legality and enforceability of the
remaining provisions of the agreement shall not in any way be affected or
impaired thereby.
14. Governing Law; Venue. The validity, interpretation, performance and
enforcement of this agreement shall be governed by the laws the Commonwealth of
Massachusetts. The parties hereto hereby irrevocably and unconditionally consent
to the exclusive jurisdiction of the courts of the Commonwealth of Massachusetts
and the United States District Court for the District of Massachusetts for any
action, suit or proceeding arising out of or relating to this agreement or the
Proposed Transaction, and agree not to commence any action, suit or proceeding
related thereto except in such courts. The parties hereto further hereby
irrevocably and unconditionally waive any objection to the laying of venue of
any action, suit or proceeding arising out of or relating to this agreement in
the courts of the Commonwealth of Massachusetts or the United States District
Court for the District Massachusetts, and hereby further irrevocably and
unconditionally waive and agree not to plead or claim in any such court that any
such action, suit or proceeding brought in any such court has been brought in an
inconvenient forum. Each of the parties hereto further agrees that service of
any process, summons, notice or document by U.S. registered mail to its address
set forth above shall be effective service of process for any action, suit or
proceeding brought against it in any such court.
15. Counterparts. This agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which shall
constitute the same agreement.
[signature page to follow]
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Please acknowledge your agreement to the foregoing by countersigning this
agreement in the place provided below and returning it to the undersigned.
Very truly yours,
FERROFLUIDICS CORPORATION
By: /s/ Paul F. Avery, Jr.
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Name: Paul F. Avery, Jr.
Title: President and CEO
Accepted and Agreed to,
this 16th day of August, 1999
FERROTEC CORPORATION
By: /s/ Akira Yamamura
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Name: Akira Yamamura
Title: President
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