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It turned out to be an unforgettable Valentine’s Day for the crew of lawyers who inked a $660 million deal for Credence Systems Corp. to acquire NPTest Holdings Corp. NPTest gave Credence a 14-day period of exclusivity for the purchase and that meant lawyers had to work through the long holiday weekend. “The deal went from a handshake to a definitive agreement in 12 days,” said William Sherman, a partner in Morrison & Foerster‘s Palo Alto office, who represented Milpitas-based Credence Systems. “I’ve been doing this 32 years and I’ve not done a deal this fast or seen a company taken public and sold so fast.” NPTest, which manufactures automated test equipment and diagnostic equipment for the semiconductor industry, went public in December. The San Jose company had changed hands just prior to the IPO. Schlumberger Ltd. sold NPTest to a group of investors led by Francisco Partners for $220 million in cash. NPTest was originally a unit of Fairchild Semiconductor, which was acquired by Schlumberger in 1979. Credence will acquire NPTest in a combined stock-for-stock and cash transaction valued at approximately $660 million based on the closing price of Credence stock on Feb. 20. Each NPTest common share outstanding as of the closing date will be converted into the right to acquire 0.80 shares of Credence common stock and $5.75 in cash. In addition to Sherman, the Credence deal team included MoFo partners Richard Scudellari, M. Ellen Robb, Patrick McCabe and Thomas Wilson, of counsel Mary Shimizu and Aki Bayz and associates Amie Peters, Jeffrey Hom, Monica Cha, Francis Jose, Jeffrey Jaeckel, Timothy Verrall, and Christine Lyon. Davis Polk & Wardwell represented NPTest in the transaction. The corporate team included Menlo Park partner Alan Denenberg and New York partner John Amorosi, and associates Michael Halstead, Kevin Greenslade, Nandan Kamath, Yi Sun and Barbara Niederkofler. Others on the team included partners Jean McLoughlin, Michael Mollerus and Arthur Burke and associates Cynthia Akard, Rachel Kleinberg and Douglas Cardwell. – Brenda Sandburg QUEST SOFTWARE / AELITA SOFTWARE While guiding Irvine-based Quest Software Inc. through its $115 million purchase of Columbus, Ohio’s Aelita Software, Cooley Godward partner Eric Reifschneiderfound himself navigating Russia’s unique business market. While Reifschneider declined to comment specifically on the Aelita deal because the company is private, he spoke in general about the complexities of doing business in the former Soviet Union. “From a due diligence standpoint, getting access to documents, records and people can be very hard to do,” said Reifschneider, an intellectual property specialist who has worked on numerous international deals. “In countries where the government is extensively involved in the private sector, things considered bribes in the U.S. are accepted as being just fine, a necessary fact of life,” he said. Quest sells application and Microsoft infrastructure management solutions. Aelita, which develops tools that help corporations install and manage Microsoft-based networks, has research and development operations in Russia. Doing due diligence on intellectual property can also be challenging. Buyers must ensure that a target company has all necessary patent, copyright and trademark rights, which can be complicated when the company employs consultants to help develop its products. Further complicating matters are moral rights — inalienable property rights that reside with the individuals who create a product — that are common in Russia and much of Europe but nonexistent in the United States. “[This law] was created with statues and paintings in mind,” Reifschneider said. “It has to do with giving proper attribution to the author of the work and not changing the work in a way the author wouldn’t approve of.” But for modern products, such as software, moral rights become more complicated. Buyers need to ensure that the target company has obtained appropriate intellectual property assignments from all involved in the creation of its products. Sometimes, Reifschneider said, a creator shows up at the last minute and claims to have rights over the software — moral or otherwise. “You look for signs of problem former employees who seem to be potential troublemakers — same as you worry about things happening on the eve of an IPO.” Cooley worked through local counsel in Russia to finalize the due diligence on Aelita, which takes its name from a science fiction novel by Aleksei Tolstoy. After a year of working with Palo Alto-based Cooley on the deal, Quest inked the deal with Aelita on Jan. 23. The final days of negotiation took place at Aelita’s Columbus headquarters between Christmas and New Year’s. Richard Climan led Reifschneider and the rest of the Cooley team, which consisted of associate Jane Ross, tax specialist Lea Ann Borders and employee benefits expert Thomas Reicher. Associates Robin Lee and Francis Fryscak lent an assist. Working in house for Quest were counsel David Cramer and General Counsel J. Michael Vaughn. Willkie Farr & Gallagher represented Aelita with partner Gordon Caplan leading the team alongside partner Andrew Needham. Associates Stuart Goldfarb and Claudia Cantarella lent an assist. – Adrienne Sanders FINISAR / HONEYWELL’S VCSEL UNIT A 15-attorney team at Gray Cary Ware & Freidenrich represented Finisar Corp in its $75 million acquisition of a Honeywell unit. The all-cash deal, expected to close in the first quarter of 2004, transfers ownership of Honeywell’s VCSEL Optical Products business to Sunnyvale-based Finisar. Dennis Sullivan, who co-led the team of Gray Gary lawyers, said the fact that the purchase involved only a part of a company added a layer of complexity to the transaction. “Acquisitions of business units from large companies are always relatively complicated, and often more complicated than outright purchases of entire companies because you have to disentangle the business from the ongoing operations of the seller,” said Sullivan. In addition to working out intellectual property issues, the attorneys had to negotiate a lease for the Texas manufacturing facility where VCSEL is based. The VCSEL Optical Products business produces laser devices for fiber-optic computer networks. Honeywell was represented by its in-house counsel, with help from Kirkpatrick & Lockart. Joe Sorenson, a partner at Gray Cary’s East Palo Atlo office, was co-lead of the Finisar crew, along with Sullivan. They were assisted by corporate associates Benjamin Griebe and Albert Li, intellectual property partner Maureen Dorney and associate Dawn Barsy, real estate partners Jeffrey Trant and James Anderson, environmental partner Robert Longstreth, antitrust special counsel Michael McNeely and associate Eric Wang, tax partner David Plewa and associate Stacy Paz, and employment and benefits partner John Shuman Jr. and associate Ralph Barry. – Alexei Oreskovic

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