SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
January 19, 1999
(Date of earliest event reported)
SUPERTEX, INC.
(Exact name of Registrant as specified in its Charter)
California 94-2328535
(State or other jurisdiction of (IRS Employer Identification #)
incorporation or organization)
1235 Bordeaux Drive
Sunnyvale, California 94089
(Address of principal executive offices)
Registrant's Telephone Number, Including Area Code: (408) 744-0100
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On February 1, 1999, Supertex, Inc., a California
corporation (the "Company"), completed the acquisition
of all assets of the six inch sub-micron wafer
fabrication (fab) facility located in San Jose,
California from Orbit Semiconductor, Inc. ("Orbit") a
wholly owned subsidiary of Dii Group, pursuant to an
Asset Purchase Agreement dated January 16, 1999. The
purchase price, including the assumption of operating
lease liabilities, is approximately $11.2 million. In
connection with the acquisition, the Company is assuming
certain contract obligations and work-in-process
inventory.
The amount of consideration paid for the acquired assets
was determined through arm's length transactions between
the Company and Orbit and was paid from the cash reserves
of the Company.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits.
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EXHIBIT NUMBER DESCRIPTION
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2.1 Agreement for Purchase and Sale of
Assets, dated January 16, 1999, by
and among Orbit Semiconductor, a
California Corporation ("Seller")
and Supertex, Inc., a California
Corporation ("Buyer")
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SIGNATURES
Pursuant to the requirements of the Securities
Exchange Act of 1934, the registrant has duly caused this
report to be signed on its behalf by the undersigned
hereunto duly authorized.
SUPERTEX, INC.
(Registrant)
Date: February 12, 1999 By /s/ Henry C. Pao
-------------------------
Name: Henry C. Pao
Title: President & CEO
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TABLE OF CONTENTS
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1. ARTICLE ONE DEFINITIONS 1
1.1 "Assets". 1
1.2 Wafer Fabrication Facility 2
1.3 "Hazardous Materials" 2
1.4 "Insurance Policies". 3
1.5 "Permits". 3
1.6 "Premises". 3
1.7 "NationsBanc Lease". 3
1.8 "Associated Agreements". 3
1.9 "Premises Lease". 3
1.10 "Escrow Holder". 3
1.11 "Environmental Claims" 3
1.12 "Environmental Laws" 4
1.13 "Environmental Liabilities" 4
1.14 "Tax" or, collectively "Taxes". 4
2. ARTICLE TWO PURCHASE AND SALE OF ASSETS 5
2.1 Buy and Sell. 5
2.2 Purchase Price. 5
2.3 Deposit, Liquidated Damages and Due Diligence. 5
2.4 Payment of Purchase Price. 9
2.5 Allocation of Purchase Price. 9
2.6 Assumption of Liabilities 9
2.7 Buyer's Sales and Use Tax. 10
2.8 Seller's Real and Personal Property Tax 10
2.9 Delivery of Title. 10
2.10 Documents to be Delivered by Seller at the
Closing. 11
2.11 Documents to be Delivered by Buyer at the
Closing 11
2.12 Employees. 11
2.13 Operating Permits and Claims Concerning
the Assets 11
2.14 Seller's Premises Lease Assumption 12
2.15 Process Development Agreement 12
2.16 Limitation of Liability, Purchase Price
Escrow, and Guaranty 12
2.17 "As-Is" Sale: Releases and Waivers 13
2.18 Work in Progress ("WIP") 17
2.19 Operation of Premises 17
2.20 Seller's Intellectual Property 18
3. ARTICLE THREE WAFER PRODUCTION 18
3.1 Wafer Production and Purchase Rights 18
4. ARTICLE FOUR REPRESENTATIONS AND WARRANTIES OF SELLER 19
4.1 Seller's Corporate Status 19
4.2 Authorization; Etc. 19
4.3 Material Changes in Seller's Financial
Condition 19
4.4 Title to Assets; Encumbrances. 19
4.5 Seller's Lease 20
4.6 Employee's Contracts 20
4.7 Litigation. 20
4.8 Contracts, Warranties and the NationsBanc
Lease 20
4.9 Hazardous Materials 20
4.10 Underground Storage Tanks 21
4.11 Environmental Reports 21
4.12 Existing Contamination 21
4.13 Compliance with Environmental Laws/Claims 21
4.14 Existing Improvements 21
4.15 Compliance 22
4.16 Disclosure 22
4.17 Taxes 22
5. ARTICLE FIVE BUYER'S REPRESENTATIONS AND WARRANTIES 22
5.1 Authorization; Etc. 22
5.2 No Violation 22
5.3 Consents and Approvals of Government
Authorities 23
6. ARTICLE SIX CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE 23
6.1 Seller's Representations and Warranties Are
True 23
6.2 Seller Has Performed 23
6.3 No Legal Action Pending 23
6.4 Material Adverse Change 24
6.5 Duly Authorized. 24
6.6 Assignment of Lease 24
6.7 Associated Agreements 24
6.8 No Defaults 24
6.9 Consents 24
6.10 Due Diligence. 24
7. ARTICLE SEVEN CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE 24
7.1 Buyer's Representations and Warranties Are True 24
7.2 Buyer Has Performed 24
7.3 No Legal Action Pending 25
7.4 Duly Authorized 25
7.5 Necessary Consents 25
7.6 Assignment of Lease 25
7.7 Associated Agreements 25
8. ARTICLE EIGHT THE CLOSING 25
8.1 Closing Date 25
8.2 Seller's Delivery. 25
8.3 Seller's Assistance 25
8.4 Buyer's Delivery 26
9. ARTICLE NINE SELLER'S OBLIGATIONS AFTER CLOSING 26
9.1 Seller's Indemnity. 26
9.2 Notification of Claims 26
9.3 Survival of Representations and Warranties 26
9.4 Limitations on Indemnification 27
10. ARTICLE TEN BUYER'S OBLIGATIONS AFTER CLOSING 27
10.1 Buyer's Indemnity 27
10.2 Notification of Claims 27
11. ARTICLE ELEVEN PUBLICITY 27
11.1 Publicity 27
12. ARTICLE TWELVE COSTS 28
12.1 No Agents 28
12.2 Costs and Prorations 28
13. ARTICLE THIRTEEN FORM OF AGREEMENT 29
13.1 Headings 29
13.2 Entire Agreement, Waivers 29
13.3 Counterparts 29
14. ARTICLE FOURTEEN PARTIES IN INTEREST 30
14.1 Third Party 30
14.2 Assignment 30
15. ARTICLE FIFTEEN REMEDIES 30
15.1 Arbitration 30
15.2 Attorney's Fees 30
15.3 Termination 30
16. ARTICLE SIXTEEN NOTICES 31
17. ARTICLE SEVENTEEN GOVERNING LAW 32
18. ARTICLE EIGHTEEN SEVERABILITY 32
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AGREEMENT FOR PURCHASE AND SALE OF ASSETS
This Agreement for Purchase and Sale of Assets (the
"Agreement") is entered into and made effective as of
January 16, 1999 (the "Effective Date") at San Jose,
California, by and between ORBIT SEMICONDUCTOR, INC, a
Delaware corporation, ("Seller") and SUPERTEX, INC., a
California corporation ("Buyer").
RECITALS
A. Buyer desires to purchase from Seller and
Seller desires to sell to Buyer, on the terms and subject
to the conditions of this Agreement, the Assets of
Seller's Wafer Fabrication Facility (as these terms are
defined below) in exchange for the cash and other
consideration described herein below. Said Assets do not
constitute substantially all of the business operations
of Seller, and Seller shall continue as an operating
business after such sale.
B. In consideration of the mutual covenants,
agreements, representations, and warranties contained in
this agreement, the parties agree as follows:
1. ARTICLE ONE
DEFINITIONS
As used herein, the terms set forth below shall have
the meanings set forth below:
1.1 "Assets". The term "Assets" shall mean all of
the following:
(a) Tangible items of equipment, fixtures, and
supplies, related to Seller's Wafer Fabrication Facility
(as defined below at Section 1.2), located at the
Premises (defined below at Section 1.6) or at any other
location and that are specifically described as the items
listed on Exhibit A, attached hereto and incorporated
herein by this reference, involved in the operation of
the Seller's Wafer Fabrication Facility (the
"Equipment");
(b) All Permits, listed in Exhibit D;
(c) The rights of Seller under warranties and
guaranties given by the Equipment suppliers or others in
connection with the Equipment (the "Warranties"), which
Warranties are described on Exhibit B attached hereto and
incorporated herein by this reference, to the extent
transferable;
(d) The rights of Seller under all service and
maintenance contracts relating to the Equipment (the
"Contracts"), which Contracts are described on Exhibit C
attached hereto and incorporated herein by this
reference, and which Buyer has assumed subject to
acceptance;
(e) Seller's service records pertaining to the
Equipment (the "Service Records"), to the extent
reasonably available;
(f) Plans and specifications pertaining to the
Equipment (the "Plans and Specifications"), to the extent
reasonably available;
(g) All blueprints, plans, drawings, floor
plans, construction drawings, site plans, and any other
written or electronically stored information regarding
the Premises, to the extent reasonably available;
(h) A license to use Seller's proprietary
rights and interests in processes used in the Wafer
Fabrication Facility as described on Exhibit A-1
("Seller's Intellectual Property");
(i) The entire, undivided right, title,
interest and estate of the "Tenant" under the "Premises
Lease" and all right, title and interest of Seller in,
under, and to the Premises; and
(j) Seller's customer lists attached as
Exhibit A-2.
1.2 Wafer Fabrication Facility. The term "Wafer
Fabrication Facility" shall mean the semiconductor wafer
fabrication manufacturing facility operated by Seller at
the Premises;
1.3 "Hazardous Materials". The term "Hazardous
Materials" shall include, but not be limited to, any
substance, material or waste which is or becomes
regulated by any local governmental authority, the State
of California, or the United States of America, because
of its toxic, flammable, corrosive, reactive,
carcinogenic or other hazardous property, or which is now
or hereafter defined or listed as "hazardous substances,"
"hazardous materials," "toxic substances," "petroleum,"
"carcinogen," "asbestos," or "asbestos materials" in any
federal, state or local laws, rules or regulations
(whether now existing or hereafter enacted or
promulgated) including, without limitation, the Federal
Water Pollution Control Act (33 U.S.C. 1251, et seq.),
Hazardous Materials Transportation Act (49 U.S.C.
1801, et seq.), Resource Conservation and Recovery Act
(42 U.S.C. 6901, et seq.), Safe Drinking Water Act (42
U.S.C. 3000(f), et seq.), Toxic Substances Control Act
(15 U.S.C. 2601, et seq), Clean Air Act (42 U.S.C.
7401), Comprehensive Environmental Response, Compensation
and Liability Act (42 U.S.C. 9601 et seq.), United
States Department of Transportation Hazardous Materials
Table (49 CFR 172.101), California Health & Safety Code
( 25100, et seq., 25300, et seq., 39000, et
seq.), California Water Code ( 13000, et seq.),
California Labor Code 6501.7 and 9004, California
Civil Code ( 2929.5), or any judicial or administrative
interpretation of such laws, rules or regulations;
1.4 "Insurance Policies". The term "Insurance
Policies" shall mean all insurance policies, certificates
of insurance or other documents and instruments in the
possession of Seller evidencing all insurance policies
issued in whole or in part for the benefit of owner, held
or formerly held by Seller covering the Assets, the Wafer
Fabrication Facility and/or the Premises.
1.5 "Permits". The term "Permits" shall mean all
operating permits and licenses for the Wafer Fabrication
Facility, which Permits are described on Exhibit D
attached hereto and incorporated herein by this
reference.
1.6 "Premises". The term "Premises" shall mean
that leased building and all that real property and
improvements commonly known as 71 Vista Montana, San
Jose, California which Seller uses as a wafer fabrication
facility (fab area -- cleanroom, fab peripheral area, and
facility support -- pad area and cleanroom) and which is
more particularly described on Exhibit E attached hereto
and incorporated herein by this reference.
1.7 "NationsBanc Lease". The term "NationsBanc
Lease" shall mean the Master Equipment Lease Agreement
between Seller and NationsBanc dated September 15, 1995,
and the following schedules thereunder: Schedule No. 1
dated September 15, 1995, Schedule No. 2 dated September
20, 1996, Schedule No. 3 dated September 25, 1996, and
Schedule No. 4 dated December 16, 1996, copies of which
are attached hereto as Exhibit F and incorporated herein
by reference.
1.8 "Associated Agreements". The term "Associated
Agreements" shall mean all those contracts, documents and
instruments to be executed and delivered under this
Agreement.
1.9 "Premises Lease". The term "Premises Lease"
shall mean the lease for the Premises entered into
between Paradigm Technology, Inc., a Delaware corporation
("Paradigm"), and Sobrato Development Companies #871, a
California limited partnership ("Landlord"), dated
December 7, 1988, as amended by that certain First
Amendment to Lease dated May 4, 1987, that certain Second
Amendment to Lease dated June 18, 1990, and that certain
Third Amendment to Lease dated December 21, 1995, which
was assigned to Seller pursuant to that certain
Assignment of Lease and Consent to Assignment of Lease
entered into between Landlord, Seller, and Paradigm dated
November 15, 1996.
1.10 "Escrow Holder". The term "Escrow Holder"
shall mean San Jose National Bank, One North Market
Street, San Jose, California 95113, Attn: Margo A.
Culcasi, Telephone: 408-947-7562, Telecopy: 408-947-7038.
1.11 "Environmental Claims" shall mean any notice,
claims, act, cause of action or investigation by any
person alleging liability (including potential liability
for investigatory costs, cleanup costs, governmental
response costs, natural resources damages, property
damages, personal injuries or penalties) arising out of,
based on or resulting from (i) the presence, or release
into the environment, of any Hazardous Materials or (ii)
any violation, or alleged violation, of any Environmental
Laws.
1.12 "Environmental Laws" shall mean all federal,
state and local laws and regulations relating to the
environment (including ambient air, surface water, ground
water, land surface or subsurface strata) including laws
and regulations relating to the release or emission of
Hazardous Materials, or otherwise relating to the
manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of Hazardous
Materials.
1.13 "Environmental Liabilities" shall mean any
liability, obligation, judgment, penalty, fine, cost or
expense, of any kind or nature, or the duty to indemnify,
defend or reimburse any Person with respect to: (i) the
presence in, on or under the Premises, on or before the
Closing Date of any Hazardous Materials in the soil,
groundwater, surface water, air or building materials
(including both land and improvements thereon) ("Pre-
Existing Contamination"); (ii) the migration of Pre-
Existing Contamination prior to the Closing Date to any
other real property, or the soil, groundwater, surface
water, air or building materials thereof; (iii) any
transportation, transfer, recycling, storage, use,
handling, treatment, manufacture, removal, investigation,
remediation, release, emission, sale, disposal or
distribution of any Hazardous Materials, or any product
or waste containing Hazardous Materials conducted on the
Premises prior to the Closing Date ("Pre-Closing
Hazardous Materials Activities"); (iv) the exposure of
any person to Pre-Existing Contamination or to Hazardous
Materials Activities at the Premises, in the course of or
as a consequence of any Pre-Closing Hazardous Materials
Activities at the Premises, without regard to whether any
health effect of the exposure has been manifested as of
the Closing Date; (v) the violation of any Environmental
Laws by the Seller or its agents, employees or
contractors prior to the Closing Date or in connection
with any Pre-Closing Hazardous Materials Activities prior
to the Closing Date; and (vi) any actions or proceedings
brought or threatened by any third party with respect to
any of the foregoing. Environmental Liabilities shall be
subject to the provisions of Section 2.16, 2.17 and
Article 9 herein.
1.14 "Tax" or, collectively "Taxes". shall mean any
and all federal, state, local and foreign taxes,
assessments and other governmental charges, duties,
impositions and liabilities, including taxes based upon
or measured by gross receipts, income, profits, sales,
use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture,
employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to
such amounts and any obligations under any agreements or
arrangements with any other person with respect to such
amounts and including any liability for taxes of a
predecessor entity.
2. ARTICLE TWO
PURCHASE AND SALE OF ASSETS
2.1 Buy and Sell. Subject to the terms and
conditions set forth in this Agreement, Seller agrees to
sell, convey, transfer, assign, and deliver to Buyer, and
Buyer agrees to purchase from Seller, all the Assets at
the Closing.
2.2 Purchase Price. As full payment of the
purchase price for the Assets (the "Purchase Price") for
the transfer of the Assets to Buyer, Buyer shall deliver
at the Closing the following:
(a) The cash sum of Nine Million Two Hundred
Thousand Dollars ($9,200,000.00).
(b) An assumption of Seller's NationsBanc
Lease, provided, however, that in the event that
NationsBanc refuses to accept Buyer's assignment and
assumption of the NationsBanc Lease,
Buyer shall be responsible for payment to Seller under a
sublease of the NationsBanc Lease on the same terms and
conditions, including rent, of the NationsBanc Lease.
(c) Assumptions of all other leases, contracts
or other obligations being assumed by Buyer under the
terms of this Agreement.
Buyer warrants that it shall use its best efforts to
cooperate and work with Seller to accomplish the
assignment and assumption of the NationsBanc Lease. In
the event that Buyer is unable to deliver the assumption
of the NationsBanc Lease as provided in subsection (b),
Seller shall continue to be responsible for the
NationsBanc Lease and Buyer and Seller shall enter into a
sublease of the NationsBanc Lease upon the consent of
NationsBanc of such sublease.
2.3 Deposit, Liquidated Damages and Due Diligence.
(a) (1) Deposit. On execution of this
Agreement, Buyer shall deposit with Escrow Holder (the
"Escrow") a cash deposit (the "Initial Deposit") of FIVE
HUNDRED THOUSAND DOLLARS ($500,000.00) of which the sum
of TWO HUNDRED FIFTY THOUSAND DOLLARS ($250,000.00)
("First Refundable Deposit") shall immediately become
non-refundable, unless there is any material breach,
default, fraud or misrepresentation on Seller's part.
For purposes of this Section 2.3, "material" shall mean
"resulting in damages, loss, or costs in excess of
$250,000.00. Said First Refundable Deposit shall also be
refundable in the event that Landlord (identified in
Section 1.9 herein) prior to Closing, fails to enter into
a Lease Assignment (identified in Section 2.9(c) herein)
on terms reasonably acceptable to Seller and Buyer or
fails to enter into a Fourth Amendment to the Premises
Lease with Buyer on terms reasonably acceptable to Buyer
("Landlord Fails to Consent"). All interest earned on
the Deposit (as defined below) shall be paid to the
recipient of the underlying principal when the Deposit
Funds are disbursed to Buyer or Seller. Upon receipt of
the Initial Deposit, the Escrow Holder shall immediately
place the Initial Deposit in an interest-bearing account.
Within five (5) business days of Buyer's receipt of the
Due Diligence Items (defined at Section 2.3(b) below),
Buyer shall deliver into Escrow an additional cash
deposit (the "Additional Deposit") of SEVEN HUNDRED
THOUSAND DOLLARS ($700,000.00), of which the sum of TWO
HUNDRED FIFTY THOUSAND DOLLARS shall be non-refundable
("Second Non-Refundable Deposit"), unless there is any
material breach, default fraud or misrepresentation on
Seller's part or Landlord Fails to Consent, and the
Escrow Holder shall immediately place the Additional
Deposit into an interest-bearing account. The Initial
Deposit and the Additional Deposit are referred to
collectively as the "Deposit". In the event that this
Agreement is terminated because Landlord Fails to Consent
on or before Closing or, prior to the expiration of the
Approval Deadline (defined below) for any reason other
than Seller's material breach, default, fraud or
misrepresentation, Seller shall retain the First Non-
Refundable Deposit and the Second Non-Refundable Deposit
and the remainder of the Deposit, if any shall be
returned to Buyer. Upon expiration of the Approval
Deadline, the Deposit shall become irrevocable and non-
refundable to Buyer except and only in the event of
Seller's material breach, default, fraud or
misrepresentation or if Landlord Fails to Consent prior
to Closing. In the event Buyer is entitled to the return
of any portion of the Deposit under the terms of this
Agreement, such portion of the Deposit shall be promptly
returned to Buyer (and Seller shall instruct Escrow
Holder to so return the Deposit to the extent required by
Escrow Holder). The Deposit shall be disbursed by Escrow
Holder to Seller through Escrow at Closing (and Buyer
shall instruct Escrow Holder to so disburse the Deposit
to the extent such instruction is required by Escrow
Holder). Should the Closing occur, the Deposit shall be
applied to the Purchase Price.
(2) Liquidated Damages. SELLER AND BUYER
HAVE DISCUSSED THE POSSIBLE CONSEQUENCES TO SELLER IF THE
CLOSING FAILS TO OCCUR ON OR BEFORE THE CLOSING DATE
(DEFINED BELOW). THE DEPOSIT SHALL BE PAID TO AND
RETAINED BY SELLER AS LIQUIDATED DAMAGES, AND NOT AS A
PENALTY, UNLESS SELLER BREACHES THIS AGREEMENT AND THIS
TRANSACTION FAILS TO CLOSE BY REASON THEREOF (AND BUYER
HEREBY IRREVOCABLY INSTRUCTS ESCROW HOLDER, UPON DEMAND
BY SELLER WITHOUT FURTHER AUTHORIZATION BY BUYER, TO
DIRECTLY PAY SELLER THE DEPOSIT PLUS ALL INTEREST THEREON
IN THE EVENT OF SUCH BREACH BY BUYER). BUYER AND SELLER
ACKNOWLEDGE AND AGREE THAT SELLER'S DAMAGES IN THE EVENT
OF SUCH BREACH BY BUYER WOULD BE EXTREMELY DIFFICULT OR
IMPOSSIBLE TO DETERMINE, THAT THE AMOUNT OF THE DEPOSIT
PLUS SUCH INTEREST AS MAY BE EARNED THEREON WHILE IN
ESCROW IS THE PARTIES' BEST ESTIMATE OF THE DAMAGES
SELLER WOULD SUFFER IN THE EVENT THIS TRANSACTION FAILS
TO CLOSE BY REASON OF BUYER'S BREACH OF THIS AGREEMENT,
AND THAT SUCH ESTIMATE IS REASONABLE UNDER THE
CIRCUMSTANCES EXISTING ON THE EFFECTIVE DATE OF THIS
AGREEMENT. BUYER AND SELLER AGREE THAT SELLER'S RIGHT TO
BE PAID AND RETAIN THE DEPOSIT AND SAID INTEREST ACCRUED
THEREON SHALL BE THE SOLE REMEDY OF SELLER AT LAW OR IN
EQUITY IN THE EVENT OF SUCH BREACH OF THIS AGREEMENT BY
BUYER WHERE THIS TRANSACTION FAILS TO CLOSE. IT IS THE
INTENTION OF THE PARTIES THAT THIS SECTION COMPLY WITH
THE PROVISIONS OF 1671(b) AND 1677 OF THE CIVIL CODE
OF CALIFORNIA.
(b) Due Diligence. Buyer's obligation to
purchase the Assets and Seller's obligation to sell the
Assets are each conditioned upon the satisfaction or
express written waiver of the conditions precedent set
forth below:
(1) Attached hereto as Exhibit A-3 is a
list of items that Seller agrees to provide to Buyer as
part of Buyer's due diligence and investigation of the
Assets, which Seller agrees to provide as soon as
practicable (the "Due Diligence Items"). The Due
Diligence Items shall be provided to the extent that such
items are in writing or human readable electronic format
and to the extent that such items do not need to be
created by Seller for the sole purpose of satisfying
Buyer's due diligence. The provision of all such items
in Seller's possession shall constitute full satisfaction
of Seller's obligation hereunder, even if such items
constitute only a portion of the items otherwise
requested by Buyer. Buyer shall have until 5:00 p.m. on
Saturday, January 23, 1999 (the "Approval Deadline"), to
approve or disapprove, at its sole discretion the
following matters pertaining to the Assets: (a) the
physical and environmental condition of the Equipment and
the Premises, including, without limitation, the presence
or absence of any Hazardous Materials at or beneath the
Premises; (b) the financial condition of the Assets
including, without limitation, the feasibility,
convertability, desirability and suitability of the
Assets for Buyer's intended use and purposes; (c) the
legal condition of the Assets including, without
limitation, the Assets' compliance or non-compliance with
any applicable federal, state or local statutes,
ordinances, codes, regulations, decrees, orders, laws or
other governmental requirements (collectively,
"Applicable Laws"); (d) the Documents (hereinbelow
defined) and all other Seller Materials (hereinbelow
defined), if any; (e) the existence or non-existence, and
availability or nonavailability, of any governmental,
quasi-governmental or private approvals, permits,
licenses, or other entitlements, if any, affecting the
Assets or their use or occupancy; (f) the dimensions and
specifications of the Premises; (g) the zoning, building,
and land use restrictions affecting the Premises; and (h)
the condition of title to the Assets The matters
described in clauses (a) through (h), above, are
collectively referred to herein as the "Condition of the
Assets". Buyer may, at its sole cost and expense, retain
a qualified licensed contractor to perform a Phase I and
a Phase II environmental assessment of the Premises.
(2) Buyer acknowledges that the period of
time from the execution of this Agreement until the
Approval Deadline affords Buyer sufficient time to make
all inspections, tests, analyses, evaluations and reviews
Buyer deems necessary and prudent to fully evaluate the
Condition of the Assets. Buyer shall approve or
disapprove the Condition of the Assets by delivering
written notice thereof to Seller on or before the
Approval Deadline. If Buyer disapproves the condition of
the Assets in the manner provided in this Section 2.3,
then this Agreement shall terminate without further
action by the parties as provided in Section 15.3, below.
(3) Seller hereby grants Buyer the right
to enter upon the Premises from the date of execution of
this Agreement through and until the Approval Deadline
between the hours of 8:00 a.m. and 5:00 p.m. to conduct
such inspections, tests, investigations, analyses and
evaluations as Buyer deems necessary or prudent to
evaluate the Condition of the Assets, provided that such
activity does not interfere with Seller's business or the
operation of the Wafer Fabrication Facility and that
Buyer shall give Seller oral or written notice at least
one (1) business day before the entry of any person
possessing mechanic's or materialmen's or other lien
rights so as to allow Seller to post the appropriate
notices of non-responsibility. Any such requirement
shall not delay Buyer's scheduled inspections, tests, or
interviews, provided Buyer has provided Seller with at
least three (3) business days prior written notice of the
date, time and location of the scheduled inspections of
the Premises or the Assets. All tests, inspections and
examinations of the Assets shall be done at Buyer's sole
expense in a workmanlike manner in accordance with
Applicable Laws. Notwithstanding anything to the
contrary herein, Buyer may not perform any test or
inspection or carry out any activity at the Premises that
damages the Premises or Assets or which is physically
intrusive into the ground or any improvements on the
Premises, without the prior written consent of Seller,
which Seller may withhold in its sole and absolute
discretion. If Seller does not consent to any such test,
inspection or activity, then Buyer may give written
notice to Seller of its disapproval of the Condition of
the Assets and thereby terminate this Agreement in the
manner provided above. Buyer shall, at its sole expense,
immediately repair any damage to the Premises or the
Assets caused by any entry by Buyer or any of Buyer's
agents, servants, nominees, contractors, consultants,
engineers, subcontractors, employees or other persons
acting for or on behalf of Buyer (collectively, "Buyer's
Representatives") upon the Premises, and Buyer shall, at
its sole expense, after each entry by Buyer or any of
Buyer's Representatives upon the Premises, restore the
Property to the same condition it was in as of the date
this Agreement was executed.
(4) Buyer shall indemnify, protect,
defend and hold Seller, its employees, agents,
successors, and assigns, and the Assets free and harmless
from and against any and all claims, actions, causes of
action, suits, proceedings, costs, expenses (including,
without limitation, attorneys' fees and costs),
liabilities, damages and liens of any type or kind
("Costs") to the extent resulting from property damage or
personal injury caused by Buyer's exercise of its
inspection rights under paragraph 2.3(b)(3); provided,
however, that the foregoing indemnity shall not apply to
any Costs resulting from (i) the acts, omissions of
Seller or any agent, contractor or representative of
Seller, or (ii) Buyer's discovery of any information
potentially having a negative impact on the Assets, the
Premises or the Wafer Fabrication Facility, including,
without limitation, any Costs arising from or relating to
the discovery of any Hazardous Materials on or about the
Premises.
(5) Within two (2) days of the execution
of the Agreement, Seller will provide or will make
available to Buyer for review and photocopying (at
Buyer's sole expense), at the office of Seller, during
Seller's normal business hours, any other additional
documents related to the Assets that are in Seller's
possession, including, but not limited to, building and
improvement plans, maintenance and inspection reports,
construction records, environmental reports, assessments,
permits, audits, and agency correspondence (including any
Phase I or Phase II or other environmental reports or
information previously created or in progress), or
statements of any information with respect to possible or
pending actions regarding the Assets by any Federal,
State or other government agency. Such documents are
collectively referred to herein as the "Documents".
Buyer hereby agrees that it shall not remove any original
Documents from Seller's offices. On the termination of
this Agreement for any reason whatsoever, Buyer shall
immediately return all photocopies of any Documents to
Seller.
(6) The conditions precedent set forth
above shall fail or shall be satisfied in accordance with
their respective terms. No waiver of any such conditions
precedent shall be effective unless expressly set forth
in writing by the party or parties receiving the benefit
of the condition.
2.4 Payment of Purchase Price. Buyer shall pay to
Seller the Purchase Price as described above in
immediately available funds at the Closing.
2.5 Allocation of Purchase Price. Buyer and Seller
agree to negotiate in good faith concerning an allocation
of the Purchase Price among the Assets, and to establish
such allocation no later than seven (7) days prior to the
Closing, provided, however, that up to $2,200,000 shall
be allocated for Seller's Intellectual Property. Buyer
and Seller agree that all returns and reports made to the
Internal Revenue Service, the California Franchise Tax
Board, the California State Board of Equalization or any
other authority with respect to the purchase and sale of
the Assets shall be consistent with such allocation. Each
of the parties agrees to report this transaction for
federal tax purposes substantially in accordance with
this allocation of the purchase price.
2.6 Assumption of Liabilities. On the terms and
subject to the conditions set forth in this Agreement, at
the Closing, Buyer shall assume the following liabilities
of Seller: the obligations assumed under the NationsBanc
Lease, the obligations assumed under the Lease Assignment
and the obligations assumed under the assumed Contracts
as set forth on Exhibit C (collectively, the "Assumed
Liabilities"). Buyer shall not assume any liabilities or
obligations of Seller except for those liabilities and
obligations which Buyer expressly assumes pursuant to
this Section 2.6, Section 2.17, or as otherwise expressly
assumed in other provisions of this Agreement. Except as
otherwise provided in this Agreement, Buyer expressly is
not assuming any obligations or liabilities arising from
events occurring prior to Closing, whether accrued,
absolute, contingent, matured, unmatured or other, of
Seller or any other person or entity, except for the
Assumed Liabilities.
2.7 Buyer's Sales and Use Tax. Buyer shall pay all
sales and use Taxes arising out of the transfer of the
Assets and shall pay its portion, prorated as of the
Closing Date, of state and local real and personal
property Taxes, if any, of Seller's Wafer Fabrication
Facility. Except as otherwise provided in this
Agreement, Buyer will not be responsible for the payment
of any sales, use, or similar Taxes by virtue of any
state law providing for the liability of Buyer as a
successor in interest to Seller with respect to the
Assets.
2.8 Seller's Real and Personal Property Tax.
Seller shall pay its portion, prorated as of the Closing
Date, of state and local real and personal property Taxes
if any, of Seller's Wafer Fabrication Facility.
2.9 Delivery of Title. At the Closing, Seller
shall convey to Buyer good and marketable title to all of
the Assets. In each case, title shall be conveyed free
and clear of any and all taxes, liens, charges,
encumbrances, judgments, obligations, security interests,
liabilities or claims of any nature whatsoever of any
third party or parties except for any such matters
relating to (a) NationsBanc Lease and (b) Seller's
obligations under the Assumed Contracts or (c) any other
matters set forth in Exhibit A-4, assuming all necessary
consents are obtained. The conveyances shall be effected
by means of:
(a) a bill of sale ("Seller's Bill of Sale")
executed by Seller in the form of Exhibit H attached
hereto and incorporated herein by this reference.
(b) an Assignment of Rights ("Seller's
Assignment") executed by Seller in the form of Exhibit I
attached hereto and incorporated herein by this
reference.
(c) an Assignment of Lease ("Lease
Assignment") executed by Buyer, Seller and Landlord
containing terms reasonably acceptable to Buyer and
Seller.
(d) a license of Seller's Intellectual
Property executed by Seller in favor of Buyer. Said
license shall be perpetual, non-exclusive, irrevocable,
sublicenseable, transferable and royalty-free.
2.10 Documents to be Delivered by Seller at the
Closing. Seller shall deliver to Buyer the following
documents at or prior to the Closing:
(a) The Seller's Bill of Sale duly executed by
Seller.
(b) The Seller's Assignment of the NationsBanc
Lease.
(c) The Lease Assignment of the Premise's
Lease duly executed by Seller and Landlord.
(d) Such other documents or instruments as may
be reasonably necessary to consummate the transactions
contemplated herein.
2.11 Documents to be Delivered by Buyer at the
Closing. Buyer shall deliver to Seller at or prior to
the Closing such documents or instruments as may be
reasonably necessary to consummate the transactions
contemplated herein.
2.12 Employees. At the Closing, Seller intends,
unless otherwise requested by Buyer, to terminate all
employees working in connection with the Seller's Wafer
Fabrication Facility (the "Employees"). Buyer shall then
extend offers of employment to at least 108 of the
Employees identified on Exhibit N attached hereto and
incorporated herein by reference; provided, however, that
Seller shall have the right to elect to retain any
Employee listed on Exhibit N by giving written notice of
such election to Buyer prior to Closing. Such employment
offers shall be the same or similar positions as is
currently held by each such employee and shall include a
competitive market rate salary proposal. Prior to
Closing, Buyer may elect to employ more than 108 of the
Employees in order to have greater production capacity at
the Wafer Fabrication Facility prior to March 31, 1999.
In no event, however, shall Buyer retain fewer than 108
of the Employees as of March 31, 1999. Provided that
Buyer retains at least 108 of the Employees as of March
31, 1999, any Employees hired by Buyer that Buyer does
not elect to retain as of March 31, 1999 shall receive
severance pay packages from Seller as though such
Employees had not been employed by Buyer.
2.13 Operating Permits and Claims Concerning the
Assets. At the Closing, Seller shall, and hereby does,
assign to Buyer (a) all operating permits and licenses
relating to the Assets or the Wafer Fabrication Facility
(to the extent transferable and Seller makes no
representation or warranty that such permits and licenses
are transferable), and (b) all claims and rights of
Seller and with respect to any unrepaired or unremedied
damage to any part or all of the Assets occurring prior
to the Closing and which may be outstanding as of such
date, including, without limitation, claims against any
insurance companies.
2.14 Seller's Premises Lease Assumption. At or
prior to January 23, 1999, Buyer and Landlord shall have
entered into a new lease, assumption or other acceptable
arrangement for Buyer's continued use of the Premises,
which shall be reasonably satisfactory to Buyer. Seller
shall be released from all liability to Landlord under
the Premises Lease, and shall be entitled to retain its
security deposit under the Premises Lease. Seller and
Buyer shall pay to Landlord a fee of no more than
$600,000.00, which shall be borne $300,000.000 by Seller
and $300,000.00 by Buyer. Buyer agrees to purchase from
Seller the $65,000 security deposit that Seller has on
deposit with Landlord under the Premises Lease on a
dollar for dollar basis, which shall be in addition to
the Purchase Price and which shall be credited to Seller
or otherwise applied for the benefit of Seller through
the Escrow by Escrow Holder. Buyer agrees that the
existing terms of the Lease are satisfactory. Seller
shall have the right, but not the obligation to take
exclusive occupancy of that portion of the Premises
consisting of approximately 2,300 square feet in the
digital test area and outlined on Exhibit J-1 (the
"Interim Space") for a period of up to thirty (30) days
after the date of the Closing. Any such occupancy shall
be subject to the terms and conditions described on
Exhibit J-2 attached hereto and made a part hereof.
2.15 Process Development Agreement. In
contemplation of Buyer operating the Wafer Fabrication
Facility, Buyer will require technical expertise to
develop processes necessary for said Facility's
operation. The parties intend to enter into a contract
separate and distinct from this Agreement. Orbit has
commenced work on said processes prior to the execution
of this Agreement in contemplation of this Agreement
being signed. Effective as of December 28, 1998, Buyer
and Seller shall enter into a Process Development
Agreement ("PDA"), under which Seller, with Buyer's
assistance, shall develop the processes necessary to
manufacture Buyer's wafers. The PDA shall further
provide that, once Seller has developed such processes,
Seller shall assign such processes to Buyer. The parties
agree that the consideration for the PDA shall be
$2,800,000 payable pursuant to the terms of the PDA. The
PDA shall contain such other terms as are customary and
reasonably satisfactory to Buyer and Seller.
2.16 Limitation of Liability, Purchase Price Escrow,
and Guaranty.
(a) Limitation of Liability. Subject to
Section 2.17(i), below, Seller's obligation to indemnify,
defend, and hold harmless Buyer pursuant to Section 9.1
hereof (i) shall not exceed the sum of One Million
Dollars ($1,000,000.00) and (ii) shall survive only for a
period of one (1) year after Closing, except for claims
made prior to the first anniversary of Closing that are
not fully and finally resolved before such anniversary.
Seller's liability under this Agreement for any matters
arising pursuant to or related to this Agreement
including, but not limited to Environmental Liabilities,
shall not exceed the sum of One Million Dollars
($1,000,000.000). Subject to Section 2.17(i) below and
the above limitation on liability, Seller shall be liable
for any matters relating to the representations and
warranties under Article 4 and Environmental Liabilities
for a period of one (1) year after Closing.
(b) Purchase Price Escrow. At Closing, the
sum of One Hundred Thousand Dollars ($100,000.00) of
Purchase Price delivered by Buyer shall be held by the
Escrow Holder as a fund for Buyer's protection against
undisclosed liabilities, breach of warranties, and
misrepresentations (the "Purchase Price Escrow"), under
the terms of an Escrow Agreement substantially in the
form of Exhibit G. It is expressly agreed that any
portion of the Purchase Price Escrow used to satisfy
Seller's liabilities shall be applied against the total
limit of Seller's liability as provided under Section
2.16(a) above.
(c) Guaranty. At Closing, Seller shall
deliver to Buyer a Guaranty executed by the DII Group,
Inc., a Delaware corporation, substantially in the form
of Exhibit P. The purpose of the Guaranty shall be to
protect Buyer against Environmental Liabilities or any
breach of warranties or misrepresentations by Seller.
The Guaranty shall be limited to One Million Dollars
($1,000,000.00), shall be for a term of one (1) year from
Closing, shall be reduced by all amounts paid to Buyer by
Seller, and shall not be exercised by Buyer until the
Purchase Price Escrow has been exhausted.
2.17 "As-Is" Sale: Releases and Waivers.
(a) Buyer acknowledges except as provided in
Article 4 of this Agreement, and that except for written
disclosures delivered to Buyer prior to the expiration of
the Approval Deadline, neither Seller, nor anyone acting
or claiming to act for or on behalf of Seller, has made
any representations, warranties, promises or statements
to Buyer concerning the Condition of the Assets. Buyer
further acknowledges and agrees that the Condition of the
Assets will be independently verified by Buyer to its
full satisfaction on or before the Approval Deadline (or
Buyer will terminate this Agreement pursuant to Section
2.3 above), that Buyer will be acquiring the Assets based
upon the representations and warranties of the Seller set
forth in this Agreement together and in reliance on its
own inspections, analyses and conclusions, and that if
Buyer acquires the Assets, it will acquire the Assets in
the Assets' "AS-IS" condition and "AS-IS" state of repair
inclusive of all faults and defects, whether latent or
patent, or known or unknown, except provided in Article 4
of this Agreement. Without limiting the scope or
generality of the foregoing, Buyer expressly assumes the
risk that the Assets may not now or in the future comply
with any applicable laws hereafter in effect.
(b) Buyer further acknowledges and agrees that
the notification given by Seller in the first paragraph
of this Section 2.17 is given for disclosure purposes
only and that it does not constitute a representation or
warranty that the adverse conditions so disclosed to
Buyer are the only adverse conditions that may exist at
or otherwise affect the Assets and, without limiting the
scope or generality of this Section 2.17, and except as
otherwise set forth herein, Buyer expressly assumes the
risk that adverse physical, environmental, financial and
legal conditions may not be revealed by Buyer's
inspection and evaluation of the Assets, the Documents,
and other materials.
(c) Buyer hereby fully and forever waives, and
Seller hereby fully and forever disclaims, all warranties
of whatever type or kind with respect to the Property,
whether express, implied or otherwise including, without
limitation, those of fitness for a particular purpose,
tenantability, habitability or use except for the
representations and warranties set forth in this
Agreement or incorporated by reference herein, and
subject to and limited by the terms and conditions of
Section 2.16 above.
(d) Except with respect to the representations
and warranties as provided in Article 4 hereof, Buyer
further acknowledges that any information including,
without limitation, the Documents, any engineering
reports, architectural reports, feasibility reports,
marketing reports, soils reports, environmental reports,
analyses or data, or other similar reports, analyses,
data or information of whatever type or kind which Buyer
has received or may hereafter receive from Seller, its
agents, its consultants, or anyone acting or claiming to
act on its behalf (the foregoing are collectively
referred to herein as the "Seller Materials") are
furnished without warranty of any kind and with no
representation by Seller as to the completeness or
accuracy of any of the Documents (except that Seller is
providing the Documents to Buyer in good faith and with
no basis in Seller's actual knowledge to believe that the
Documents are not accurate) and on the express condition
that Buyer shall make its own independent verification of
the accuracy, reliability and sufficiency of such
information and that Buyer will not rely thereon.
Accordingly, Buyer agrees that under no circumstances
will it make any claim, directly or indirectly, against,
bring any action, cause of action or proceeding against,
or assert any liability upon, Seller, its agents,
consultants, contractors, or any other persons who
prepared or furnished any of the Seller Materials as a
result of the inaccuracy, unreliability or insufficiency
of, or any defect or mistake in, any of the Seller
Materials (including, without limitation, by reason of
any person's sole, active, passive or other negligence).
(e) Subject to Section 2.17(i) below, upon the
expiration of one (1) year from the Closing Date, during
which time such claims shall be subject to and limited by
the terms and conditions of Section 2.16 above, Buyer
shall fully and forever release, acquit and discharge
Seller of and from, and hereby fully and forever waives:
(1) Any and all claims, actions, causes
of action, suits, proceedings, demands, rights, damages,
costs, expenses or other compensation whatsoever, whether
known or unknown, direct or indirect, foreseeable or
unforeseeable, absolute or contingent, that Buyer then
has or may have or which may arise in the future arising
out of, directly or indirectly: (A) any negligent act or
omission of Seller (or any person acting for or on behalf
of Seller or for whose conduct Seller may be liable),
whether or not such negligence be the active, passive or
sole negligence of Seller, in connection with Seller's
prior ownership, operation or use of the Property; (B)
any condition of environmental contamination or pollution
at the Premises, however and whenever occurring
(including, without limitation, the contamination or
pollution of any surface or subsurface soils, subsurface
media, surfacewaters or groundwaters at the Premises);
(C) to the extent not already included in (B), above, the
prior, present or future existence, release or discharge,
or threatened release, of any Hazardous Materials at the
Premises, however and whenever occurring (including,
without limitation, the release or discharge, or
threatened release, of any Hazardous Materials into the
air at the Premises or into any soils, subsoils,
surfacewaters or groundwaters at the Premises); (D) the
violation of any Applicable Law now or hereafter in
effect, however and whenever occurring, with respect to
the Premises; (E) geologic and seismic conditions at the
Premises, and soil and subsoil conditions at the
Premises; or (F) the condition of the Assets and the
Premises (including, without limitation, any structural,
foundation, roof, plumbing, heating, air-conditioning,
electrical, mechanical and other defects as may exist
therein and any non-compliance thereof with building
codes, other Applicable Laws, and private restrictions).
(2) Any and all damages; losses; costs;
judgments; fines and penalties; fees; expenses; or other
compensation whatsoever arising out of, directly or
indirectly, any of the matters described in clauses (A)
through (F) of Section 2.17(e)(1), above.
(f) Without limiting the scope or generality
of the foregoing release and waiver provisions, and
subject to Section 2.17(i) below those provisions shall
specifically include and cover (1) any claim for or right
to indemnification, contribution or other compensation
based on or arising under the Comprehensive Environmental
Response, Compensation and Liability Act, as amended
("CERCLA"), 42 U.S.C. 9601, et seq., the Resource
Conservation and Recovery Act, as amended ("RCRA"), 42
U.S.C. 6901, et seq., the Carpenter-Presley-Tanner
Hazardous Substances Account Act, as amended ("CPTHSA"),
Cal. Health & Safety Code 25300, et seq., or any similar
or other Applicable Law now or hereafter in effect, and
(2) any claim for or based on trespass, nuisance, waste,
negligence, negligence per se, strict liability,
ultrahazardous activity, indemnification, contribution or
other theory arising under the common law of the State of
California (or any other applicable jurisdiction) or
arising under any Applicable Law now or hereafter in
effect.
(g) For purposes of this Section 2.17, the
word "at" also means on, beneath, in, above, and in the
vicinity of.
(h) With respect to all releases made by Buyer
in this Agreement, Buyer hereby waives the application
and benefits of California Civil Code 1542 and hereby
verifies that it has read and understands the following
provision of California Civil Code 1542:
"A general release does not extend to
claims which the creditor does not know or
suspect to exist in his favor at the time
of executing the release, which if known
by him must have materially affected his
settlement with the debtor."
_________________
Buyer's Initials
(i) Upon the expiration of one (1) year from
the Closing Date ("Claims Period"), Buyer shall release,
indemnify, protect, defend and hold Seller, its
employees, agents, successors and assigns free and
harmless from and against any and all claims, actions,
causes of action, suits, proceedings, costs, expenses
(including without limitation, attorneys' fees and
costs), liabilities, damages and liens of any type or
kind, including Environmental Claims, arising out of: any
breach of this Agreement or of the representations,
warranties or covenants contained therein; the Assets;
the Premises; the Wafer Fabrication Facility, or the
operation, prior to or after the Closing Date, of the
Assets, Premises or Wafer Fabrication or the Business
relating thereto ("Business Claims"). Such release,
indemnity, protection and defense obligations shall not
extend to claims under the Wafer Production Agreement or
any Business Claims, to the extent such Business Claims
are made prior to the expiration of the Claims Period but
are not fully and finally resolved by the expiration of
the Claims Period. The above notwithstanding, after the
Claims Period has expired, Seller shall indemnify,
protect, defend and hold Buyer harmless from and against
any suits or legal proceedings brought by any third
parties unrelated to Buyer (including any governmental
entities) with regard to Environmental Liabilities
("Third Party Environmental Claims") provided that: (i)
the indemnity, protection, defense and hold harmless
obligations of Seller shall only extend to Environmental
Liabilities caused by Seller or first occurring on the
Premises during Seller's occupancy of the Premises; and
(ii) that Buyer must, at its sole cost and expense,
undertake and thereafter remediate any Hazardous
Materials that may be the basis for such Third Party
Environmental Claims. Upon expiration of the Claims
Period, Buyer shall execute a Release to reaffirm the
release contained herein, in the form of Exhibit L.
(j) The provisions of this Section 2.17 shall
survive the Closing. Buyer hereby acknowledges and
agrees that the provisions of this Section 2.17 are
material and included as a material portion of the
consideration given to Seller by Buyer in exchange for
Seller's performance under this Agreement and that Seller
has given Buyer material concessions regarding this
transaction in exchange for Buyer agreeing to the
provisions of this Section 2.17.
2.18 Work in Progress ("WIP"). The parties
acknowledge that Seller shall have an inventory of work
in progress as of the Closing ("WIP"). The parties shall
enter into an agreement to provide for the disposition of
the WIP, under which Seller shall designate whether the
WIP will be sold by Buyer to Seller or third parties.
Seller shall purchase from Buyer only finished wafers
produced from the WIP, and the purchase price for such
finished wafers shall be based on the percentage of the
WIP used to create such finished wafers that are
incomplete as of the Closing, not to exceed $500.00.
Buyer shall pay to Seller for any WIP to be sold to third
parties other than MICREL an amount equal to the
completed percentage of the WIP, multiplied by the Cost
of the WIP. For purposes of this provision, the "Cost"
of the WIP is equal to $727. With regard to any WIP to
be sold to MICREL, Buyer shall pay to Seller an amount
equal to the completed percentage of the WIP multiplied
by the Cost, but in no event shall such amount exceed
$550. As a condition for permitting the sale of WIP to
third parties under the terms and conditions set forth
above, the average sales price ("ASP") for all WIP sold
to third parties (not including WIP sold to Seller), must
be greater than $1,454. The remaining terms of such
agreement shall be mutually agreed upon by the parties.
2.19 Operation of Premises. From the date of this
Agreement through the Closing, Seller shall (a) comply
with all Applicable Laws, Permits, the NationsBanc Lease,
the Premises Lease, and all other agreements and
arrangements relating to the Assets, the Premises and the
Wafer Fabrication Facility, make all payments due
thereunder, and suffer no default or violation thereof;
(b) without the prior written approval of Buyer, neither
negotiate nor enter into any new contract nor modify any
existing contract affecting the Assets, the Premises or
the wafer Fabrication Facility which cannot be terminated
without charge, cost, penalty or premium on or before the
Closing; (c) not modify, amend or terminate the
NationsBanc Lease, the Premises Lease, or any other such
agreement or arrangement, nor waive any term or condition
thereof, nor exercise any extension, expansion,
termination or other rights or options thereunder or
grant or withhold any approvals thereunder, without in
each instance first having obtained the prior written
consent of Buyer; and (d) not make or permit to be made
any material change to the Assets, the Premises or the
Wafer Fabrication Facility, and promptly notify Buyer in
writing of any default or claim of default under the
NationsBanc Lease, the Premises Lease or any other such
agreement or arrangement or any material change affecting
the Assets, the Premises or Wafer Fabrication Facility.
Seller shall continue to insure the Assets until Closing
in a manner consistent with Seller's prior practices.
From the date of this Agreement through the date of
Closing, Seller shall bear all risk of loss to the Assets
and the Premises, except to the extent of the non-
refundable portion of the Deposit retained by Seller.
Nothing in this Section 2.19 shall prohibit Seller from
making repairs to any Assets consistent with Seller's
prior practice.
2.20 Seller's Intellectual Property. Seller shall
grant to Buyer a non-exclusive, perpetual, irrevocable,
transferrable, sublicenseable, royalty-free license for
Seller's Intellectual Property. Seller agrees not to
license, sell or otherwise transfer any of Seller's
Intellectual Property to any of the customers identified
on Exhibit A-2 or to any entity that owns or operates a
wafer manufacturing facility that would use Seller's
Intellectual Property in order to compete with Buyer.
Seller shall have the right to manufacture or produce, or
cause to be manufactured or produced, Wafers using
Seller's Intellectual Property, and to sell such Wafers
to third parties. Seller agrees that any license, sale
or other transfer of Seller's Intellectual Property shall
prohibit the use of Seller's Intellectual Property for
the purpose of manufacturing or producing Wafers to be
sold to any of the customers identified on Exhibit A-2.
3. ARTICLE THREE
WAFER PRODUCTION
3.1 Wafer Production and Purchase Rights. At or
prior to the Closing Date, Buyer and Seller shall enter
into a Wafer Production Agreement ("WPA"), under which
Buyer shall sell to Seller and Seller shall purchase from
Buyer wafers in such quantities in any given month as
determined by Seller in a manner consistent with the
terms of the WPA for a period of three years. The WPA
shall provide that the wafer price for all wafers other
than wafers produced on Canon equipment ("Canon Wafers")
shall be $500 for the first year of the WPA and $450 for
the second and third years of the WPA. The wafer price
for Canon Wafers shall be $700 per wafer, but Buyer shall
have the right to refuse to accept orders for Canon
wafers and to terminate such work by giving Seller at
least nine (9) months' prior written notice. Seller
shall further guarantee to purchase from Buyer a minimum
of 7,200 wafers on an annual basis, and Buyer shall
guarantee to sell to Seller, should Seller so require, a
maximum of 12,000 wafers on an annual basis. Seller
agrees to pay the following minimum lot charges for
orders of (three) 3 wafers or less: (1) $1,500 for DSM
wafer orders; (2) $2,500 for Encore wafer orders; and (3)
$6,250 for all other wafer orders. Buyer shall use its
best efforts to deliver wafer orders to Seller in a
timely manner. Buyer shall reduce the amount of time
required to satisfy Seller's wafer orders by forty
percent (40%) in exchange for Seller's payment to Buyer
of a twenty-five percent (25%) premium on the price of
each such wafer order. In the event that Buyer is four
(4) weeks' late in satisfying Seller's wafer orders twice
during any calendar quarter, then the price for the next
late wafer order following the second late wafer order
shall be reduced by fifty percent (50%), regardless of
how late that wafer order is. The WPA shall contain such
other terms as are customary and reasonably satisfactory
to Buyer and Seller.
4. ARTICLE FOUR
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to, and
covenants with, Buyer that, except as described on the
Schedule of Exceptions attached as Exhibit A-4 hereto,
the following matters are and shall be true and correct
as of the date hereof and as of the Closing Date:
4.1 Seller's Corporate Status. Seller is a
corporation duly organized, validly existing, and in good
standing under the laws of Delaware, has all necessary
corporate powers to own its properties and to carry on
its business as now owned and operated by it, and is in
good standing in the State of California.
4.2 Authorization; Etc.
(a) Seller has the right, full power, legal
capacity and authority to execute, deliver, enter into
and perform this Agreement and the Associated Agreements
and to carry out the transactions contemplated in this
Agreement and the Associated Agreements. This Agreement
and the Associated Agreements will be duly and validly
executed and delivered by Seller and will be valid and
binding obligations of Seller, enforceable against Seller
in accordance with their terms, except as enforcement may
be limited by applicable bankruptcy, insolvency,
creditors' reorganization, creditors' arrangement,
moratorium or other similar laws affecting creditors'
rights, and subject to general equity principles and to
limitations on availability of equitable relief,
including specific performance.
4.3 Material Changes in Seller's Financial
Condition. Since [date] there has not been any:
(a) Damage or destruction having a material
adverse effect on the Assets or the Wafer Fabrication
Facility by fire, storm, or similar casualty, whether or
not covered by insurance.
4.4 Title to Assets; Encumbrances. At the Closing,
Buyer will obtain good and marketable title to the
Assets, free and clear of any and all taxes, liens,
charges, encumbrances, judgments, obligations, security
interests, liabilities or claims of any nature whatsoever
of any third party or parties.
4.5 Seller's Lease. Exhibit K to this agreement is
a complete and accurate legal description of the parcel
of real property leased to Seller. Exhibit K contains a
description of all buildings, fixtures, and other
improvements located on the properties. The Lease listed
in Exhibit K is valid and in full force, and there does
not exist any material default or event that with notice
or lapse of time, or both, would constitute a material
default under the Lease. The Premises Lease constitutes
the entire agreement of the Landlord and Tenant
thereunder, and there are no other agreements or
arrangements whatsoever relating to Seller's use or
occupancy of the Premises.
4.6 Employee's Contracts. Exhibit M to this
agreement is a list of all Seller's material employment
contracts, collective bargaining agreements, and pension,
bonus, profit-sharing, stock option, or other agreements
providing for remuneration or benefits for the Employees.
To the best of Seller' knowledge, Seller is not in
default under any of these agreements.
4.7 Litigation. To the best of Seller knowledge,
there is no legal proceeding or action of any nature
pending in which the Seller is a party, and none is
threatened regarding any of the Assets or Permits, the
Premises, the NationsBanc Lease or the Premises Lease or
that could have a material adverse effect on the Wafer
Fabrication Facility.
4.8 Contracts, Warranties and the NationsBanc
Lease.
(a) The Warranties, Contracts and the
NationsBanc Lease together constitute all instruments and
agreements affecting Seller's rights in and to the
Equipment.
(b) True and correct copies of each of the
Warranties, Contracts and the NationsBanc Lease and all
modifications and amendments thereto have been delivered
to Buyer by Seller.
(c) The Contracts, Warranties and the
NationsBanc Lease are valid, binding and enforceable in
accordance with their terms, except as enforcement may be
limited by applicable bankruptcy, insolvency,
reorganization, arrangement, moratorium or other similar
laws affecting creditors' rights, and subject to general
equity principles and to limitations on availability of
equitable relief, including specific performance, and are
in full force and effect and there are no existing
material defaults by Seller or any other parties under
any of the Contracts and Warranties.
4.9 Hazardous Materials.
Except as permitted by applicable law, no
Hazardous Materials are being or have been generated,
stored or otherwise used or held on, under or about all
or any portion of the Premises, or transported to, from
or across all or any portion of the Premises, by or with
the permission of Seller or, to the best of Seller's
knowledge, by any other person or entity. Except as
permitted by applicable law, Seller has not, and, to the
best of Seller's knowledge, no other person or entity
has, released or permitted the release or continuation of
a release of any Hazardous Materials on, under or about
the Premises, or any portion thereof.
4.10 Underground Storage Tanks. To the best of
Seller's knowledge there are no underground storage tanks
on, under or about the Premises.
4.11 Environmental Reports. Attached hereto as
Exhibit O is a complete list of all environmental reports
and opinions that have been issued with respect to the
Premises (the "Environmental Reports"), and that are in
Seller's possession, custody or control or within
Seller's knowledge, including names and addresses of all
engineers, consultants and experts who have inspected the
Premises for hazardous or toxic substances.
4.12 Existing Contamination. To the best of
Seller's knowledge, no Hazardous Materials are present
in, on, or under any of the Premises, or any properties
owned, leased or used at any time (including both land
and improvements thereon) in connection with the Assets,
and, to the knowledge of Seller, without investigation,
no reasonable likelihood exists that any Hazardous
Materials will come to be present in, on, or under the
Premises, or any properties owned, leased or used at any
time (including both land and improvements thereon) in
connection with the Assets, so as to give rise to any
liability or corrective or remedial obligation under any
Environmental Laws.
4.13 Compliance with Environmental Laws/Claims. To
the best of Seller's knowledge, with respect to the
ownership, use and operation of the Assets, Seller (i)
has obtained all applicable permits, licenses and other
authorizations that are required under Environmental
Laws; and (ii) is in compliance with all material terms
and conditions of such required permits, licenses and
authorizations, and also is in compliance with all other
material limitations, restrictions, conditions,
standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or
contained in any regulation, code, plan, order, decree,
judgment, notice or demand letter issued, entered,
promulgated or approved thereunder. As of the date
hereof, Seller is not aware of and has not received
notice of any event, condition, circumstance, activity,
practice, incident, action or plan that is reasonably
likely to interfere with or prevent continued compliance
or that would give rise to any common law or statutory
liability, or otherwise from the basis of any
Environmental Claim.
4.14 Existing Improvements. To the best of Seller's
knowledge, all licenses, permits, authorizations and
approvals required for the operation of the Wafer
Fabrication Facility by all governmental authorities have
been issued and paid for.
4.15 Compliance. Seller has complied in all
material respects with all laws applicable to the Assets,
and has received no notice alleging any conflict,
violation, breach or default with respect to such laws.
4.16 Disclosure. To the best of Seller's knowledge,
no representation or warranty by Seller contained in this
Agreement contains or will contain any untrue statement
of material fact.
4.17 Taxes. Seller has paid all taxes required
under applicable law. There are (and as of immediately
following the Closing there will be) no Liens (other than
statutory liens securing amounts not yet due or payable)
on the Assets relating to or attributable to Taxes.
5. ARTICLE FIVE
BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants that:
5.1 Authorization; Etc.
(a) Buyer has the right, full power, legal
capacity and authority to execute, deliver, enter into
and perform this Agreement and the Associated Agreements
and to carry out the transactions contemplated in this
Agreement and the Associated Agreements. Upon receipt of
approval by the Board of Directors of Buyer, this
Agreement and the Associated Agreements will be duly and
validly executed by Buyer and will be valid and binding
obligations of Buyer, enforceable against Buyer in
accordance with their terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, creditors'
reorganization, creditors' arrangement, moratorium or
other similar laws affecting creditors' rights, and
subject to general equity principles and to limitations
on availability of equitable relief, including specific
performance. Any and all authorizations and approvals of
the Board of Directors and Shareholders of Buyer required
by law or under Buyer's Articles of Incorporation or
Bylaws in connection with the execution, delivery and
performance of this Agreement and each of the Associated
Agreements will be duly obtained at or prior to the
Closing.
(b) Buyer has the right, power, legal capacity
and authority to enter into, and perform its obligations
under, this Agreement, and no approvals or consents of
any persons other than Buyer are necessary in connection
with this Agreement. The execution and delivery of this
Agreement by Buyer has been duly authorized by all
necessary corporate action on the part of Buyer.
5.2 No Violation. Neither the execution and
delivery of this Agreement by Buyer nor the consummation
by Buyer of the transactions contemplated hereby will:
(a) violate the Articles of Incorporation or
Bylaws of Buyer;
(b) violate, or be in conflict with, or
constitute a default (or an event which, with or without
due notice or lapse of time, or both, would constitute a
default) under, or cause or permit the acceleration of
the maturity of, any material debt, obligation, contract,
commitment or other agreement to which Buyer is a party
except for approval of Buyer's lenders; and
(c) violate any statute or law or any
judgment, decree, order, regulation or rule of any court
or governmental authority by which Buyer is bound.
5.3 Consents and Approvals of Government
Authorities. No consent, approval or authorization of,
or declaration, filing or registration with, any
governmental or regulatory authority is required on the
part of Buyer in connection with the execution, delivery
and performance of this Agreement or the Associated
Agreements by Buyer and the consummation by Buyer of the
transactions contemplated thereby.
6. ARTICLE SIX
CONDITIONS PRECEDENT TO BUYER'S PERFORMANCE
The obligations of Buyer to purchase the Assets
under this Agreement are subject to the satisfaction, at
or before the Closing, of all the conditions set out
below in this Article 6. Buyer may waive any or all of
these conditions in whole or in part without prior
notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Buyer of any of
its other rights or remedies, at law or in equity.
6.1 Seller's Representations and Warranties Are
True. All representations and warranties by the Seller
in this Agreement, or in any written statement that shall
be delivered to Buyer under this Agreement, shall be true
in all material respects on and as of the Closing Date as
though made such representations and warranties were made
on and as of that date.
6.2 Seller Has Performed. Seller shall have
performed, satisfied, and complied in all material
respects with all covenants, agreements, and conditions
required by this Agreement to be performed or complied
with by it, on or before the Closing Date.
6.3 No Legal Action Pending. Subject to the
Schedule of Exceptions attached as Exhibit A-4, no
action, suit, or proceeding before any court or any
governmental body or authority, pertaining to the
transaction contemplated by this Agreement or to its
consummation, shall have been instituted or threatened on
or before the Closing Date.
6.4 Material Adverse Change. During the period
from December 18, 1998 to the Closing Date, there shall
not have been any material adverse change in the Assets.
6.5 Duly Authorized. The execution and delivery of
this Agreement by Seller, and the performance of its
covenants and obligations under it, shall have been duly
authorized by all necessary corporate action.
6.6 Assignment of Lease. The Premises Lease shall
have been assigned from Seller to Buyer and Landlord
shall have consented thereto, pursuant to the Lease
Assignment.
6.7 Associated Agreements. The PDA and the WPA
shall have been executed.
6.8 No Defaults. There shall not have occurred any
material default or event of material default, or any
event or condition that (with the giving of notice or the
passage of time or both) could constitute such a material
default or event of material default, under the
NationsBanc Lease or the Premises Lease.
6.9 Consents. Seller and/or Buyer shall have
obtained all consents reasonably necessary to be obtained
prior to Close of Escrow to operate the Wafer Fabrication
Facility.
6.10 Due Diligence. On or before the Approval
Deadline, Buyer shall have provided Seller written
approval of the Condition of the Assets, as provided in
Section 2.3(b) of this Agreement.
7. ARTICLE SEVEN
CONDITIONS PRECEDENT TO SELLER'S PERFORMANCE
The obligations of Seller to sell and transfer the
Assets under this Agreement are subject to the
satisfaction, at or before the Closing, of all the
following conditions. Seller may waive any or all of
these conditions in whole or in part without prior
notice; provided, however, that no such waiver of a
condition shall constitute a waiver by Seller of any of
its other rights or remedies, at law or in equity.
7.1 Buyer's Representations and Warranties Are
True. All representations and warranties by Buyer
contained in this Agreement or in any written statement
delivered by Buyer under this Agreement shall be true on
and as of the Closing Date as though such representations
and warranties were made on and as of that date.
7.2 Buyer Has Performed. Buyer shall have
performed and complied with all covenants and agreements
and satisfied all conditions that it is required by this
Agreement to perform, comply with, or satisfy, before or
at the Closing.
7.3 No Legal Action Pending. No action, suit, or
proceeding before any court or any governmental body or
authority, pertaining to the transaction contemplated by
this Agreement or to its consummation, shall have been
instituted or threatened on or before the Closing Date.
7.4 Duly Authorized. The execution and delivery of
this agreement by Buyer, and the performance of its
covenants and obligations under it, shall have been duly
authorized by all necessary corporate action, and Seller
shall have received copies of all resolutions pertaining
to that authorization, certified by the Secretary of
Buyer.
7.5 Necessary Consents. All necessary agreements
and consents of any parties to the consummation of the
transactions contemplated by this Agreement, or otherwise
pertaining to the matters covered by it, shall have been
obtained by Buyer and delivered to Seller.
7.6 Assignment of Lease. The Premises Lease shall
have been assigned from Seller to Buyer pursuant to the
Lease Assignment.
7.7 Associated Agreements. The PDA and the WPA
shall have been executed, containing terms and conditions
reasonably acceptable to Seller and Buyer.
8. ARTICLE EIGHT
THE CLOSING
8.1 Closing Date. The transfer of the Assets by
Seller to Buyer (the "Closing") shall take place at the
offices of Bryant, Clohan, Eller, Maines & Baruh, LLP,
101 Park Center Plaza Suite 400, San Jose, California, as
soon as practicable after the satisfaction of the
conditions to closing described herein, but in no event
later than Monday, January 25, 1999 (the "Closing Date"),
unless otherwise agreed to by the parties.
8.2 Seller's Delivery. At the Closing, Seller
shall deliver or cause to be delivered to Buyer:
(a) Assignments of all leaseholds, properly
executed and acknowledged by Seller; and
(b) Instruments of assignment and transfer of
all Assets described in Section 1.1, as provided in
Section 2.9.
8.3 Seller's Assistance. Seller, at any time
before or after the Closing Date, will execute,
acknowledge, and deliver any further assignments,
conveyances, and other assurances, documents, and
instruments of transfer, reasonably requested by Buyer,
and will take any other action consistent with the terms
of this Agreement that may reasonably be requested by
Buyer for the purpose of assigning, transferring,
granting, conveying, and confirming to Buyer, or reducing
to possession, any or all property to be conveyed and
transferred under this Agreement.
8.4 Buyer's Delivery. At the Closing, Buyer shall
deliver to Seller the following consideration,
instruments and documents:
(a) Good funds to be deposited with Escrow
Holder and released to Seller in the amount of Nine
Million Two Hundred Thousand Dollars ($9,200,000.00).
(b) Instruments of assumption or release of
the liabilities of Seller under Seller's NationsBanc
Lease, the Premises Lease, all other leases, contracts or
other obligations being assumed by Buyer under the terms
of this Agreement, and any other documents necessary to
perform Buyer's obligations under this Agreement.
(c) In the event that NationsBanc refuses to
accept Buyer's assignment and assumption of the
NationsBanc Lease, a sublease of the NationsBanc Lease
for the balance of the term of the NationsBanc Lease on
the same terms and conditions as the NationsBanc Lease,
including rent.
9. ARTICLE NINE
SELLER'S OBLIGATIONS AFTER CLOSING
9.1 Seller's Indemnity. Seller shall, indemnify,
defend, and hold harmless Buyer against and in respect of
any and all claims, demands, losses, costs, expenses,
obligations, liabilities, damages, recoveries, and
deficiencies, including interest, penalties, and
reasonable attorneys' fees (collectively "Losses"), that
Buyer shall incur or suffer, that arise, result from, or
relate to any breach of, or failure by Seller to perform,
any of its representations, warranties, covenants, or
agreements in this Agreement or in any schedule,
certificate, exhibit, or other instrument furnished by
Seller under this Agreement. Said indemnity shall be
subject to the limitations set forth in Section 9.4
below.
9.2 Notification of Claims. Buyer shall promptly
notify Seller of the existence of any Losses. Buyer
shall undertake the defense of, or compromise or settle
the claim or other matter.
9.3 Survival of Representations and Warranties. All
representations and warranties in this Agreement and any
other certificate or document delivered pursuant to this
Agreement shall survive the Closing for a period of one
(1) year after the Closing Date. No representations or
warranties whatever are made by any party, except as
specifically set forth in this Agreement, or in an
instrument, certificate, opinion, or other writing
provided for in this Agreement. All statements contained
in any of these instruments, certificates, opinions, or
other writings, shall be deemed to be representations and
warranties under this Agreement. The representations,
warranties and indemnities made by the parties in this
Agreement or in instruments, certificates, opinions, or
other writings provided for in the covenants and
agreements to be performed or complied with by the
respective parties under it before the Closing Date,
shall be deemed to be continuing and shall survive the
Closing to the extent provided herein. Nothing in this
section shall affect the obligations and indemnities of
the parties with respect to the covenants and agreements
contained in this Agreement that are permitted to be
performed, in whole or in part, after the Closing Date.
9.4 Limitations on Indemnification.
(a) Notwithstanding any other provision of
this Agreement, Seller shall have no liability for
indemnification under this Article 9 for Losses in excess
of One Million Dollars ($1,000,000.00).
(b) The amount of any Losses shall be reduced
by the amount, if any, of the recovery (net of reasonable
expenses) incurred in obtaining such recovery) which
Buyer shall have received with respect thereto from any
other party, person or entity, including an insurer of
the Buyer (and no right of subrogation shall accrue to
any insurer hereunder).
10. ARTICLE TEN
BUYER'S OBLIGATIONS AFTER CLOSING
10.1 Buyer's Indemnity. Buyer agrees to indemnify,
defend and hold harmless Seller against, and in respect
of, any and all Losses that Seller may incur or suffer,
that arise, result from, or relate to: (a) any breach
of, or failure by Buyer to perform, any of its
representations, warranties, covenants or agreements,
whether contained in this Agreement, the Associated
Agreements, the NationsBanc Leases, the Premises Lease,
or in any schedule, certificate, exhibit, or other
instrument furnished or to be furnished by Buyer; or (b)
the operations, activities or other conduct of Buyer
(with respect to the Assets or otherwise) after the
Closing Date.
10.2 Notification of Claims. Seller shall promptly
notify Buyer of the existence of any Losses. Seller
shall undertake the defense of, or compromise or settle
the claim or other matter.
11. ARTICLE ELEVEN
PUBLICITY
11.1 Publicity. Except as required by applicable
regulations of the Securities and Exchange Commission or
other applicable law, neither Buyer nor Seller shall make
any press release or otherwise publicize or disclose the
transactions contemplated by this Agreement to any third
party without the express written consent of the other
party, which shall not be unreasonably withheld. The
parties further agree to enter into a Confidentiality
Agreement with regard to certain trade secret and
intellectual property matters, in form and substance
mutually acceptable to the parties. The parties shall
issue a joint press release upon execution of the
Agreement and upon Closing in form and substance mutually
acceptable to the parties.
12. ARTICLE TWELVE
COSTS
12.1 No Agents. Each party represents and warrants
that it has dealt with no broker or finder in connection
with any transaction contemplated by this Agreement, and,
as far as it knows, no broker or other person is entitled
to any commission or finder's fee in connection with any
of these transactions. Buyer agrees to indemnify and
hold harmless Seller against any loss, liability, damage,
cost, claim, or expense incurred by reason of any broker-
age, commission, or finder's fee alleged to be payable
because of any act, omission, or statement of Buyer.
12.2 Costs and Prorations. Each party shall pay all
its own costs and expenses incurred or to be incurred by
it in negotiating and preparing this Agreement and in
closing and carrying out the transactions contemplated by
this Agreement. At Closing, all closing costs shall be
allocated between Buyer and Seller in equal shares. Each
party shall be responsible for its own attorneys' fees,
consultants' fees, and other professional fees. For
purposes of calculating prorations, Buyer shall be deemed
to be in title to the Assets, and therefore entitled to
the income and responsible for the expenses, for the
entire day upon which the Closing occurs. All real
estate taxes and any interest on assessments and/or bonds
applicable to the Premises, the Assets, or any part
thereof, and all personal property taxes applicable to
the Assets, if any, shall be prorated based on the most
recently available tax information. Buyer shall be
responsible for all such taxes and assessments from and
after Closing. Buyer shall pay sales and use taxes
arising out of the transfer of the Assets. Any refund
for real estate taxes or assessments applicable to the
period preceding the Closing, whether paid before or
after the Closing, shall be paid to Seller, and Buyer
shall have no claim or right thereto. The principal
amount of any and all assessments and/or bonds which
encumber the Assets or any part thereof shall not be
prorated or apportioned but shall be assumed in full by
Buyer at Closing without adjustment to the Purchase
Price. All utilities including, without limitation, oil,
gas, electricity, water, telephone, cable television,
sewer, and refuse collection), and other operating
expenses of the Assets, not separately billed by the
provider shall be prorated based upon actual meter
readings by the utility company (if metered), upon the
monthly or bimonthly statement most recently received by
Seller (if charged on a flat-rate monthly or bimonthly
basis) or in accordance with standard escrow custom and
practice, if not metered or charged on a flat-rate basis.
Any refundable utility deposits or deposits under the
Premises Lease, NationsBanc Lease, Permits, Contracts or
any other leases being approved by Buyer shall be
credited to Seller. Fees under service or maintenance
contracts to be continued by Buyer after the Closing, if
any, shall be prorated as of the date on which the
Closing occurs. All prorations shall be made in
accordance with custom and practice in the County of
Santa Clara, except as otherwise expressly provided
herein. All items attributable to the period up to the
date on which the Closing occurs shall be credited to
Seller. All items attributable to the period on and
after the date on which the Closing occurs shall be
credited to Buyer. Except as otherwise provided herein,
Buyer shall bear all costs of obtaining all consents
required of third parties in connection with the purchase
and sale of the Assets, the assignment of the NationsBanc
Lease, the Premises Lease, and the Permits (including any
share of the purchase price claimed by the Premises
landlord to be allocable to the value of the Premises
Lease). If any errors or omissions are made regarding
adjustments and prorations as set forth above, the
parties shall make the appropriate corrections promptly
upon the discovery thereof, provided the same is
discovered within six (6) months after the Closing. Any
error or omission not discovered within that period shall
not thereafter be subject to adjustment. The amount
necessary to correct any adjustment or proration that is
to be corrected hereunder shall be paid in cash to the
party entitled thereto. Said six (6) month limitation
shall not apply to any real property tax refund relating
to the period preceding the Closing, which shall be paid
to Seller regardless of when the refund is made.
13. ARTICLE THIRTEEN
FORM OF AGREEMENT
13.1 Headings. The subject headings of the
articles, paragraphs and subparagraphs of this Agreement
are included for convenience only and shall not affect
the construction or interpretation of any of its
provisions.
13.2 Entire Agreement, Waivers. This Agreement and
those documents and agreements referred to herein
constitute the entire agreement between the parties
pertaining to the subject matter contained in it and
supersedes all prior and contemporaneous agreements,
representations, and understandings of the parties. No
supplement, modification, or amendment of this Agreement
shall be binding unless executed in writing by all the
parties. No waiver of any of the provisions of this
Agreement shall be deemed, or shall constitute, a waiver
of any other provision, whether or not similar, nor shall
any waiver constitute a continuing waiver. No waiver
shall be binding unless executed in writing by the party
making the waiver.
13.3 Counterparts. This Agreement may be executed
simultaneously in one or more counterparts, each of which
shall be deemed an original, but all of which together
shall constitute one and the same instrument. This
Agreement (or any counterpart hereof) may also be
executed by facsimile signature.
14. ARTICLE FOURTEEN
PARTIES IN INTEREST
14.1 Third Party. Nothing in this Agreement,
whether express or implied, is intended to confer any
rights or remedies under or by reason of this Agreement
on any persons other than the parties to it and their
respective successors and assigns, nor is anything in
this Agreement intended to relieve or discharge the
obligation or liability of any third persons to any party
to this Agreement, nor shall any provision give any third
persons any right of subrogation or action over against
any party to this Agreement.
14.2 Assignment. This Agreement shall be binding
on, and shall inure to the benefit of, the parties to it
and their respective heirs, legal representatives,
successors, and assigns. Buyer may assign any of its
rights under this Agreement, provided Buyer's assignee
agrees to assume Buyer's obligations or duties under this
Agreement.
15. ARTICLE FIFTEEN
REMEDIES
15.1 Arbitration. Any controversy or claim arising
out of, or relating to, this Agreement, or the making,
performance, or interpretation of it, shall be settled by
arbitration in San Jose, California under the commercial
arbitration rules of the American Arbitration Association
then existing, and judgment on the arbitration award may
be entered in any court having jurisdiction over the
subject matter of the controversy. Arbitrators shall be
persons experienced in negotiating, making, and
consummating acquisition agreements.
15.2 Attorney's Fees. If any legal action or any
arbitration or other proceeding is brought for the
enforcement of this Agreement, or because of an alleged
dispute, breach, default, or misrepresentation in
connection with any of the provisions of this Agreement,
or in connection with the Purchase Price Escrow, the
successful or prevailing party shall be entitled to
recover reasonable attorneys' fees and other costs
incurred in that action or proceeding, in addition to any
other relief to which it or they may be entitled.
15.3 Termination.
(a) This Agreement may be terminated:
(1) by the mutual consent of Buyer and
Seller;
(2) by Seller or Buyer if the Closing has
not taken place before January 25,
1999; provided, however, that no
party then in breach of any of its
obligations hereunder shall have the
right to terminate;
(3) by Buyer upon notice to Seller if any
of the conditions set forth in
Article 6 hereof become impossible to
satisfy (other than by reason of the
failure of Buyer to fulfill its
obligations under this Agreement);
and
(4) by Seller upon notice to Buyer if any
of the conditions set forth in
Article 7 hereof become impossible to
satisfy (other than by reason of the
failure of Seller to fulfill its
obligations under this Agreement).
(b) If this Agreement is terminated for any
reason pursuant to this Section 15.3, each party shall
return to the other party all documents and copies
thereof which shall have been furnished to it by such
other party or, with the agreement of the other party,
shall destroy all such documents and copies thereof and
certify in writing to the other party any such
destruction.
(c) If this Agreement is terminated by Seller
or Buyer as permitted under paragraph (a) of this Section
15.3 and not as a result of a breach of a representation
or warranty or the failure of any party to perform its
obligations hereunder, such termination shall be without
liability of any party. If a party terminates this
Agreement as a result of a breach of a representation or
warranty by the other party or the failure of the other
party to perform its obligations hereunder, the
nonbreaching party, in addition to any other legal
remedies that may be available, shall be entitled to
reimbursement from the breaching party for all expenses
incurred by the nonbreaching party in connection with
this Agreement and the transactions contemplated hereby.
16. ARTICLE SIXTEEN
NOTICES
All notices, requests, demands, and other
communications under this Agreement shall be in writing
and shall be deemed to have been duly given on the date
of service if served personally on the party to whom
notice is to be given, or on the third day after mailing
if mailed to the party to whom notice is to be given, by
first class mail, registered or certified, postage
prepaid, and properly addressed as follows:
To Seller at: Orbit Semiconductor
169 Java Drive
Sunnyvale, CA 94089
Attn: Duncan Robertson
Telephone: (408) 744-1800
Telecopy: (408) 747-1263
With a copy to: Bryant, Clohan, Eller, Maines
& Baruh LLP
101 Park Center Plaza, Suite 400
San Jose, CA 95113
Attn: James J. Eller
Telephone: (408) 299-0180
Telecopy: (408) 795-3100
To Buyer at: Supertex, Inc.
1235 Bordeaux Drive
Sunnyvale, CA 94089
Attn: Henry C. Pao, President & CEO
Telephone: (408) 744-0100
Telecopy: (408) 222-4869
With a copy to: Wilson Sonsini Goodrich & Rosati,P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attn: John B. Goodrich
Telephone: (650) 493-9300
Telecopy: (650) 493-6811
Any party may change its address for purposes of this
paragraph by giving the other parties written notice of
the new address in the manner set forth above.
17. ARTICLE SEVENTEEN
GOVERNING LAW
This Agreement shall be construed in accordance
with, and governed by, the laws of the State of
California as applied to contracts that are executed and
performed entirely in California.
18. ARTICLE EIGHTEEN
SEVERABILITY
If any provision of this Agreement is held invalid
or unenforceable by any court of final jurisdiction, it
is the intent of the parties that all other provisions of
this Agreement be construed to remain fully valid,
enforceable, and binding on the parties.
IN WITNESS WHEREOF, the parties to this Agreement
have duly executed it on the day and year first above
written.
SELLER:
ORBIT SEMICONDUCTOR,INC.,
A Delaware corporation
By: /s/ Ronald R. Snyder
Ronald R. Snyder
Its: President
BUYER:
SUPERTEX, INC., a
California corporation
By: /s/ Henry C. Pao
Henry C. Pao
Its: President and CEO
6977c
1/15/99
