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EXHIBIT 2.23
BILL OF SALE
THIS BILL OF SALE is executed and delivered this 8th day of September, 2000
by Micro Linear Corporation, a Delaware corporation ("Seller").
WHEREAS, Seller has entered into an Asset Purchase Agreement (the "Asset
Purchase Agreement"), dated as of September 6, 2000, with Fairchild
Semiconductor Corporation, a Delaware corporation ("Buyer"), pursuant to which
Seller has agreed to sell and Buyer has agreed to purchase certain assets of
Seller (the "Purchased Assets", as such term is defined in the Asset Purchase
Agreement), in consideration of the payment of the Purchase Price to Seller by
Buyer (as determined and adjusted pursuant to the provisions of the Asset
Purchase Agreement),
NOW, THEREFORE, in accordance with and for the consideration stated in the
Asset Purchase Agreement, Seller hereby grants, bargains, sells, transfers, sets
over, assigns, conveys, releases, confirms and delivers unto Buyer, if and to
the extent that the same have not otherwise been effectively conveyed, assigned
and transferred to Buyer by compliance with the terms of the Asset Purchase
Agreement and delivery of possession, all of its right, title and interest in
and to the Purchased Assets,
TO HAVE AND TO HOLD the Purchased Assets unto Buyer, its successors and
assigns, to its and their own and ownership forever. The transfer of legal and
equitable title to the Purchased Assets shall take effect as of the date hereof.
All capitalized terms used herein but not otherwise defined herein shall
have the same meanings assigned to them in the Asset Purchase Agreement.
IN WITNESS WHEREOF, Seller has caused this Bill of Sale to be executed and
delivered by its duly authorized officer on the date first written above.
MICRO LINEAR CORPORATION
By: /s/ DAVID L. GELLATLY
--------------------------------
Name: David L. Gellatly
Title: President and CEO
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ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (this "Agreement") is made and entered into as of
September 6, 2000 by and between Fairchild Semiconductor Corporation, a Delaware
corporation ("Buyer"), and Micro Linear Corporation, a Delaware corporation
("Seller").
Background
Buyer desires to buy and Seller desires to sell Seller's non-wireless,
non-networking semiconductor device business in exchange for cash, on the terms
and subject to the conditions set forth in this Agreement.
Terms
In consideration of the mutual covenants contained herein and intending to be
legally bound hereby, the parties hereto agree as follows:
ARTICLE I
SALE AND PURCHASE OF ASSETS
1.1 Purchase and Sale; Definition of Purchased Assets. Upon the terms and
subject to the conditions of this Agreement and in reliance upon the
representations and warranties contained herein, on the Closing Date, Seller
shall sell, transfer, assign, convey and deliver to Buyer, and Buyer shall
purchase from Seller, free and clear of all Encumbrances, other than Permitted
Encumbrances, all of the Purchased Assets, the Business as a going concern and
the goodwill related thereto, as the same shall exist on the Closing Date.
"Purchased Assets" shall mean all of Seller's right, title and interest in and
to the assets, properties and rights set forth or described in Section 1.1(a)
through 1.1(n), inclusively (except in each case for the Excluded Assets),
wherever such assets, properties and rights are located and whether such assets
are tangible or intangible, matured or unmatured, known or unknown, contingent
or fixed, and whether or not any of such assets have any value for accounting
purposes or are carried or reflected on or specifically referred to in Seller's
books or financial statements:
(a) all rights under all contracts, agreements, leases, purchase orders, sales
orders, warranties, instruments and arrangements which relate to the Business,
including those identified on Schedule 1.1(a) (collectively, the "Contracts"),
in each case to the extent any of such rights arise from or otherwise relate to
Assumed Liabilities;
(b) the goodwill, going concern value, past and present mailing lists, customer
and prospective customer lists and supplier lists, sales and marketing
materials, training materials, recruiting materials, advertising materials,
telephone numbers and other similar proprietary or confidential information
used, held for use in, or related to the conduct of the Business;
EXECUTION COPY
(c) all employment and personnel records (including medical records) and
information relating to the Business Employees, and all resumes, applicant files
and other related information held by Seller (other than those records and
information for which transfer is not permitted by law);
(d) all books and records of Seller relating to the Business, including all data
and other information relating to the Business stored on disks, tapes or other
media (the materials and information described in subsections (b), (c) and (d)
of this Section 1.1 hereinafter being referred to as "Business Records");
(e) all mask sets owned by Seller and used in connection with the Business;
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(f) all of the furniture and office equipment, including desks, tables, chairs,
file cabinets and other storage devices, communications equipment, computers and
office supplies identified on Schedule 1.1(f) and any rights to the warranties
and licenses received from the manufacturers and distributors of such equipment
and to any related claims, credits, causes of action, rights of recovery and
set-off arising with respect to such items;
(g) all engineering and laboratory equipment identified on Schedule 1.1(g) and
any rights to the warranties and licenses received from the manufacturers and
distributors of such equipment and to any related claims, credits, causes of
action, rights of recovery and set-off arising with respect to such items;
(h) all Trademarks and Copyrights related exclusively to the Business, including
those listed on Schedule 1.1(h), together with the goodwill associated
therewith, the right to sue for past infringement of any thereof, and all
renewals, modifications and extensions thereof;
(i) all rights under the licenses, agreements and other arrangements under which
the Business uses or has the right to use any of the intangible or proprietary
rights of a third party, and which are used, held for use in, or related to the
conduct of the Business, including the licenses described on Schedule 1.1(i)
(collectively, the "Licenses");
(j) all of the governmental permits, licenses, approvals or other authorizations
issued with respect to the Business (other than those relating to any Excluded
Asset) and which are used in, held for use in, or necessary or material to, or
which are otherwise required by law for, the operation of the Business to be
transferred to Buyer (the "Governmental Permits") including those Governmental
Permits which are described and identified in Schedule 1.1(j) (other than those
Governmental Permits for which transfer is not permitted by law or the issuing
authority);
(k) all of the rights, claims or causes of action of Seller against third
Persons to the extent they relate to the Purchased Assets;
(l) all of Seller's inventories of raw materials, work in progress, parts,
subassemblies and finished goods, in each case to the extent relating to the
Business, and including the inventory reflected on the Closing Statement,
wherever located and whether or not obsolete or carried on Seller's books of
account;
(m) all of the Intellectual Property Rights exclusively related to the Business
or more closely related to the Business than to the business to be continued
after the Closing by Seller, including the Assigned IP (collectively, the
"Assigned Technology"); and
(n) rights to all of the software and information management systems described
in Schedule 1.1(n), including any documentation and manuals related thereto.
1.2 Excluded Assets. The Purchased Assets shall not include, Seller shall not
sell, transfer or assign to Buyer and Buyer shall not purchase or acquire from
Seller, the following (the properties and assets expressly excluded by this
Section 1.2 being referred to herein as the "Excluded Assets"):
(a) any of Seller's real property, leasehold rights thereto or any fixtures or
improvements thereon;
(b) any of Seller's manufacturing equipment (to the extent not included in the
Purchased Assets under Section 1.1(g));
(c) any of Seller's cash, bank deposits and similar bank items existing as of
the opening of business on the Closing Date;
(d) any of Seller's accounts receivable or other accounts existing as of the
opening of business on the Closing Date;
(e) any claim, right or interest of Seller in and to any refund for Taxes,
together with any interest due Seller thereon, for any periods prior to the
Closing Date;
(f) all assets attributable or related to any Benefit plan;
(g) all of Seller's rights under all contracts and agreements which are not
Contracts or Licenses (each as defined herein) (the "Excluded Contracts");
(h) all of the rights, claims or causes of action of Seller against third
Persons to the extent they relate to Excluded Assets or Excluded Liabilities
(i) any asset of Seller which is not among the Purchased Assets; and
(j) all of the items listed on Schedule 1.2(j).
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1.3 Assumed Liabilities; Excluded Liabilities.
(a) On the Closing Date, Buyer shall execute and deliver to Seller an assumption
agreement in the form set forth in Exhibit B (the "Assumption Agreement")
pursuant to which Buyer shall assume and agree to pay, perform or otherwise
discharge, in accordance with their respective terms and subject to the
respective conditions thereof, and subject to the provisions of Section 1.3(b),
all of the liabilities and obligations of Seller relating to the Business under
the Contracts and Licenses set forth on Schedules 1.1(a) and 1.1(i), in each
case solely to the extent that such liabilities or obligations constitute
commitments by Seller to purchase goods to be consumed by or used in the
Business, and which commitments (i) were made under such Contracts or Licenses
in the ordinary course of business prior to the Closing Date and (ii) have not
been performed or satisfied by Seller on or before the Closing Date, and
provided, that in no event shall Assumed Liabilities include any liabilities or
obligations of Seller for any breach of such Contracts or Licenses on or prior
to the Closing Date. The foregoing obligations and liabilities, together with
all the Permitted Encumbrances which are specifically identified on Schedule
2.12 hereto, are herein called the "Assumed Liabilities."
(b) Other than the Assumed Liabilities, Buyer shall not assume or be obligated
to pay, perform or otherwise assume or discharge any obligations or liabilities
of Seller or any of its Affiliates, of any nature, whether due or to become due,
whether or not accrued, whether or not related to the Business and whether
direct or indirect, known or unknown, expressed or implied, or absolute,
contingent or otherwise, existing on the Closing Date, or arising out of any
transactions entered into or any state of facts existing, or the use, ownership,
possession or operation of the Purchased Assets or the conduct of the Business
on or prior to the Closing Date (all of such obligations and liabilities not so
assumed being herein called the "Excluded Liabilities"). The Excluded
Liabilities shall include the following:
(i) any intercompany payables and liabilities or obligations of Seller to any of
its Affiliates;
(ii) any liabilities or obligations in respect of Excluded Assets;
(iii) any liability for Taxes including any liability for Taxes incident to or
arising from the consummation of the transactions contemplated under this
Agreement;
(iv) any liabilities or obligations of Seller to the Business Employees,
including claims asserted for workers' compensation or under any Benefit plan or
collective bargaining agreement or as a result of the transactions contemplated
by this Agreement (whether or not such individual is a Transferred Employee);
(v) notwithstanding the provisions of any consent to assignment of any
contractual right, except for those liabilities and obligations included in the
Assumed Liabilities, any contractual liability or obligation relating to any
period prior to the close of business on the Closing Date, including any
liability or obligation for any breach of or default under any contract or
arrangement which liability or obligation relates to any such breach or default
occurring prior to the close of business on the Closing Date;
(vi) any product liability or product warranty liabilities relating to Business
Products not manufactured by Buyer;
(vii) any liabilities for commissions owed to sales representatives, subject
only to Buyer's obligations under Section 1.10;
(viii) any liabilities, costs or expenses relating to claims by any third party
(whether direct, indirect or by implication) of the Business's misappropriation,
infringement or violation of any of such third party's Intellectual Property
Rights, to the extent (1) such claim was first made on or prior to the Closing
Date or (2) such liabilities, costs or expenses arise or accrue prior to the
close of business on the Closing Date;
(ix) any liabilities for accounts payable or other accrued liabilities of
Seller; and
(x) any liabilities or obligations of Seller, contingent or otherwise, for any
Indebtedness.
1.4 Purchase Price; Post-Closing Adjustment; Payment.
(a) Purchase Price. The aggregate purchase price for all of the Purchased Assets
and the other agreements of Seller herein shall be $10.0 million (such amount,
as adjusted pursuant to Section 1.4(b), the "Purchase Price"), to be paid to
Seller on the Closing Date by wire transfer of immediately available funds to an
account designated by Seller to Buyer at least two business days before the
Closing Date.
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(b) Post-Closing Adjustment. The Purchase Price shall be subject to adjustment
after the Closing as follows: (i) if the Inventory Value (as hereinafter
defined) as set forth on the Closing Statement is less than $5.6 million, then
the Purchase Price shall be reduced by the amount of such deficiency; or (ii) if
the Inventory Value as set forth on the Closing Statement exceeds $5.6 million,
then the Purchase Price shall be increased by the amount of such excess,
provided, however, that the amount of the adjustment under either of clauses (i)
or (ii) above shall not exceed $1.0 million. The Purchased Assets shall include
all of the inventories pursuant to Section 1.1(l) regardless of the amount of
any adjustment under this Section 1.4(b). As used herein, the "Inventory Value"
shall mean the value of inventories included among the Purchased Assets pursuant
to Section 1.1(l), to the extent reflected on Seller's books of account, net of
reserves, as of any given date of determination, provided that any such
inventory that has been returned to Seller by distributors or other customers
shall only be included in the Inventory Value with Buyer's consent.
(c) Regarding the Closing Statement.
(i) Within 30 days after the Closing Date, Seller shall cause to be prepared and
delivered to Buyer a preliminary draft of a statement (the "Closing Statement")
setting forth (i) the Inventory Value as of the Closing Date and (ii) the book
value of other Purchased Assets as and to the extent recorded in Seller's books
of account as of the Closing Date. The figures included in the Closing Statement
shall be prepared in accordance with GAAP applied consistently (including with
respect to inventory reserves reflected in the Inventory Value) with those
applied in the preparation of the Year-End Financials, Interim Financials and
Inventory Statement (as such terms are defined in Section 2.5). Seller will
allow Buyer full and complete access to all work papers, books and records and
all additional information used in preparing the Closing Statement and will make
its officers, employees and independent accountants available to discuss with
Buyer such papers, books, records and information. The Closing Statement, as
delivered to Buyer by Seller, shall be deemed conclusive and binding on the
parties and will be deemed to be the Closing Statement upon which the adjustment
to the Purchase Price will be based, unless the Buyer notifies Seller within 10
days after receipt of the Closing Statement of its disagreement therewith (the
"Dispute Notice) (which Dispute Notice shall state with reasonable specificity
the reasons for any disagreement and the amounts in dispute). If there is a
disagreement, and such disagreement cannot be resolved within 30 days following
the receipt by Seller of the Dispute Notice, the items in dispute shall be
submitted to a nationally recognized firm of independent auditors acceptable to
both Buyer and Seller, and the determination by such independent auditing firm
shall be binding and conclusive upon the parties. Buyer and Seller shall each
pay one-half of the cost of the fees and expenses of such independent auditing
firm.
(ii) Any adjustment to the Purchase Price pursuant to this Section shall be paid
within 10 days after the final determination of such adjustment, by wire
transfer to an account designated by the receiving party.
(iii) Seller and Buyer shall agree on the allocation of the Purchase Price among
the Purchased Assets by the Closing Date.
1.5 Time and Place of Closing.
The closing under this Agreement (the "Closing") will take place at 9:30 a.m.,
local time, on a business day not later than the fifth business day after the
satisfaction or waiver of all of the conditions precedent to the Closing
described in Article VI, at the offices of Wilson Sonsini Goodrich & Rosati,
P.C., Palo Alto, California, or at such other time, date or place or by such
other means as the parties shall mutually agree. The date and time on which
Closing occurs is sometimes referred to herein as the "Closing Date." Subject to
the provisions of Article VIII, failure to consummate the transactions
contemplated hereby on the date and time and at the place determined pursuant to
this Section 1.5 will not result in the termination of this Agreement and will
not relieve any party of any obligation under this Agreement.
1.6 Deliveries and Proceedings at Closing. At the Closing:
(a) Deliveries by Seller. Seller shall deliver or cause to be delivered to
Buyer:
(i) a bill of sale and instrument of assignment to the Purchased Assets, duly
executed by Seller substantially in the form of Exhibit C hereto (the "Bill of
Sale");
(ii) the Assumption Agreement, duly executed by Seller;
(iii) a Transition Services Agreement mutually agreeable to Buyer and Seller
(the "Transition Services Agreement"), duly executed by Seller;
(iv) the IP License Agreement, duly executed by Seller; and
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(v) subject to Section 1.6(d), such other instruments of conveyance as shall, in
the reasonable opinion of Buyer, be necessary to vest in Buyer good, valid and
marketable title to the Purchased Assets in accordance with Section 1.1. (b)
Deliveries by Buyer.
(i) Buyer shall pay to Seller the Purchase Price in immediately available funds
wired to an account designated by Seller to Buyer at least two business days
before the Closing Date;
(ii) Buyer shall deliver the Assumption Agreement, duly executed by Buyer;
(iii) Buyer shall deliver the Transition Services Agreement, duly executed by
Buyer; and
(iv) Buyer shall deliver the IP License Agreement, duly executed by Buyer.
(c) Other Closing Deliveries. Seller or Buyer, as the case may be, shall deliver
the closing certificates and other documents required to be delivered pursuant
to this Agreement.
(d) Post-Closing Deliveries. Within 10 business days after the Closing Date,
Seller shall deliver to Buyer any additional certificates or instruments
necessary to convey to Buyer good, valid and marketable title to the Assigned IP
or any of the other Purchased Assets not conveyed, transferred or assigned to
Buyer at Closing, in each case as required under applicable laws and regulations
and as of the Closing Date, duly executed and in recordable form.
1.7 Regarding Certain Consents.
Nothing in this Agreement shall be construed as an attempt to assign any
contract, agreement, permit, franchise, or claim included in the Purchased
Assets which is by its terms or in law nonassignable without the consent of the
other party or parties thereto, unless such consent shall have been given, or as
to which all the remedies for the enforcement thereof enjoyed by Seller would
not, as a matter of law, pass to Buyer as an incident of the assignments
provided for by this Agreement. In order, however, to provide Buyer the full
realization and value of every contract, agreement, permit, franchise and claim
of the character described in the immediately preceding sentence, Seller agrees
that on and after the Closing, it will, at the request and under the direction
of Buyer, in the name of Seller or otherwise as Buyer shall specify take all
reasonable action (including without limitation the appointment of Buyer as
attorney-in-fact for Seller) and do or cause to be done all such things as shall
in the reasonable opinion of Buyer or its counsel be necessary or proper (a) to
assure that the rights of Seller under such contracts, agreements, permits,
franchises, and claims shall be preserved for the benefit of Buyer and (b) to
facilitate receipt of the consideration to be received by Seller in and under
every such contract, agreement, permit, franchise, and claim, which
consideration shall be held for the benefit of, and shall be delivered to,
Buyer. Without limiting the generality of the foregoing, Seller shall, if
necessary in the performance of its obligations under this Section 1.7, purchase
wafers, die and/or finished goods under any Contract the benefits of which may
not be enjoyed by Buyer and resell the same to Buyer at Seller's cost under such
Contract. Nothing in this section shall in any way diminish Seller's obligations
hereunder to obtain all consents and approvals and to take all such other
actions prior to, at or following Closing as are necessary to enable Seller to
convey or assign valid title to all the Purchased Assets to Buyer.
1.8 Post-Closing Reconciliation.
In the event that Seller or any of its Affiliates receives payment after the
Closing Date on invoices issued by Buyer relating to products sold by the
Business after the Closing Date, Seller will promptly notify Buyer of such
receipt and will promptly remit, or will cause such Affiliate to promptly remit,
such payment to Buyer. In the event that Buyer or any Affiliate of Buyer
receives payment after the Closing Date on invoices issued by Seller relating to
product sold or services rendered on or prior to the Closing Date, Buyer will
promptly notify Seller of such receipt and will remit, or will cause such
Affiliate to promptly remit, such payment to Seller.
1.9 IP License Agreement.
At the Closing, Buyer and Seller shall enter into an Intellectual Property
License Agreement mutually agreeable to them (the "IP License Agreement"),
pursuant to which, among other things, (i) Seller will license to Buyer the
Licensed IP and certain other Intellectual Property Rights of Seller, (ii)
Seller will sublicense to Buyer the Third-Party Licensed IP (subject to any
required consents of the licensors thereof), (iii) Seller will license to Buyer
the Home-Grown Software and (iv) Buyer will license to Seller the Assigned IP to
the extent necessary for the operation of Seller's business after the Closing
Date, all in accordance with and subject to the terms of the IP License
Agreement.
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1.10 Commissions for Backlog Orders.
Buyer agrees to pay commissions to sales representatives, in accordance with the
terms of agreements between such sales representatives and Seller, in respect of
revenues earned by Buyer following the Closing resulting from sales orders for
Business Products placed in the ordinary course of business prior to Closing. In
no event shall Buyer's obligations under this Section 1.10 be deemed to
constitute the assignment of any contract, agreement or arrangement or of any
rights thereunder, or the assumption by Buyer of any obligations or duties under
any contract, agreement or arrangement, except as expressly provided in the
preceding sentence.
1.11 Software Transfer Fees.
Buyer shall be responsible for any software transfer or similar fees relating to
the assignment or transfer of the rights included among the Purchased Assets
pursuant to Section 1.1(n), provided that if any such fees are unreasonably
excessive in light of the transactions contemplated hereby, then upon Buyer's
request such rights shall not be transferred under Section 1.1(n), but instead
shall be provided by Seller to Buyer under the terms of the Transition Services
Agreement to the extent permitted under the terms of applicable vendor
agreements.
ARTICLE II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, subject to such exceptions as are
specifically disclosed in the attached Schedules (referencing the appropriate
section and paragraph numbers) supplied by Seller to Buyer and dated as of the
date hereof, that on the date hereof and as of the Closing Date, as follows;
provided, that the representations and warranties made as of a specified date
will be true and correct as of such date:
2.1 Organization and Authority of Seller.
Seller (i) is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware, (ii) is duly qualified to do
business as a foreign corporation and is in good standing in each jurisdiction
in which the failure to be so qualified would have a Material Adverse Effect and
(iii) has the requisite power and authority to execute, deliver and perform this
Agreement and all Related Agreements.
2.2 Due Authorization; Binding Agreement.
The execution and delivery by Seller of this Agreement and all Related
Agreements and the performance by Seller of its obligations hereunder and
thereunder have been duly authorized by all necessary corporate action on the
part of Seller and its stockholders. Attached hereto as Schedule 2.2 is a copy
of the resolutions duly adopted by the board of directors of Seller authorizing
the execution, delivery and performance of this Agreement and the Related
Agreements. This Agreement and all Related Agreements constitute the legal,
valid and binding obligations and acts of Seller enforceable in accordance with
the respective terms thereof, subject to applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and similar laws affecting
creditors' rights and remedies generally and to general principles of equity
(regardless of whether enforcement is sought in a proceeding at law or equity).
2.3 No Conflicts.
Except as set forth on Schedule 2.3, the execution and delivery by Seller of
this Agreement and any Related Agreement to which Seller is a party, and the
consummation of the transactions contemplated hereby and thereby, will not
conflict with or result in any violation of or default under (with or without
notice or lapse of time, or both) or give rise to a right of termination,
cancellation, modification or acceleration of any obligation or loss of any
benefit under (any such event, a "Conflict") (i) any provision of the
Organizational Documents of Seller, (ii) any Contract or (iii) any contract,
license, lease or other agreement, judgment, order, decree, statute, law,
ordinance, rule or regulation applicable to Seller or any of its properties
(tangible and intangible) or assets. Neither the execution and delivery of this
Agreement and the Related Agreements, nor the consummation or performance of any
of the transactions contemplated hereby or thereby, will, directly or
indirectly, cause Buyer to become subject to, or liable for the payment of any,
Tax, or cause any of the Purchased Assets to be reassessed or revalued by any
taxing authority or other Governmental Authority, or result in the imposition or
creation of any encumbrance upon or with respect to any of the Purchased Assets.
Seller is in material compliance with and has not materially breached, violated
or defaulted under, or received notice that it has breached, violated or
defaulted under, any of the terms or conditions of any Contract, nor is Seller
aware of any event that would constitute such a breach, violation or default
with the lapse of time, giving of notice or both. Each
<PAGE> 8
Contract to which Seller is a party is in full force and effect and Seller is
not in default thereunder nor, to Seller's knowledge, is any party obligated to
Seller pursuant to any such Contract in material default thereunder. Seller has
obtained, or will obtain prior to the Closing, all necessary consents, waivers
and approvals of parties to any Contract as are required (i) thereunder in
connection with the transactions contemplated hereby and (ii) for any such
Contract to remain in full force and effect without limitation, modification or
alteration after the Closing. Subject to Section 1.7, after the Closing Buyer
will be permitted to exercise all of the rights under the Contracts that were
vested in Seller prior to the Closing without the payment of any additional
amounts or consideration other than ongoing fees, royalties or payments which
Seller would otherwise be required to pay pursuant to the terms of such
Contracts had the transactions contemplated by this Agreement not occurred.
2.4 Consents.
No consent, waiver, approval, order or authorization of, or registration,
declaration or filing with any Governmental Entity or any third party, including
a party to any agreement with Seller (so as not to trigger any Conflict), is
required by or with respect to Seller in connection with the execution and
delivery of this Agreement and any Related Agreement to which Seller is a party
or the consummation of the transactions contemplated hereby and thereby, except
for such consents, waivers, approvals, orders, authorizations, registrations,
declarations and filings as may be required under applicable securities laws.
2.5 Seller's Financial Statements.
(a) (i) Schedule 2.5(a)(i) sets forth the audited balance sheet of Seller as of
December 31, 1999, and the related audited statements of income, cash flows and
stockholders' equity for the 12-month period then ended (the "Year-End
Financials") and (ii) Schedule 2.5(a)(ii) sets forth the unaudited balance sheet
of Seller as of June 30, 2000, and the related unaudited statements of income,
cash flow and stockholders' equity for the six-month period then ended (the
"Interim Financials"). The Year-End Financials and the Interim Financials have
been prepared in accordance with GAAP on a basis consistent with each other and
with the written financial information contained in the confidential
presentation to Buyer's management or supplied to Buyer's management prior to
the date hereof. The Year-End Financials and the Interim Financials present
fairly the financial condition, operating results and cash flows of Seller as of
the dates and during the periods indicated therein, subject to normal year-end
adjustments, which are not material in amount in any individual case or in the
aggregate. Seller's unaudited balance sheet as of June 30, 2000 is referred to
herein as the "Current Balance Sheet."
(b) Schedule 2.5(b) includes statements setting forth (i) the Inventory Value as
of June 30, 2000 and July 31, 2000 and (ii) the revenues of the Business for the
six-month period ended June 30, 2000. The statements set forth on Schedule
2.5(b) have been prepared in accordance with GAAP and on a basis consistent with
the Year-End Financials, the Interim Financials and with the written financial
information contained in the confidential presentation to Buyer's management or
supplied to Buyer's management prior to the date hereof.
2.6 Business Products.
(a) Exhibit A-1 sets forth all Business Products that (i) are being manufactured
or are under development by Seller (including such products being sampled or
under prototype) on the date hereof or (ii) from which Seller has earned any
revenues during or after June 1997. Exhibit A-2 sets forth all Business Products
as to which Seller has earned any revenues from and including January 1997 up to
and including June 2000.
(b) As to the Business Products included thereon, Exhibit A-1 sets forth
correctly and completely (i) Seller's part number for such product, (ii)
Seller's product number (designated thereon as the "Basic ML #"), (iii) whether
such product has been announced as "end of life" (designated by an "E" thereon),
(iv) the mask set name (if mask sets are available) and (v) the foundry
associated with such product. If a mask set is not available for a product the
designation "none" appears in the last column of Exhibit A-1, and if masks sets
are partially available the designation "base set" appears in the last column of
Exhibit A-1.
(c) Except for such Business Products designated as "end of life" on Exhibit
A-1, on the Closing Date, all of the Business Products set forth on Exhibit A-1
could be manufactured by Seller under existing agreements to the extent mask
sets are available, and no rights under any other contract or agreement with any
third party would be required by Seller to manufacture any Business Product set
forth on Exhibit A-1.
2.7 Inventory.
All of the inventories of raw materials, work in progress, parts, subassemblies
and finished goods included in the Purchased Assets are in good condition,
suitable for their intended use and are valued at the lower of cost or market,
the cost thereof being
<PAGE> 9
determined on a first-in, first-out basis, using standard cost as an
approximation of actual cost. All such inventories consist of items of a quality
and quantity usable or saleable in the ordinary course of Seller's business
within a reasonable period of time and at normal profit margins, and all such
inventories can be expected to be consumed or sold in the ordinary course of
business within a reasonable period of time. Except as set forth in Schedule
2.7, none of such inventories are obsolete or slow moving, and any obsolete or
slow moving inventory has been written off or reserved against in the Year End
Financials, Interim Financials and Inventory Statement, as applicable.
2.8 No Indebtedness or Undisclosed Liabilities.
Seller does not have any material liability, indebtedness, obligation, expense,
claim, deficiency, guaranty or endorsement of any type related to the Business,
whether accrued, absolute, contingent, matured, unmatured or other which is
required to be reflected in financial statements in accordance with GAAP and
which has not been reflected on the Current Balance Sheet.
2.9 No Changes. Except as set forth on Schedule 2.9, since June 30, 2000, there
has not been, occurred or arisen any:
(a) transaction by Seller related to the Business except in the ordinary course
of business as conducted on that date and consistent with past practices;
(b) with respect to the Business, capital expenditure or commitment by Seller in
excess of $50,000 individually or $250,000 in the aggregate;
(c) destruction of, damage to or loss of any material assets of Seller relating
to the Business;
(d) change or, to the Seller's knowledge, any threat of any change in any of its
relations with, or any loss or, to the knowledge of the Seller, threat of loss
of, any of the suppliers, distributors or customers of the Business;
(e) claim of wrongful discharge, or other unlawful labor practice or action with
respect to the Business or any Business Employee, whether written or oral, nor
does Seller have reasonable basis to believe that such claims are threatened;
(f) change in accounting methods or practices (including any change in
depreciation or amortization policies or rates) by Seller and related to the
Business, except as may be required by GAAP;
(g) amendments or changes to the Organizational Documents of Seller related to
the Business;
(h) revaluation by Seller of any of its assets related to the Business;
(i) acquisition, sale, license or other disposition or transfer of any of the
material assets or properties of Seller related to the Business, except for
sales of inventory in the ordinary course of business as conducted on that date
and consistent with past practices;
(j) amendment or termination of any Contract or License;
(k) the commencement, settlement, notice or, to the knowledge of Seller, threat
(directly or indirectly) of, any lawsuit or proceeding by or against Seller or
investigation of Seller or its affairs affecting or relating in any way to the
Business;
(l) increase in the salary or other compensation payable or to become payable by
Seller to any of the Business Employees (other than normal annual raises in
accordance with past practice), or the declaration, payment or commitment or
obligation of any kind for the payment, by Seller, of
(m) a bonus or other additional salary or compensation to any Business Employee;
(n) adoption of, or increase in the payments to or benefits under, any profit
sharing, bonus, deferred compensation, savings, insurance, pension, retirement,
or other employee benefit plan for or with any Business Employee outside the
ordinary course of business;
(o) change in any election in respect of Taxes, adoption or change in any
accounting method in respect of Taxes, agreement or settlement of any claim or
assessment in respect of Taxes, or extension or waiver of the limitation period
applicable to any claim or assessment in respect of Taxes, in any of the
foregoing cases that would affect Buyer's possession or use of the Purchased
Assets or operation of the Business;
<PAGE> 10
(p) agreement, whether oral or written, by Seller or any officer or employee
thereof to do any of the foregoing (other than negotiations with Buyer and its
representatives regarding the transactions contemplated by this Agreement); or
(q) any other change that would result in a Business Material Adverse Effect.
2.10 Taxes.
(a) To the extent that the failure to do any of the following could adversely
affect the Purchased Assets, Buyer's use of the Purchased Assets or Buyer's
operation of the Business: (i) Seller has (1) timely filed all Tax returns or
reports which are due on or before the Closing Date, (2) paid all Taxes which
are shown to have become due pursuant to such returns and (3) paid all other
Taxes for which a notice of assessment or demand for payment has been received
and payment is due on or before the Closing Date, except for such Taxes that are
being disputed in good faith and for which adequate reserves are being
maintained; (ii) all Tax returns have been prepared in accordance with
applicable laws and requirements and are true and correct in all material
respects; (iii) all Taxes for periods beginning after the last day of Seller's
last completed fiscal year are adequately provided for on the books of Seller;
(iv) Seller has filed all information returns or reports that are required to be
filed and has reported all information required to be included in such returns
or reports with reasonable accuracy; and (v) Seller has not received notice from
a taxing authority in a jurisdiction in which Seller does not file Tax returns
asserting that Seller is or may be subject to Tax in that jurisdiction.
(b) All deficiencies resulting from tax audits of Seller have been paid or are
adequately provided for in the Financial Statements, except to the extent that
the failure to so pay or provide for would not adversely affect the Purchased
Assets, Buyer's use of the Purchased Assets or Buyer's operation of the
Business. Seller has not (i) executed a waiver or consent extending any statute
of limitation for federal income or other Tax liability which remains
outstanding, or (ii) entered into a closing agreement with any taxing authority
or applied for a Tax ruling which, in the case of either of clauses (i) or (ii),
would have continuing effect with respect to the Purchased Assets or the
Business following the Closing.
2.11 Restrictions on Business Activities.
There is no agreement (non-compete or otherwise), commitment, judgment,
injunction, order or decree to which Seller is a party or which has or may
reasonably be expected to have the effect of prohibiting any business practice
of Seller related to the Business or otherwise limiting the freedom of Seller to
engage in any line of business related to the Business or to compete with any
Person in any respect relating to the Business.
2.12 Title to Properties; Absence of Encumbrances; Condition of Certain Assets.
Except as described in Schedule 2.12 (the "Permitted Encumbrances"), Seller has
and, upon the sale contemplated hereby, Buyer will be vested with, good and
marketable title to the Purchased Assets, free and clear of any and all pledges,
liens, claims, restrictions, encumbrances or security interests of any kind or
nature. All tangible assets included among the Purchased Assets are in good
operating condition, subject to normal wear and tear.
2.13 Intellectual Property.
(a) Schedule 2.13(a) contains a complete and correct list of (i) all Patents and
invention disclosures, (ii) all Trademarks, (iii) all Copyrights, (iv) all Mask
Works and (v) the subject of any trade secrets, in each case that are owned by
Seller and that are exclusively related to the Business or more closely related
to the Business than to the business to be continued after the Closing by Seller
(all of the foregoing, the "Assigned IP"), specifying, as to each such item that
is the subject of an application, certificate or registration filed with, issued
by, or recorded by a Governmental Entity, (1) the jurisdiction in which the item
is issued, registered or recorded, (2) the filing date and (3) in the case of
issued Patents, the expiration date.
(b) Schedule 2.13(b) contains a complete and correct list of (i) all Patents and
invention disclosures, (ii) all Trademarks, (iii) all Copyrights, (iv) all Mask
Works and (v) the subjects of any trade secrets, in each case that are owned by
Seller and relating to the Business or otherwise of general applicability to the
field of technology in which the Business operates, but not included on Schedule
2.13(a) (all of the foregoing, the "Licensed IP"), specifying, as to each such
item that is the subject of an application, certificate or registration filed
with, issued by or recorded by a Governmental Entity, (1) the jurisdiction in
which the item is issued, registered or recorded, (2) the filing date and (3) in
the case of issued Patents, the expiration date.
(c) Schedule 2.13(c) contains a complete and correct list of all Intellectual
Property Rights relating to the Business which are licensed by Seller from or
jointly owned by Seller with a third party pursuant to license or other
agreements (excluding commercial off-the-shelf software) (the "Third-Party
Licensed IP").
<PAGE> 11
(d) Each item of Assigned IP and Licensed IP is in full force and effect, any
maintenance or similar fees due thereon prior to 30 days after the Closing Date
have been paid and all necessary documents and certificates in connection with
such Assigned IP and Licensed IP have been filed with the relevant patent,
copyright, trademark or other authorities in the United States or other foreign
jurisdictions, as the case may be, for the purposes of maintaining the same.
None of the Assigned IP or Licensed IP is subject to any cancellation, reissue,
interference or reexamination proceeding or any other actual or, to the
knowledge of Seller, threatened, proceeding which challenges its scope or
validity.
(e) Seller owns and has good title to each item of Assigned IP and Licensed IP,
free and clear of any Encumbrances and each such item is freely assignable or
licensable by Seller, as the case may be, without the consent or permission of,
or the accounting or payment of consideration to, any third party.
(f) Except as set forth on Schedule 2.13(f), the operation of the Business as it
currently is conducted does not infringe or misappropriate the Intellectual
Property Rights of any third party, violate the rights of any third party
(including rights to privacy or publicity), or constitute unfair competition.
Seller has not received written notice from any third party claiming, directly
or indirectly, that such operation requires a license from or the permission of
such third party (including a request to meet with representatives of Seller to
discuss such matters) or that such operation constitutes or might constitute any
such infringement, misappropriation, violation or unfair competition.
(g) To Seller's knowledge, no third party is infringing or misappropriating any
of Seller's Intellectual Property Rights relating to the Business, including any
Assigned IP or Licensed IP.
(h) No Intellectual Property Right of Seller relating to the Business, including
the Assigned IP and Licensed IP, is subject to any outstanding decree, order,
judgment, or stipulation restricting the use thereof.
(i) The Assigned Technology, Licensed IP and Third-Party Licensed IP include all
Intellectual Property Rights necessary for the operation of the Business. None
of the Intellectual Property Rights necessary for the operation of the Business
will be impaired, limited or otherwise adversely affected by the Closing or the
transactions contemplated hereby, or, to the knowledge of Seller, by the
operation of the Business following the Closing by Buyer.
2.14 Agreements, Contracts and Commitments.
(a) Except as set forth on Schedule 1.1(a) or Schedule 2.14, with respect to its
operation of the Business, Seller is not a party to, the operations of the
Business are not subject to and none of the Purchased Assets are bound by, any
lease, contract, commitment or other agreement, oral or written, formal or
informal, of any the following types:
(i) mortgages, indentures, security agreements or other agreements and
instruments relating to the borrowing of money, the extension of credit or the
granting of liens or encumbrances;
(ii) employment and consulting agreements;
(iii) union or other collective bargaining agreements;
(iv) powers of attorney;
(v) sales agency, manufacturers representative and distributorship agreements or
other distribution or commission arrangements;
(vi) licenses of or to patent, trademark or other intellectual property rights;
(vii) agreements, orders or commitments for the purchase of services, raw
materials, supplies or finished products from any one supplier for an amount in
excess of $50,000;
(viii) agreements, orders or commitments for the sale of products or services
for more than $50,000 to any single purchaser;
(ix) contracts or options relating to the sale by Seller of any asset, other
than sales of inventory in the ordinary course of business;
(x) agreements or commitments for capital expenditures in excess of $50,000 for
any single project;
(xi) joint venture agreements;
(xii) agreements requiring the consent of any party thereto as to the
consummation of the transactions contemplated hereby;
(xiii) agreements, arrangements or understandings with any Affiliate of Seller;
<PAGE> 12
(xiv) lease agreements under which Seller is either lessor or lessee;
(xv) agreement, contract or commitment for any charitable or political
contribution; or
(xvi) other agreements, contracts and commitments which are material to the
Business.
(b) All leases, contracts, commitments and other agreements listed on Schedule
1.1(a) and Schedule 2.14 are in full force and effect; all parties to such
leases, contracts and other commitments have complied with the provisions
thereof; no such party is in default under any of the terms thereof; and no
event has occurred that with the passage of time or the giving of notice or both
would constitute a default by any party under any provision thereof.
2.15 Interested Party Transactions.
No officer or director of Seller has, directly or indirectly, (i) an interest in
any entity which furnished or sold, or furnishes or sells, services or products
that Seller furnishes or sells, or proposes to furnish or sell, or (ii) any
interest in any entity that purchases from or sells or furnishes to Seller, any
goods or services, or (iii) a beneficial interest in any Contract; provided,
however, that ownership of no more than five percent of the outstanding publicly
traded voting stock of a corporation shall not be deemed to be an "interest in
any entity" for purposes of this Section 2.15.
2.16 Litigation.
Except as described on Schedule 2.16, there is no action, order, writ,
injunction or decree outstanding or claim, suit, litigation, proceeding,
arbitral action or investigation (any of which, an "Action") pending or, to the
knowledge of Seller, threatened against, relating to or affecting (i) the
Purchased Assets or the Business or (iii) the transactions contemplated by this
Agreement, at law or in equity, by or before any court or Governmental Entity
and, to Seller's knowledge, there is no reasonable basis for any such Action.
Seller is not in default with respect to any judgment, order, writ, injunction
or decree of any court or governmental agency, and there are no unsatisfied
judgments against Seller or the Business or affecting any of the Purchased
Assets.
2.17 Environmental Matters.
(a) Hazardous Materials Activities. To the extent that the failure to do so
could adversely affect the Purchased Assets, Buyer's use of the Purchased Assets
or Buyer's operation of the Business, to Seller's knowledge Seller has conducted
all activities relating to the Business in compliance with all applicable
Environmental Laws.
(b) Environmental Litigation. No Action is pending, or to the best of Seller's
knowledge, threatened, concerning or relating to any Environmental Permit or
violation of or non-compliance with any Environmental Law of Seller related to
the Business.
2.18 Brokers' and Finders' Fees; Third Party Expenses.
Seller has not incurred, nor will it incur, directly or indirectly, any
liability for brokerage or finders' fees or agents' commissions or any similar
charges in connection with the Agreement or any transaction contemplated hereby.
2.19 [Reserved].
2.20 Compliance with Legal Requirements.
Seller has complied in all material respects with, is not in violation of, and
has not received any notices of violation or investigation with respect to, any
foreign, federal, state or local statute, law or regulation, except to the
extent that any non-compliance, violation, notice or investigation would not
adversely affect the Purchased Assets, Buyer's use of the Purchased Assets or
Buyer's operation of the Business.
2.21 Insurance.
There is no claim by Seller pending under any insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations or
employees of the Business. All premiums due and payable under all such policies
and bonds have been paid, and Seller is otherwise in material compliance with
the terms of such policies and bonds (or other policies and bonds providing
substantially similar insurance coverage). Seller has no knowledge of threatened
termination of, or premium increase with respect to, any of such policies.
<PAGE> 13
2.22 Product Warranty.
Schedule 2.22 sets forth the standard warranty terms pursuant which the products
of the Business are sold. Except as set forth on Schedule 2.22, all products and
equipment manufactured, sold, leased or delivered by Seller relating to the
Business have been in conformity with all material contractual commitments or
other legal obligations, and Seller does not have any liability for replacement
or repair thereof or other damages in connection therewith in excess of any
warranty reserve established with respect thereto and included on the Current
Balance Sheet. Seller has not been notified of any claims for (and Seller has no
knowledge of any threatened claims for) any defective product returns, warranty
obligations or product services relating to any of its products or services
related to the Business.
2.23 Product Liability.
To Seller's knowledge, Seller does not have any liability arising out of any
injury to individuals or property as a result of the ownership, possession or
use of any products or equipment manufactured, sold, leased or delivered by
Seller or with respect to any services rendered by Seller as part of the
Business.
2.24 Customers and Suppliers.
Schedule 2.24 sets forth the names and addresses of the 10 most significant
customers, suppliers and subcontractors of Seller, with respect to the Business,
by dollar volume of sale and purchases, respectively for the fiscal year ended
December 31, 1999. Seller has not received any notice that any of such customers
has ceased, or will cease, to use the products, equipment, goods or services of
Seller, or has substantially reduced, or will substantially reduce, the use of
such products, equipment, goods or services at any time. Seller has not received
any notice from any of such suppliers of Seller to the effect that such supplier
will stop, materially decrease the rate of, or materially change the terms with
respect to, supplying materials, products or services to Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller that on the date hereof and as of
the Closing Date, as follows, provided, that the representations and warranties
made as of a specified date will be true and correct as of such date:
3.1 Organization.
Buyer (i) is a corporation duly organized, validly existing and in good standing
under the laws of the State of Delaware, (ii) is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction in which
the failure to be so qualified would have a Material Adverse Effect and (iii)
has the requisite power and authority to execute, deliver and perform this
Agreement and all Related Agreements.
3.2 Authority; Consents.
(a) The execution and delivery of this Agreement and the Related Agreements and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by all necessary corporate action on the part of Buyer. This
Agreement and each of the Related Agreements has been duly executed and
delivered by Buyer and constitutes the valid and binding obligation of Buyer,
enforceable in accordance with its terms, except as enforceability may be
limited by bankruptcy and other similar laws and general principles of equity.
The execution and delivery of this Agreement or any Related Agreement does not,
and the consummation of the transactions contemplated hereby and thereby will
not, conflict with, or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation or acceleration of any obligation or loss of a benefit
under (i) any provision of the Certificate of Incorporation or Bylaws of Buyer
or (ii) any material mortgage, indenture, lease, contract or other agreement or
instrument, permit, concession, franchise, license, judgment, order, decree,
statute, law, ordinance, rule or regulation applicable to Buyer or its
properties or assets other than any such conflicts, violations, defaults,
terminations, cancellations or accelerations which would not have a material
adverse effect on the ability of Buyer to consummate the transactions
contemplated hereby.
(b) No consent, approval, order or authorization of, or registration,
declaration or filing with, any Governmental Entity, is required by or with
respect to Buyer in connection with the execution and delivery of this Agreement
by Buyer or the consummation by Buyer of the transactions contemplated hereby,
except for such consents, authorizations, filings, approvals and registrations
which if not obtained or made would not have a Buyer Material Adverse Effect.
<PAGE> 14
ARTICLE IV
CONDUCT PRIOR TO THE CLOSING DATE
4.1 Conduct of Business of Seller.
During the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, Seller agrees,
except to the extent that Buyer shall otherwise consent in writing, to carry on
the Business in the usual, regular and ordinary course in substantially the same
manner as heretofore conducted, to pay the debts and Taxes of Seller when due,
to pay or perform other obligations when due, and, to the extent consistent with
the Business, use commercially reasonable efforts consistent with past practice
and policies to preserve intact Seller's present business organizations, keep
available the services of the officers and key employees of the Business and
preserve the relationships of the Business with customers, suppliers,
distributors, licensors, licensees, and others having business dealings with the
Business, in all material respects, all with the goal of preserving unimpaired
the goodwill and ongoing business of the Business at the Closing. Seller shall
promptly notify Buyer of any event or occurrence or emergency not in the
ordinary course of business of Seller and any material event involving Seller
that could adversely affect the performance of Seller's obligations under this
Section 4.1. Except as expressly contemplated by this Agreement, Seller shall
not without the prior written consent of Buyer take any action that, at the time
of taking such action, would result in the material breach of the representation
and warranty contained in Section 2.9.
4.2 No Solicitation.
Until the earlier of (i) the Closing Date, or (ii) the date of termination of
this Agreement pursuant to the provisions of Section 8.1 hereof, Seller shall
not (nor shall Seller permit, as applicable, any of Seller's officers,
directors, employees, agents, or representatives to), directly or indirectly,
take any of the following actions with any party other than Buyer and its
designees: (a) solicit, encourage, initiate or participate in any inquiry,
negotiations or discussions, or enter into any agreement, with respect to any
offer or proposal to acquire all or any material part of the Purchased Assets,
(b) disclose any information not customarily disclosed to any third party
concerning the Purchased Assets or the Business, or afford to any person or
entity access to its properties, technologies, books or records concerning the
Purchased Assets or the Business not customarily afforded such access, (c)
assist or cooperate with any third party to make any proposal to purchase all or
any material part of the Purchased Assets or the Business other than inventory
in the ordinary course of business, or (d) enter into any agreement with any
third party providing for the acquisition of the Business. In the event that
Seller or any of Seller's Affiliates shall receive, prior to the Closing Date or
the termination of this Agreement, any offer, proposal, or request, directly or
indirectly, of the type referenced in clause (a), (c) or (d) above, or any
request for disclosure or access pursuant to clause (b) above, Seller shall
immediately notify Buyer thereof, including information as to the identity of
the offeror or the party making any such offer or proposal and the specific
terms of such offer or proposal, as the case may be, and such other information
related thereto as Buyer may reasonably request.
ARTICLE V
ADDITIONAL AGREEMENTS
5.1 Business Employees.
(a) Schedule 5.1 identifies certain employees of Seller employed in connection
with the Business (the "Business Employees") by (i) name, (ii) location, (iii)
title or function, (iv) date of hire, (v) social security number, (vi) accrued
but unused vacation and the amount owed to each employee in respect thereof and
(vii) accrued but unused sick leave and the amount owed to each employee in
respect thereof. Seller shall terminate each Business Employee immediately prior
to the Closing and Buyer shall extend offers of employment to each Business
Employee, such employment to be effective immediately upon such termination by
Seller, provided that Buyer reserves the right not to make an employment offer
to any Business Employee upon notice to Seller not less than 10 days before the
Closing. Buyer shall have no obligation to make employment offers to any
employee of Seller who is not a Business Employee. Buyer shall not assume any
liability, cost or expense of Seller with respect to any of Seller's employees,
including the Business Employees and with respect to their termination by
Seller. In furtherance and not in limitation of the foregoing, Buyer may decide
in its sole and absolute discretion not to employ certain or all Business
Employees following the Closing, or to employ them with such benefits (including
vacation, insurance and severance benefits) as Buyer may adopt from time to time
in its sole and absolute discretion. No such act of Buyer shall be construed as
an assumption by Buyer of any obligation of Seller in connection with any
employee, whether incurred before or after the Closing Date. Any Business
Employee who receives and accepts an offer of employment from Buyer is
hereinafter referred to as a "Transferred Employee."
(b) Seller shall assist Buyer in hiring Business Employees.
<PAGE> 15
(c) For purposes of eligibility and vesting in any employee benefit plan of the
Buyer for which a Transferred Employee otherwise becomes eligible, such
Transferred Employee shall be given credit under such plan for all service prior
to the Closing with Seller except with respect to Buyer's 401(k) plan. Nothing
contained in this Agreement shall confer upon any Transferred Employee any right
with respect to employment by Buyer, nor shall anything herein interfere with
the right of Buyer, following any employment of any Transferred Employee, to
terminate the employment of any such Transferred Employee at any time, with or
without cause, or restrict Buyer in the exercise of its independent business
judgment in modifying any of the terms and conditions of the employment of any
such Transferred Employee.
5.2 Access to Information.
Seller shall afford Buyer and its accountants, counsel and other
representatives, reasonable access during the period prior to the Closing Date
to (i) all of Seller's properties, books, contracts, commitments and records
relating to the Business, (ii) all other information concerning the Business as
Buyer may reasonably request, and (iii) all Business Employees. To the extent
relevant to the transactions contemplated hereby, Seller agrees to provide to
Buyer and its accountants, counsel and other representatives copies of internal
financial statements (including Returns and supporting documentation) promptly
upon request. No information or knowledge obtained in any investigation pursuant
to this Section 5.2 shall affect or be deemed to modify any representation or
warranty contained herein or the conditions to the obligations of the parties to
consummate the transactions contemplated hereby in accordance with the terms and
provisions hereof.
5.3 Confidentiality.
Each of the parties hereto hereby agrees that the information obtained in any
investigation pursuant to Section 5.2 hereof, or pursuant to the negotiation and
execution of this Agreement, any Related Agreement or the effectuation of the
transactions contemplated hereby or thereby, shall be maintained in confidence
pursuant to that certain Non-Disclosure Agreement dated July 27, 2000 between
Buyer and Seller.
5.4 Expenses.
Whether or not the transactions contemplated hereby are consummated, all fees
and expenses incurred in connection with such transactions including, without
limitation, all legal, accounting, financial advisory, consulting and all other
fees and expenses of third parties incurred by a party in connection with the
negotiation and effectuation of the terms and conditions of this Agreement, the
Related Agreements and the transactions contemplated hereby and thereby, shall
be the obligation of the respective party incurring such fees and expenses.
5.5 Public Disclosure.
No public disclosure (whether or not in response to an inquiry) shall be made by
any party hereto regarding the subject matter of this Agreement unless approved
by the other parties hereto prior to release or unless such disclosure is
required by law or by the rules of the New York Stock Exchange or the Nasdaq
National Market.
5.6 Consents.
Seller shall use its reasonable best efforts to obtain the consents, waivers,
assignments and approvals under any of the Contracts or Licenses as may be
required in connection with the transactions contemplated hereby so as to
preserve all rights of, and benefits to, Buyer thereunder.
5.7 Reasonable Efforts.
Subject to the terms and conditions provided in this Agreement, each of the
parties hereto shall use its reasonable best efforts to take promptly, or cause
to be taken, all actions, and to do promptly, or cause to be done, all things
necessary, proper or advisable under applicable laws and regulations to
consummate and make effective the transactions contemplated hereby, to obtain
all necessary waivers, consents and approvals and to effect all necessary
registrations and filings and to remove any injunctions or other impediments or
delays, legal or otherwise, in order to consummate and make effective the
transactions contemplated by this Agreement for the purpose of securing to the
parties hereto the benefits contemplated by this Agreement.
<PAGE> 16
5.8 Additional Documents and Further Assurances.
Each party hereto, at the reasonable request of another party hereto, shall
execute and deliver such other instruments and do and perform such other acts
and things as may be necessary or desirable for effecting completely the
consummation of this Agreement, the Related Agreements and the transactions
contemplated hereby and thereby.
5.9 [Reserved].
5.10 [Reserved].
5.11 Non-Competition.
(a) For a period of two years from and after the Closing Date, Seller will not
and will cause its Affiliates not to, other than in the performance of Seller's
obligations under the Transition Services Agreement, for its own account or for
the account of others, directly or indirectly, (i) engage in any Competing
Business, or (ii) own, manage, operate, join, control or participate in the
ownership, management, operation or control of any Person who or which at any
relevant time during such period is engaged in any Competing Business or (iii)
sell, transfer, assign, license, sub-license or otherwise transfer Intellectual
Property Rights to any Person who or which at any relevant time during such
period directly or indirectly is engaged in any Competing Business.
(b) "Competing Business" shall mean the design, development, production,
manufacture, assembly, testing, distribution, marketing or sale of (i) any
Business Product or (ii) any product that is derived from or based upon a
Business Product or that fulfills substantially the same function as a Business
Product (as determined from such product's data sheet), regardless of when such
activities take place or by whom they are undertaken.
(c) The restrictive covenant contained in this Section is a covenant independent
of any other provision of this Agreement and the existence of any claim which
Seller may allege against any other party to this Agreement, whether based on
this Agreement or otherwise, shall not prevent the enforcement of this covenant.
Seller agrees that Buyer's remedies at law for any breach or threat of breach by
Seller of the provisions of this Section will be inadequate, and that Buyer
shall be entitled to an injunction or injunctions to prevent breaches of the
provisions of this Section and to enforce specifically the terms and provisions
hereof, in addition to any other remedy to which Buyer may be entitled at law or
equity. In the event of litigation regarding the covenant not to compete, the
prevailing party in such litigation shall, in addition to any other remedies the
prevailing party may obtain in such litigation, be entitled to recover from the
other party its reasonable legal fees and out of pocket costs incurred by such
party in enforcing or defending its rights hereunder. The length of time for
which this covenant not to compete shall be in force shall not include any
period of violation or any other period required for litigation during which
Buyer seeks to enforce this covenant. Should any provisions of this Section be
adjudged to any extent invalid by any competent tribunal, such provision will be
deemed modified to the extent necessary to make it enforceable.
5.12 Employee Retention Program.
In accordance with the employee retention program established by Seller prior to
the date hereof, Buyer shall notify and certify to Seller, as soon as
practicable after November 1, 2000, specifying as to each Transferred Employee
that remains permanently employed by Buyer as of such date (a "Retained
Employee"), (i) such employee's name, (ii) such employee's base salary as paid
by Seller as of the Closing Date and (iii) the amount of FICA and other Tax
obligations to be incurred by Buyer as a result of Buyer's payments to Retained
Employees under this Section 5.12, net of any tax benefit to Buyer relating
thereto. Within five business days after receiving such notice from Buyer,
Seller shall pay to Buyer an amount per Retained Employee equal to three months'
base salary for such Retained Employee, based on the salary information
specified under clause (ii) above (the "Bonus"), plus the aggregate amount of
the obligations stated in clause (iii) above. Buyer shall remit Bonus amounts in
their entirety to the respective Retained Employees as soon as practicable
following receipt from Seller.
<PAGE> 17
ARTICLE VI
CONDITIONS TO THE CLOSING
6.1 Conditions to Obligations of Each Party.
The respective obligations of Seller and Buyer to effect the Closing shall be
subject to the satisfaction at or prior to the Closing Date of the following
condition:
No Injunctions or Restraints; Illegality. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the transactions contemplated hereby shall be in effect;
provided, that Buyer and Seller have used reasonable efforts to remove such
injunction, order, restraint or prohibition, subject to Section 5.7; nor shall
any proceeding brought by a Governmental Entity, domestic or foreign, seeking
any of the foregoing be pending; nor shall there be any action taken, or any
statute, rule, regulation or order enacted, entered, enforced or deemed
applicable to the transactions contemplated hereby, which makes the consummation
of such transactions illegal.
6.2 Additional Conditions to Obligations of Seller.
The obligations of Seller to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing of each of the following conditions, any of which may be
waived, in writing, exclusively by Seller:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of Buyer in this Agreement (other than the representations and
warranties of Buyer as of a specified date, which will be true and correct as of
such date) shall be true and correct in all material respects on and as of
Closing Date as though such representations and warranties were made on and as
of such time, and (ii) Buyer shall have performed and complied with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Closing Date.
(b) Certificate of Buyer. Seller shall have been provided with a certificate
executed on behalf of Buyer by an authorized officer to the effect that, as of
the Closing Date:
(i) All representations and warranties of Buyer in this Agreement (other than
the representations and warranties of Buyer as of a specified date, which will
be true and correct as of such date) shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time; and
(ii) all covenants, obligations and conditions of this Agreement to be performed
by Buyer on or before such date have been so performed.
6.3 Additional Conditions to the Obligations of Buyer.
The obligations of Buyer to consummate and effect this Agreement and the
transactions contemplated hereby shall be subject to the satisfaction at or
prior to the Closing Date of each of the following conditions, any of which may
be waived, in writing, exclusively by Buyer:
(a) Representations, Warranties and Covenants. (i) The representations and
warranties of Seller in this Agreement (other than the representations and
warranties of Seller as of a specified date, which will be true and correct as
of such date) shall be true and correct in all material respects on and as of
the Closing Date as though such representations and warranties were made on and
as of such time, and (ii) Seller shall have performed and complied with all
covenants, obligations and conditions of this Agreement required to be performed
and complied with by it as of the Closing Date.
(b) Certificate of Seller. Buyer shall have been provided with a certificate
executed on behalf of Seller by its President to the effect that, as of the
Closing Date:
(i) All representations and warranties of Seller in this Agreement (other than
the representations and warranties of Seller as of a specified date, which will
be true and correct as of such date) shall be true and correct in all material
respects on and as of the Closing Date as though such representations and
warranties were made on and as of such time;
(ii) all covenants, obligations and conditions of this Agreement to be performed
by Seller on or before such date have been so performed; and
(iii) the condition set forth in Section 6.3(c) has been satisfied.
<PAGE> 18
(c) No Material Adverse Effects. There shall not have occurred any change in the
business, assets, prospects, financial condition or results of operations of
Seller that would cause a Business Material Adverse Effect.
ARTICLE VII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES;REMEDIES
7.1 Representations, Warranties and Covenants; Right to Indemnification Not
Affected by Knowledge.
Except as provided in Section 7.2(c), all representations, warranties and
covenants in this Agreement or in any instrument delivered pursuant hereto will
survive the Closing. The right to indemnification, payment of damages or other
remedy based on such representations, warranties, covenants and obligations will
not be affected by any investigation conducted with respect to, or any knowledge
acquired (or capable of being acquired) at any time, whether before or after the
execution and delivery of this Agreement or the Closing Date, with respect to
the accuracy or inaccuracy or compliance with, any such representation,
warranty, covenant or obligation. The waiver of any condition based on the
accuracy of any representation or warranty, or on the performance of or
compliance with any covenant or obligation, will not affect the right to
indemnification, payment of damages or other remedy based on such
representation, warranties covenants or obligations.
7.2 Indemnification.
(a) Indemnification by Seller. Seller shall defend, indemnify and hold Buyer and
its officers, directors and Affiliates (the "Buyer Indemnified Parties")
harmless against all claims, losses, liabilities, damages, deficiencies, costs
and expenses, including reasonable attorneys' fees and expenses of investigation
and defense (collectively, "Losses") incurred by a Buyer Indemnified Party
directly or indirectly as a result of:
(i) any inaccuracy or breach of a representation or warranty of Seller contained
in this Agreement or any certificate delivered by Seller in connection herewith;
(ii) any failure by Seller to perform or comply with any covenant contained in
this Agreement;
(iii) any Loss arising out of or resulting from any claim asserted with respect
to the Excluded Assets or Excluded Liabilities; and
(iv) any Loss arising out of or resulting from the patent infringement lawsuit
filed against Seller by Pioneer Magnetics, Inc.
The remedies provided in this Section 7.2(a) will not be exclusive of or limit
any other remedies that may be available to Buyer or other Buyer Indemnified
Parties.
(b) Indemnification by Buyer. Buyer shall defend, indemnify and hold Seller and
its officers, directors and Affiliates (collectively, the "Seller Indemnified
Parties") harmless against all Losses incurred by a Seller Indemnified Party
directly or indirectly as a result of:
(i) any inaccuracy or breach of a representation or warranty of Buyer contained
in this Agreement or any certificate delivered by Buyer in connection herewith;
or
(ii) any failure by Buyer to perform or comply with any covenant contained in
this Agreement; or
(iii) any Loss resulting from or arising out of the failure by Buyer to pay or
discharge, or cause to be paid or discharged, any of the Assumed Liabilities.
The remedies provided in this Section 7.2(b) will not be exclusive of or limit
any other remedies that may be available to Seller or other Seller Indemnified
Parties.
(c) Time Limitations. Except as provided below, the representations and
warranties in this Agreement, and in any certificate delivered in connection
herewith, will survive the Closing for a period of 18 months and any claims (for
indemnification or otherwise) on the basis of inaccuracies or breaches of such
representations and warranties must be asserted prior to the end of such period.
A claim with respect to Section 2.13 must be asserted within the three-year
period following the Closing Date. A claim with respect to Sections 2.1, 2.2,
3.1 or 3.2 may be made at any time. A claim with respect to Sections 2.10 or
2.17 may be made no later than upon the expiration of the applicable statute of
limitations relating thereto. Any time limitation under this paragraph will not
affect any claim if the claiming party has given written notice to the other
party of the facts and circumstances underlying such claim in reasonable detail
prior to the expiration of such time limitation.
<PAGE> 19
(d) Limitation on Amount-Seller. Seller will have no liability (for
indemnification or otherwise) with respect to the matters described in Sections
7.2(a)(i) and 7.2(a)(ii) until the total of all Losses with respect to such
matters exceeds $100,000 in the aggregate, and then only to the extent of such
excess. In the absence of fraud, Seller will have no liability (for
indemnification or otherwise) for an amount in excess of $2.0 million with
respect to all claims made under Sections 7.2(a)(i) and 7.2(a)(ii) of this
Agreement (including with respect to claims relating to inaccuracies or breaches
of the representations and warranties in Section 2.13), provided that Seller may
be liable for an additional $1.0 million with respect to claims relating only to
inaccuracies or breaches of the representations and warranties in Section 2.13
and provided, further, that Seller's covenant to indemnify the Buyer Indemnified
Parties under Sections 7.2(a)(iii) and 7.2(a)(iv) shall not be considered a
covenant limited by the limitations under this Section 7.2(d).
(e) Limitation on Amount-Buyer. Buyer will have no liability (for
indemnification or otherwise) with respect to the matters described in Sections
7.2(b)(i) or 7.2(b)(ii) until the total of all Losses with respect to such
matters exceeds $100,000 in the aggregate, and then only to the extent of such
excess, provided, that, in and the absence of fraud, Buyer will have no
liability (for indemnification or otherwise) for an amount in excess of $2.5
million with respect to claims made under Sections 7.2(b)(i) or 7.2(b)(ii) of
this Agreement and provided, further, that Buyer's covenant to indemnify the
Seller Indemnified Parties under Section 7.2(b)(iii) shall not be considered a
covenant limited by the limitations under this Section 7.2(e).
(f) Indemnification Procedure-Third-Party Claims.
(i) Promptly after receipt by an indemnified party under Section 7.2(a) or
7.2(b) of notice of the commencement of any action, suit or other proceeding
(any of which, a "proceeding") against it, such indemnified party will, if a
claim is to be made against an indemnifying party under such section, give
notice to the indemnifying party of the commencement of such claim, but the
failure to notify the indemnifying party will not relieve the indemnifying party
of any liability that it may have to any indemnified party, except to the extent
that the indemnifying party demonstrates that the defense of such action is
prejudiced by the indemnified party's failure to give such notice.
(ii) If any proceeding referred to in the preceding paragraph is brought against
an indemnified party and it gives notice to the indemnifying party of the
commencement of such proceeding, the indemnifying party will be entitled to
participate in such proceeding and, to the extent that it wishes (unless (1) the
indemnifying party is also a party to such proceeding and the indemnified party
determines in good faith that joint representation would be inappropriate or (2)
the indemnifying party fails to provide reasonable assurance to the indemnified
party of its financial capacity to defend such proceeding and provide
indemnification with respect to such proceeding), to assume the defense of such
proceeding with counsel reasonably satisfactory to the indemnified party and,
after notice from the indemnifying party to the indemnified party to assume the
defense of such proceeding, the indemnifying party will not, as long as it
diligently conducts such defense, be liable to the indemnified party under this
Article VII for any fees of other counsel or any other expenses with respect to
the defense of such proceeding, in each case subsequently incurred by the
indemnified party in connection with the defense of such proceeding, other than
reasonable costs of investigation. If the indemnifying party assumes the defense
of a proceeding, (1) it will be conclusively established for purposes of this
Agreement that the claims made in that proceeding are within the scope of and
subject to indemnification hereunder; (2) no compromise or settlement of such
claims may be effected by the indemnifying party without the indemnified party's
consent unless (A) there is no finding or admission of any violation of any law,
regulation, order or decree, or any violation of the rights of any person and no
effect on any other claims that may be made against the indemnified party and
(B) the sole relief provided is monetary damages that are paid in full by the
indemnifying party; and (3) the indemnified party will have no liability with
respect to any compromise or settlement of such claims effected without its
consent. If notice is given to an indemnifying party of the commencement of any
proceeding, and the indemnifying party does not, within 20 days after the
indemnified party's notice is given, give notice to the indemnified party of its
election to assume the defense of such proceeding, the indemnifying party will
be bound by any determination made in such proceeding or any compromise or
settlement effected by the indemnified party.
(iii) Notwithstanding the foregoing, if an indemnified party determines in good
faith that there is a reasonable probability that a proceeding may adversely
affect it or its affiliates other than as a result of monetary damages for which
it would be entitled to indemnification under this Agreement, the indemnified
party may, by notice to the indemnifying party, assume the exclusive right to
defend, compromise or settle such proceeding, but the indemnifying party will
not be bound by any determination of a proceeding so defended or any compromise
or settlement effected without its consent (which may not be unreasonably
withheld).
(g) Indemnification Procedure-Other Claims. A claim for indemnification for any
matter not involving a third-party claim may be asserted by written notice to
the party from whom indemnification is sought.
<PAGE> 20
ARTICLE VIII
TERMINATION, AMENDMENT AND WAIVER
8.1 Termination
Except as provided in Section 8.2 below, this Agreement may be terminated and
the transactions contemplated hereby abandoned at any time prior to the Closing:
(a) by mutual agreement of Seller and Buyer;
(b) by Seller or Buyer if: (i) the Closing has not occurred by October 15, 2000;
provided, however, that the right to terminate this Agreement under this Section
8.1(b) shall not be available to any party whose action or failure to act has
been a principal cause of or resulted in the failure of the Closing to occur on
or before such date and such action or failure to act constitutes a breach of
this Agreement; (ii) there shall be a final nonappealable order of a federal or
state court in effect preventing the Closing; or (iii) there shall be any
statute, rule, regulation or order enacted, promulgated or issued or deemed
applicable to the transactions contemplated hereby by any Governmental Entity
that would make consummation of the transactions contemplated hereby illegal;
(c) by Buyer or Seller if there shall be any action taken, or any statute, rule,
regulation or order enacted, promulgated or issued or deemed applicable to the
transactions contemplated hereby by any Governmental Entity, which would: (i)
prohibit Buyer's ownership or operation of all or a portion of the Business or
(ii) compel Buyer or Seller to dispose of or hold separate all or a portion of
the Business as a result of the transactions contemplated hereby;
(d) by Buyer if it is not in material breach of its obligations under this
Agreement and there has been a material breach of any provision contained in
this Agreement on the part of Seller and such breach has not been cured within
30 days after written notice to Seller; provided, however, no cure period shall
be required for a breach which by its nature cannot be cured; or
(e) by Seller if Seller is not in material breach of its obligations under this
Agreement and there has been a material breach of any provision contained in
this Agreement on the part of Buyer and such breach has not been cured within 30
days after written notice to Buyer; provided, however, no cure period shall be
required for a breach which by its nature cannot be cured.
8.2 Effect of Termination.
In the event of termination of this Agreement as provided in Section 8.1, this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of Buyer or Seller, or (if applicable) their respective
officers, directors or stockholders; provided, however, that each party shall
remain liable for any breaches of this Agreement prior to its termination and
the terminating party's right to pursue all legal remedies will survive such
termination unimpaired; and provided, further, that, the provisions of Sections
5.3, 5.4 and 5.5, Articles IX and X hereof and this Section 8.2 shall remain in
full force and effect and survive any termination of this Agreement pursuant to
the terms of this Article VIII.
8.3 Amendment.
This Agreement may be amended by the parties hereto at any time by execution of
an instrument in writing signed on behalf of each of the parties hereto.
8.4 Extension; Waiver.
At any time prior to the Closing, Buyer and Seller may, to the extent legally
allowed, (i) extend the time for the performance of any of the obligations of
the other party hereto, (ii) waive any inaccuracies in the representations and
warranties made to such party contained herein or in any document delivered
pursuant hereto, and (iii) waive compliance with any of the agreements or
conditions for the benefit of such party contained herein. Any agreement on the
part of a party hereto to any such extension or waiver shall be valid only if
set forth in an instrument in writing signed on behalf of such party.
<PAGE> 21
ARTICLE IX
DEFINITIONS
9.1 Defined Terms
As used in this Agreement, the following terms shall have the following
meanings:
"Accounts Receivable" shall have the meaning set forth in Section 2.8.
"Action" shall have the meaning set forth in Section 2.16.
"Affiliate" shall have the meaning set forth in the Exchange Act.
"Agreement" shall mean this Asset Purchase Agreement made and entered into as of
the date set forth in the first paragraph hereof by and between Buyer and
Seller, as amended by all amendments made in accordance with the provisions
hereof,
"Assigned IP" shall have the meaning given in Section 2.13(a) of this Agreement.
"Assumed Liabilities" shall have the meaning given in Section 1.3(a) of this
Agreement.
"Assumption Agreement" shall have the meaning given in Section 1.3(a) of this
Agreement.
"Bill of Sale" shall have the meaning given in Section 1.6(a)(i) of this
Agreement.
"Business" shall mean Seller's business of designing, manufacturing or having
manufactured, marketing and selling the Business Products.
"Business Employee" shall have the meaning set forth in Section 5.1(a) of this
Agreement.
"Business Products" shall mean all semiconductor devices and products that are
not networking or wireless products ever developed, manufactured or sold by
Seller prior to the Closing Date, including those set forth on Exhibits A-1 and
A-2 attached to this Agreement.
"Business Records" shall have the meaning set forth in Section 1.1(d) of this
Agreement.
"Buyer" shall have the meaning as set forth in the first paragraph of this
Agreement.
"Buyer Indemnified Party" shall have the meaning set forth in Section 7.2(a).
"Closing" shall have the meaning set forth in Section 1.3 of this Agreement.
"Closing Statement" shall have the meaning set forth in Section 1.2(c) of this
Agreement.
"Closing Date" shall have the meaning set forth in Section 1.3 of this
Agreement.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
"Conflict" shall have the meaning set forth in Section 2.3 of this Agreement.
"Contract" shall have the meaning set forth in Section 1.1(a) of this Agreement.
"Copyrights" shall mean all copyrighted works of any country, whether registered
or unregistered, applications for copyright registrations and
application-specific software.
"Current Balance Sheet" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Dispute Notice" shall have the meaning set forth in Section 1.4(c) of this
Agreement.
<PAGE> 22
"Encumbrance" means any security interest, pledge, mortgage, lien (including
environmental and tax liens), charge, encumbrance, adverse claim, preferential
arrangement or restriction of any kind, including any restriction on the use,
voting, transfer, receipt of income or other exercise of any attributes of
ownership.
"Environmental Laws" shall mean all applicable laws, rules, regulations, orders,
treaties, statutes, and codes promulgated by any Governmental Entity relating to
pollution or protection of persons or the environment or any Hazardous Material
Activity, including the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, the Resource Recovery and Conservation Act of 1976, the
Federal Water Pollution Control Act, the Clean Air Act, the Hazardous Materials
Transportation Act, the Clean Water Act, comparable laws, rules, regulations,
ordinances, orders, treaties, statutes, and codes of other Governmental
Entities, the regulations promulgated pursuant to any of the foregoing, and all
amendments and modifications of any of the foregoing, all as amended to date.
"Environmental Permit" shall mean any approval, permit, license, clearance or
consent required to be obtained from any private person or any Governmental
Entity with respect to any Environmental Law.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Excluded Assets" shall have the meaning given in Section 1.2 of this Agreement.
"Excluded Contracts" shall have the meaning set forth in Section 1.2(g) of this
Agreement.
"Excluded Liabilities" shall have the meaning given in Section 1.3(b) of this
Agreement.
"FICA" shall mean the Federal Insurance Contribution Act.
"FUTA" shall mean the Federal Unemployment Tax Act.
"GAAP" shall mean U.S. generally accepted accounting principles.
"Governmental Entity" shall mean any local, state, provincial, federal or
international governmental authority or agency which has had or now has
jurisdiction over any portion of the subject matter of this Agreement.
"Governmental Permits" shall have the meaning set forth in Section 1.1(j) of
this Agreement.
"Hazardous Material" shall mean any material or substance that is prohibited or
regulated by any Environmental Law or that has been designated by any
Governmental Entity to be radioactive, toxic, hazardous or otherwise a danger to
health, reproduction, safety or the environment.
"Hazardous Materials Activity" shall mean the transportation, transfer,
recycling, storage, use, treatment, manufacture, removal, remediation, release,
exposure of others to, sale or distribution of any Hazardous Material or any
product containing a Hazardous Material.
"Home-Grown Software" shall have the meaning set forth in the IP License
Agreement.
"Indebtedness" shall mean, as to any Person, without duplication, (a) all
obligations of such Person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such Person evidenced by bonds,
debentures, notes or similar instruments, (c) any indebtedness, whether or not
of such Person, that is secured by any Encumbrance on the property of such
Person and (d) any indebtedness, whether or not of such Person, that is
guaranteed by such Person.
"Intellectual Property Rights" shall mean any or all of the following and all
rights in, arising out of, or associated therewith: (i) Patents; (ii)
Copyrights; (iii) Trademarks; (iv) Mask Works; (v) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, know-how, technology, technical data and customer
lists, and all documentation relating to any of the foregoing; (vi) all
databases and data collections and all rights therein throughout the world; and
(vii) all computer software including all source code, object code, firmware,
development tools, files, records and data, all media on which any of the
foregoing is recorded, and all documentation related to any of the foregoing
throughout the world.
"Interim Financials" shall have the meaning set forth in Section 2.5 of this
Agreement.
"Inventory Value" shall have the meaning set forth in Section 1.4(b) of this
Agreement.
"IP License Agreement" shall have the meaning given in Section 1.9 of this
Agreement.
"IRS" shall mean the U.S. Internal Revenue Service.
<PAGE> 23
"to Seller's knowledge" and correlative terms means the actual knowledge, after
reasonable inquiry, of Seller's executive officers, as such term is defined
under the Exchange Act.
"Licensed IP" shall have the meaning given in Section 2.13(b) of this Agreement.
"Licenses" shall have the meaning set forth in Section 1.1(i) of this Agreement.
"Loss" shall have the meaning set forth in Section 7.2 of this Agreement.
"Mask Works" shall mean all mask works of any country, whether registered or
unregistered, and applications for mask work registration.
"Material Adverse Effect" when used in connection with an entity means any
change, event, violation, inaccuracy, circumstance or effect that is, or would
reasonably be expected to be, materially adverse to (i) the business, assets,
capitalization, financial condition, prospects or results of operations of such
entity and all of its subsidiaries (if any) considered as a whole, (ii) the
ability of such entity and all of its subsidiaries (if any) considered as a
whole to perform its obligations under this Agreement and to consummate the
transactions provided for hereunder or (iii) the ability of such entity and all
of its subsidiaries (if any) considered as a whole to substantially conduct its
business as presently conducted.
"Organizational Documents" shall mean those documents of any Person on file with
the Secretary of State in its jurisdiction of formation and the bylaws (or
equivalent governing documents) of such Person.
"Patents" shall mean U.S. and foreign patents, patent applications and
industrial design registrations, together with any continuations,
continuations-in-part or divisional applications thereof, and all patents
issuing thereon (including reissues, renewals and reexaminations of the
foregoing).
"Permitted Encumbrances" shall have the meaning given in Section 2.12 of this
Agreement.
"Person" shall mean any individual, corporation, limited liability company,
trust, partnership, association, Governmental Entity or other entity.
"Purchase Price" shall have the meaning set forth in Section 1.4(a) of this
Agreement.
"Purchased Assets" shall have the meaning given in Section 1.1 of this
Agreement.
Agreement.
"Related Agreements" shall mean the Assumption Agreement, the Bill of Sale and
the Transition Services Agreement.
"SEC" shall mean the U.S. Securities and Exchange Commission.
"Seller" shall have the meaning set forth in the first paragraph of this
Agreement.
"Seller Indemnified Party" shall have the meaning set forth in Section 7.2(b) of
this Agreement.
"Taxes" shall mean (i) 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 each such
amount; (ii) any liability for the payment of any amounts of the type described
in clause (i) of this definition as a result of being a member of an affiliated,
consolidated, combined in unitary group for any period; and (iii) any liability
for the payment of any amounts of the type described in clauses (i) or (ii) of
this definition as a result of any express or implied obligation to indemnify
any other person or as a result of 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.
"Third-Party Licensed IP" shall have the meaning given in Section 2.13(c) of
this Agreement.
<PAGE> 24
"Trademarks" shall mean registered and unregistered trademarks, service marks,
trade names and applications for the foregoing.
"Transferred Employee" shall have the meaning set forth in Section 5.1(a) of
this Agreement.
"Transition Services Agreement" shall have the meaning given in Section
1.6(a)(v) of this Agreement.
"Year-End Financials" shall have the meaning set forth in Section 2.5 of this
Agreement.
ARTICLE X
GENERAL PROVISIONS
10.1 Notices.
All notices and other communications hereunder shall be in writing and shall be
deemed given if delivered personally, sent by documented courier service, mailed
by registered or certified mail (return receipt requested) or sent by fax (with
confirmation of receipt) at the following addresses and fax numbers (or at such
other address or number for a party as shall be specified by like notice):
(a) if to Buyer, to:
Fairchild Semiconductor Corporation
82 Running Hill Road
South Portland, ME 04106
Attention: General Counsel
Fax: (207) 761-6020
(b) if to Seller, to:
Micro Linear Corporation
2092 Concourse Drive
San Jose, CA 95131
Attention: President
Fax: (408) 432-0363
With a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
650 Page Mill Road
Palo Alto, CA 94304
Attention: J. Robert Suffoletta
Fax: (650) 493-6811
10.2 Interpretation.
The words "include," "includes" and "including" when used herein shall be deemed
in each case to be followed by the words "without limitation" unless expressly
provided otherwise in such case. All words used in this Agreement will be
construed to be of such gender or number as the circumstances require. All
references to any exhibit, section, subsection or paragraph refer to the
corresponding exhibit, section, subsection or paragraph of this Agreement. The
headings contained in this Agreement are for reference purposes only and shall
not affect in any way the meaning or interpretation of this Agreement.
10.3 Counterparts.
This Agreement may be executed in counterparts, all of which shall be considered
one and the same agreement and shall become effective when one or more
counterparts have been signed by each of the parties and delivered to the other
parties, it being
<PAGE> 25
understood that all parties need not sign the same counterpart. Delivery of
signature pages of this Agreement, any Related Agreement or any instruments or
certificates contemplated hereby or thereby via facsimile transmission shall be
valid and effective for all purposes.
10.4 Entire Agreement; Assignment.
This Agreement (including the recitals), the Related Agreements, the Exhibits
hereto and thereto, the Schedules the documents and instruments and other
agreements among the parties hereto referenced herein or dated the date hereof:
(a) constitute the entire agreement among the parties with respect to the
subject matter hereof and supersede all prior agreements and understandings,
both written and oral, among the parties with respect to the subject matter
hereof and (b) shall not be assigned by operation of law or otherwise except as
otherwise specifically provided in this Agreement; provided, however, that Buyer
may assign all, but not less than all of its rights and obligations under this
Agreement, either before or after the Closing Date, to its parent or to any
subsidiary or Affiliate provided that the assignee agrees to be bound by the
provisions of, and in the reasonable judgment of Seller has the financial
capacity to perform the obligations of Buyer under, this Agreement, in each case
to the same extent as Buyer prior to such assignment. This Agreement shall inure
to the benefit of and be binding upon the successors and permitted assigns of
the parties hereto.
10.5 Severability.
In the event that any provision of this Agreement or the application thereof,
becomes or is declared by a court of competent jurisdiction to be illegal, void
or unenforceable, the remainder of this Agreement will continue in full force
and effect and the application of such provision to other persons or
circumstances will be interpreted so as reasonably to effect the intent of the
parties hereto. The parties further agree to replace such void or unenforceable
provision of this Agreement with a valid and enforceable provision that will
achieve, to the extent possible, the economic, business and other purposes of
such void or unenforceable provision.
10.6 Specific Performance; Other Remedies.
The parties hereto agree that irreparable damage would occur in the event that
the material provisions of this Agreement were not performed in accordance with
their specific terms or were otherwise breached. It is accordingly agreed by the
parties hereto that the parties hereto shall be entitled to seek an injunction
or injunctions to prevent material breaches of the provisions of this Agreement
and to enforce specifically the material terms and provisions hereof in any
court of the United States or any state within the United States having
jurisdiction, this being in addition to any other remedy to which any party
hereto may be entitled at law or in equity. Except as otherwise provided herein,
any and all remedies herein expressly conferred upon a party will be deemed
cumulative with and not exclusive of any other remedy conferred hereby, or by
law or equity upon such party, and the exercise by a party of any one remedy
will not preclude the exercise of any other remedy.
10.7 Governing Law.
This Agreement shall be governed by and construed in accordance with the laws of
the State of Maine, regardless of the laws that might otherwise govern under
applicable principles of conflicts of laws thereof.
10.8 Rules of Construction.
The parties hereto agree that they have been represented by counsel during the
negotiation and execution of this Agreement and, therefore, waive the
application of any law, regulation, holding or rule of construction providing
that ambiguities in an agreement or other document will be construed against the
party drafting such agreement or document.
10.9 Schedules.
The disclosures in the Schedules must relate only to the representations and
warranties in the Section of the Agreement to which they expressly relate and
not to any other representation or warranty in this Agreement.
10.10 No Third-Party Beneficiary.
This Agreement is for the sole benefit of the parties and their permitted
successors and assigns and nothing herein expressed or implied shall give or be
construed to give any third party, other than the parties hereto and such
permitted successors and assigns, any legal or equitable rights hereunder.
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[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, Buyer and Seller have caused this Asset Purchase Agreement
to be duly signed, all as of the date first written above.
FAIRCHILD SEMICONDUCTOR
CORPORATION
By:
-------------------------------------
Name: Joseph R. Martin
Title: Executive Vice President
and Chief Financial Officer
MICRO LINEAR CORPORATION
By:
-------------------------------------
Name:
Title:
Exhibit A-Business Products
Exhibit B-Form of Assumption Agreement
Exhibit C-Form of Bill of Sale
