<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 29, 1999
INTEGRATED PACKAGING ASSEMBLY CORPORATION
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(Exact Name of Registrant as Specified in Charter)
Delaware
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(State or other jurisdiction of incorporation)
0-22712 77-0309372
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(Commission File No.) (IRS Employer Identification Number)
2221 Oakland Road
San Jose, California 95131
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(Address of Principal Executive Offices)
(408) 321-3600
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(Registrant's Telephone Number, Including Area Code)
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Item 2. Acquisition or Disposition of Assets
------------------------------------
Pursuant to an Agreement for Purchase and Sale of Common Stock dated
as of October 29, 1999 by and among the Registrant, OSE, Inc., a California
corporation ("OSEI"), and the shareholders of OSEI, the Registrant acquired all
of the outstanding capital stock of OSEI in a stock for stock exchange. The
transaction closed on October 29, 1999. As a result of the transaction, each
outstanding share of OSEI Common Stock was exchanged for 304.8246 shares of the
Registrant's Common Stock and an aggregate of 25,910,090 shares of Common Stock
were issued by the Registrant. The transaction consideration was negotiated
among the parties.
OSEI is a privately held corporation that serves as the exclusive North
American distributor of Orient Semiconductor Electronics, Limited ("OSE"), a
public Taiwanese company, and the Registrant's principal shareholder. OSEI
derives its earnings from fees received on the sales of OSE's semiconductor
assembly and test services to customers in North America. OSEI had revenues of
$48.8 million in the fiscal year 1999 that ended June 1999. Following
the transaction, OSEI will continue its operations as a wholly owned subsidiary
of the Registrant.
In connection with the transaction, the Registrant issued 4,877,193 shares
of its Common Stock to OSE which held 16,000 shares of OSEI. OSE owns
approximately 63% of the Registrant's outstanding voting securities, assuming
conversion of all outstanding preferred shares, and has three representatives on
the Registrant's Board of Directors.
Item 7. Financial Statements and Exhibits
---------------------------------
(a) Financial Statements of Business Acquired.
The required financial statements of OSEI will be filed no later
than sixty (60) days after the filing of this Report on Form 8-K.
(b) Pro Forma Financial Information.
The required pro-forma financial information will be filed no
later than sixty (60) days after the filing of this Report on Form
8-K.
(c) Exhibits
--------
2.1 Agreement for Purchase and Sale of Common Stock of OSE, Inc.
by and among the Registrant, OSE, Inc. and the shareholders
of OSE, Inc. dated as of October 29, 1999.
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2.2 Exclusive Sales Distributor Agreement between OSE, Inc. and
Orient Semiconductor Electronics Limited dated as of October
29, 1999.
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
INTEGRATED PACKAGING ASSEMBLY
CORPORATION
By: /s/ PATRICK VERDERICO
-------------------------------------
Patrick Verderico
President and Chief Executive Officer
Date: November 15, 1999
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INTEGRATED PACKAGING ASSEMBLY CORPORATION
CURRENT REPORT ON FORM 8-K
--------------------------
INDEX TO EXHIBITS
Sequentially
Exhibit
Number Description
- ------- ------------------------------------------------
2.1 Agreement for Purchase and Sale of Common Stock by and among the
Registrant, OSE, Inc. and the shareholders of OSE, Inc. dated as
of October 29, 1999.
2.2 Exclusive Sales Distributor Agreement between OSE, Inc. and Orient
Semiconductor Electronics Limited dated as of October 29, 1999.
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<PAGE>
EXHIBIT 2.1
================================================================================
AGREEMENT FOR PURCHASE AND SALE OF
COMMON STOCK BY AND AMONG
INTEGRATED PACKAGING ASSEMBLY CORPORATION,
OSE, INC. AND THE SHAREHOLDERS OF OSE, INC.
October 29, 1999
================================================================================
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
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<S> <C>
Section 1 PURCHASE AND SALE OF SHARES.............................. 1
1.1 Purchase and Sale of Shares............................. 1
1.2 Closing................................................. 1
SECTION 2 THE COMPANY'S REPRESENTATIONS AND WARRANTIES............. 2
2.1 Organization and Standing............................... 2
2.2 Corporate Power......................................... 2
2.3 Capitalization.......................................... 2
2.4 Authorization........................................... 2
2.5 SEC Reports; Financial Statements....................... 3
2.6 Compliance With Other Instruments....................... 4
2.7 Governmental Consents................................... 4
2.8 No Finder's Fee......................................... 4
SECTION 3 REPRESENTATIONS AND WARRANTIES OF OSEI................... 4
3.1 Organization and Standing............................... 4
3.2 Corporate Power......................................... 5
3.3 Subsidiaries............................................ 5
3.4 Capitalization.......................................... 5
3.5 Authorization........................................... 5
3.6 Financial Statements.................................... 5
3.7 Title................................................... 6
3.8 Patents and Trademarks.................................. 6
3.9 Litigation.............................................. 6
3.10 Compliance With Other Instruments....................... 7
3.11 Insurance............................................... 7
3.12 Governmental Consents................................... 7
3.13 No Finder's Fee......................................... 7
SECTION 4 REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS....... 7
4.1 Legal Power............................................. 7
4.2 Authorization........................................... 8
4.3 Compliance With Other Instruments....................... 8
4.4 Governmental Consents................................... 8
4.5 No Finder's Fee......................................... 8
4.6 Good Title.............................................. 8
4.7 OSEI Representations.................................... 9
</TABLE>
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TABLE OF CONTENTS
(continued)
<TABLE>
<CAPTION>
Page
----
<S> <C>
4.8 Investment Representations.............................. 9
4.9 Legends................................................. 10
4.10 Tax Advisors............................................ 10
4.11 Investor Counsel........................................ 10
SECTION 5 CONDITIONS TO CLOSING.................................... 10
5.1 Conditions to Company's Obligations..................... 10
5.2 Conditions to Obligations of Shareholders............... 11
5.3 Covenants of the Parties................................ 11
SECTION 6 MISCELLANEOUS............................................ 12
6.1 Waivers and Amendments.................................. 12
6.2 Severability............................................ 12
6.3 Survival................................................ 12
6.4 Notices, etc............................................ 12
6.5 Entire Agreement........................................ 14
6.6 Governing Law........................................... 14
6.7 Expenses................................................ 15
6.8 Attorneys' Fees; Limitation of Liability................ 15
6.9 Titles and Subtitles.................................... 15
6.10 Counterparts............................................ 15
</TABLE>
Exhibit A - Schedule of OSEI Shareholders
Exhibit B - IPAC Schedule of Exceptions
Exhibit C - OSEI Schedule of Exceptions
Exhibit D - Sales Distributor Agreement
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<PAGE>
AGREEMENT FOR PURCHASE AND SALE OF
COMMON STOCK BY AND AMONG
INTEGRATED PACKAGING ASSEMBLY CORPORATION,
OSE, INC. AND THE SHAREHOLDERS OF OSE, INC.
This Agreement is entered into as of October 29, 1999, by and among
Integrated Packaging Assembly Corporation, a Delaware corporation (the
"Company"), OSE, Inc., a California corporation ("OSEI"), and the shareholders
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of OSEI listed on Exhibit A hereto (individually, a "Shareholder" and
--------- -----------
collectively, the "Shareholders").
------------
RECITALS
A. The Shareholders currently hold of record and beneficially all of the
outstanding shares of capital stock of OSEI (the "OSEI Shares").
-----------
B. The parties desire that the Company purchase the OSEI Shares held by
the Shareholders at a purchase price of approximately $58.83 per share, for an
aggregate purchase price of approximately $5,000,000.
SECTION 1
---------
PURCHASE AND SALE OF SHARES
---------------------------
1.1 Purchase and Sale of Shares. At the Closing (as defined herein), the
---------------------------
Shareholders will severally sell to the Company and the Company will severally
purchase from the Shareholders all of the OSEI Shares at a price of
approximately $58.83 per share, with the purchase price to be paid in shares of
the Company's common stock (the "IPAC Shares"). For purposes of this
-----------
Agreement, the IPAC Shares shall be valued at $0.1930 per share which equals the
average of the closing price of the Company's common stock for the twenty (20)
trading days ending on the day prior to the date hereof. As a result, each OSEI
Share shall be exchanged for 304.8246 IPAC Shares and all of the OSEI Shares
shall be exchanged for an aggregate of 25,910,090 IPAC Shares as indicated on
Exhibit A hereto.
- ---------
1.2 Closing. The closing of the purchase and sale of the OSEI Shares (the
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"Closing") shall occur at such date (the "Closing Date") and such location as
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the parties shall mutually agree, as soon as practicable following the
satisfaction or waiver of each of the conditions to closing set forth in Section
5 hereof. At the Closing, each of the Shareholders shall deliver to the Company
a stock certificate representing the OSEI Shares to be sold by such Shareholder
to the Company as indicated on Exhibit A and the Company shall be obligated to
---------
issue to such Shareholder a certificate representing the number of IPAC Shares
to be issued to such Shareholder as indicated on Exhibit A. The Company hereby
---------
covenants with each Shareholder to deliver the certificates representing the
IPAC Shares to such Shareholder as soon as practical following the Closing Date.
<PAGE>
SECTION 2
---------
THE COMPANY'S REPRESENTATIONS AND WARRANTIES
--------------------------------------------
Except as set forth in the Schedule of Exceptions to the representations
and warranties of the Company attached hereto as Exhibit B, the Company
---------
represents and warrants to each Shareholder, as follows. Where used in this
Section 2, the terms "to the knowledge of the Company," "of which the Company
-------------------------------- --------------------
is aware" or similar terms mean the actual knowledge of the executive officers
- --------
of the Company.
2.1 Organization and Standing. The Company is a corporation duly
-------------------------
organized and validly existing under the laws of the State of Delaware and is in
good standing as a domestic corporation under the laws of said state. The
Company has all requisite corporate power and authority to own and lease its
properties and to conduct its business as presently conducted. The Company is
qualified as a foreign corporation in all jurisdictions in which it conducts
business, other than any such jurisdiction where the failure to be so qualified
will not have a material adverse effect on the Company's business as now
conducted.
2.2 Corporate Power. The Company has all requisite legal and corporate
---------------
power to execute and deliver this Agreement, to purchase the OSEI Shares
hereunder, to issue the IPAC Shares hereunder and to carry out and perform its
obligations under the terms of this Agreement.
2.3 Capitalization. The authorized capital stock of the Company consists
--------------
of (i) 200,000,00 shares of common stock (the "IPAC Common Stock") and (ii)
-----------------
10,000,000 shares of preferred stock, of which 3,000,000 shares are designated
"Series A Preferred Stock." There are 28,507,012 shares of IPAC Common Stock
------------------------
issued and outstanding (plus any additional shares issued since September 27,
1999 on exercise of options). No subscription, warrant, option or other right to
purchase or acquire any shares of any class of capital stock of the Company or
securities convertible into or exchangeable for such capital stock are
outstanding other than: (i) 41,246,312 shares reserved for issuance upon
conversion of the outstanding shares of Series A Preferred, (ii) 20,000,000
shares reserved for issuance pursuant to the Company's 1993 Stock Option Plan,
(iii) 750,000 shares reserved for issuance pursuant to the Company's
Nonstatutory Stock Option Plan, (iv) 100,000 shares reserved for issuance
pursuant to the Company's 1996 Director Option Plan, (v) 2,000,000 shares
reserved for issuance pursuant to the Company's Employee Stock Purchase Plan and
(vi) 4,000,000 shares reserved for issuance pursuant to the Company's 1999
Director Stock Option Plan.
2.4 Authorization. The execution, delivery and performance of this
------------
Agreement by the Company have been duly authorized by all requisite corporate
action, and this Agreement constitutes a valid and binding obligation of the
Company enforceable in accordance with its terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights, or rules of law governing
specific performance, injunctive relief or other equitable remedies. All
corporate action on the part of the Company, its directors and stockholders
necessary for the authorization, issuance and delivery of the IPAC Shares has
been taken or will be taken prior to the Closing. No stockholder has any
preemptive rights or
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rights of first refusal by reason of the issuance of the IPAC Shares. The IPAC
Shares, when issued, sold and delivered in compliance with the provisions of
this Agreement will be duly and validly issued, fully paid and nonassessable and
will be free of any liens or encumbrances; provided, however, that the IPAC
Shares are subject to restrictions on transfer under state and/or federal
securities laws.
2.5 SEC Reports; Financial Statements.
---------------------------------
(a) The Company has delivered to the OSEI shareholders (or such
shareholders have otherwise obtained) a complete and accurate copy of each
report, schedule, registration statement and definitive proxy statement filed by
the Company with the Securities and Exchange Commission (the "SEC") on or after
---
January 1, 1999 (the "SEC Reports"), which are all the forms, reports and
-----------
documents required to be filed by the Company with the SEC on or after January
1, 1999. The SEC Reports (i) complied in all material aspects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
--------------
or the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as the
------------
case may be, at and as of the times they were filed (or, if amended or
superseded by a filing prior to the date of this Agreement, then on the date of
such filing) and (ii) did not at and as of the time they were filed (or, if
amended or superseded by a filing prior to the date of this Agreement, then on
the date of such filing) contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(b) The financial statements (including any related notes thereto)
contained in the SEC Reports (collectively, the "IPAC Financial Statements")
-------------------------
were prepared in accordance with generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods involved (except
----
as may be indicated in the notes thereto) and fairly present the consolidated
financial position of the Company as at the respective dates thereof and the
consolidated results of its operations and cash flows for the periods indicated,
except that the quarterly unaudited interim financial statements included in the
IPAC Financial Statements were or are subject to normal year-end audit
adjustments which were not or are not expected to be material in amount.
(c) Since the date of filing of the most recent SEC Report (or, if
amended or superseded by a filing prior to the date of this Agreement, then the
date of such filing) there has not been any change, or any development or
combination of changes or developments that has resulted in or could reasonably
be expected to result in a material adverse change in the assets, financial
condition or affairs of the Company.
2.6 Compliance With Other Instruments. The Company is not in violation or
---------------------------------
breach of any term of its Certificate of Incorporation or Bylaws or to its
knowledge in violation or breach of any term of any indenture, mortgage, deed of
trust or other agreement, instrument, court order, judgment, decree, statute,
rule or regulation to which it is a party or by which it is bound, the violation
or breach of which is likely to result in a material adverse change in the
assets, financial condition or affairs of the Company. The execution, delivery
and performance of and compliance with this Agreement, including the purchase by
the Company of the OSEI Shares and the issuance of the IPAC Shares, will not
result in any such violation or be in conflict with or constitute a default
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<PAGE>
under any such term or result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company
pursuant to any such term.
2.7 Governmental Consents. No consent, approval or authorization of, or
---------------------
designation, declaration or filing with, any Federal or state governmental
authority in the United States is required on the part of the Company in
connection with the valid execution and delivery of this Agreement, the purchase
of the OSEI Shares, the issuance of the IPAC Shares or the consummation of any
other transaction contemplated hereby, except if required, qualifications or
filings in connection with exemptions under any applicable state "blue sky" laws
--------
and Federal securities laws, which qualifications or exemptions, if required,
will have been obtained and will be effective on the Closing Date, or will be
obtained or filed after the Closing Date within the prescribed time in order to
secure such exemptions or qualifications.
2.8 No Finder's Fee. Except as set forth on Exhibit B, the Company has
--------------- ---------
retained no finder or broker in connection with the transactions contemplated by
this Agreement and hereby agrees to indemnify and to hold each OSEI Shareholder
harmless of and from any liability for commission or compensation in the nature
of a finder's fee to any broker or other person or firm (and the costs and
expenses of defending against such liability or asserted liability) for which
the Company, or any of its employees or representatives, are responsible.
SECTION 3
---------
REPRESENTATIONS AND WARRANTIES OF OSEI
--------------------------------------
Except as set forth in the Schedule of Exceptions to the representations
and warranties of OSEI attached hereto as Exhibit C, OSEI represents and
----------
warrants to the Company, as follows. Where used in this Section 3, the terms
"to the knowledge of OSEI, " "of which OSEI is aware" or similar terms mean the
- -------------------------- ----------------------
actual knowledge of the executive officers of OSEI.
3.1 Organization and Standing. OSEI is a corporation duly organized and
-------------------------
validly existing under the laws of the state of California and is in good
standing as a domestic corporation under the laws of said state. OSEI has all
requisite corporate power and authority to own and lease its properties and to
conduct its business as presently conducted. OSEI is qualified as a foreign
corporation in all jurisdictions in which it conducts business, other than any
such jurisdiction where the failure to be so qualified will not have a material
adverse effect on OSEI's business as now conducted.
3.2 Corporate Power. OSEI has all requisite legal and corporate power to
---------------
execute and deliver this Agreement and to carry out and perform its obligations
under the terms of this Agreement.
3.3 Subsidiaries. OSEI does not presently control, directly or
------------
indirectly, any other corporation, partnership, business trust, association or
other business entity, except as listed on Exhibit C.
---------
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<PAGE>
3.4 Capitalization. The authorized capital stock of OSEI consists of
--------------
1,000,000 shares of common stock (the "OSEI Common Stock"). There are 85,000
-----------------
shares of OSEI Common Stock issued and outstanding, all of which are held by the
Shareholders in the amounts listed in Exhibit C. No subscription, warrant,
---------
option or other right to purchase or acquire any shares of any class of capital
stock of OSEI or securities convertible into or exchangeable for such capital
stock are outstanding.
3.5 Authorization. The execution, delivery and performance of this
-------------
Agreement by OSEI have been duly authorized by all requisite corporate action,
and this Agreement constitutes a valid and binding obligation of OSEI
enforceable in accordance with its respective terms, except as may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights, or rules of law governing
specific performance, injunctive relief or other equitable remedies.
3.6 Financial Statements. OSEI's unaudited financial statements for the
--------------------
quarter ended June 30, 1999 (the "OSEI Financial Statements") have been
-------------------------
delivered to the Company. The OSEI Financial Statements present fairly the
financial condition, operating results and cash flows of OSEI in all material
respects as of their date and for the period then ended and have been prepared
in accordance with GAAP applied on a consistent basis throughout the periods
indicated, except that no notes have been included in the OSEI Financial
Statements and the OSEI Financial Statements are subject to year-end
adjustments, consisting only of normal, recurring adjustments necessary to
present the OSEI Financial Statements fairly in accordance with GAAP which
adjustments will not be material in amount.
Since June 30, 1999, there has not been any change in the assets,
liabilities, financial condition or operations of OSEI from that reflected in
the OSEI Financial Statements, other than changes in the ordinary course of
business, none of which individually or in the aggregate has had a materially
adverse effect on such assets, liabilities, financial condition or operations of
OSEI.
Except as shown or reflected in the OSEI Financial Statements, OSEI
does not have outstanding on the date of this Agreement any material
indebtedness or liability (absolute or contingent), except those incurred in the
ordinary course of business since June 30, 1999.
3.7 Title. OSEI has good title to all properties and assets owned by it,
-----
other than any deficiencies in title which, individually or in the aggregate,
are not material to the business or properties of OSEI as a whole. OSEI's
properties and assets are not subject to any liens, mortgages, pledges,
encumbrances or charges of any kind, except liens for current taxes and
assessments not delinquent and except any such liens, mortgages, pledges,
encumbrances or charges which, individually or in the aggregate, are not
material to the business or properties of OSEI as a whole. All material leases
pursuant to which OSEI leases real or personal property are in good standing and
are valid and effective in accordance with their respective terms, and there
exists no material default or other occurrence or condition which could result
in a material default or termination of any such lease.
3.8 Patents and Trademarks. OSEI, to its knowledge, has sufficient title
----------------------
to, ownership of or the right to use, or believes it can obtain on reasonable
terms the right to use, all patents,
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<PAGE>
trademarks, service marks, trade names, copyrights, trade secrets, software
programs, information, proprietary rights and processes ("Proprietary Rights")
------------------
necessary to conduct its business as now conducted, and, to OSEI's knowledge,
OSEI's ownership or use of such Proprietary Rights does not and will not
conflict with or infringe upon the rights of others. OSEI has not received any
written communications (or, to the knowledge of the executive officers of OSEI,
any oral communications) alleging that OSEI has violated any of the Proprietary
Rights of any other person.
3.9 Litigation. There is no action, suit, proceeding or investigation
----------
pending or, to OSEI's knowledge, currently threatened against OSEI which
questions the validity of this Agreement, or the right of OSEI to enter into
this Agreement or to consummate the transactions contemplated hereby or thereby,
or which is likely to result, either individually or in the aggregate, in any
material adverse change in the assets, financial condition or affairs of OSEI or
any change in the current equity ownership of OSEI. The foregoing includes,
without limitation, actions known to OSEI that are pending or threatened and
which involve the prior employment of any of OSEI's employees, their use in
connection with OSEI's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. OSEI is not to its knowledge a party or subject
to the provisions of any order, writ, injunction, judgment or decree of any
court or government agency or instrumentality.
3.10 Compliance With Other Instruments. OSEI is not in violation or breach
---------------------------------
of any term of its Articles of Incorporation or Bylaws or to its knowledge in
violation or breach of any term of any indenture, mortgage, deed of trust or
other agreement, instrument, court order, judgment, decree, statute, rule or
regulation to which it is a party or by which it is bound, the violation or
breach of which is likely to result in a material adverse change in the assets,
financial condition or affairs of OSEI. The execution, delivery and performance
of and compliance with this Agreement will not result in any such violation or
be in conflict with or constitute a default under any such term or result in the
creation of any mortgage, pledge, lien, encumbrance or charge upon any of the
properties or assets of OSEI pursuant to any such term.
3.11 Insurance. OSEI has fire, casualty and liability insurance policies
---------
with recognized insurers, in such amounts and with such coverage as are
customary for similarly situated companies.
3.12 Governmental Consents. No consent, approval or authorization of, or
---------------------
designation, declaration or filing with, any Federal or state governmental
authority in the United States is required on the part of OSEI in connection
with the valid execution and delivery of this Agreement or the consummation of
any transaction contemplated hereby, except if required, qualifications or
filings in connection with exemptions under any applicable state "blue sky"
--------
laws and Federal securities laws, which qualifications or exemptions, if
required, will have been obtained and will be effective on the Closing Date, or
will be obtained or filed after the Closing Date within the prescribed time in
order to secure such exemptions or qualifications.
3.13 No Finder's Fee. OSEI has retained no finder or broker in
---------------
connection with the transactions contemplated by this Agreement and hereby
agrees to indemnify and to hold the Company harmless of and from any liability
for commission or compensation in the nature of a finder's fee to any broker or
other person or firm (and the costs and expenses of defending against such
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<PAGE>
liability or asserted liability) for which OSEI, or any of its employees or
representatives, are responsible.
SECTION 4
---------
REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDERS
--------------------------------------------------
Each of the Shareholders, severally and not jointly, represents and
warrants to the Company with respect to the OSEI Shares to be sold by such
Shareholder, as follows:
4.1 Legal Power. Shareholder has all requisite legal power to execute and
-----------
deliver this Agreement, to sell and convey the OSEI Shares hereunder, and to
carry out and perform its obligations under the terms of this Agreement.
4.2 Authorization. The execution, delivery and performance of this
-------------
Agreement by Shareholder has been duly authorized by all requisite corporate,
partnership or other action if the Shareholder is not an individual, and this
Agreement constitutes a valid and binding obligation of Shareholder enforceable
against it in accordance with its terms, except as may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights, or rules of law governing
specific performance, injunctive relief or other equitable remedies.
4.3 Compliance With Other Instruments. The execution, delivery and
---------------------------------
performance of and compliance with this Agreement by Shareholder and the sale
and transfer of the OSEI Shares by such Shareholder pursuant to the terms
hereof, will not result in any violation or breach of any term of its charter
documents if the Shareholder is not an individual, or to its knowledge any
violation or breach by it of any term of any indenture, mortgage, deed of trust
or other agreement, instrument, court order, judgment, decree, statute, rule or
regulation to which it is a party or by which it is bound or be in conflict with
or constitute a default under any such term or result in the creation of any
mortgage, pledge, lien, encumbrance or charge upon any of the properties or
assets of Shareholder.
4.4 Governmental Consents. No consent, approval or authorization of, or
---------------------
designation, declaration or filing with, any Federal or state governmental
authority in the United States is required on the part of Shareholder in
connection with the valid sale and transfer of the OSEI Shares or the
consummation of any other transaction contemplated hereby, except, if required,
qualifications or filings in connection with exemptions under any applicable
state "blue sky" laws and Federal securities laws, which qualifications or
--------
exemptions, if required, will have been obtained and will be effective on the
Closing Date, or will be obtained or filed after the Closing Date within the
prescribed time in order to secure such exemptions or qualifications.
4.5 No Finder's Fee. Shareholder has retained no finder or broker in
---------------
connection with the transactions contemplated by this Agreement and hereby
agrees to indemnify and to hold the Company harmless of and from any liability
for any commission or compensation in the nature of a finder's fee to any broker
or other person or firm (and the costs and expenses of defending against
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<PAGE>
such liability or asserted liability) for which Shareholder, or any of its
employees or representatives, is responsible.
4.6 Good Title. Shareholder has, and on the Closing Date will have, good
----------
and marketable title to the OSEI Shares proposed to be sold by such person
hereunder on such Closing Date and full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver such OSEI Shares
hereunder, free and clear of all voting trust arrangements, liens, encumbrances,
equities, security interests, restrictions and claims whatsoever, other than
restrictions imposed by applicable federal and state securities laws; and upon
delivery of and payment for such OSEI Shares hereunder, the Company will acquire
good and marketable title thereto, free and clear of all liens, encumbrances,
equities, claims, restrictions, security interests, voting trusts or other
defects of title whatsoever, other than restrictions imposed by applicable
federal and state securities laws.
4.7 OSEI Representations. To the best of such Shareholder's knowledge,
--------------------
each of the representations and warranties made by OSEI in Section 3 hereof are
true and correct.
4.8 Investment Representations.
--------------------------
(a) This Agreement is made by the Company with each Shareholder in
reliance upon such Shareholder's representations and covenants made in this
Section 4.7, which by his execution of this Agreement the Shareholder hereby
confirms.
(b) Shareholder understands that the IPAC Shares have not been
registered under the Securities Act and are being offered and sold pursuant to
an exemption from registration contained in the Securities Act based upon the
representations of each Shareholder contained herein.
(c) Shareholder knows of no public solicitation or advertisement of
an offer in connection with the proposed issuance and sale of the IPAC Shares.
(d) Shareholder is acquiring the IPAC Shares to be issued and sold
hereunder for his own account for investment and not as a nominee and not with a
view to the distribution thereof. Shareholder understands that he must bear the
economic risk of this investment indefinitely unless the IPAC Shares are
registered pursuant to the Securites Act, or an exemption from such registration
is available, and that the Company has no present intention of registering the
IPAC Shares. Shareholder further understands that there is no assurance that any
exemption from the Securities Act will be available or, if available, that such
exemption will allow Shareholder to dispose of or otherwise transfer any or all
of the IPAC Shares under the circumstances, in the amounts or at the times
Shareholder might propose.
(e) By reason of his business or financial experience, Shareholder
has the capacity to protect his own interests in connection with the purchase of
the IPAC Shares hereunder and has the ability to bear the economic risk
(including the risk of total loss) of his investment.
(f) Each Shareholder further covenants that he will not make any
sale, transfer or other disposition of the IPAC Shares in violation of the
Securities Act, the Exchange Act or the rules of the SEC promulgated thereunder.
-8-
<PAGE>
(g) Shareholder acknowledges that the Company's transfer agent shall
make a notation in its stock books regarding the restrictions on transfer set
forth in this Section 4.7 and shall transfer such shares on its books only to
the extent permitted hereunder.
4.9 Legends. Shareholder understands and acknowledges that the
-------
certificate evidencing his IPAC Shares will be imprinted with a legend referring
to the applicable restrictions on the IPAC Shares pursuant to the Securities
Act.
4.10 Tax Advisors. Shareholder has reviewed with his own tax advisors the
------------
federal, state and local tax consequences of this transaction, where applicable,
and the transactions contemplated by this Agreement. Each Shareholder is relying
solely on such advisors and not on any statements or representations of the
Company or any of its agents and understands that each Shareholder (and not the
Company) shall be responsible for the Shareholder's own tax liability that may
arise as a result of the transactions contemplated by this Agreement.
4.11 Investor Counsel. Shareholder acknowledges that he has had the
----------------
opportunity to review this Agreement, the exhibits and the schedules attached
hereto and the transactions contemplated by this Agreement with his own legal
counsel. Each Shareholder is relying solely on such counsel and not on any
statements or representations of the Company or any of its agents for legal
advice with respect to the transactions contemplated by this Agreement.
SECTION 5
---------
CONDITIONS TO CLOSING
---------------------
5.1 Conditions to Company's Obligations. The Company's obligation to
-----------------------------------
purchase the OSEI Shares from the Shareholders at the Closing is subject to the
fulfillment to the Company's satisfaction or prior to the Closing Date of the
following conditions, any of which may be waived in whole or in part by the
Company:
(a) The representations and warranties made by OSEI in Section 3
hereof and by the Shareholders in Section 4 hereof shall be true and correct
when made and as of the Closing Date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company and the Shareholders on or prior to the
Closing Date shall have been performed or complied with.
(c) All matters of a legal nature which pertain to this Agreement,
and the transactions contemplated hereby, shall have been approved by counsel to
the Company.
(d) OSEI and Orient Semiconductor Electronics Limited ("OSE") shall
---
have entered into a Sales Distributor Agreement in the form attached hereto as
Exhibit D and such agreement shall be in full force and effect.
- ---------
-9-
<PAGE>
5.2 Conditions to Obligations of Shareholders. The obligations of the
-----------------------------------------
Shareholders to sell and convey the OSEI Shares at the Closing is subject to the
fulfillment to the satisfaction of Shareholders, on or prior to the Closing Date
of the following conditions, any of which may be waived in whole or in part by
the Shareholders:
(a) The representations and warranties made by the Company in Section
2 hereof shall be true and correct when made and as of the Closing Date.
(b) All covenants, agreements and conditions contained in this
Agreement to be performed by the Company on or prior to the Closing Date shall
have been performed or complied with.
(c) All matters of a legal nature which pertain to this Agreement,
and the transactions contemplated hereby, shall have been approved by counsel to
OSEI.
5.3 Covenants of the Parties.
------------------------
(a) Each of the Company, OSEI and the Shareholders hereby covenants
and agrees to use all reasonable efforts to effect the closing of the
transactions contemplated hereby at the earliest possible date.
(b) The Company agrees that each of the employees of OSEI on the
Closing Date shall be entitled to participate in all employee benefit programs
and stock option plans of the Company to the same extent as other similarly
situated employees of the Company.
(c) The Company covenants and agrees with OSEI and each of the
Shareholders that it shall cause OSEI to declare and pay a dividend to the
Shareholders of those investments held by OSEI as listed in Section 3.3 of
Exhibit C.
- ---------
(d) Each of the Shareholders and OSEI agree to take all actions which
may be necessary to cause the financial statements of OSEI for the last three
fiscal years to be audited and to cause such audited financial statements to be
delivered to the Company no later than December 1, 1999.
(e) The Company and OSE shall take all such actions as may be
reasonably necessary to cause the Registration Rights Agreement between the
Company, OSE and certain other parties to be amended to cause the IPAC Shares
being issued hereunder to be "Registrable Securities" under such agreement.
-10-
<PAGE>
SECTION 6
---------
MISCELLANEOUS
-------------
6.1 Waivers and Amendments. The rights or obligations of any party
----------------------
hereunder under this Agreement may be waived upon the written consent of such
party. This Agreement may be amended upon the written consent of the Company,
OSEI and each of the Shareholders.
6.2 Severability. In the event that any provision of this Agreement shall
------------
be deemed to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof shall not in any way be
affected or impaired thereby.
6.3 Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive any investigation made by any party hereto and the
Closing of the transactions contemplated hereby.
6.4 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be delivered (a) personally;
(b) by facsimile transmission (with verification of transmission without error,
and with copy promptly sent by United States Postal Service (first class mail)
or Federal Express or similar courier); (c) by Federal Express or similar
overnight courier; or (d) by United States Postal Service (first class mail); in
each case with all delivery or postal charges pre-paid. Notices shall be
addressed
(i) if to the Company, to
Integrated Packaging Assembly Corporation
2221 Old Oakland Road
San Jose, CA 95131
Telephone (408) 321-3600
Fax (408) 321-0311
Attention: Patrick Verderico
with a copy to:
Wilson Sonsini Goodrich & Rosati, P.C.
Two Palo Alto Square
Palo Alto, California 94306
Telephone (650) 493-9300
Fax (650) 493-6811
Attention: J. Robert Suffoletta, Esq.
or at such other address as the Company shall have furnished to
the Shareholders in writing.
-11-
<PAGE>
(ii) if to OSEI, to
OSE, Inc.
2700 Augustine Drive, Suite 140
Santa Clara, CA 95054
Telephone (408) 988-6650
Fax (408) 988-7574
Attention: Edmond Tseng, President
with a copy to:
Cooley Godward, LLP
3000 El Camino Real
Five Palo Alto Square
Palo Alto, CA 94306
Telephone (650) 843-5000
Fax (650) 843-843-5048
Attention: Matthew Sonsini
or at such other address as OSEI shall have furnished to the
Company in writing.
(iii) if to a Shareholder, at the address of such Shareholder on
the signature pages hereto, or at such other address as each such Shareholder
shall have furnished to the Company in writing.
Each such notice or communication, addressed and posted as aforesaid,
shall for all purposes of this Agreement be treated as effective or having been
given (a) when delivered, if delivered personally; (b) if delivered by facsimile
transmission as provided above, then on the same day if the transmission is
completed and received by 5:00 p.m. on a business day or, if the transmission is
completed and received after 5:00 p.m. on any business day or at any time on a
non-business day, then on the next business day; (c) one (1) business day after
the business day of deposit with Federal Express or similar courier, if
delivered by such means; or (d) upon the earlier of its receipt or five (5)
business days after the business day of deposit with the United States Postal
Service (first class mail) if delivered by such means.
6.5 Entire Agreement. This Agreement and the exhibits hereto constitute
----------------
the full and entire understanding and agreement among the parties with regard to
the subjects hereof and supersede any and all prior agreements and
understandings among the parties.
6.6 Governing Law. This Agreement shall be governed by and construed and
-------------
enforced in accordance with the laws of the State of California and the Federal
laws of the California as they apply to contracts entered into and wholly to be
performed within the State of by residents of such state.
-12-
<PAGE>
6.7 Expenses. Each party hereto shall each bear all expenses that such
--------
respective party has incurred or incurs in connection with this Agreement and
the transactions contemplated hereby, and any amendments or waivers hereto.
6.8 Attorneys' Fees; Limitation of Liability. In the event of any
----------------------------------------
litigation in a court of competent jurisdiction arising in connection with this
Agreement and the transactions contemplated hereby, the prevailing party in
judgment shall be entitle to recover reasonable legal fees and costs in
connection with such action. Except in the case of fraud on the part of a
Shareholder, the total amount of all payments that such Shareholder can be
required to make under or in connection with this Agreement shall be limited to
the aggregate purchase price for such Shareholder's OSEI Shares.
6.9 Titles and Subtitles. The titles of the paragraphs and subparagraphs
--------------------
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original and all of which together shall
constitute one instrument.
[Remainder of page intentionally left blank]
-13-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered as of the day and year first written above.
COMPANY: INTEGRATED PACKAGING ASSEMBLY
CORPORATION, a Delaware corporation
By: /s/ P. Verderico
-----------------------------------------
Patrick Verderico, President and Chief
Executive Officer
OSEI: OSE, INC., (USA)
By: /s/ Edmond Tseng
-----------------------------------------
Title: President
--------------------------------------
OSEI SHAREHOLDERS: ORIENT SEMICONDUCTOR ELECTRONICS,
LIMITED
By: /s/ Calvin Lee
-----------------------------------------
Title: President
--------------------------------------
Address: 12-2, Nei-Huan S. Road
------------------------------------
NEPZ, Kaohsiung 81120, Taiwan, ROC
--------------------------------------------
____________________________________________
Edmond Tseng
Address:____________________________________
/s/ Tom Majeski
--------------------------------------------
Tom Majeski
Address: 15231 Skyview Dr
------------------------------------
San Jose, CA 95132
--------------------------------------------
-14-
<PAGE>
/s/ Danny Chang
---------------------------------------------
Danny Chang
Address: 45530 Cheyenne Place
-------------------------------------
Fremont, CA 94539
---------------------------------------------
/s/ Calvin Lee
---------------------------------------------
Calvin Lee
Address: 5F-5, No.33, Ming Che Road
---------------------------------------------
San Ming District 807, Kaohsiung,
---------------------------------------------
Taiwan R.O.C
/s/ Eugene Duh
---------------------------------------------
Eugene Duh
Address: No. 92, Hwa-Fong Street
-------------------------------------
Gu-Shan District 804, Kaohsiung Taiwan,
---------------------------------------------
R.O.C
-15-
<PAGE>
Exhibit A
---------
Schedule of OSEI Shareholders
-----------------------------
<TABLE>
<CAPTION>
OSEI Shares IPAC Shares
----------- -----------
<S> <C> <C>
Orient Semiconductor Electronics, Limited 16,000 4,877,193
Edmond Tseng 15,000 4,572,369
Tom Majeski 15,000 4,572,369
Danny Chang 15,000 4,572,369
Calvin Lee 14,000 4,267,544
Eugene Duh 10,000 3,048,246
------ ----------
Total 85,000 25,910,090
====== ==========
</TABLE>
-i-
<PAGE>
EXHIBIT 2.2
OSE INC. EXCLUSIVE SALES DISTRIBUTOR AGREEMENT
This Sales Distributor Agreement (the "AGREEMENT") is made and entered into this
29th day of October, 1999 (the "EFFECTIVE DATE"), between ORIENT SEMICONDUCTOR
ELECTRONICS LTD., a Taiwanese corporation ("MANUFACTURER") and OSE INC. (U.S.),
a California corporation ("DISTRIBUTOR").
THE PARTIES AGREE AS FOLLOWS:
Article 1 APPOINTMENT
-----------
1.1 Subject to the terms and conditions of this Agreement, Manufacturer
appoints Distributor as its exclusive sales distributor with the right to place
orders for the products for the IC assembly test and services (the "Products")
within the United States, Canada and Mexico (the "Territory"). By its execution
of this Agreement, Distributor accepts appointment as Manufacturer's exclusive
sales distributor in the Territory, subject to the terms and conditions of this
Agreement.
1.2 Manufacturer reserves the right to discontinue manufacturing and
selling or to modify any of its Products, subject to the limitations in
paragraph 5 of this Article. Manufacturer will keep Distributor informed about
pending modifications to or deletions from its Products.
1.3 Manufacturer reserves the right to deal directly with any customer at
any time; however, in such event, Distributor will receive the full payment it
would otherwise have received under Article 6.
1.4 Distributor will not sell or promote products that, in the opinion of
Manufacturer, are directly or indirectly in conflict or competitive with
Manufacturer's Products without prior approval in writing by Manufacturer.
1.5 At its sole discretion, upon 30 days' written notice to Distributor,
Manufacturer may, from time to time,
(a) add to the definition of "Products" the description of any new
item that is similar in kind to any item already described as Products in this
Agreement; or
(b) substitute for any item described in the definition of "Products"
in this Agreement the description of a similar item; or
(c) delete any Product described herein, the production of which has
been discontinued or limited by Manufacturer.
1.6 Distributor will provide Manufacturer with a complete list of
companies it represents and products it sells and agrees to notify Manufacturer
in writing of each deletion or addition to this list while this Agreement is in
effect.
<PAGE>
1.7 Manufacturer will inform Distributor of facts and policies concerning
the shipment and transportation of Products to the extent necessary to satisfy
reasonable and foreseeable customer inquiries.
1.8 Manufacturer agrees to maintain sufficient inventory and supplies to
enable it to fill promptly all orders placed by Distributor.
Article 2 DURATION OF THE AGREEMENT
-------------------------
2.1 The term of this Agreement shall be for a period of ten (10) years
from the Effective Date. This Agreement shall automatically renew itself for an
additional ten (10) years, upon the same terms and conditions unless terminated
pursuant to Article 4.
Article 3 TERRITORY
---------
3.1 Manufacturer grants to Distributor the exclusive right to place orders
for Products from any potential customer, subject to the exceptions listed in
paragraph 3.3, located in the Territory.
3.2 Manufacturer shall provide to Distributor with a list of exporters and
companies that Distributor is prohibited from making sales to for the express
purpose of sale or resale in foreign markets. Distributor may make such sales
only after obtaining written approval from Manufacturer.
3.3 The Territory may subsequently be modified, enlarged, reduced, or
otherwise modified in area by the mutual written consent of the parties to this
Agreement.
Article 4 TERMINATION
-----------
4.1 Either party will have the right to terminate this Agreement, prior to
the expiration of the term (or any renewal term) hereof, upon the occurrence of
any of the following events:
(a) Any material breach or default by the other party of any term,
obligation, covenant, or warranty under this Agreement, if the breach or default
is not waived in writing by the non-defaulting party, at any time after ninety
(90) days' written notice to the party in breach or default if during such 90-
day period the party in breach or default has failed to cure such material
breach or default;
(b) Mutual written consent of the parties;
(c) Written notice of termination given by either party to the other
party if such other party commits, or becomes subject to, any of the following
acts or proceedings:
(i) the filing of a voluntary or involuntary petition in
bankruptcy or other insolvency proceeding, including a petition for
reorganization; or
-2-
<PAGE>
(ii) the general inability of a party to pay its debts as
such debts become due; or
(iii) the appointment of a receiver or trustee of the
business of the party, or a creditor's taking over of the business of a party.
4.2 If Manufacturer terminates this Agreement for any reason prior to the
expiration of the term, such early termination by Manufacturer will require the
payment by Manufacturer of the following amount to compensate Distributor for
early termination:
(i) if during the first year from the Effective Date, $5.0 million;
(ii) if during the second year from the Effective Date, $4.5 million;
(iii) if during the third year from the Effective Date, $4.0 million;
(iv) if during the fourth year from the Effective Date, $3.5 million;
(v) if during the fifth year from the Effective Date, $3.0 million;
(vi) if during the sixth year from the Effective Date, $2.5 million;
(vii) if during the seventh and eighth year from the Effective Date, $2.0
million; or
(viii) if during the ninth or tenth year from the Effective Date, $1.5
million.
4.3 Within 30 days after the termination of this Agreement if terminated
due to a material breach or default of the Distributor, Distributor shall
surrender to Manufacturer a list of active negotiations with customers and
prospective customers. Distributor shall also surrender to Manufacturer a copy
of all support materials such as letters, contact reports, etc., for each
potential sale listed.
4.4 Manufacturer must pay 100% of applicable payments to the terminated
Distributor for orders received (and subsequently accepted) by Manufacturer from
prospective customers who appear in the list surrendered to Manufacturer
pursuant to paragraph 4.3 if such orders are received (and subsequently
accepted) within six months of termination date.
4.5 Upon termination of this Agreement, Distributor must return promptly
to Manufacturer all samples, sales manuals, price lists, technical information,
and any and all papers relating to the business between Manufacturer and the
customers in the Territory that are in Distributor's possession. The costs of
returning the aforesaid material will be paid by the party electing to terminate
the relationship, except that if termination is as a result of a material breach
or default the breaching or defaulting party shall be responsible for such
costs.
4.6 All samples, brochures, confidential material, trademarks, patents,
drawings, technical and sales aids, and any other material submitted by
Manufacturer to Distributor are the property of Manufacturer. Upon termination
of this Agreement, Distributor must, within a reasonable time, gather and pack
all such material in its possession for return shipment, in accordance with
Manufacturer's reasonable instructions.
-3-
<PAGE>
4.7 Upon termination of this Agreement, Manufacturer must honor all orders
placed by Distributor and accepted prior to termination, and Distributor shall
be entitled to payments pursuant to Article 6.
4.8 Promptly upon the termination (for any reason) of this Agreement,
Distributor must immediately and forever thereafter cease to place orders or to
represent in any manner that Distributor is associated with Manufacturer.
4.9 Promptly upon the termination (for any reason) of this Agreement,
Distributor shall discontinue use of any trademarks or trade names of
Manufacturer or relating to the Products, including, but not limited to,
advertising and business materials of Manufacturer. At its own expense,
Distributor will remove all signs which designate Distributor as distributor or
agent of Manufacturer and shall give notice to publications that list it as a
distributor of Manufacturer. In the event Distributor fails to so remove, or
give notice, Manufacturer may itself so remove, or give notice, at Distributor's
expense.
4.10 The confidentiality requirement of Article 12 shall survive
termination of this Agreement. In addition, Distributor must return all
confidential information, as described in Article 12 hereof, immediately upon
termination of this Agreement.
4.11 Any termination under this Article will not deprive the terminating
party of its legal or equitable remedies for breach of this Agreement.
4.12 All customers placed by Distributor during the term of this Agreement
are the customers of Manufacturer. For a period of one year immediately
following the termination of this Agreement, Distributor shall not:
(a) disclose to any person, firm, or corporation the names or
addresses of any of Manufacturer's customers or any information pertaining to
them; or
(b) call on, solicit, or take away any of Manufacturer's customers on
whom Distributor called or with whom it became acquainted during the term of
this Agreement, for the purpose of selling, or negotiating to sell, products
which, in the opinion of Manufacturer, compete with the Products.
Article 5 PAYMENT TO DISTRIBUTOR
----------------------
5.1 The payments set forth in this section will be the sole compensation
and payment in full to Distributor for all services Distributor will render
under this Agreement.
5.2 Manufacturer will pay Distributor a payment of five percent (5%) of
the gross invoice value of Manufacturer's shipment to purchaser.
5.3 Payment will be deemed earned by Distributor when invoice is remitted
to the purchaser.
-4-
<PAGE>
5.4 Manufacturer retains the discretion to allocate payments between
Distributors or between Distributor(s) and Manufacturer, when the place of
initial placement, location of purchaser, and shipping destination do not all
fall within the Territory of a single Distributor. The total of the split
payments will add up to a full payment, and each Distributor involved will
receive a proportionate share relative to its contribution as determined by
Manufacturer.
5.5 Manufacturer shall use good faith to not knowingly allow reshipment by
a purchaser for the purpose of avoiding the payment of payments to Distributor.
Article 6 PAYMENT TO MANUFACTURER
-----------------------
6.1 Manufacturer and Distributor will determine on a case-by-case basis
whether to set off the amount of payment earned in connection with Products
returned, for any reason, by customers against payments otherwise earned by
Distributor. If a customer returns a Product for warranty service, repair, or
replacement, Distributor's payment will not be affected unless the customer
receives a refund.
6.2 Manufacturer will provide Distributor with a statement of shipments of
Products to customers within Distributor's Territory as soon as practicable.
6.3 Upon collection, Distributor will deduct the amount of payment earned
in connection with sales of Products, and then remit the balance of the
collection to Manufacturer.
6.4 Distributor will have the right to engage, at its own expense, an
independent, certified public accountant reasonably acceptable to Manufacturer,
to examine Manufacturer's records from time to time as may be necessary to
determine but no more than once annually, with respect to any calendar year, the
correctness of any report or payment made under this Agreement. If any such
audit reveals an underpayment of more than five percent of the correct amount of
payments due hereunder, such audit will be at the expense of Manufacturer. If
any audit conducted on behalf of Distributor shall show that Manufacturer
underpaid the payments due to Distributor under the Agreement herein as to the
period subject to the audit, then Manufacturer shall immediately pay to
Distributor any such deficiency with interest thereon at an annual rate equal to
two percent above the U.S. dollar reference rate (the "prime rate") charged from
time to time by Citibank, N.A. from the date due until paid or at such lower
rate as shall be the maximum rate permitted by law.
Article 7 COLLECTIONS
-----------
7.1 Distributor will have primary responsibility for all collections from
customers.
7.2 Distributor and Manufacturer will share in the assumption of any bad
debts that arise from customer sales such that one-third (33.3%) of the bad debt
will be assumed by Distributor, and two-thirds (66.6%) of the bad debt will be
assumed by Manufacturer.
-5-
<PAGE>
7.3 For purposes of this Article 7, bad debt will be calculated net of all
collection expenses, including legal fees.
7.4 At least two times per month, Distributor will send to Manufacturer
the collection amount net of payment via wire transfer to the financial
institution designated by Manufacturer.
Article 8 DISTRIBUTOR'S EXPENSES
----------------------
8.1 Distributor shall be solely responsible for all expenses incurred for
the operation of its office and sales activities, including, without limitation,
office and warehouse rent, salaries and payments of office help and salesmen in
its employ, licenses, taxes, insurance, automotive costs, transportation and
living expenses.
8.2 Distributor must maintain full liability insurance on automotive and
other transportation equipment utilized in the course of Distributor's business
to protect Manufacturer from responsibility or liability resulting from
accidents. Distributor must also maintain, at its own expense, full insurance
under any Workers' Compensation Laws effective in the Territory, covering all
persons employed by and working for Distributor in connection with this
Agreement.
8.3 Manufacturer will be solely responsible for the payment of expenses
incurred for producing, packaging, shipping, and, where applicable, installing
the Products.
Article 9 SALES PROMOTION
---------------
9.1 Distributor must use its commercially reasonable efforts to place
orders for Products in the Territory during the term of this Agreement.
9.2 Distributor will be solely responsible for marketing and sales
activities within the Territory, including all customer visits, direct mail, and
telephonic contacts of customers. All of Distributor's marketing and sales
efforts shall be at Distributor's sole discretion.
9.3 Distributor will be responsible for negotiating sales with customers,
subject to Distributor's keeping Manufacturer reasonably informed of sales
negotiations within the Territory.
9.4 Distributor will use its commercially reasonable efforts to
communicate to Manufacturer any operational or product difficulties expressed by
customers in the Territory. Upon reasonable request by Manufacturer,
Distributor will also assist Manufacturer on matters relating to quality
assurance and technical issues to improve business prospects in the Territory.
9.5 Distributor must provide Manufacturer, on or before December 1 and May
1 of each year, with a sales forecast on a Product-by-Product basis for the next
six month period beginning January 1 and June 1, respectively.
Article 10 ADVERTISING
-----------
-6-
<PAGE>
10.1 Manufacturer will supply to Distributor, without cost to Distributor,
reasonable quantities of Manufacturer's advertising and selling literature,
samples, price lists, displays, drawings, technical or engineering data, and
other data relating to the Products, if any, as designed and made available by
Manufacturer.
10.2 Distributor agrees to utilize, distribute, and display the advertising
and selling aids provided by Manufacturer in a manner reasonably intended to be
effective.
10.3 Distributor will charge sixty-five percent (65%) of any advertising
costs or expenses to Manufacturer, and will be responsible for the remaining
thirty-five percent (35%) of such costs; provided, however, that Manufacturer
shall be fully responsible for all advertising costs and expenses relating to
the "Semicon International" advertisements in the Territory. Distributor and
Manufacturer shall equally share the costs associated with a hospitality suite
at the "Semicon" trade show.
10.4 Distributor and Manufacturer shall share the JEDEC standard meeting
joining fee such that Distributor shall be responsible for one-third (33.3%),
and Manufacturer shall be responsible for two-thirds (66.6%) of such fee.
10.5 Manufacturer shall be fully responsible for the cost of the JEDEC
joint membership annual fee.
10.6 Distributor agrees to provide Manufacturer with complete written
descriptions of Distributor's planned use of any authorized trademark or trade
names of Manufacturer on stationery, invoices, catalogs, brochures, or other
materials and to submit to Manufacturer samples of any advertising or other
written materials which use such trademark or trade name. Distributor agrees
not to make any use of Manufacturer's trademark or trade name without
Manufacturer's prior written approval, which shall be given at Manufacturer's
discretion.
Article 11 INFRINGEMENT AND INDEMNITY
--------------------------
11.1 Distributor shall promptly notify Manufacturer in writing in the event
Distributor is informed or has reason to believe that any third party is or may
be infringing upon any patent, copyright, trademark, or other proprietary right
relating to any Product. Upon Manufacturer's reasonable request, Distributor
shall fully cooperate with Manufacturer in the prosecution of such infringement
claim relating to any Product, and such cooperation shall include making
available all of Distributor's records pertaining to the Products or
Distributor's representation under this Agreement. Distributor's cooperation on
such matters shall be at Manufacturer's reasonable expense.
11.2 Manufacturer shall be permitted to defend, settle, compromise, or
otherwise respond to any such infringement in whatever manner it deems fit, in
its absolute discretion.
-7-
<PAGE>
11.3 Distributor and Manufacturer will share equally in the cost of any
sales or import taxes and duties arising under the laws of the United States,
any State, political subdivision of a State, or municipality that arise directly
from the representation under this Agreement.
Article 12 CONFIDENTIALITY
---------------
12.1 Each party hereto will maintain in confidence all confidential
information disclosed by the other party hereto. Neither party will use,
disclose or grant use of such Confidential Information except as expressly
authorized by this Agreement. To the extent that disclosure is authorized by
this Agreement, the disclosing party will obtain prior agreement from its
employees, agents or consultants to whom disclosure is to be made to hold in
confidence and not make use of such information for any purpose other than those
permitted by this Agreement. Each party will use at least the same standard of
care as it uses to protect its own most confidential information to ensure that
such employees, agents or consultants do not disclose or make any unauthorized
use of such confidential information. Each party will promptly notify the other
upon discovery of any unauthorized use or disclosure of the confidential
information. Notwithstanding any other provision in this Agreement to the
contrary, the obligations set forth in this Article 12 shall survive any
termination or expiration of this Agreement for a period of ten (10) years
thereafter.
12.2 The obligations of confidentiality contained in Section 12.1 will not
apply to the extent that it can be established by the receiving party by
competent proof that such confidential information:
(a) was already known to the receiving party, other than under an
obligation of confidentiality, at the time of disclosure by the other party;
(b) was generally available to the public or otherwise part of the
public domain at the time of its disclosure to the other party;
(c) became generally available to the public or otherwise part of the
public domain after its disclosure and other than through any act or omission of
the receiving party in breach of this Agreement; or
(d) was disclosed to the receiving party, other than under an
obligation of confidentiality, by a third party who had no obligation to the
other party not to disclose such information to others.
12.3 Each party may disclose the confidential information to the extent
such disclosure is reasonably necessary in filing or prosecuting patent
applications, prosecuting or defending litigation or complying with applicable
governmental regulations, provided that if such party is required to make any
such disclosure of the confidential information it will to the extent
practicable give reasonable advance notice to the other party of such disclosure
requirement and, except to the extent inappropriate in the case of patent
applications, will use its best efforts to secure confidential treatment of such
information required to be disclosed.
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<PAGE>
Article 13 PRODUCT WARRANTY AND PRODUCT LIABILITY
--------------------------------------
13.1 Manufacturer will provide its standard warranty ("warranty") covering
Products to each customer placed by Distributor.
13.2 Such warranty will contain a statement to the effect that no one is
authorized to make any warranty or representation other than as set forth in the
warranty and that the customer may not rely on any other warranty or
representation.
13.3 Manufacturer will indemnify Distributor for all liability, loss,
costs, expenses, or damages howsoever caused by any Products (whether or not
defective), including but not limited to any injury to any person or to
property.
Article 14 RETURNED PRODUCTS
-----------------
14.1 Distributor shall inform any customers that desire to return Products
that Products must be returned to Manufacturer.
14.2 If Distributor does receive returned Products, Distributor agrees to
keep Products for a reasonable time and in such a manner that Products will not
be damaged in any way beyond normal deterioration, subject to Manufacturer's
approval. Manufacturer agrees to retrieve Products in a reasonable time and at
its own expense. Manufacturer shall reimburse Distributor for any reasonable
storage costs within one month after retrieval.
Article 15 REPAIRS
-------
15.1 Distributor understands that it is not authorized by this Agreement to
perform servicing of any kind upon any Products in the Territory or elsewhere
absent the express prior written approval of Manufacturer.
15.2 Distributor shall report to Manufacturer all malfunctions of or
related to the Products which come to Distributor's attention.
15.3 Distributor shall be technically capable and physically equipped to
undertake nominal field repairs.
Article 16 DISTRIBUTOR'S IMPROVEMENTS IN PRODUCTS
--------------------------------------
16.1 If Distributor makes any discoveries, devices, or other tangible or
intangible improvement relating to Products and to which Distributor can
legitimately claim a proprietary right, Distributor agrees to give Manufacturer
the first right to negotiate to use, license, or market such improvement outside
Distributor's Territory.
Article 17 REPORTS
-------
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<PAGE>
17.1 Every six months, in connection with the sales forecast required in
Paragraph 9.5 of this Agreement, Distributor will report to Manufacturer
concerning i) its activities under this Agreement from the date of its last
report to the date of the report in question and ii) the proposed activities of
Distributor under this Agreement for the next six month period. Distributor
shall also notify Manufacturer at once concerning major developments in the
Territory relating to the sale or use of the Products.
Article 18 NOTICES
-------
18.1 Except with respect to oral notices expressly permitted by this
Agreement, any notice or communication contemplated by, or made pursuant to,
this Agreement must be in writing and will be deemed delivered on the date of
delivery if delivered personally, or in three days after mailing if placed in
the United States mail, postage pre-paid addressed to Distributor or
Manufacturer, as the case may be, at the address shown below in this Article or
such other address as the relevant party shall designate with at least 10 days'
written notice.
18.2 Notwithstanding the above paragraph, the parties may communicate by
telegram, telex, electronic mail or confirmed facsimile and such telegram,
telex, electronic mail or confirmed facsimile shall be deemed delivered on the
date of transmission if sent to the address shown in this Article or such other
address as shall be designated with at least 10 days' written notice.
18.3 Every notice to Manufacturer required or contemplated by this
Agreement shall be sent to Manufacturer as follows:
Manufacturer
__________________________
__________________________
Attention: _______________
Facsimile:________________
18.4 Every notice to Distributor required or contemplated by this Agreement
shall be sent to Distributor as follows:
Distributor
__________________________
__________________________
Attention: _________________
Facsimile: _________________
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<PAGE>
Article 19 ASSIGNMENT
----------
19.1 The rights or obligations of either party to this Agreement may be
assigned or delegated, respectively, in connection with the sale of all or any
portion of the business of the assigning or delegating party; provided, however,
that the assignee or delegatee (1) continues the transferred business for
portion thereof sold upon essentially the same or larger scale and scope of
effectiveness as Manufacturer's or Distributor's business or portion thereof
sold and (2) enters into a binding legal contract, where permitted under
controlling law, with the selling Manufacturer or Distributor prohibiting the
seller from engaging in an activity competitive with the assignee or delegatee
in the Territory for a period of three years or more from the effective date of
such transfer or assignment.
19.2 Manufacturer will not restrict Distributor's appointment of desirable
and effective sub-agents in the Territory involved, pursuant to Article 23.
Article 20 TRADEMARKS AND TRADE NAMES
--------------------------
20.1 Distributor is authorized to use Manufacturer's trademark or trade
name as a trademark connected with the Products and shall always refer to the
Products in such a manner as to indicate that they are the Products of
Manufacturer. Distributor agrees to use only Manufacturer's trademark or trade
name in referring to Products.
20.2 Distributor acknowledges that it has no right in or to either the name
Orient Semiconductor Electronics Ltd. or any trademark or trade name currently
used or which may later be used by Manufacturer, and Distributor agrees that it
shall not acquire any right to such name, trademark, or trade name by virtue of
this Agreement or any operations under this Agreement.
20.3 Distributor further agrees that it will not use any trademark or trade
name used by or similar to those used by Manufacturer in any manner as a part of
its business, corporate, or trade name or otherwise, except in a manner
preserving Manufacturer's rights therein and with Manufacturer's prior written
permission.
20.4 Distributor will not remove, deface, destroy, or conceal in any way
any insignia, decal, label, or other markings placed on the Product or Product's
container by Manufacturer.
20.5 Distributor shall not obtain or attempt to obtain in any country or
Territory during the term of this Agreement or any time thereafter any right,
title, or interest in or to any patents, trademarks, trade names, utility
models, or other industrial property currently or hereafter used or owned by
Manufacturer or in or to any design or improvements or inventions whatsoever
embodied in or to be embodied in the Products, except with the prior written
consent of Manufacturer, and Distributor hereby expressly waives any right that
it may have, or may subsequently have, to do so. In the event that any such
right, title, or interest should be obtained by Distributor in contravention of
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<PAGE>
this Article, Distributor shall hold the same on behalf of Manufacturer and must
transfer the same to Manufacturer upon Manufacturer's request and without
expense to Manufacturer.
20.6 Upon expiration or other termination of this Agreement or upon request
by Manufacturer, Distributor must cease using, in any way, any and all
trademarks or trade names of Manufacturer and shall cease making any reference
to such marks or names in its stationery, advertising, in telephone books and
directories, and in or on any other property in its possession or control.
Article 21 LEGAL FEES AND COSTS
--------------------
21.1 If any legal action or other proceeding is brought to enforce this
Agreement, the successful or prevailing party will be entitled to recover
reasonable attorneys' fees and other costs incurred in any such action or
proceeding, in addition to any other relief to which it may be entitled.
Article 22 LEGAL RELATIONSHIP
------------------
22.1 Distributor is neither the legal representative nor the agent of
Manufacturer for any purpose whatsoever and has no right or authority to assume
or create any obligations of any kind or make any representations or warranties,
whether express or implied, on behalf of Manufacturer or to bind Manufacturer in
any respect whatsoever without the prior written consent of Manufacturer.
22.2 Manufacturer warrants that the Products sold under this Agreement are
and will be free of any patent infringement. Manufacturer agrees to defend at
its expense all actions and suits alleging infringement to which Distributor may
be made a party. Manufacturer shall indemnify Distributor from all claims of
infringement of any patent, copyright, trademark, or other proprietary right
with respect to any Product and all other claims against Distributor with
respect to Products including, without limitation, product liability claims.
Distributor shall promptly notify Manufacturer in the event any such claim is
made against Distributor or Manufacturer, and Manufacturer shall at its option
defend or otherwise respond to any such claim or pay Distributor's reasonable
costs for so defending or responding. Distributor shall fully cooperate with
Manufacturer in defense of all such claims.
22.3 If, at any time this Agreement remains in force, Distributor has
reason to believe it has any claim against Manufacturer with respect to any
transaction arising from this Agreement, it will notify Manufacturer thereof, in
writing, upon the occurrence of the event considered in the claim, or within 60
days thereafter. If Distributor fails to notify Manufacturer in the manner
prescribed in this paragraph, Distributor shall be deemed to have waived its
claim against Manufacturer.
22.4 Distributor will have the right to appoint or otherwise designate
suitable and desirable salesmen, employees, agents, and representatives.
Distributor will be solely responsible for such persons and their acts. Such
persons must be employed at Distributor's own risk, expense, and supervision and
will not have any claim against Manufacturer for salaries, payments, items of
cost, or any other form of compensation or reimbursement. Distributor agrees
and covenants that such
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<PAGE>
persons will be subordinate to Distributor and subject to each and all of the
terms, provisions, and conditions applying to Distributor under this Agreement.
Article 23 FORCE MAJEURE
-------------
23.1 Neither Manufacturer nor Distributor shall be responsible or liable
for its failure to perform its obligations under this Agreement due to events
beyond its reasonable control including, but not limited to, strikes, riots,
wars, fire, acts of God, acts in compliance with any law, regulation, or
ordinance (whether valid or invalid) of any government.
Article 24 APPLICABLE LAW AND JURISDICTION
-------------------------------
24.1 This Agreement shall be governed and construed in accordance with the
laws of the State of California. If any provision is held invalid by any court
of competent jurisdiction, its invalidity shall not affect any other provision
in this Agreement.
24.2 The parties to this Agreement unconditionally and irrevocably agree
that the state and federal courts of California and any courts competent to hear
appeals from such courts shall have the exclusive jurisdiction over any and all
actions arising out of or in relation to this Agreement.
Article 25 COUNTERPARTS
------------
25.1 This Agreement may be executed in any number of counterparts, and each
counterpart shall constitute an original instrument, but all such separate
counterparts shall constitute only one and the same instrument.
Article 26 SEVERABILITY
------------
26.1 Any provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition without invalidating the remaining provisions hereof or
affecting the validity or enforceability of such provision in any other
jurisdiction.
Article 27 WAIVER
------
27.1 Failure by either party at any time to require the other party's
performance of any obligation under this Agreement shall not affect its right to
require performance of that obligation. Any waiver of any breach of any
provision of this Agreement shall not be construed as a waiver of any continuing
or succeeding breach of such provision, a waiver or modification of the
provision itself, or a waiver or modification of any right under this Agreement.
No waiver will be binding unless executed in writing by the party making the
waiver.
Article 28 MODIFICATIONS
-------------
28.1 No modification, amendments, or supplements to this Agreement shall be
effective for any purpose unless made in writing and signed by each party.
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<PAGE>
Article 29 ENTIRE AGREEMENT
----------------
29.1 This Agreement, which includes the Schedules attached hereto,
constitutes the entire agreement between the parties pertaining to the subject
matter of this Agreement and supersedes all prior and contemporaneous
agreements, representations, and understandings of the parties. No party is
relying upon any warranties, representations, definitions, or inducements not
set forth in this Agreement. Except as stated herein, no supplement,
modification, or amendment of this Agreement will be binding unless executed in
writing by both parties.
[REMAINDER OF PAGE LEFT INTENTIONALLY BLANK]
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<PAGE>
IN WITNESS WHEREOF, the parties to this Agreement have caused this Agreement to
be duly executed at Santa Clara, California, as of the first date written above.
MANUFACTURER
Orient Semiconductor Electronics Ltd.
By: /s/ Calvin Lee
-----------------------------
Title: President
--------------------------
DISTRIBUTOR
OSE Inc.
By: Edmond Tseng
-----------------------------
Title: President
--------------------------
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