Exhibit 2.1
MERGER AGREEMENT
THIS MERGER AGREEMENT (the "Agreement") is made as of October 21, 1998,
by and among MISYN Acquisition Corp., a Delaware corporation ("Micrel
Subsidiary"), Micrel, Incorporated, a California corporation ("Micrel"),
Synergy Semiconductor Corporation, a California corporation ("Seller"), and
Xxxx X. Xxxxxxxx (the "Seller Representative").
RECITALS
Micrel and Seller desire to merge (the "Merger") Micrel Subsidiary with
and into Seller with Seller being the surviving corporation (the "Surviving
Corporation") of the Merger.
NOW, THEREFORE, the parties hereto hereby agree as follows:
AGREEMENT
ARTICLE 1
MERGER
1.1 The Merger. Subject to the terms and conditions of this Agreement
and in accordance with the General Corporation Law of the State of California
(the "California Act") and the Delaware General Corporation Law (the
"Delaware Act"), at the Effective Time (as hereinafter defined), Micrel
Subsidiary will be merged with and into Seller, with Seller being the
Surviving Corporation of the Merger and becoming a wholly-owned subsidiary of
Micrel and the separate corporate existence of Micrel Subsidiary ceasing.
1.2 The Closing. Subject to the terms and conditions of this
Agreement, the consummation of the Merger and the other transactions
contemplated hereby (the "Closing") shall take place as promptly as
practicable (and in any event within three (3) business days) after the
satisfaction or waiver of the conditions set forth in Article 7 hereof, at
the offices of Xxxxxxxx & Xxxxxxxx LLP, 755 Page Xxxx Xxxx, Xxxx Xxxx,
Xxxxxxxxxx 00000, or such other place and time as the parties may otherwise
agree. The date of the Closing is referred to herein as the "Closing Date."
1.3 Filing of Merger Documents; Effective Time. At the Closing, the
parties shall cause the Merger to be consummated by executing and filing duly
executed Agreements of Merger and duly executed Certificates of Merger
(collectively the "Merger Documents") with respect to the Merger with the
Secretary of State of the States of California and Delaware, in such form as
Micrel reasonably determines is required by and in accordance with the
relevant provisions of the California Act and the Delaware Act. The time
upon which such filing becomes effective in accordance with the California
Act and the Delaware Act is referred to herein as the "Effective Time."
1.4 Effect of Merger. At the Effective Time, the effect of the Merger
shall be as provided in the California Act and the Delaware Act. Without
limiting the generality of the foregoing, at the Effective Time:
(a) All property, rights, privileges, policies and franchises of
Seller and Micrel Subsidiary shall vest in the Surviving Corporation and all
debts, liabilities and duties of Micrel Subsidiary and Seller shall become
the debts, liabilities and duties of the Surviving Corporation.
(b) The Articles of Incorporation and the Bylaws of Seller, as in
effect immediately prior to the Closing Date, shall become the Articles of
Incorporation and Bylaws of the Surviving Corporation, unless and until
amended in accordance with their terms and as provided by law.
(c) The directors of the Micrel Subsidiary shall become the
directors of the Surviving Corporation, each to hold a directorship in
accordance with the Articles of Incorporation and Bylaws of the Surviving
Corporation until his successor is duly elected and qualified, and the
parties listed on Schedule 1.4 shall be the respective officers of the
Surviving Corporation as identified on Schedule 1.4.
1.5 Tax and Accounting Treatment. The parties hereto acknowledge and
agree that the Merger contemplated hereby shall be treated for accounting
purposes as a purchase. The parties also acknowledge and agree that the
Merger is intended to be a taxable transaction under the Internal Revenue
Code of 1986, as amended (the "Code").
ARTICLE 2
CONVERSION OF STOCK
2.1 Consideration; Conversion of Stock.
2.1.1 At the Effective Time, by virtue of the Merger, and without
further action by any person or entity, all of the shares of Seller Stock (as
hereinafter defined) issued and outstanding immediately prior to the
Effective Time (other than Dissenting Shares (as hereinafter defined)) shall
be converted into and become the right to receive) the Consideration (as
hereinafter defined) in accordance with Section 0 below. All shares of
Seller Stock held by Seller as treasury stock shall be canceled and no
payment shall be made with respect thereto. All Dissenting Shares shall be
handled in accordance with Section 0. Each issued and outstanding share of
capital stock of Micrel Subsidiary shall, at the Effective Time, be
automatically converted into one share of Seller Common Stock (as hereinafter
defined). For the purposes hereof, the term "Seller Stock" shall mean all
issued and outstanding shares of Seller's common stock ("Seller Common
Stock") immediately prior to the Effective Time, and all issued and
outstanding shares of Seller's preferred stock ("Seller Preferred Stock"),
immediately prior to the Effective Time. For the purposes of this Agreement,
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the term "Consideration" shall mean the aggregate sum of $13,000,000 (minus
the Seller Transaction Costs (as hereinafter defined)), as adjusted pursuant
to Sections 2.1.3 and 2.1.4 below. For the purposes of this Agreement, the
term "Seller Transaction Costs" shall mean (a) all fees and costs (including,
without limitation, attorneys', accountants', investment bankers', and
consultants' fees and costs) incurred by Seller in connection with the
transactions contemplated hereby, and (b) one-half (1/2) of the HSR filing
fee. No later than three (3) business days prior to the Closing Date, Seller
shall deliver to Micrel, for Micrel's reasonable approval, a statement
detailing the Seller Transaction Costs. Any Seller Transaction Costs not
included on such statement shall be deemed Micrel's Damages (as hereinafter
defined).
2.1.2 The Consideration shall be allocated first among the
holders of shares of the Series BB Preferred Stock of Seller (the "Seller
Series BB Preferred") issued and outstanding immediately prior to the
Effective Time, if any, (other than the holders of Dissenting Shares) by
allocating to each of such holders that portion of the Consideration equal to
the product of (a) the Series BB Original Issue Price (as defined in Seller's
Restated Articles of Incorporation ("Seller's Articles"), multiplied by (b)
the number of shares of Seller Series BB Preferred held by such holder. The
Consideration shall then be allocated among the holders of shares of the
Series AA Preferred Stock of Seller (the "Seller Series AA Preferred") issued
and outstanding immediately prior to the Effective Time, if any, (other than
the holders of Dissenting Shares) by allocating to each of such holders that
portion of the Consideration equal to the product of (i) the Series AA
Original Issue Price (as defined in Seller's Articles), multiplied by (ii)
the number of shares of Seller Series AA Preferred held by such holder.
After the applicable portion of the Consideration has been allocated to the
holders of the issued and outstanding shares of Seller Series BB Preferred
and Seller Series AA Preferred, respectively, if any, (other than the holders
of Dissenting Shares) then any remaining Consideration will be allocated
among the holders of shares of Seller Common Stock and holders of shares of
Seller Series BB Preferred issued and outstanding immediately prior to the
Effective Time, if any, by allocating to each of such holders that portion of
the Consideration equal to the product of (1) the portion of the
Consideration remaining after application in accordance with the first two
sentences of this Section 2.1.2, multiplied by (2) a fraction, the numerator
of which shall be (A) the aggregate of (a) the number of shares of Seller
Common Stock held by such holder and (b) the number of shares of Seller
Common Stock into which the number of shares of Seller Series BB Preferred
held by such holder, if any, are convertible immediately prior to the
Effective Time pursuant to Seller's Articles, and (B) the denominator of
which shall be the aggregate of (I) the number of shares of Seller Common
Stock outstanding immediately prior to the Effective Time, and (II) the
number of shares of Seller Common Stock into which the number of shares of
Seller Series BB Preferred outstanding immediately prior to the Effective
Time, if any, are convertible immediately prior to the Effective Time
pursuant to Seller's Articles.
2.1.3 At the Closing, a reasonable estimate of the adjustment to
the Consideration provided for in Section 0 below shall be made by Seller
based upon a review of the Shareholder Equity (as hereinafter defined), as of
a date as close as practicable to the Closing Date (the "Estimated
Adjustment"). The Estimated Adjustment shall be used as the basis of
calculating and paying the Consideration at the Closing until such time as
the Final Adjustment (as hereinafter defined) is fully determined.
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2.1.4 (a) The Consideration shall be adjusted upward or downward
on a dollar for dollar basis to reflect any difference between the
Shareholder Equity as shown on the projected balance sheet for the Company as
of September 27, 1998 (the "Projected Balance Sheet"), a copy of which is
attached hereto as Schedule 2.1.4, and the Shareholder Equity as shown on the
Closing Date Balance Sheet (as hereinafter defined). The term "Closing Date
Balance Sheet" shall mean the Closing Date balance sheet of the business of
Seller (the "Business") as at the close of business on the Closing Date. The
Closing Date Balance Sheet shall be prepared by Seller and Seller
Representative and Seller's accountants from the books and records of Seller
in accordance with this Agreement and generally accepted accounting
principles ("GAAP"), consistent with prior practice for Seller, subject to
Section 2.1.4(b). The Closing Date Balance Sheet shall be delivered to
Micrel and its accountants no later than twenty (20) days after the Closing
Date. The Closing Date Balance Sheet shall be reviewed by Micrel and
Micrel's accountants. In furtherance of Micrel's and its accountants' review
of the Closing Date Balance Sheet, (a) prior to the Closing, Seller shall,
and shall cause its accountants to, reasonably cooperate with Micrel and its
accountants (which cooperation shall include, without limitation, furnishing
Micrel and its accountants with the books and records of Seller and all other
documentation reasonably requested by Micrel or its accountants, including,
without limitation, access to the working papers related to Seller prepared
by Seller's accountants), and (b) from and after the Closing, Seller
Representative shall cause Seller's accountants to reasonably cooperate with
Micrel and its accountants (including, without limitation, by causing
Seller's accountants to provide to Micrel and its accountants access to all
working papers prepared by such accountants with respect to Seller). After
delivery by Seller, Micrel and its accountants shall have thirty (30) days in
which to review the Closing Date Balance Sheet and to notify Seller
Representative in writing of any specific detailed objections thereto. If
Micrel does not provide such notice within such period, the Closing Date
Balance Sheet (and the Final Adjustment calculated pursuant thereto) shall be
deemed approved by Micrel. For purposes of this Section 2.1.4(a), the term
"Shareholder Equity" shall mean the shareholder's equity reflected on the
Projected Balance Sheet or the Closing Date Balance Sheet, as applicable.
Provided that the same shall not affect the Final Adjustment or otherwise
affect any amounts payable to Seller's shareholders hereunder, Micrel may
make such adjustments to any inventory reserves established by Seller deemed
desirable by Micrel.
(b) For purposes of the preparation of the Closing Date
Balance Sheet, the parties agree as follows: (i) all work in progress
products ordered by Seller from SiMI, but not delivered, prior to the date
hereof shall be accrued and reflected as inventory (together with a
corresponding liability) on the Closing Date Balance Sheet, in the amount
certified by Seller pursuant to Section 7.1.4 hereof; (ii) a liability shall
be entered on the Closing Date Balance Sheet in the aggregate amount of the
estimated cost to settle all amounts owed to SiMI by Seller for products
delivered by such entity to Seller prior to the Closing Date; (iii) all
inventory previously sold to Future Electronics by Seller as of the Closing
(but not sold by Future Electronics to third party end user customers) shall
be accounted for on the Closing Date Balance Sheet in the same manner as that
of Seller's other United States distributors; (iv) all accounts payable of
Seller as of the Closing Date shall be entered on the Closing Date Balance
Sheet as current liabilities in their full stated amount; and (v) the Closing
Date Balance Sheet shall include a liability for the projected attorneys'
fees and costs reasonably required to settle or otherwise finally resolve the
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case of Xxxxxx v. Synergy, currently pending in Santa Xxxxx County Superior
Court, case no. H-198206-8.
2.1.5 If, after notice as to any objections to the Closing Date
Balance Sheet is timely and properly given to Seller Representative by Micrel
pursuant to Section 2.1.4(a), the parties are unable to resolve their
disagreements within thirty (30) days following Seller Representative's
receipt of such notice, the matter in dispute shall be resolved by
arbitration as provided in Section 12.18 hereof. Resolution of such dispute
by agreement of the parties hereto or by arbitration shall be final,
conclusive and binding on the parties. The Purchase Price shall be adjusted
based upon such final resolution (the "Final Adjustment"). If, pursuant to
the Final Adjustment, the Purchase Price is increased, within ten (10) days
after the date on which the Final Adjustment is determined, Micrel shall,
subject to Section 2.2.3 of this Agreement and the Escrow Agreement, deliver
to the Seller Representative on behalf of the holders of Seller Stock (as of
immediately prior to the Effective Time) the remainder of the Consideration
in the manner calculated and allocated pursuant to Section 2.1.2. If,
pursuant to the Final Adjustment, the Purchase Price is decreased, Micrel
shall be entitled to immediately receive and retain that portion of the
Escrowed Cash (as hereinafter defined), equal to the amount of such decrease.
2.1.6 Notwithstanding anything to the contrary set forth in this
Agreement, the following shall be deemed Micrel's Damages and Micrel shall be
entitled to retain the same from the Escrowed Cash as and when provided in
this Section 2.1.6: (a) the aggregate value (in the amount set forth on the
Closing Date Balance Sheet), if any, of all inventory reflected on the
Closing Date Balance Sheet pursuant to clause (i) of Section 2.1.4(b) above
that is unsold to end-users as at the date that is 365 days after the Closing
Date; (b) the aggregate amount (the "SiMI Settlement Amount"), if any, by
which (i) the amount Seller is required to pay (through settlement or
otherwise) to SiMI exceeds (ii) the amount of the liability set forth on the
Closing Date Balance Sheet pursuant to Section 2.1.4(b)(ii); and (c) the
amount, if any, by which the aggregate value of all end-user sales returns to
Seller (that Seller is contractually obligated to take back) between the
Closing Date and the date that is 180 days thereafter, exceeds the amount of
any liability or reserve entered on the Closing Date Balance Sheet with
respect thereto. With respect to clause (b) above, if on the date that is
180 days after the Closing Date, the SiMI Settlement Amount has not been
determined (because the amounts owing to SiMI has not been settled (including
due to the failure of Seller Representative to approve any settlement as
provided below) or otherwise), Micrel and Seller Representative shall use
their good faith efforts to agree on the SiMI Settlement Amount, provided
that if such Persons cannot so agree within thirty (30) days after the
expiration of such 180 day period, such period shall be extended to the date
that is 365 days after the Closing Date. If at the end of such 365 day
period, the SiMI Settlement Amount has not been determined as provided above
and Micrel and the Seller Representative have not agreed on the SiMI
Settlement Amount, the SiMI Settlement Amount shall be determined by binding
arbitration pursuant to Section 12.18 hereof. With respect to any of the
amounts set forth in clause (b) or (c) above, if and to the extent, at the
date that is 180 days after the Closing Date (as such date may be extended
pursuant to this Section 2.1.6 with respect to the determination of the SiMI
Settlement Amount), the amount of the applicable liability set forth on the
Closing Date Balance Sheet exceeds (x) the SiMI Settlement Amount, in the
case of clause (b) above (as and when determined pursuant to this Section
2.1.6), or (y) the aggregate value of all end-user sales returns (that Seller
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is contractually obligated to take back) between the Closing Date and the
date that is 180 days after the Closing Date, in the case of clause (c)
above, the Consideration shall be increased by the amount of the net of any
such excess (after taking into account any Micrel's Damages accrued prior to
the date on which such excess is determined and not satisfied by application
of the Escrowed Cash), and Micrel shall cause the same to be paid to the
Seller Representative on behalf of the shareholders for distribution in the
amounts and in the manner set forth in this Agreement. Micrel shall use its
reasonable commercial efforts, in the ordinary course of business, to (A)
sell any and all inventory described in clause (a) above at commercially
reasonable prices (and giving effect to Micrel's normal gross margin
requirements), which inventory shall be sold on a first in first out basis
(subject to any customer restrictions on acquiring such inventory), and (B)
settle the amounts owed to SiMI, if any, pursuant to clauses (b) above,
provided that any such settlement shall be subject to the approval of Seller
Representative, which approval shall not be unreasonably withheld or delayed.
Micrel shall keep Seller Representative promptly informed of all developments
and discussions related to any such settlement.
2.2 Payment of Consideration.
2.2.1 Subject to Section 2.2.2, on the Closing Date Micrel shall
issue and deliver to the holders of Seller Stock, the Consideration (other
than the Escrowed Cash) allocated to such shareholders in accordance with
Schedule 0 attached hereto.
2.2.2 From and after the Closing, Micrel shall ensure that the
paying agent appointed by Micrel (the "Paying Agent") has, as and when needed,
amounts sufficient in the aggregate to provide all funds necessary for the
Paying Agent to make payments pursuant to Section 2.2.1 to holders of shares
of Seller Stock. After the Effective Time, there shall be no transfers on
the stock transfer books of the Surviving Corporation of shares of capital
stock of Seller which were outstanding immediately prior to the Effective
Time. Promptly, but in no event more than five (5) business days, after the
Effective Time, the Surviving Corporation shall cause to be mailed to each
person who was, at the Effective Time, a holder of record of shares of Seller
Stock a form of letter of transmittal and instructions for use in effecting
the surrender of the certificates which, immediately prior to the Effective
Time, represented any of such shares of Seller Stock in exchange for payment
therefor. Upon surrender to the Paying Agent of such certificates, together
with such letter of transmittal, duly executed and completed in accordance
with the instructions thereto, the Surviving Corporation shall promptly cause
to be paid to the persons entitled thereto a check in the amount equal to the
portion of the Consideration payable to such persons less any required tax
withholdings. No interest will be paid or will accrue on the amount payable
upon the surrender of any such certificate. If payment is to be made to a
person other than the registered holder of the certificate surrendered, it
shall be a condition of such payment that the certificate so surrendered
shall be properly endorsed or otherwise in proper form for transfer and that
the person requesting such payment shall pay any transfer or other taxes
required by reason of the payment to a person other than the registered
holder of the certificate surrendered or establish to the satisfaction of the
Surviving Corporation or the Paying Agent that such tax has been paid or is
not applicable. One hundred and eighty (180) days following the Effective
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Time, the Surviving Corporation shall be entitled to cause the Paying Agent
to deliver to it any funds (including any interest received with respect
thereto) made available to the Paying Agent which have not been disbursed to
holders of certificates formerly representing shares of Seller Stock, and
thereafter such holders shall be entitled to look to the Surviving
Corporation only as general creditors thereof with respect to the cash
payable upon due surrender of their certificates. Notwithstanding the
foregoing, neither the Paying Agent nor any party hereto shall be liable to
any holder of certificates formerly representing shares of Seller Stock for
any amount paid to a public official pursuant to any applicable abandoned
property, escheat or similar law. The Surviving Corporation shall pay all
charges and expenses, including those of the Paying Agent, in connection with
the exchange of cash for shares of Seller Stock.
2.2.3 On the Closing Date Micrel shall deposit 20% of the aggregate
Consideration (the "Escrowed Cash") payable at the Closing Date with an
escrow agent selected by Micrel and reasonably satisfactory to Seller (the
"Escrow Agent") to be held and disbursed by the Escrow Agent in accordance
with the form of escrow agreement (the "Escrow Agreement") attached hereto as
Exhibit 2.2.3. Upon determination of the Final Adjustment, 20% of the
remaining portion of the Consideration payable by Micrel, if any, as the
result of the Final Adjustment shall be deemed Escrowed Cash and deposited
with and held by such escrow agent pursuant to the terms of the Escrow
Agreement. Subject to the terms of the Escrow Agreement and Section 2.1.5
hereof (with respect to the determination of the Final Adjustment), all
portions of the Escrowed Cash not distributed to Micrel pursuant to Section
2.1.5 shall be distributed as follows: (a) 180 days after the Closing Date,
all portions of the Escrowed Cash (other than the portions described in
clauses (b) and (c) below and any portion of the Escrowed Cash distributed or
distributable to Micrel as Micrel's Damages (other than Micrel's Damages
provided for in clauses (b) and (c) below), if any) shall be paid to the
Seller Representative on behalf of the holders of Seller Stock for
distribution in the amounts and in the manner set forth in this Agreement;
(b) if on the date that is 180 days after the Closing Date, any of the
inventory described in clause (a) of Section 2.1.6 remains unsold to end-
users as provided therein, a portion of the Escrowed Cash in the amount of
the value of such unsold inventory shall be retained in escrow pursuant to
the Escrow Agreement until the date that is 365 days after the Closing Date,
at which time any Micrel's Damages relating to such clause shall be
immediately distributed to Micrel and the balance, if any, of such amount
shall be paid to the Seller Representative on behalf of the holders of Seller
Stock for distribution in the amounts and in the manner set forth in this
Agreement; and (c) if on the date that is 180 days after the Closing Date,
the amount of the SiMI Settlement Amount has not been determined pursuant to
Section 2.1.6, a portion of the Escrowed Cash in the amount of the estimated
SiMI Settlement Amount, as reasonably determined by Micrel (after
consultation with the Seller Representative), shall be retained in the escrow
pursuant to the Escrow Agreement until the date on which the SiMI Settlement
Amount is determined pursuant to Section 2.1.6, at which time any Micrel's
Damages relating to clause (b) of Section 2.1.6 shall be immediately
distributed to Micrel and the balance, if any, of such amount shall be paid
to the Seller Representative on behalf of the holders of Seller Stock for
distribution in the amounts and in the manner set forth in this Agreement.
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2.3 Dissenting Shares.
2.3.1 Shares of capital stock of Seller held by a shareholder who
has properly exercised dissenters rights with respect thereto in accordance
with Section 1300 of the California Act (collectively, the "Dissenting
Shares") shall not be converted into a right to receive a portion of the
Consideration. From and after the Effective Time, a shareholder who has
properly exercised such dissenters rights shall no longer retain any rights
of a shareholder of Seller or the Surviving Corporation, except those
provided under the California Act.
2.3.2 Seller shall give Micrel (i) prompt notice of any written
demands under Section 1300 of the California Act with respect to any shares
of capital stock of Seller, any withdrawal of any such demands and any other
instruments served pursuant to the California Act and received by Seller and
(ii) the right to participate in all negotiations and proceedings with
respect to any demands under Section 1300 with respect to any shares of
capital stock of Seller. Seller shall cooperate with Micrel concerning, and
shall not, except with the prior written consent of Micrel, voluntarily make
any payment with respect to, or offer to settle or settle, any such demands.
2.4 Options. Prior to the Closing Date, Seller shall cause all
outstanding Warrants and Options (as hereinafter defined), to be exercised
(and all shares of Seller Common Stock required to be issued pursuant to such
exercise to be validly and fully issued as fully paid, nonassessable shares)
or terminated, such that, as of the Effective Time, (a) no options, warrants
or other rights to acquire any shares of Seller's capital stock or any
securities convertible into shares of Seller's capital stock are outstanding,
and (b) no person or entity other than the holders of Seller Stock shall have
any right, title or interest in or to Seller or any securities issued by
Seller, all of which holders shall have no such, right, title or interest in
or to Seller, other than their ownership of Seller Stock.
2.5 Taxes and Closing Costs. All transfer, sales and use taxes imposed
by any governmental entity or with respect to or as the result of the Merger
shall be paid by Seller and accrued prior to the Closing Date. Seller shall
also be responsible for any of Seller's business, occupation, withholding,
income or other taxes whatsoever, or any taxes of any kind, that are related
to any period before the Closing Date. Except as provided above, each party
shall bear its own costs in connection with the transactions contemplated
hereby.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants to Micrel and Micrel Subsidiary
that the following facts and circumstances are true and correct, as of the
date of this Agreement, subject to the limitations and exceptions set forth
on Schedule 3 (the "Seller Disclosure Schedule"). Whenever the term "to
Seller's knowledge" or similar expression appears in any representation or
warranty in this Article 3, it means to the actual knowledge of Seller's
directors and officers, after reasonable inquiry and investigation. Whenever
the term "Seller has received no notice" or like expression appears in any
representation or warranty in this Article 3, it means that none of Seller's
directors and officers has received actual oral or written notice of the
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matter to which such term is applied, after having made reasonable inquiry as
to whether notice has been received.
3.1 Organization. Seller: (i) is a corporation duly organized,
validly existing and in good standing under the laws of the State of
California; (ii) has all necessary corporate power to own and lease its
properties, to carry on its business as now being conducted and to enter into
and perform this Agreement and all of the other documents and agreements
contemplated hereby; and (iii) is qualified to do business in all
jurisdictions in which the failure to so qualify would have a material
adverse effect on the business, operations or financial condition of Seller.
Seller has no Subsidiaries (as hereinafter defined) and holds no right, title
or interest in or to any other corporation, company, partnership, trust,
limited liability company or other entity.
3.2 Authority and Consents. The execution and performance of this
Agreement and the other documents to be executed by Seller pursuant to the
terms hereof will not result in a violation of Seller's Articles or Bylaws.
Seller has full power and authority (corporate and otherwise) to enter into
this Agreement and the other documents to be executed by Seller pursuant to
the terms hereof and to carry out the transactions contemplated by this
Agreement and such other documents. This Agreement and the other documents
to be executed by Seller pursuant to the terms hereof and their execution and
delivery to Micrel Subsidiary and Micrel have been duly authorized by the
Board of Directors and shareholders of Seller and, subject to Section 0, no
further corporate action prior to the Closing shall be necessary on the part
of Seller or its shareholders to effect the Merger or to make this Agreement
and the other documents to be executed by Seller pursuant to the terms hereof
and the transactions contemplated by this Agreement and such other documents
valid and binding upon Seller. Upon the filing of the Merger Documents with
the Secretary of State for the States of California and Delaware, the Merger
shall be immediately and automatically effective without further action by
any person or entity. This Agreement and the other documents to be executed
by Seller pursuant to the terms hereof do and will constitute a legal, valid
and binding obligation of Seller, enforceable against Seller in accordance
with their respective terms, subject as to enforcement only: (i) to
bankruptcy, insolvency, reorganization, arrangement, moratorium and other
similar laws of general applicability relating to or affecting creditors'
rights generally; and (ii) to general principles of equity.
Seller has delivered to Micrel true, complete and correct copies of
(i) its Articles of Incorporation, as amended to date, certified by the
appropriate official of the jurisdiction of incorporation, (ii) its Bylaws,
as amended to date, and (iii) its stock ledger, in each case, certified by
Seller's corporate secretary. The Articles of Incorporation and Bylaws of
Seller are in full force and effect and Seller is in full compliance with the
provisions thereof.
3.3 Capitalization and Title to Shares.
3.3.1 Seller is authorized to issue 18,000,000 shares of Seller
Common Stock, of which 2,720,473 shares are issued and outstanding, and
14,000,000 shares of Seller Preferred Stock issuable in series. Of such
Seller Preferred Stock, 5,800,000 shares have been designated Series AA
Preferred Stock, of which 5,749,344 shares are issued and outstanding; and
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8,200,000 shares have been designated as Series BB Preferred Stock, of which
5,771,231 shares are issued and outstanding. Such shares are owned of record
by the persons and in the amounts set forth on Section 0 of the Seller
Disclosure Schedule. No other class of capital stock of Seller is authorized
or outstanding. All of the issued and outstanding shares of Seller's capital
stock are duly authorized and are validly issued, fully paid, nonassessable
and free of pre-emptive rights. None of the issued and outstanding shares of
Seller have been issued in violation of any federal or state law or any
preemptive rights or rights to subscribe for or purchase securities.
3.3.2 Section 0 of the Seller Disclosure Schedule includes a true
and complete list of all outstanding rights, subscriptions, warrants, calls,
preemptive rights, options or other agreements of any kind to purchase or
otherwise receive from Seller any shares of the capital stock or any other
security of Seller, and all outstanding securities of any kind convertible
into or exchangeable for such securities (all such rights, subscriptions,
warrants, calls, options, agreements and convertible securities,
collectively, "Warrants and Options"). True and complete copies of all
instruments (or the form of such instruments) referred to in this Section 0
have been previously furnished to Micrel. There are no shareholder
agreements, voting trusts, proxies or other agreements or understandings with
respect to the outstanding shares of capital stock of Seller to which Seller
is a party.
3.3.3 Seller does not own beneficially any shares of capital
stock of Micrel.
3.4 Real Property; Title to Assets. Seller has good and valid title
to all of its tangible and intangible assets and properties reflected as
owned on the Current Balance Sheet (as hereinafter defined) and the Projected
Balance Sheet (the "Assets"), and, except as noted in Section 3.4 of the
Seller Disclosure Schedule, all of the Assets are free and clear of all
liens, charges, encumbrances, restrictions, security interests and rights and
interests in others (collectively, "Liens"). Seller has a valid, binding and
enforceable leasehold estate and interest, free and clear of all Liens (other
than the interest of the landlord therein) in and to the property located at
0000 Xxxxx Xxxxxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, 00000 (the "Property")
pursuant to a lease (the "Lease") dated February 29, 1996 between Xxxxxx
Corporation, as landlord, and Seller, as tenant. Section 3.4 of the Seller
Disclosure Schedule contains a true and complete description of the term of
the lease (including any and all option terms), and the rental provisions
thereunder. Seller owns good, marketable and valid title, free and clear of
all Liens, to the semiconductor manufacturing facility (the "Facility")
located on the Property and all improvements, equipment and fixtures
(collectively, the "Facility Improvements") located thereon or therein.
3.5 Properties and Assets. The Business has, at all times, been owned
and operated by Seller. The tangible Assets (including, without limitation,
the Facility and the Facility Improvements) are in good working order and in
a state of reasonable maintenance and repair. The Business as conducted on
the Closing does not violate any covenant or restriction affecting the
Property or the Facility. To Seller's knowledge, there are no pending
developments affecting or threatening Seller, the Business or the Facility
which materially interfere with a continuation of the existing use of the
Facility. The Assets include all rights, properties and other assets
necessary to permit to conduct the Business in the same manner and to the
same extent as it is conducted on, and has been conducted prior to, the date
of this Agreement.
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3.6 Consents and Approvals of Government Authorities. Except for the
filing of the Merger Documents, the notification of Seller's shareholders
pursuant to Section 5.5, and the filing of a notice and the expiration of the
waiting period under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of
1976, as amended ("HSR"), no consent, approval or authorization of, or
declaration, filing, notice or registration with, any governmental agency,
regulatory authority or other Person is required in connection with the
execution, delivery and performance of this Agreement or any of the other
documents contemplated hereby by Seller or the consummation of the
transactions contemplated herein and therein.
3.7 Accounts Receivable/Prepayable.
3.7.1 Section 0 of the Seller Disclosure Schedule sets forth a
true, correct full and complete list of the accounts receivable (the
"Accounts Receivable") outstanding on Seller's books. All Accounts
Receivable, whether or not reflected in the Current Balance Sheet or the
Projected Balance Sheet, (a) were accrued on Seller's books in the ordinary
course of business consistent with past practices in accordance with GAAP,
(b) represent and will represent bona fide claims against debtors for sales
and other charges, and (c) are not subject to discount except for ordinary
course cash and immaterial ordinary course trade discount. The amount
carried for doubtful accounts and allowances disclosed in the Current Balance
Sheet is sufficient to provide for any losses that may be sustained on
realization of the receivables.
3.7.2 Section 0 of the Seller Disclosure Schedule sets forth a
true, correct and complete list of accounts payable (the "Accounts Payable")
of Seller. All Accounts Payable, whether or not reflected in the Current
Balance Sheet or the Projected Balance Sheet, represent amounts incurred by
Seller in the ordinary course operation of the Business have been accrued
consistent with past practice in accordance with GAAP.
3.8 Inventory. Section 3.8 of the Seller Disclosure Schedule sets
forth a true, correct and complete list of all of Seller's inventory,
including all spare parts inventory (the "Inventory"). Subject to
corresponding reserves reflected in the Current Balance Sheet, all of the
Inventory is in good and merchantable condition and salable or useable in the
ordinary course of the Business.
3.9 Contracts. Section 3.9(a) of the Seller Disclosure Schedule,
constitutes a true, correct and complete list of all Material Contracts (as
hereinafter defined), copies of each of which have been provided to Micrel.
Each Contract (as hereinafter defined) is a valid and enforceable obligation
of Seller and, to Seller's knowledge, the other party to such Contract, in
accordance with its respective terms. Except as set forth on Section 3.9(a)
of the Seller Disclosure Schedule, Seller is not in default in the
performance of any of its obligations thereunder, no event of has occurred
which (whether with or without notice, lapse of time, or both) would
constitute such a default thereunder. To Seller's knowledge, no other party
thereto is in default thereunder and no such other party has any
counterclaims, offsets and defenses with respect thereto. There are no
claims against Seller to return products by reason of alleged overshipments,
defective products or otherwise, or of products in the hands of customers or
distributors under an understanding that such products would be returnable.
Section 3.9(b) of the Seller Disclosure Schedule constitutes a true, correct
11
and complete list of all prepaid expenses and deposits associated with the
Contracts and the Facility. For the purposes of this Agreement, the term
"Contract" means any and all contracts, agreements and other understandings
with respect to which Seller is a party or by which any of its assets are
bound, including, without limitation, all patent, technology, software and
other intellectual property license agreements, assignment agreements,
purchase contracts, purchase orders, sales contracts, sales orders, rights to
discounts, maintenance agreements, employment and consulting agreements,
confidentiality agreements and noncompetition agreements, service agreements,
distribution agreements, partnership, joint venture and joint development
contracts, notes, security agreements, loan agreements, guarantees and other
documents evidencing or securing indebtedness, and agreements for leased
equipment (together with the Lease, the "Contracts"). For the purposes
hereof, the term "Material Contract" means the following Contracts: (a) all
patent, technology, software and other intellectual property license
agreements, (b) all employment and consulting agreements, confidentiality
agreements and noncompetition agreements, (c) all distribution agreements,
(d) partnership, joint venture and joint development contracts, (e) all
notes, security agreements, loan agreements, guarantees and other agreements
evidencing, securing or guaranteeing indebtedness, (f) all agreements for
leased equipment, (g) the Lease, (h) all service agreements, (i) any Contract
relating to impending capital expenditures, (j) and all other Contracts
(other than those that provide for annual payments of less than $15,000).
3.10 Compliance with Laws.
3.10.1 Seller has all licenses, permits, franchises, orders or
approvals of any federal, state, local or foreign governmental or regulatory
body required for the conduct of the Business (collectively, "Permits"); such
Permits are in full force and effect; and no proceeding is pending or, to the
knowledge of Seller, threatened to revoke or limit any Permit.
Section 3.10.1 of the Seller Disclosure Schedule contains a true and complete
list of all Permits.
3.10.2 Seller is not in material violation of any applicable law,
ordinance or regulation or any order, judgment, injunction, decree or other
requirement of any court, arbitrator or governmental or regulatory body,
Seller has not received notice of, and there has not been any citation, fine
or penalty imposed against Seller for, any such violation or alleged
violation.
3.11 Bank Accounts and Powers of Attorney. Section 3.11 of the Seller
Disclosure Schedule identifies all bank and brokerage accounts of Seller,
whether or not such accounts are held in the name of Seller, lists the
respective signatories therefor and lists the names of all persons holding a
power of attorney from Seller and a summary of the terms thereof.
3.12 Agreement Will Not Cause Breach or Violation. Neither the
execution nor delivery of this Agreement or the other documents contemplated
hereby by Seller, nor performance by Seller of the terms and provisions of
this Agreement or such other documents will (a) conflict with or result in a
breach or violation of any of the terms, conditions or provisions of any
Permit or any judgment, order, injunction, decree, regulation or ruling of
any court or governmental authority to which Seller or the Assets are subject
or of any Contract or any material agreement, contract, or commitment to
which Seller is a party or by which it is bound, or (b) give any person or
12
entity the right to terminate or modify any Contract, or accelerate any
material obligation or indebtedness of Seller thereunder.
3.13 Financial Statements. Seller has delivered to Micrel a balance
sheet of Seller as of June 28, 1998 (the "Current Balance Sheet") together
with statements of income and cash flows for Seller for the nine month period
ended June 28, 1998 (the "Financial Statements"). The Financial Statements
were prepared in accordance with GAAP consistently applied in accordance with
past practices of the Business, and are true, complete and accurate in all
material respects and present fairly the financial position and results of
operations of Seller as of such dates and for the periods then ended. All
reserves (including, without limitation, all Inventory-related reserves) set
forth on the Current Balance Sheet are reasonable, appropriate and adequate
for the purposes for which they were established.
3.14 No Undisclosed Liabilities. Seller has no liabilities or
obligations of any nature except (a) liabilities which are fully reflected or
reserved against in the Financial Statements, and (b) liabilities incurred in
the ordinary course of operation of the Business since the date of the
Current Balance Sheet. Without limiting the foregoing in any manner, (a)
except as set forth on the Current Balance Sheet, Seller has no obligations
or liabilities (absolute or contingent) to Toshiba, except to the extent
incurred in the ordinary course of business consistent with past practice,
and (b) except as disclosed by Seller in writing to Micrel prior to the date
hereof, Seller has no obligations or liabilities (absolute or contingent) to
SiMI.
3.15 Customers. Section 3.15 of the Seller Disclosure Schedule sets
forth a list of the ten (10) customers who accounted for the largest sales of
Seller in fiscal 1996 and a list of such customers for fiscal 1997 (the
"Customers"). Except as set forth in Section 3.15 of the Seller Disclosure
Schedule, no Customer has canceled or otherwise terminated its relationship
with Seller, or has during fiscal year 1998 to date decreased materially its
purchase of the services of Seller. Seller has not received any notice from
any Customer, to terminate, cancel or otherwise materially and adversely
modify its relationship with Seller or to decrease materially or limit its
purchase of the services or products of Seller.
3.16 Transactions with Management. No officer or director of Seller
has (whether directly or indirectly through another entity in which such
person has an interest, other than as the holder of less than one percent
(1%) of a class of securities of a publicly traded company) any interest in
(a) any property or assets of Seller (except as a shareholder), (b) to
Seller's knowledge any current competitor, customer or supplier of Seller, or
(c) to Seller's knowledge any person which is currently a party to any
Contract.
3.17 Absence of Certain Changes. Since the date of the Current
Balance Sheet, there have been no material changes in the condition,
financial or otherwise, of any of the Assets or any of the liabilities,
business, prospects or operations of Seller or the Business, other than
changes in the ordinary course of business which in the aggregate have not
been materially adverse to the business, finances or operations of Seller.
Without limiting the foregoing, since the date of the Current Balance Sheet:
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(a) Seller has not altered the nature of the Business as carried
on or made any material change in the products and services it supplies;
(b) Seller has not borrowed or agreed to borrow any funds or
incurred, or assumed or become subject to, whether directly or by way of
guarantee or otherwise, any obligation or liability, except trade payables
incurred in the ordinary course of business and consistent with past
practice;
(c) Seller has not paid, discharged or satisfied any claim,
liability or obligation other than the payment, discharge or satisfaction in
the ordinary course of business and consistent with past practice of
liabilities or obligations reflected or reserved against in the Current
Balance Sheet or trade payables incurred in the ordinary course of business
since the date of the Current Balance Sheet and consistent with past
practice;
(d) Seller has not permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to be subjected to
any Lien of any kind;
(e) Seller has not written down the value of any inventory or
written off as uncollectible any notes or accounts receivable, except for
write-downs and write-offs in the ordinary course of business and consistent
with past practice, none of which is material;
(f) Seller has not cancelled any debts or waived any claims or
rights of substantial value, waived any statute of limitation or sold,
transferred, or otherwise disposed of any of its properties or assets (real,
personal or mixed, tangible or intangible), except sales of inventory in the
ordinary course of business and consistent with past practice;
(g) Seller has not licensed or disposed of or permitted to lapse
any rights to the use of any Seller Intellectual Property;
(h) Seller has not granted any increase in the compensation of
officers or employees (including any such increase pursuant to any bonus,
pension, profit-sharing or other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or employee;
(i) Seller has not made any capital expenditure or commitment
therefor in excess of $10,000 individually or $25,000, in the aggregate;
(j) Seller has not paid, loaned or advanced any amount to, or
sold, transferred or leased any properties or assets (real, personal or
mixed, tangible or intangible) to, or entered into any agreement or
arrangement with, any of its officers, directors or any Affiliate or
associate of any of its officers, directors or shareholders;
(k) Seller has not made any change in the accounting policies or
practices of Seller;
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(l) Seller has not entered into any other transaction, other than
in the ordinary course of business;
(m) Seller has not issued any shares of its capital stock or any
other securities or made any redemption or other acquisition of any capital
stock of Seller or any declaration, setting aside, or payment of any dividend
or distribution of any kind with respect to any shares of capital stock of
Seller;
(n) there have been no losses or damage to any Assets due to fire
or other casualty, whether or not insured, amounting to more than $25,000, in
the aggregate; and
(o) Seller has not agreed, whether in writing or otherwise, to do
any of the foregoing.
3.18 Intellectual Property.
3.18.1 Section 3.18.1 of the Seller Disclosure Schedule lists all
of Seller's United States and foreign (i) patent and patent applications;
(ii) registered trademarks and trademark applications; (iii) registered
copyrights and applications for copyright registration; (iv) mask work
registrations and applications to register mask works; and (v) any other
Seller Intellectual Property (as hereinafter defined) that is the subject of
an application to, or certificate or registration issued by, any state,
government or other public legal authority. The registrations of the Seller
Intellectual Property of Seller listed on Section 3.18.1 of the Seller
Disclosure Schedule are valid and subsisting, all necessary registration and
renewal fees in connection with such registrations have been filed with the
relevant patent, copyright and trademark authorities in the United States for
the purposes of maintaining such registrations. Seller has complied with all
applicable disclosure requirements and neither Seller nor any named inventor
or assignee has committed any fraudulent act in the application for or
maintenance of any patent, trademark or copyright of Seller. For the
purposes hereof, the term "Seller Intellectual Property" shall mean all
patents, patent applications, software, trademarks, trademark applications,
service marks, service xxxx applications, trade and other marks and names
(either registered, common law or registration applied for), copyrights,
copyright applications, mask works, inventions, trade secrets, proprietary
information, know-how, processes, manufacturing or marketing procedures,
recipes, formulae, drawings, schematics and patterns, and all documentation
and other media relating to the foregoing ("Intellectual Property") owned by
Seller or with respect to which Seller has a license, interest or other right
to use. Without limitation of the foregoing, the Seller Intellectual
Property shall be deemed to further include any drawings, documentation,
schematics, manuals or other materials, whether in written or magnetic form
that describe, disclose or otherwise set forth any of the Seller Intellectual
Property.
3.18.2 Seller owns and has good and valid title to each patent
included in the Seller Intellectual Property and listed as owned by Seller on
Section 3.18.1 of the Seller Disclosure Schedule, free and clear of any
Liens. Seller owns, or has the binding and enforceable right to use or
operate under, all Seller Intellectual Property (a) listed as not owned by
Seller on Section 3.18.1 of the Seller Disclosure Schedule, or (b) not
listed on Section 3.18.1 of the Seller Disclosure Schedule, in each case,
free and clear of any Liens (other than solely as provided in any licenses
15
relating to such Seller Intellectual Property). No Seller Intellectual
Property or product and/or technology of Seller is subject to any outstanding
decree, order, judgment, stipulation, license or agreement restricting in any
material manner the use or licensing thereof by Seller.
3.18.3 The operation of the Business as it currently is
conducted, including its design, development, manufacture, use and sale of
its products and/or technology, including products and/or technology
currently under development, and provision of services, does not infringe the
Intellectual Property of any other Person. No officer, director, employee or
consultant of Seller is infringing or misappropriating the Intellectual
Property of any other Person in the course of performing his or her duties
for Seller. Seller has not received notice from any Person that the
operation of the Business, including its design, development, manufacture and
sale of its products and/or technology (including with respect to products
and/or technology currently under development) and provision of services,
infringes the Intellectual Property of any Person.
3.18.4 To the knowledge of Seller, no Person is infringing or
misappropriating any of the Seller Intellectual Property.
3.18.5 Neither the consummation of the Merger nor the change in
control of Seller effected thereby will limit, impair or otherwise affect, in
any manner, any of Seller's right, title or interest in or to any of the
Seller Intellectual Property.
3.18.6 The Seller Intellectual Property includes all Intellectual
Property necessary to conduct the Business as currently conducted.
3.19 Product Warranties and Returns. Except as set forth in Section
3.19 of the Seller Disclosure Schedule, Seller has not made any warranties or
guarantees relating to its products that will be in effect as of the Closing
Date. During the twelve (12) month period ended on the date of the Balance
Sheet, Seller has received no customer complaints pursuant to which Seller
gave credit or accepted a product return.
3.20 Litigation. Except as set forth in Section 3.20 of the Seller
Disclosure Schedule, none of Seller, or any officer or director of Seller,
or, to Seller's knowledge, any shareholder, employee or agent of Seller, is a
party to any pending or, to Seller's knowledge, threatened action, suit,
arbitration, mediation, proceeding or investigation, at law or in equity or
otherwise in, for or by any court or other governmental body or any
arbitration, mediation or similar forum (collectively, "Litigation"). Seller
is not subject to any decree, judgment, order, law or regulation of any court
or other governmental body which could have a material adverse effect on the
condition, financial or otherwise, of any of the Assets or the Business or
which could prevent the transactions contemplated by this Agreement.
3.21 Personnel; Employee Plans.
3.21.1 Section 3.21.1 of the Seller Disclosure Schedule lists:
(i) all contracts or agreements with directors, officers, employees or
unions, or consulting agreements, to which Seller is a party or it or its
16
assets are subject as of the date of this Agreement; (ii) the names, current
salary rates, bonuses paid during the last fiscal year, and accrued vacation
and sick leave for all the employees of Seller; and (iii) all group insurance
programs in effect for employees of Seller. Seller is not in default with
respect to any of the obligations so listed. Seller has delivered to Micrel
true, complete and correct copies of all such written obligations and
complete summaries of all such oral obligations. Seller has no union
contracts or collective bargaining agreements with, or any other obligations
to, employee organizations or groups, nor is Seller currently engaged in any
labor negotiations except in minor grievances not involving any employee
organization or group, nor, to the knowledge of Seller, is Seller the subject
of any union organization. There is no pending or, to Seller's knowledge,
threatened labor dispute, strike or work stoppage affecting the Business.
3.21.2 Section 3.21.2 of the Seller Disclosure Schedule lists
(i) all "employee benefit plans" within the meaning of Section 3(3) of the
Employee Retirement Income Security Act of 1974 ("ERISA"), and (ii) all other
employee benefit, bonus or other incentive compensation, stock option, stock
purchase, stock appreciation, severance pay, lay-off or reduction in force,
change in control, sick pay, vacation pay, salary continuation, retainer,
leave of absence, educational assistance, service award, employee discount,
fringe benefit plans, arrangements, policies or practices, whether legally
binding or not, to which Seller contributes to or has any obligation to or
liability for (collectively, the "Employee Plans"). Each Employee Plan
provides that it may be amended or terminated at any time and, except for
benefits protected under Section 411(d) of the Code, all benefits payable to
current or terminated employees or any beneficiary may be amended or
terminated by Seller at any time without liability.
3.21.3 None of the Employee Plans is a Defined Benefit Plan or a
Multiemployer Plan (within the meaning of ERISA) and neither Seller has ever
(i) sponsored, maintained or contributed to, or been obligated to contribute
to, a Defined Benefit Plan or (ii) contributed to, or been obligated to
contribute to, a Multiemployer Plan.
3.21.4 Seller does not maintain or contribute to any welfare
benefit plan that provides health benefits to an employee after the
employee's termination of employment or retirement except as required under
Section 4980B of the Code and Sections 601 through 608 of ERISA.
3.21.5 Each Employee Plan which is an "employee benefit plan", as
defined in Section 3(3) of ERISA, has complied, in all material respects,
since its inception, with (a) its terms, and (b) with the requirements
provided by any and all statutes, orders or governmental rules or regulations
currently in effect and applicable to the Employee Plan, including but not
limited to ERISA and the Code. To Seller's knowledge, Seller is not subject
to a risk of liability to any governmental entity, including, without
limitation, excise taxes or civil penalties, as the result of the application
of any provision of ERISA or the Code. No investigations or audits by a
governmental entity, or other actions, demands, proposals, negotiations or
claims with respect to any Employee Plan have occurred, or are pending, or,
to Seller's knowledge, are threatened or imminent, against any employer who
is participating (or who has participated) in any Employee Plan or any
fiduciary (as defined in Section 3(21) of ERISA) of the Employee Plan or
17
which otherwise concern matters covered or that would be covered by the
Employee Plans. Neither Seller, nor any fiduciary with respect to any
Employee Plan, has any knowledge of any facts that could give rise to any
such action, demand, proposal, negotiation or claim.
3.21.6 The Internal Revenue Service has determined that each
Employee Plan intended to qualify under Section 401(a) of the Code so
qualifies as of the end of the remedial amendment period, as set forth in the
Code and each trust maintained pursuant thereto is exempt from taxation under
Section 501 of the Code. Nothing has occurred since the date of the Internal
Revenue Service's favorable determination letter that could adversely affect
the qualification of the Employee Plan and its related trust.
3.21.7 True, correct and complete copies of (i) all documents
creating or evidencing any Employee Plan listed in Section 3.21.2 of the
Seller Disclosure Schedule, (ii) all reports, forms and other documents
required to be filed with any governmental entity (including, without
limitation, summary plan descriptions, Forms 5500 and summary annual reports
for all plans subject to ERISA), and (iii) the latest favorable letters of
determination from the Internal Revenue Service with respect to the Employee
Plans that are intended to qualify under Section 401(a) of the Code have been
delivered to Micrel.
3.21.8 All expenses and liabilities relating to all of the
Employee Plans described in Section 3.21.2 of the Seller Disclosure Schedule
have been, and will on the Closing Date be, fully and properly accrued on
Seller's books and records and are disclosed on the Current Balance Sheet and
such Employee Plans have no unfunded liabilities not reflected on the Current
Balance Sheet.
3.21.9 Without limiting any other representation or warranty of
Seller set forth herein, the termination of the employment of any and all
officers and employees of Seller prior to the date hereof was effected in
accordance with all applicable laws and the employment arrangements between
Seller and such officers and employees and Seller has no liability or
obligation (including, without limitation, any liability for severance
payments), absolute or contingent, to any former officer or employee of
Seller. No former officer or employee of Seller will, at the Closing, have
any debt, liability or other obligation, absolute or contingent, owing to
Seller.
3.22 OSHA. Without limiting Section 3.10, to Seller's knowledge,
Seller is not in material violation of any federal, state or local statutes,
laws, regulations or rules relating to occupational health or safety,
including, without limitation, the rules and regulations of the Occupational
Safety and Health Administration ("OSHA"). No investigation or claim has at
any time been commenced or pending against Seller or the Business or any real
property owned or occupied at any time by Seller by OSHA or any similar state
or local agency and, to Seller's knowledge, no basis exists for any such
investigation or claim. No claim has at any time been made by any current or
former employee of Seller relating to occupational health or safety.
3.23 Taxes.
3.23.1 For purposes of this Agreement, the following definitions
shall apply:
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(a) The term "Taxes" shall mean all taxes, however, denominated,
including any interest, penalties or other additions to tax that may become
payable in respect thereof, imposed by any federal, territorial, state, local
or foreign government or any agency or political subdivision of any such
government, which taxes shall include, without limiting the generality of the
foregoing, all income or profits taxes (including, but not limited to,
federal income taxes and state income taxes), payroll and employee
withholding taxes, unemployment insurance, social security taxes, sales and
use taxes, ad valorem taxes, excise taxes, franchise taxes, gross receipts
taxes, business license taxes, occupation taxes, real and personal property
taxes, stamp taxes, environmental taxes, transfer taxes, workers'
compensation, Pension Benefit Guaranty Corporation premiums and other
governmental charges, and other obligations of the same or of a similar
nature to any of the foregoing, which Seller is required to pay, withhold or
collect.
(b) The term "Returns" shall mean all reports, estimates,
declarations of estimated tax, information statements and returns relating
to, or required to be filed in connection with, any Taxes, including
information returns or reports with respect to backup withholding and other
payments to third parties.
3.23.2 All Returns required to be filed by or on behalf Seller have
been duly filed on a timely basis and such Returns are true, complete and
correct. All Taxes shown to be payable on the Returns or on subsequent
assessments with respect thereto have been paid in full on a timely basis, and
no other Taxes are payable by Seller with respect to items or periods covered
by such Returns (whether or not shown on or reportable on such Returns) or
with respect to any period prior to the date of this Agreement. Seller has
withheld and paid over all Taxes required to have been withheld and paid
over, and complied with all information reporting and backup withholding
requirements, including maintenance of required records with respect thereto,
in connection with amounts paid or owing to any employee, creditor,
independent contractor, or other third party. There are no liens on any of
the assets of Seller with respect to Taxes, other than liens for Taxes not
yet due and payable or for Taxes that Seller is contesting in good faith
through appropriate proceedings and for which appropriate reserves have been
established.
3.23.3 The amount of Seller's liability for unpaid Taxes for all
periods ending on or before the date of this Agreement do not, in the
aggregate, exceed the amount of the current liability accruals for Taxes
(excluding reserves for deferred Taxes) reflected on the Current Balance
Sheet, and the amount of Seller's liability for unpaid Taxes for all periods
ending on or before the Closing Date shall not, in the aggregate, exceed the
amount of the current liability accruals for Taxes (excluding reserves for
deferred Taxes) reflected on the Closing Date Balance Sheet.
3.23.4 Micrel has been furnished by Seller true and complete copies
of (i) relevant portions of income tax audit reports, statements of
deficiencies, closing or other agreements received by Seller relating to
Taxes, and (ii) all federal and state income or franchise tax returns for the
Seller for all periods ending on and after December 31, 1993. Seller has
never been a member of an affiliated group filing consolidated returns.
Seller does not do business in or derive income from any state, local,
19
territorial or foreign taxing jurisdiction other than those for which all
Returns have been furnished to Micrel.
3.23.5 The Returns of Seller have never been audited by a
government or taxing authority, nor is any such audit in process, pending or
threatened (either in writing or verbally, formally or informally). No
deficiencies exist or have been asserted (either in writing or verbally,
formally or informally) or are expected to be asserted with respect to Taxes
of Seller, and Seller has not received notice (either in writing or verbally,
formally or informally) or expects to receive notice that it has not filed a
Return or paid Taxes required to be filed or paid by it. Seller is neither a
party to any action or proceeding for assessment or collection of Taxes, nor
has such event been asserted or threatened (either in writing or verbally,
formally or informally) against Seller or any of its assets. No waiver or
extension of any statute of limitations is in effect with respect to Taxes or
Returns of Seller. Seller has disclosed on its federal income tax returns all
positions taken therein that could give rise to a substantial understatement
penalty within the meaning of Section 6662 of the Code.
3.23.6 Seller is not (nor has it ever been) a party to any tax
sharing agreement.
3.23.7 Seller is not a party to any safe harbor lease within the
meaning of Section 168(f)(8) of the Code, as in effect prior to amendment by
the Tax Equity and Fiscal Responsibility Act of 1982. None of the assets of
Seller (i) directly or indirectly secures any debt the interest on which is
tax exempt under Section 103(a) of the Code or (ii) is "tax exempt use
property" within the meaning of Section 168(h) of the Code. Seller is not nor
has it been a United States real property holding corporation within the
meaning of Section 897(c)(2) of the Code during the applicable period
specified in Section 897(c)(1)(A)(ii) of the Code and Micrel is not required
to withhold tax on the purchase of the stock of Seller by reason of Section
1445 of the Code. Seller is not a "consenting corporation" under Section
341(f) of the Code. Seller has not entered into any compensatory agreements
with respect to the performance of services which payment thereunder: (i)
would result in a nondeductible expense to Seller pursuant to Section 280G of
the Code or an excise tax to the recipient of such payment pursuant to Section
4999 of the Code, (ii) would not be deductible under Section 162 of the Code
by reason of being unreasonable in amount, or (iii) would otherwise be
nondeductible by application of Section 162(m) of the Code. Seller has not
made will not make a deemed dividend election under Treasury Regulations
Section 1.1502-32(f)(2). Seller has not participated in an international
boycott as defined in Code Section 999. Seller has not agreed, nor is it
required to make, any adjustment under Code Section 481(a) by reason of a
change in accounting method or otherwise. Seller does not have a permanent
establishment in any foreign country, as defined in any applicable Tax treaty
or convention between the United States of America and such foreign country,
and Seller is not a party to any joint venture, partnership, or other
agreement, contract, or arrangement (either in writing or verbally, formally
or informally) which could be treated as a partnership for federal income tax
purposes.
3.23.8 The Seller Disclosure Schedule contains accurate and
complete description of Seller's basis in its assets, Seller's current and
accumulated earnings and profits, Seller's tax carryovers, and any tax
20
elections made by Seller. Seller has no net operating losses or other tax
attributes presently subject to limitation under Code Sections 382, 383, or
384.
3.23.9 Seller has filed all reports and has created and/or retained
all records required under Section 6038A of the Code with respect to its
ownership by and transactions with related parties. Each related foreign
person required to maintain records under Section 6038A with respect to
transactions between Seller and the related foreign person has maintained
such records. All documents that are required to be created and/or preserved
by the related foreign person with respect to transactions with Seller are
either maintained in the United States, or Seller is exempt from the record
maintenance requirements of Section 6038A with respect to such transactions
under Treasury Regulation Section 1.6038A-1. Seller is not a party to any
record maintenance agreement with the Internal Revenue Service with respect
to Section 6038A of the Code. Each related foreign person that has engaged
in transactions with Seller and has authorized Seller to act as its limited
agent solely for purposes of Sections 7602, 7603, and 7604 of the Code with
respect to any request by the Internal Revenue Service to examine records or
produce testimony related to any transaction with Seller, and each such
authorization remains in full force and effect.
3.24 Environmental Liability. Without limiting Section 3.10, at all
times Seller has materially complied with all applicable environmental and
hazardous waste laws, orders, regulations, rules and ordinances adopted,
imposed or promulgated by any governmental or regulatory entity having
jurisdiction over the Property, the Facility or any other property at any
time owned or occupied by Seller. Neither Seller nor any portion of the
Property, the Facility or any other property at any time owned or occupied by
Seller (prior to and during the period of such ownership or occupancy) has at
any time been in material violation of any federal, state or local law,
ordinance or regulation relating to industrial hygiene, worker safety,
environmental protection, hazardous materials or waste or toxic materials.
Prior to the date hereof, there has been no spill, release or discharge of
any Hazardous Materials (as defined below) on, under or about the Property,
the Facility or any other property owned or occupied by Seller (until such
time as Seller's ownership or occupancy ceased). No current use of the
Property or the Facility constitutes a public or private nuisance. Seller
currently holds all environmental licenses, permits, clearances, covenants
and authorizations required for the Business (and any other business or
operations of Seller at any time) and all such permits, clearances, covenants
and authorizations required for the current operation of the Business are in
full force and effect. Any handling, generation, transportation, storage,
treatment or use of Hazardous Material that has occurred on or about the
Property (except as otherwise disclosed in this Section 3.24), the Facility
or any other property owned or occupied by Seller (prior to and during the
time of such ownership and occupancy) has been in material compliance with
all laws, regulations and orders relating to Hazardous Materials. As used
herein, the term "Hazardous Materials" means any hazardous or toxic
substance, material or waste which is regulated by any applicable local
government authority, the State of California, or any other state or the
United States Government having jurisdiction over Seller or the Business or
any real property owned or occupied at any time by Seller. With the
exception of regional groundwater contamination affecting the Property, all
of the facts and circumstances relating to which contamination (including the
circumstances surrounding the causes of the same) of which Seller has
21
knowledge have been disclosed to Micrel, the Property and the Facility,
including, without limitation, the soil and groundwater on or under the
Facility, is free of Hazardous Materials. No notification of release of
Hazardous Materials pursuant to applicable law has been received by Seller as
to the Property, the Facility or any other property owned or occupied by
Seller at any time. No wastes generated by Seller have ever been sent
directly or indirectly to any site listed or formally proposed for listing on
any federal or state list of hazardous substances sites requiring
investigation or clean-up. Seller has not received from any governmental
authority or third party any requests for information, notices of claim,
demand letters, or other notification that they or it are or is or may be
potentially responsible with respect to any investigation or clean-up of
Hazardous Materials. Seller has no knowledge of any fact or circumstance
that could involve Seller or Micrel in any environmental litigation or
proceeding or impose any environmental liability upon Seller or Micrel.
Section 3.24 of the Seller Disclosure Schedule contains a true and complete
list of all environmental surveys, tests and reports performed with respect
to the Property by or on behalf of Seller (including, without limitation, all
soil and groundwater surveys, tests and reports.
3.25 Year 2000 Compliance. To Seller's knowledge, none of Seller's
systems (including, without limitation, Seller's telecommunications,
automation and computer related systems), assets or technology, including
without limitation, the Seller Intellectual Property (including, without
limitation, all computer software and hardware owned or licensed by Seller or
used in the Business) has or will have any Year 2000 Error (as hereinafter
defined). For the purposes hereof, the term "Year 2000 Error" means (a) any
failure of computer hardware or software products or technology properly to
record, store, process, calculate or present calendar dates falling on and
after (and if applicable, spans of time including) January 1, 2000 as a
result of the occurrence, or use of data consisting of, such dates; (b) any
failure of computer hardware or software products or technology to calculate
any information dependent on or relating to dates on or after January 1, 2000
in the same manner, and with the same functionality, data integrity and
performance, as such computer hardware or software products or technology
records, stores, processes, calculates and presents calendar dates on or
before December 31, 1999, or information dependent on or relating to such
dates; or (c) any loss of functionality or performance with respect to the
introduction of records or processing of data containing dates falling on or
after January 1, 2000.
3.26 Representations Complete. The representations and warranties of
Seller contained in this Article 3 do not contain any untrue statement of a
material fact and do not omit to state any material fact necessary to make
such representations and warranties, in light of the circumstances under
which they were made, not misleading. There is no fact known to Seller that
has not been disclosed to Micrel in this Agreement that is reasonably likely
to have a material adverse effect on Seller's business, operations or
financial condition.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF MICREL SUBSIDIARY AND MICREL
Micrel Subsidiary and Micrel hereby, jointly and severally, represent
and warrant to Seller that the following facts and circumstances are true and
correct:
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4.1 Authorization; Etc. Each of Micrel Subsidiary and Micrel: (i) is
a corporation duly organized, validly existing and in good standing under the
laws of the State of California, with respect to Micrel, and the State of
Delaware, with respect to Micrel Subsidiary; (ii) has all necessary corporate
power to own and lease its properties, to carry on its business as now being
conducted and to enter into and perform this Agreement and all of the other
documents and agreements contemplated hereby; and (iii) is qualified to do
business in all jurisdictions in which the failure to so qualify would have a
material adverse effect on the business, operations or financial condition of
Micrel Subsidiary or Micrel, as applicable. Each of Micrel Subsidiary and
Micrel has full corporate power and authority to enter into this Agreement
and the other documents contemplated hereby and to carry out the transactions
contemplated hereby and thereby. Each of Micrel Subsidiary and Micrel has
taken all required action by law to authorize the execution and delivery of
this Agreement and the other documents contemplated hereby and the
transactions contemplated hereby and thereby, and this Agreement and the
other documents contemplated hereby is a valid and binding obligation of
Micrel Subsidiary and/or Micrel, as applicable, enforceable against it in
accordance with its terms, subject as to enforcement only: (i) to bankruptcy,
insolvency, reorganization, arrangement, moratorium and other similar laws of
general applicability relating to or affecting creditors' rights generally;
and (ii) to general principles of equity. This Agreement and the
transactions contemplated hereby have been approved by the Board of Directors
of Micrel and Micrel Subsidiary.
4.2 No Violation. Neither the execution and delivery of this
Agreement nor the consummation of the transactions contemplated hereby will
violate any provisions of the Articles of Incorporation or Bylaws of Micrel
Subsidiary or Micrel, violate, or be in conflict with, or constitute a
default under or cause the acceleration of the maturity of any debt or
obligation pursuant to, any agreement or commitment to which Micrel
Subsidiary or Micrel is a party or by which Micrel or Micrel is bound, or
violate any statute or law or any judgment, decree, order, regulation, or
rule of any court or governmental authority.
4.3 Consents and Approvals of Government Authorities. Except for the
filing of a notice and the expiration of the waiting period under HSR, no
consent, approval or authorization of, or declaration, filing or registration
with, any governmental or regulatory authority is required in connection with
the execution, delivery and performance of this Agreement or the other
documents contemplated hereby by Micrel or Micrel and the consummation of the
transactions contemplated hereby or thereby.
4.4 Sufficient Funds. At the Closing Micrel shall have sufficient
funds to pay the Consideration as and in the manner provided in this
Agreement.
4.5 Representations Complete. The representations and warranties of
Micrel Subsidiary and Micrel contained in this Article 4 do not contain any
untrue statement of a material fact and do not omit to state any material
fact necessary to make such representations and warranties, in light of the
circumstances under which they were made, not misleading.
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ARTICLE 5
SELLER'S COVENANTS
5.1 Access to Properties and Records. Throughout the period between
the date of this Agreement and the Closing Date, Seller shall give to Micrel
and Micrel's authorized representatives reasonable access, during business
hours, to the Property, the Facility and any and all of the other Assets, and
shall provide Micrel and its representatives with all records, documents and
information reasonably required by Micrel relating to Seller and/or the
Business. Without limiting the foregoing, Micrel shall be permitted to
interview during regular business hours all employees of Seller.
5.2 Conduct of the Business Prior to Closing Date. Between the date
of this Agreement and the Closing, and except as otherwise required by this
Agreement:
5.2.1 The Business shall be operated in the ordinary course
consistent with past practices and in a normal businesslike fashion
(including, without limitation, its normal accounts receivable practice), and
Seller shall take such actions as are in its business judgment reasonably
necessary to facilitate a smooth transition of the control of operation of
the Business from Seller to Micrel at the Closing. Seller shall use its best
efforts to preserve and maintain the Business and Seller's goodwill,
including relationships with employees, suppliers and customers. Seller shall
maintain quantities of Inventories in a manner consistent with prior practice
and in a normal businesslike fashion. In addition, Seller shall maintain
records and books of account for the Business consistent with past practices
and in a normal businesslike fashion, and shall continue to carry all of the
insurance for the Business consistent with past practice.
5.2.2 Seller shall not take (or permit to be taken) any action
which would cause any material change in any of the items and matters covered
by the representations and warranties set forth in Article 3, including,
without limitation:
(a) incurring or becoming subject to, or agreeing to incur or
become subject to, any obligation or liability (absolute or contingent),
except current liabilities incurred, and obligations under contracts entered
into, in the ordinary course of business consistent with past practices;
(b) mortgaging, pledging or assuming any Lien, or agreeing to do
so, in respect to any of the Assets;
(c) waiving or compromising any material rights or any material
debt owed to Seller;
(d) entering into any transactions, other than in the ordinary
course of business consistent with past practices;
(e) increasing the rate of compensation payable or to become
payable to any employees;
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(f) terminating or amending any Contract, unless terminated or
amended in the ordinary course of business consistent with past practices;
(g) introducing any new method of accounting with respect to the
Business or any of the Assets or liabilities of Seller (assumed or not
assumed) (including, without limitation, any change in depreciation or
amortization policies or rates);
(h) making any capital expenditures or entering into commitments
for capital expenditures exceeding, in the aggregate, Ten Thousand Dollars
($10,000);
(i) without Micrel's prior consent (which consent Micrel shall
not unreasonably withhold or delay), hiring or terminating employees;
(j) issuing any shares of its capital stock or other securities
(or any options or warrants to acquire any such shares of capital stock or
other securities) or making any redemption or other acquisition of any
capital stock of Seller or any declaration, setting aside, or payment of any
dividend or distribution of any kind with respect to any shares of capital
stock of Seller;
(k) altering its practice for creating or accounting for
Inventory; or
(l) commencing, settling or compromising any litigation, except
those related to insured claims or arising in the ordinary course of business
consistent with past practices.
5.3 Advice of Developments. Seller shall have continuing obligations
after the date of this Agreement through the Closing Date to advise Micrel of
all significant matters concerning itself and the Business.
5.4 Acquisition, Merger or Similar Negotiations With Other Parties.
From the date hereof until the earlier of the termination of this Agreement
or consummation of transactions contemplated hereby, none of Seller or any of
its officers, directors, employees, representatives, agents or Affiliates
shall directly or indirectly encourage, solicit, initiate or conduct
discussions or negotiations with, provide any information to, or enter into
any agreement with, any corporation, partnership, limited liability company,
person or other entity or group concerning any merger, combination,
consolidation, sale of assets (other than in the ordinary course of business)
or other similar transaction involving Seller, the Business or the Assets.
Seller shall immediately notify Micrel of any contact by any third-party with
respect to any of the matters described in this Section 0.
5.5 Shareholder Notification. Seller shall, in accordance with
applicable law, promptly after the date hereof, notify its shareholders of
the transactions contemplated hereby and the approval thereof by the
requisite holders of the outstanding capital stock of Seller.
5.6 Satisfaction of Conditions. Without limiting Section 5.5,
Seller shall take or cause to be taken all actions reasonably within its power
necessary to satisfy all conditions to Micrel's obligations to close and
consummate the transactions contemplated by this Agreement.
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5.7 Consents. On or prior to the Closing Date, Seller shall
(a) notify all persons required to be notified pursuant to applicable law or
any of the Permits or Contracts of the transactions contemplated hereunder,
in the form and manner required thereunder, and (b) use its commercially
reasonable efforts to obtain the consent of all persons whose consent is
required pursuant to applicable law or any of the Permits or Contracts in
connection with the consummation of the transactions contemplated hereby, in
the form and manner required thereunder. Without limiting the foregoing,
promptly after Seller's execution of this Agreement, Seller shall make any
and all filings (and all other submissions required in connection therewith)
required to be made by Seller under HSR in connection with the transactions
contemplated hereby, and shall seek early termination of the applicable
waiting period under HSR.
5.8 Notification of Certain Matters. Without limiting Section 0,
Seller shall give prompt notice to Micrel of the occurrence or non-occurrence
of any event which causes or is likely to cause any representation or
warranty made by Seller herein to be untrue or inaccurate or any covenant,
condition or agreement contained herein not to be complied with or satisfied
(provided, however, that any such disclosure shall not in any way be deemed
to (a) amend, modify or in any way affect the representations, warranties and
covenants made by such party in or pursuant to this Agreement, (b) or alter
or waive any rights of Micrel Subsidiary or Micrel with respect to the breach
thereof).
5.9 Termination of Automobile Leases. Prior to the Closing, Seller
shall terminate, with no further liability to Seller, all automobile leases
entered into by Seller for automobiles used by its officers, directors or
employees.
5.10 SiMI Purchase Orders. Prior to the Closing, Seller shall cause
all outstanding purchase orders for products with SiMI (other than those for
work in progress as of the date hereof referred to in clause (i) above) to be
terminated with no further liability or obligation to Seller. Without
limiting any other obligations of Seller hereunder, between the date hereof
and the Closing Date, without Micrel's prior written consent in its sole
discretion, Seller shall not (a) issue any purchase orders to or otherwise
enter into any agreement or understanding with SiMI, or (b) modify, amend,
compromise or settle any agreement, arrangement or understanding between
Seller and SiMI.
ARTICLE 6
MICREL'S COVENANTS
6.1 Consents. On or prior to the Closing Date, Micrel Subsidiary and
Micrel shall (a) notify all persons required to be notified by Micrel
Subsidiary or Micrel pursuant to applicable law of the transactions
contemplated hereby, in the form and manner required thereunder, and
(b) obtain the consent of all persons whose consent is required to be
obtained by Micrel Subsidiary or Micrel pursuant to applicable law in
connection with the consummation of the transactions contemplated hereby, in
the form and manner required thereunder.
6.2 Satisfaction of Conditions. Without limiting Section 6.1, Micrel
and Micrel Subsidiary shall take or cause to be taken all actions reasonably
26
within their power necessary to satisfy all conditions to Seller's
obligations to close and consummate the transactions contemplated by this
Agreement.
ARTICLE 7
CONDITIONS TO CLOSING
7.1 Conditions to Micrel's Obligation to Close. Micrel's obligations
to consummate the transactions contemplated by this Agreement shall be
subject to the full satisfaction of following conditions, each of which
conditions may be waived in writing by Micrel:
7.1.1 Instruments. Seller and Seller Representative (in the case
of the Escrow Agreement) shall have executed and delivered to Micrel the
Merger Documents, the Escrow Agreement and any and all other documents
reasonably required by Micrel to effect the transactions contemplated hereby.
7.1.2 Representations and Warranties True. The representations
and warranties of Seller contained in this Agreement shall be true in all
material respects at the Closing as though made at such time, provided that
any such representations and warranties that are qualified by the term
"material" or otherwise qualified as to materiality shall be true at the
Closing in accordance with the terms thereof.
7.1.3 Performance of Covenants. Seller shall have performed all
obligations and complied with all covenants and conditions required by this
Agreement to be performed or complied with by it on or prior to the Closing
Date.
7.1.4 Certificate. Seller shall have delivered to Micrel a
certificate executed by its chief executive officer certifying as to
(a) Seller's satisfaction of the conditions set forth in Sections 7.1.2 and
7.1.3 above, (b) Seller's estimate of the amount of Shareholder Equity
pursuant to Section 2.1.3, and (c) the value of all work-in-progress products
ordered by Seller from SiMI as of the date hereof but not delivered.
7.1.5 No Material Changes. There shall not have been any
material adverse change in the assets, liabilities, business, operations or
financial conditions of Seller from the date hereof to the Closing Date.
7.1.6 Consents. All consents or approvals required for the
consummation of the transactions contemplated hereby, including the
expiration of the waiting period under HSR and any required consents of the
parties to any Contract, shall have been obtained.
7.1.7 Opinion. Seller shall have delivered to Micrel an opinion
of its counsel in the form of Exhibit 7.17 attached hereto.
7.1.8 Environmental Diligence. Micrel shall have reasonably
determined, on or prior to the date on which all other conditions to the
Closing have been satisfied or waived by the party entitled to the benefit
thereof, that Seller has no material liability or obligation (contingent or
27
absolute) for any environmental condition affecting the Property that has not
been previously disclosed by Seller to Micrel prior to the date hereof.
7.1.9 Xxxxxx Xxxx Settlement. Seller shall have entered into a
settlement agreement with Xxxxxx X. Xxxx ("Mino"), upon terms and conditions
reasonably approved by Micrel, pursuant to which Mino shall agree (a) to
forever and irrevocably waive and release Seller and Micrel and its
affiliates from any and all liabilities, claims, damages, obligations and
responsibilities, and (b) that the aggregate amount of the indebtedness owed
by him to Seller (including principal and interest) as of the Closing Date
shall be secured by all shares of Seller Stock beneficially owned by him, and
(c) at the Effective Time, such indebtedness shall automatically be deducted
from the portion of the Consideration payable to him pursuant to this
Agreement.
7.1.10 Shareholder Notification. Seller shall have provided all
shareholder notices and otherwise taken all other actions pursuant to the
California Act required in connection with the consummation of the
transactions contemplated hereby.
7.2 Conditions to Seller's Obligations at the Closing. Seller's
obligations to consummate the transactions contemplated by this Agreement
shall be subject to the following conditions, each of which conditions may be
waived in writing by Seller:
7.2.1 Instruments. Micrel and/or Micrel Subsidiary, as
applicable, shall have executed and delivered to Seller the Merger Documents,
the Escrow Agreement and any and all other documents reasonably required by
Seller to effect the transactions contemplated hereby.
7.2.2 Representations and Warranties True. The representations
and warranties of Micrel Subsidiary and Micrel contained in this Agreement
shall be true in all material respects at the Closing as though made at such
time.
7.2.3 Performance of Covenants. Micrel Subsidiary and Micrel
shall have performed all obligations and complied with all covenants and
conditions required by this Agreement to be performed or complied with by
them at or prior to the Closing Date.
7.2.4 Certificate. Micrel shall have delivered to Seller a
certificate executed by an officer of Micrel certifying as to Micrel's and
Micrel Subsidiary's satisfaction of the conditions set forth in Sections 0
and 0.
7.2.5 HSR Approval. All approvals required under HSR shall have
been obtained.
ARTICLE 8
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNIFICATION
8.1 Survival. The representations and warranties of Seller contained
in this Agreement or in any document, certificate or schedule or instrument
contemplated hereby or delivered pursuant hereto, shall survive the Closing
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Date to until the date that is 180 days after the Closing Date. The
representations and warranties of Micrel Subsidiary and Micrel contained in
this Agreement or in any document, certificate or instrument contemplated
hereby or delivered pursuant hereto, shall survive the Closing Date to until
the date that is 180 days after the Closing Date.
8.2 Seller's Indemnity.
8.2.1 Seller shall indemnify, defend, protect and hold harmless
Micrel (and Micrel's Subsidiaries and Affiliates and their respective
officers, directors, shareholders, employees and agents) from and against any
and all losses, costs, expenses, liabilities, obligations, claims, demands,
causes of action, suits, settlements and judgments of every nature, including
the costs and expenses associated therewith and reasonable attorneys',
consultants' and witness fees incurred in connection therewith ("Micrel's
Damages"), which arise out of: (i) the breach of any representation or
warranty made by Seller under of this Agreement or any document or
certificate delivered by Seller pursuant to this Agreement; (ii) the non-
performance, partial or total, of any covenant made by Seller pursuant to
this Agreement or any document or certificate delivered by Seller pursuant to
this Agreement; or (iii) any claim against Seller by Five Star Telecom,
accruing from facts or circumstances first occurring prior to the date
hereof. "Micrel's Damages" shall also include any other matters deemed
"Micrel's Damages" pursuant to this Agreement.
8.2.2 Notwithstanding anything herein to the contrary, from and
after the Closing Date, Seller shall protect, defend, indemnify and hold
harmless Micrel from any and all taxes of Seller which are (i) imposed on
Micrel that Micrel pays, otherwise satisfies in whole or in part, or result
in liens or encumbrances on any assets of Micrel or (ii) imposed on Seller in
respect of its income, business, property or operations or for which Seller
may otherwise be liable, which are attributable to Seller's income, business,
property operations on or before the Closing Date.
8.2.3 Notwithstanding anything to the contrary set forth in this
Section 8.2, except as provided in the next sentence, no claim for Micrel's
Damages shall be made unless and until the aggregate of all Micrel's Damages
exceeds the sum of $130,000 (the "Indemnification Threshold"), provided that,
if and when the aggregate of all Micrel's Damages equals or exceeds the
Indemnification Threshold, Micrel shall be entitled to receive all Micrel's
Damages, including all Micrel's Damages below the Indemnification Threshold.
Notwithstanding the foregoing, no Micrel's Damages pursuant to Section 2.1.1
or Section 2.1.6 of this Agreement shall be subject to the Indemnification
Threshold.
8.2.4 In the event the Merger is not consummated, Seller's
aggregate liability for Micrel's Damages shall not exceed the Purchase Price.
From and after the Effective Time, Seller's aggregate liability for Micrel's
Damages shall not exceed the value of the Escrowed Cash and any increase in
the Consideration payable by Micrel pursuant to the penultimate sentence of
Section 2.1.6, and Micrel and Micrel Subsidiary's sole recourse in respect of
a claim for indemnification under this Article 8 shall be to the Escrowed
29
Cash and any such increase in accordance with the provisions of the Escrow
Agreement and Section 2.1.6 hereof. Notwithstanding the foregoing, nothing
in this Section 8.2.3 shall limit the liability of Seller with respect to any
Micrel's Damages due to the fraud or intentional misrepresentation of Seller.
8.2.5 To secure the indemnification obligation of the Seller to
Micrel and Micrel Subsidiary, the Escrowed Cash shall be deposited into
escrow with the Escrow Agent in accordance with Section 2.24 hereof and the
Escrow Agreement.
8.3 Micrel's Indemnity.
8.3.1 Micrel Subsidiary and Micrel shall, jointly and severally,
indemnify, defend, protect and hold harmless Seller (and Seller's Affiliates
and their respective officers, directors, shareholders, employees and agents)
from and against any and all losses, costs, expenses, liabilities,
obligations, claims, demands, causes of action, suits, settlements and
judgments of every nature, including the costs and expenses associated
therewith and reasonable attorneys', consultants' and witness fees incurred
in connection therewith ("Seller's Damages"; and when used together with or
in the alternative to Micrel's Damages, "Damages"), which arise out of: the
breach by Micrel Subsidiary or Micrel of any certification, representation or
warranty made by Micrel Subsidiary or Micrel pursuant to this Agreement or
any document or certificate delivered by Seller pursuant to this Agreement;
or the non-performance, partial or total, of any covenant made by Micrel
Subsidiary or Micrel pursuant to this Agreement required to be performed
prior to the Closing or any document or certificate delivered by Seller
pursuant to this Agreement.
8.3.2 In the event the Merger is not consummated, Micrel's and
Micrel Subsidiary's aggregate liability for Seller's Damages shall not exceed
the Purchase Price. From and after the Effective Time, Micrel's and Micrel
Subsidiary's aggregate liability for Seller's Damages shall not exceed the
value of the Escrowed Cash.
8.4 Indemnity Procedures.
8.4.1 In the event that at any time or from time to time after
the Closing Date a person or entity entitled to indemnification pursuant to
Section 0 or 8.3 (any such person or entity , an "Indemnitee") shall sustain
a loss of any nature whatsoever against which such Indemnitee is indemnified
under this Agreement, such Indemnitee shall notify the party required to
provide such indemnification and, in the case of Seller, Seller
Representative (such party and Seller Representative, as applicable, the
"Indemnitor") in writing of any such loss so sustained, and Indemnitor shall
within thirty (30) days after transmittal of such notice pay to such
Indemnitee the amount of such loss so sustained, subject to their right to
contest any third-party claim which has not yet resulted in a loss, as
hereinafter provided in Section 0.
8.4.2 Promptly after receipt by an Indemnitee of written notice
of a claim or the commencement of any proceeding against it, such Indemnitee
shall, if a claim in respect thereof is to be made against an Indemnitor
under Section 0 or 0, give written notice to the Indemnitor of the
commencement thereof, but the failure so to notify the Indemnitor shall not
relieve it of any liability that it may have to any Indemnitee, except to the
extent, the Indemnitor demonstrates that the defense of such action is or has
30
been prejudiced thereby. In case any such proceeding shall be brought
against an Indemnitee and it shall give notice to the Indemnitor of the
commencement thereof, the Indemnitor shall be entitled to participate therein
and, to the extent that it shall wish (unless the Indemnitor is also a party
to such proceeding and the Indemnitee determines in good faith that joint
representation would be inappropriate) to assume the defense thereof with
counsel which is reasonably satisfactory to such Indemnitee and, after notice
from the Indemnitor to such Indemnitee of its election so to assume the
defense thereof, the Indemnitor shall not be liable to such Indemnitee under
such Section for any fees of such counsel or any other expenses with respect
to the defense of such proceeding, in each case, subsequently incurred by
such Indemnitee in connection with the defense thereof. If an Indemnitor
assumes the defense of such proceeding, (a) no compromise or settlement
thereof may be effected by the Indemnitor without the Indemnitee's reasonable
consent unless (i) there is no finding or admission of any violation of law
or any violation of the rights of any person or entity and no effect on any
other claims that may be made against the Indemnitee, and (ii) the sole
relief provided is monetary damages that are paid in full by the Indemnitor;
and (b) the Indemnitor shall have no liability with respect to any compromise
or settlement thereof effected without its consent (which shall not be
unreasonably withheld). If notice is given to an Indemnitor of the
commencement of any proceeding and it does not, within fifteen (15) business
days after the Indemnitee's notice is given, give notice to the Indemnitee of
its election to assume the defense thereof, the Indemnitor shall be bound by
any determination made in such action or any compromise or settlement thereof
effected by the Indemnitee. Notwithstanding the foregoing, if an Indemnitee
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, such Indemnitee may, by notice to the Indemnitor, assume
the exclusive right to defend, compromise or settle such proceeding, but the
Indemnitor shall not be bound by any determination of a proceeding so
defended or any compromise or settlement thereof effected without its consent
(which shall not be unreasonably withheld).
8.4.3 If any Indemnitor contests or challenges any claim or
action asserted against an Indemnitee referred to in this Article, it shall
do so at its own cost and expense, holding Indemnitee harmless from all
costs, fees, expenses, debts, liabilities and charges in connection with such
contest; shall diligently defend against any such claim; and shall hold
Indemnitee's business and assets free and harmless from any attachment,
execution, judgment, lien or other legal process.
8.4.4 Each Indemnitor further agrees to indemnify each Indemnitee
for taxes imposed on or with respect to an indemnification payment made by
such Indemnitee pursuant to this Article 8.
8.5 Other Remedy. If the Merger is consummated as contemplated
herein, this Article 8 shall set forth the sole and exclusive remedy and
recourse of the parties for any Damages resulting from, relating to or in
connection with the Merger or the transactions contemplated hereby, except to
the extent such Damages are due to or arise from the fraud or intentional
misrepresentation of the applicable party.
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8.6 The Seller Representative.
8.6.1 The Seller, on behalf of each of its officers, directors
and shareholders, hereby authorizes, directs and appoints Xxxx X. Xxxxxxxx to
act as sole and exclusive agent, attorney-in-fact and representative of its
shareholders (the "Seller Representative"), and authorized and directs the
Seller Representative to (i) take any and all actions (including without
limitation executing and delivering any documents, incurring any costs and
expenses for the account of the Seller (which will constitute Micrel's
Damages incurred or suffered by Micrel and Micrel Subsidiary within the
meaning of Section 8.2 hereof) and making any and all determinations) which
may be required or permitted by this Agreement, or the Escrow Agreement to be
taken by the Seller or the Seller Representative, (ii) exercise such other
rights, power and authority as are authorized, delegated and granted to the
Seller Representative hereunder and under the Escrow Agreement in connection
with the transactions contemplated hereby and thereby and (iii) exercise such
rights, power and authority as are incidental to the foregoing. Any such
actions taken, exercises of rights, power or authority, and any decision or
determination made by the Seller Representative consistent therewith, shall
be absolutely and irrevocably binding on Seller and its shareholders (the
"Seller Indemnitors"), as if such party personally had taken such action,
exercised such rights, power or authority or made such decision or
determination in such party's individual capacity. Notwithstanding any other
provision of this Agreement, if the Closing occurs, then with respect to the
matters covered by Article 8, (x) each of the Seller Indemnitors irrevocably
relinquishes such Seller Indemnitors' right to act independently and other
than through the Seller Representative, except with respect to the removal of
the Seller Representative or appointment of a successor Seller Representative
as provided in Section 8.6(b) below, and (y) no Seller Indemnitors shall have
any right under this Agreement or otherwise to institute any suit, action or
proceeding against the Company, Micrel and Micrel Subsidiary or the Escrow
Agent with respect to any such matter, any such right being irrevocably and
exclusively delegated to the Seller Representative. The Seller
Representative hereby acknowledges and accepts the foregoing authorization
and appointment and agrees to serve as the Seller Representative in
accordance with the Agreement and the Escrow Agreement.
8.6.2 The Seller Representative shall serve as Seller
Representative until his resignation, removal from office, incapacity or
death; provided, however, that the Seller Representative shall not have the
right to resign without (A) prior written notice to the Seller Indemnitors
and (B) picking a successor reasonably satisfactory to Micrel to serve until
a successor thereto is elected by the Seller Indemnitors. The Representative
may be removed at any time and a successor representative, reasonably
satisfactory to Micrel, may be appointed, pursuant to written action by
Seller Indemnitors who, immediately prior to the Effective Time, held shares
of Company Common Stock constituting 66 2/3% or more of all such shares then
outstanding. Any successor to the Seller Representative shall, for purposes
of this Agreement, and the Escrow Agreement, be deemed to be, from the time
of the appointment thereof if in accordance with the terms hereof, the Seller
Representative, and from and after such time, the term "Seller
Representative" as used herein and therein shall be deemed to refer to such
successor. No appointment of a successor shall be effective unless such
successor agrees in writing to be bound by the terms of this Agreement and
the Escrow Agreement.
32
8.6.3 Notwithstanding Section 8.4.3 hereof, the Seller
Representative shall be permitted to retain counsel, consultants and other
advisors and shall promptly notify Micrel and Micrel Subsidiary after
retaining any such person. All expense reimbursements paid to and received
by the Seller Representative shall constitute Micrel's Damages incurred or
suffered by Micrel within the meaning of Section 8.2 hereof.
8.6.4 The provisions of this Section 8.6 shall in no way impose
any obligations on Seller (other than those set forth in Section 8.6.3
above). In particular, notwithstanding any notice received by Micrel and
Micrel Subsidiary to the contrary (except any notice for the appointment of a
successor Seller Representative approved by the Micrel and Micrel Subsidiary
in accordance with Section 8.6.2) Micrel (i) shall be fully protected in
relying upon and shall be entitled to rely upon, shall have no liability to
the Seller Indemnitors with respect to, and shall be indemnified by the
Seller Indemnitors from and against all liability arising out of (any such
indemnifiable amounts constituting Micrel's Damages within the meaning of
Section 8.2 hereof) actions, decisions and determinations of the Seller
Representative and (ii) shall be entitled to assume that all actions,
decisions and determinations of the Seller Representative are fully
authorized by the Seller Indemnitors.
8.6.5 The Seller Representative shall not be liable to the Seller
Indemnitors for the performance of any act or the failure to act so long as
he acted or failed to act in good faith in what he reasonably believed to be
the scope of his authority and for a purpose which he reasonably believed to
be in the best interests of the Seller Indemnitors.
ARTICLE 9
EMPLOYMENT MATTERS
9.1 Employee Plans
9.1.1 Micrel shall maintain the Employee Plans set forth in
Section 3.21.1 of the Seller Disclosure Schedule for the purpose of providing
continued coverage to each employee who was employed by Seller on the date
hereof and was covered under such Employee Plans. The continuation of such
coverage will commence on the Closing Date and end on the date of such
employee's termination of employment with Micrel or November 30, 1998,
whichever is the first to occur.
9.1.2 Micrel shall terminate each of the Employee Plans effective
December 31, 1998. Alternatively, with respect to the Synergy Semiconductor
Corporation 401(k) Plan (the "401(k) Plan") only, Micrel, in its sole
discretion, may merge the 401(k) Plan with another qualified retirement plan
maintained by Micrel as of December 31, 1998, rather than terminate said
401(k) Plan.
9.1.3 Effective January 1, 1999, Micrel will provide its current
employees who were employed by Seller on the Closing Date with coverage under
the Micrel group health plan under the same terms and conditions applicable
to other Micrel employees on such date. Micrel shall waive any preexisting
33
conditions exclusions under said plan that would otherwise apply to employees
who were employed by Seller on the date hereof.
9.1.4 Effective January 1, 1999, Micrel will permit its current
employees who were employed by Seller on the Closing Date hereof to commence
participation in the Micrel 401(k) Plan under the same terms and conditions
as apply to other Micrel employees on such date. Micrel shall cause the
401(k) Plan to credit such employees with all years of service while employed
by Seller for all purposes under said plan, including vesting computation
with respect to the future contributions made my Micrel to said plan on their
behalf, if any.
ARTICLE 10
NONDISCLOSURE OF CONFIDENTIAL INFORMATION
10.1 Nondisclosure. Each party recognizes and acknowledges that it
has had in the past, currently have, and in the future may possibly have,
access to certain Confidential Information (as defined below) related to the
other parties to this Agreement. Each party agrees that it will not disclose
such Confidential Information to any person, firm, corporation, association
or other entity for any purpose or reason whatsoever, except to their
respective (a) to authorized representatives, and (b) to counsel and other
advisers, provided that such advisers agree to the confidentiality provisions
of this Section 0, unless (i) such information becomes available to or known
by the public generally through no fault of the disclosing party, or
(ii) disclosure is required by law or the order of any governmental authority
under color of law, provided, that prior to disclosing any information
pursuant to this clause (iii), the disclosing party shall, if possible, give
prior written notice thereof to the affected party and provide the affected
with the opportunity to contest such disclosure. Nothing herein shall be
construed as prohibiting the affected party from pursuing any other available
remedy for such breach or threatened breach, including the recovery of
damages.
10.2 Confidential Information. "Confidential information" shall mean
all trade secrets and other confidential and/or proprietary information of
the particular person or entity, including information derived from reports,
investigations, research, work in progress, codes, marketing and sales
programs, financial projections, cost summaries, pricing formulae, contract
analyses, financial information, projections, confidential filings with any
state or federal agency, and all other confidential concepts, methods of
doing business, ideas, materials or information prepared or performed for, by
or on behalf of such person by its employees, officers, directors, agents,
representatives, or consultants.
10.3 Nondisclosure Covenants: Remedy for Breach. The parties agree
that, in the event of breach or threatened breach of the covenants in this
Article 10, the damage or imminent damage to the value and the goodwill of
the non-breaching party will be irreparable and extremely difficult to
estimate, making any remedy at law or in damages inadequate. Accordingly, the
parties agree that the non-breaching party shall be entitled to injunctive
relief against the breaching party, in the event of any breach or threatened
breach of any of such covenants by the breaching party, in addition to any
other relief (including damages) available to the non-breaching party under
this Agreement or under law.
34
ARTICLE 11
TERMINATION
11.1 Grounds for Termination. This Agreement may be terminated at any
time prior to the Closing:
11.1.1 by mutual written agreement of Seller and Micrel; or
11.1.2 by either Seller or Micrel if the Merger shall not have
been consummated on or before December 31, 1998; or
11.1.3 by Micrel in the event of the Seller's material breach of
any of its covenants, representations or warranties under this Agreement; or
11.1.4 by Seller in the event of Micrel's or Micrel Subsidiary's
material breach of any of their respective covenants, representations or
warranties under this Agreement.
11.2 Effect of Termination. If this Agreement is terminated as
permitted by Section 0, such termination shall, except as set forth in the
next sentence, the parties hereto shall have no further obligations to each
other, provided that no such termination shall impair, limit or affect, in
any manner, any liability of any party hereto for any breach of any covenant,
representation or warranty set forth in this Agreement, accrued as of the
date of such termination. The provisions of Sections 0, 8.3, 8.4, 0, 0, 0,
0, 0, and 0 shall survive any termination hereof pursuant to Section 0.
ARTICLE 12
MISCELLANEOUS
12.1 Announcements. Neither party shall announce or otherwise
disclose the fact of or the terms and conditions of the transactions
contemplated hereby except pursuant to a press release, to be issued upon the
execution hereof, mutually agreed upon by Seller and Micrel.
12.2 Finders and Brokers. Except as provided in the next sentence,
each party hereby represents and warrants to the others that neither it nor
its representatives have taken, nor will they take, any action that would
cause the other parties hereto to have any obligation or liability to any
person for or made any arrangements for the payment of any finders' fees,
brokerage fees, agents' commissions, or like payments in connection with the
transactions contemplated hereby. Micrel has engaged the assistance of
BancBoston Xxxxxxxxx Xxxxxxxx ("BBRS"), and Seller has engaged the services
of Broadview International LLC ("Broadview"), in connection with the
transactions described herein. Micrel shall be solely responsible for any
and all fees and commissions payable to BBRS, and Seller shall be solely
responsible for any and all fees and commissions payable to Broadview (which
fees and commissions shall be paid prior to the Closing Date or accrued on
the Closing Date Balance Sheet). Each party shall indemnify and hold
harmless the others from any claim that is asserted by any person for a
35
finder's fee or like payment with respect to this Agreement arising from any
act, representation or promise of the indemnifying party or its
representative.
12.3 Amendment. Subject to applicable law, this Agreement may only be
amended or supplemented by written agreement of Seller, Micrel Subsidiary and
Micrel.
12.4 Waiver of Compliance. Any failure of Seller, on the one hand, or
Micrel, on the other, to comply with any provision of this Agreement may be
expressly waived in writing by Micrel or Seller, respectively, but such
waiver or failure to insist upon strict compliance with such provision shall
not operate as a waiver of, or estoppel with respect to, any subsequent or
other failure. No failure to exercise and no delay in exercising any right,
remedy, or power hereunder shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, remedy, or power hereunder preclude
any other or further exercise thereof or the exercise of any other right,
remedy, or power provided herein or by law or in equity. The waiver by any
party of the time for performance of any act or condition hereunder does not
constitute a waiver of the act or condition itself.
12.5 Expenses; Attorneys' Fee. Each party shall pay all expenses
incurred by it or on its behalf in connection with this Agreement or any
transaction contemplated hereby. Any transfer or similar tax in connection
with the sale of the Assets to Micrel shall be paid by Seller.
12.6 Survival of Representations and Warranties. The respective
representations and warranties of each party contained herein shall not be
deemed waived or otherwise affected by any investigation made by or on behalf
of the other party and such representations and warranties shall survive the
Closing and the consummation of the Asset purchase contemplated hereby as
provided in Article 8. All statements contained in this Agreement or in any
schedule, exhibit, certificate, list, or other document delivered pursuant
hereto shall be deemed representations or warranties, as the case may be (as
such terms are used in this Agreement), of the party making such statements.
12.7 Notices. All notices, demands, and other communications required
or permitted hereunder shall be made in writing and shall be deemed to have
been duly given if delivered by hand, against receipt, or mailed, postage
prepaid, certified or registered mail, return receipt requested, and
addressed as follows:
To Seller at:
Synergy Semiconductor Corporation
0000 Xxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn: T. Xxxx Xxxxxxx
36
With a copy to:
Xxxxxxx, Phleger & Xxxxxxxx
Two Embarcadero Place
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxxxx, Esq.
To Micrel or Micrel Subsidiary at:
Micrel, Incorporated
0000 Xxxxxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxx
With a copy to:
Xxxxxxxx & Xxxxxxxx LLP
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Attn.: Xxxxxxx X. Xxxxxxxx
To Seller Representative:
Xxxx X. Xxxxxxxx
0000 Xxxxxx Xxxxxx Xxxx
Xxxxxx, Xxxxx 00000
Notice of change of address shall be effective only when done in
accordance with this Section. All notices complying with this Section shall
be deemed to have been received on the date of delivery or on the third
business day after mailing.
12.8 Assignment; Successors and Assigns. Except as otherwise provided
herein, each party agrees that it will not assign, sell, transfer, delegate,
or otherwise dispose of, whether voluntarily or involuntarily, or by
operation of law, any right or obligation under this Agreement. Any
purported assignment, transfer, or delegation in violation of this Section
shall be null and void. Subject to the foregoing limits on assignment and
delegation, this Agreement shall be binding upon and shall inure to the
benefit of the parties and their respective successors and assigns. Except
for those enumerated above, this Agreement does not create, and shall not be
construed as creating, any rights or claims enforceable by any person or
entity not a party to this Agreement.
12.9 Governing Law. The validity, interpretation, enforceability, and
performance of this Agreement shall be governed by and construed in
accordance with the law of the State of California.
37
12.10 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
12.11 Headings. The headings of the Sections and Articles of this
Agreement and Table of Contents are for reference purposes only and shall not
constitute a part hereof or affect the meaning or interpretation of this
Agreement.
12.12 Entire Agreement. The parties intend that the terms of this
Agreement, including the Disclosure Schedule and other documents referred to
herein, shall be the final expression of their agreement with respect to the
subject matter hereof and may not be contradicted by evidence of any prior or
contemporaneous agreement. The parties further intend that this Agreement
shall constitute the complete and exclusive statement of its terms and that
no extrinsic evidence whatsoever may be introduced in any judicial,
administrative, or other legal proceeding involving this Agreement.
12.13 Seller Disclosure Schedule. The Seller Disclosure Schedule
shall be divided into sections corresponding to the sections of this
Agreement. Disclosure in any section of the Seller Disclosure Schedule shall
only constitute disclosure for purposes of the corresponding section of the
Agreement and not for any other purpose, unless it is reasonably apparent on
the face of the disclosure that it is applicable to another section of the
Agreement.
12.14 Performance by Micrel. Micrel shall cause Micrel Subsidiary to
perform all of its covenants and obligations hereunder.
12.15 Severability. If any provision of this Agreement, or the
application thereof to any Person, place, or circumstance, shall be held by a
court of competent jurisdiction to be invalid, unenforceable, or void, the
remainder of this Agreement and such provisions as applied to other Persons,
places, and circumstances shall remain in full force and effect.
12.16 Rules of Construction. The parties acknowledge that each party
has read and negotiated the language used in this Agreement. The parties
agree that, because all parties participated in negotiating and drafting this
Agreement, no rule of construction shall apply to this Agreement which
construes ambiguous language in favor of or against any party by reason of
that party's role in drafting this Agreement.
12.17 Additional Documents. Each of the parties agree, without
further consideration, to execute and deliver such other documents and take
such further action as may be reasonably required to effectuate the
provisions of this Agreement.
12.18 Dispute Resolution. Any dispute, controversy or claim between
the parties relating to, or arising out of or in connection with, this
Agreement (or any subsequent agreements or amendments thereto), including as
to its existence, enforceability, validity, interpretation, performance,
breach or damages, including claims in tort, whether arising before or after
the termination of this Agreement, shall be settled only by binding
38
arbitration pursuant to the Commercial Arbitration Rules, as then amended and
in effect, of the American Arbitration Association (the "Rules"), subject to
the following:
12.18.1 The arbitration shall take place in Palo Alto,
California.
12.18.2 There shall be three arbitrators, who shall be selected
under the normal procedures prescribed in the Rules.
12.18.3 Subject to legal privileges, each party shall be entitled
to discovery in accordance with the Federal Rules of Civil Procedure.
12.18.4 At the arbitration hearing, each party may make written
and oral presentations to the arbitrator, present testimony and written
evidence and examine witnesses.
12.18.5 The arbitrators' decision shall be in writing, shall be
binding and final and may be entered and enforced in any court of competent
jurisdiction.
12.18.6 No party shall be eligible to receive, and the
arbitrators shall not have the authority to award, exemplary or punitive
damages.
12.18.7 Each party to the arbitration shall pay one-half of the
fees and expenses of the arbitrators and the American Arbitration
Association.
12.18.8 The arbitrators shall not have the power to amend this
Agreement.
12.19 Exhibits. All Exhibits and Schedules attached hereto shall be
deemed to be a part of this Agreement and are fully incorporated in this
Agreement by this reference.
12.20 Certain Definitions.
"Affiliate" or "Associate" shall have the meaning assigned thereto in
Rule 405, as presently promulgated under the Securities Act of 1933, as
amended.
"Person" shall include any individual, partnership, joint venture,
corporation, trust, unincorporated organization, any other entity and any
government or any department or agency thereof, whether acting in an
individual, fiduciary, or other capacity.
"Subsidiary" shall mean, as to any particular parent corporation, any
corporation as to which more than fifty percent of the outstanding stock
having ordinary voting rights or power (and excluding stock having voting
rights only upon the occurrence of a contingency unless and until such
contingency occurs and such rights are to be exercised) at the time is owned
or controlled, directly or indirectly, by such parent corporation and/or by
one or more subsidiaries.
39
IN WITNESS WHEREOF, the parties hereto have duly executed this Merger
Agreement as of the date first written above.
SELLER MICREL SUBSIDIARY
SYNERGY SEMICONDUCTOR MISYN ACQUISITION CORP.
CORPORATION
By /s/ Xxxx X. Xxxxxxxx By /s/ Xxxxxxx X. Xxxx
---------------------- ----------------------
Xxxx X. Xxxxxxxx Xxxxxxx X. Xxxx
President President
MICREL
MICREL, INCORPORATED SELLER REPRESENTATIVE
By /s/ Xxxxxxx X. Xxxx /s/ Xxxx X. Xxxxxxxx
---------------------- -----------------------
Xxxxxxx X. Xxxx Xxxx X. Xxxxxxxx
President and Chief
Executive Officer
40
Pursuant to Item 601(b)(2) of Regulation S-K, the following schedules to this
Merger Agreement have been omitted. Such schedules will be submitted to the
Securities and Exchange Commission upon request.
Schedule 1.4: Surviving Corporation Officers
A list of officers of Synergy Semiconductor Corporation following the
merger with MISYN Acquisition Corp.
Schedule 2.1.4: Projected Balance Sheet
An estimated balance sheet of Synergy Semiconductor Corporation as of
November 9, 1998.
Schedule 2.2.1: Consideration Allocation
A list of the allocation of the consideration paid by the Registrant to
each shareholder of Synergy Semiconductor Corporation.
Schedule 3: Seller Disclosure Schedule
A list of limitations and exceptions to Synergy Semiconductor
Corporation's representations and warranties in the Merger Agreement.
