Exhibit 2.1
BUSINESS SALES AGREEMENT
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August 21, 1997
This BUSINESS SALE AGREEMENT (hereafter, this "Agreement") is made as of
the 21st day of August, 1997, by and between Alphatec USA, Inc., a California
corporation (including, unless otherwise specifically noted or unless the
context otherwise requires, Digital Testing Services, Inc., collectively
"SELLER"); and ISE Labs, Inc., a California corporation ("BUYER").
W I T N E S S E T H:
WHEREAS, SELLER conducts the Contract Assembly Business (as such term is
defined below) at the Facility (as such term is defined below), and the
Integrated Circuit Test Business (as such term is defined below) at the Leased
Premises (as such term is defined below) through its wholly owned subsidiary
Digital Testing Services, Inc. ("DTS"); and
WHEREAS, BUYER desires to acquire the Contract Assembly Business and the
Integrated Circuit Test Business from SELLER, upon the terms specifically
provided herein and in the exhibits attached hereto.
NOW, THEREFORE, in consideration of the representations, warranties,
agreements and covenants hereinafter set forth and other good and valuable
consideration, the receipt of which is hereby acknowledged and agreed, the
parties agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Definitions. For purposes of this Agreement, the following terms shall
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have the following meanings:
1.1.1 "Business" shall mean the "Integrated Circuit Test Business" and the
"Contract Assembly Business."
1.1.2 "Integrated Circuit Test Business" shall mean the business of
providing testing services performed by DTS.
1.1.3 "Facility" shall mean Alphatec USA, Inc.'s facility in Manteca,
California including the Land (as such term is defined in Section
2.2.3 hereof).
1.1.4 "Contract Assembly Business" shall mean the business of contract
assembly of electronic devices into electronic packages.
1.1.5 "Leased Premises" shall mean the building located at 0000 Xxxxxxxx
Xxx, Xxxxx Xxxxx, XX 00000.
1.1.6 "Closing Date" shall be September 15, 1997 or when all conditions to
Closing specified in Article 6 are satisfied or waived.
1.1.7 "Inventory" shall mean the piece parts and materials, spare parts,
office supplies, and other items used in the Contract Assembly
Business and listed, and items of a character similar to those
listed, on Schedule 1.1.7 and owned by SELLER on the Closing Date.
ARTICLE 2
PURCHASE AND SALE
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2.1 Business Purchases. On the Closing Date, BUYER shall purchase from SELLER,
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and SELLER shall sell, transfer, assign and convey to BUYER:
2.1.1 the Contract Assembly Business, such purchase and sale to include
the transfer to BUYER of the Purchased Assets (as such term is
defined in Section 2.2 hereof) and the assumption by BUYER of the
Assumed Liabilities (as such term is defined in Section 2.4 hereof),
and
2.1.2 all of the outstanding securities of DTS.
2.2 Purchased Assets. The purchase of the Assembly Business shall include the
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transfer to BUYER of the following assets:
2.2.1 Inventory: all the Inventory located at the Facility;
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2.2.2 Equipment: the machinery and equipment of the Contract Assembly
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Business as of the Closing Date and listed on Schedule 2.2.2 (the
"Assembly Equipment");
2.2.3 Land: the real property owned by SELLER more particularly described
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in Schedule 2.2.3 hereof (the "Land"), together with all buildings
and other real property improvements situated on the Land;
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2.2.4 Know-How: the trade secrets, tradenames, know-how and other
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intellectual property and proprietary information of SELLER related
to the Contract Assembly Business;
2.2.5 any and all cash and bank accounts of SELLER and its subsidiary and
affiliated companies;
2.2.6 accounts and notes receivable (other than intercompany receivables)
(for purposes of this Subsection 2.2.6, accounts and notes
receivable shall mean those receivables applicable to services
performed and/or product shipped by SELLER including DTS at any
time prior to 12:01 a.m. on the Closing Date, and are referred to
herein as the "Receivables");
2.2.7 except for the suppliers contracts referred to in Section 2.3.3,
all claims and rights under all agreements, contracts, licenses,
leases, franchises, instruments, documents, purchase and sale
orders and other executory commitments, and all permits, consents,
and certificates of any regulatory, administrative or other
governmental agency or body;
2.2.8 all rights under express or implied warranties from suppliers of
SELLER;
2.2.9 all leasehold interests of SELLER listed on Schedule 2.2.9 hereto;
2.2.10 all other assets of the Business not specifically referred to in
this Section 2.2, other than the Excluded Assets; and
2.2.11 all THREE HUNDRED FIFTY THOUSAND shares of the issued and
outstanding shares of Common Stock of DTS.
(collectively the "Purchased Assets"; provided, however, that the Purchased
Assets shall not include the Excluded Assets as such term is defined in Section
2.3 hereof). BUYER shall take delivery and possession of the Purchased Assets
upon the Closing Date.
2.3 Excluded Assets. Notwithstanding any other provision of this Agreement,
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SELLER shall not transfer to Buyer any of the following:
2.3.1 any and all intercompany accounts receivables and payables of
SELLER and its subsidiary and affiliated companies;
2.3.2 all insurance policies of SELLER pertaining to the Purchased Assets
and all rights of SELLER of every nature and description under or
arising out of such insurance policies;
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2.3.3 all losses, carryovers and rights to receive refunds from suppliers
or with respect to any and all taxes of SELLER including DTS of
every nature and description, including interest payable with
respect thereto;
2.3.4 the books and records of account and all supporting vouchers,
invoices and other records, and records and materials relating to
any or all taxes of SELLER including DTS (provided that, following
the Closing, SELLER shall grant BUYER access thereto during business
hours on reasonable notice).
If an asset of the Contract Assembly Business is not specifically listed as
an Excluded Asset under Section 2.3 of this Agreement, it shall be deemed a
Purchased Asset and shall be conveyed to Buyer pursuant to this Agreement.
2.4 Obligations.
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2.4.1 Assumed Liabilities.
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2.4.1.1 Definition. The Buyer covenants and agrees that it shall
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only assume those liabilities of Alphatec USA, Inc. (excluding DTS)
that are specifically listed on Schedule 2.4.1.1 (the "Assumed
Liabilities"). Alphatec USA, Inc. (excluding DTS) covenants to and
agrees with BUYER that all other liabilities and obligations of
Alphatec USA, Inc. (excluding DTS) shall remain the sole obligation
of Alphatec USA, Inc. and BUYER shall not be responsible for any
other liabilities and obligations of Alphatec USA, Inc. (excluding
DTS) or any of its parents or other affiliates.
2.4.1.2 Unfilled Orders. Any orders for assembly or testing by
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SELLER received or communicated in the ordinary course of business
that had not been completed or shipped prior to 12:01 a.m. of the
Closing Date, as listed on Schedule 2.4.1.2, shall be transferred to
BUYER at the Closing and BUYER shall be responsible for filling such
orders and shall be entitled to the revenues generated therefrom
(including advance payments).
2.4.1.3 Assignment and Assumption Agreement. On the Closing Date,
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SELLER and BUYER shall execute an assignment and assumption
agreement, substantially in the form of Exhibit 2.4.1.3 attached
hereto (the "Assignment and Assumption Agreement"), as evidence to
third parties of SELLER's assignment and transfer to BUYER of all of
SELLER's right, title and interest to the Purchased Assets, and
BUYER's assumption and agreement to thereafter fully and timely
perform and discharge in accordance with their terms, the Assumed
Liabilities.
2.4.2 Liabilities and Obligations. For the purposes of this Section 2.4,
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the term "liabilities and obligations" means all liabilities,
obligations, indebtedness,
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losses, damages, deficiencies, or responsibilities, fixed or unfixed,
now existing or hereafter arising, known or unknown, secured or
unsecured, accrued, absolute, contingent or otherwise, whether caused
by any action or failure to act, whether arising out of contract or
tort (including negligence) or from any other cause.
2.5 Xxxx of Sale. On the Closing Date, SELLER shall execute a xxxx of sale,
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substantially in the form of Exhibit 2.5 hereto, conveying the Purchased
Assets to BUYER ("Xxxx of Sale").
2.6 Land. On the Closing Date, SELLER shall execute a deed, substantially in
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the form of Exhibit 2.6 attached hereto, conveying the Land to BUYER (the
"Deed").
2.7 Stock. On the Closing Date, SELLER shall deliver a stock certificate for
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350,000 shares of DTS Common Stock, duly endorsed to BUYER, representing
all of the issued and outstanding shares of DTS.
2.8 Personnel; Employee Meetings. From and after the date hereof,
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representatives of BUYER shall be entitled to hold an initial meeting with
the employees of Seller upon reasonable notice to SELLER to explain and
answer questions, policies and benefits of employment under BUYER.
Thereafter, until the Closing, SELLER shall cooperate with BUYER in
communicating to the employees any additional information concerning
employment under BUYER that the employees may seek, or which BUYER may
desire to provide, and during normal working hours shall allow such
additional meetings by representatives of BUYER with employees as BUYER may
request. SELLER shall be entitled to have one or more representatives
attend all such meetings.
ARTICLE 3
PURCHASE PRICE
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3.1 Price. Subject to the terms of this Agreement, as consideration for the
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Purchased Assets, BUYER shall pay SELLER THIRTY MILLION DOLLARS
($30,000,000) (the "Purchase Price").
3.2 Allocation. The Purchase Price shall be allocated as mutually agreed upon
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by BUYER and SELLER as set forth in Exhibit 3.2 attached hereto. Following
the date hereof, the parties may modify Exhibit 3.2 by mutual written
agreement. BUYER and SELLER agree to prepare their respective federal,
state, local and foreign tax returns in a manner consistent with such
allocation and Section 9.12.
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3.3 Method of Payment. The Purchase Price shall be paid in immediately
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available funds on the Closing Date.
3.4 Taxes. BUYER shall pay all sales, use, transfer, registration, stamp, or
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other similar taxes or duties (collectively "Transfer Taxes") arising out
of or incurred in connection with the transfers of Purchased Assets
pursuant to this Agreement. Notwithstanding the foregoing, BUYER shall
have no liability to SELLER with respect to any income taxes or any other
taxes measured by the affairs of SELLER or SELLER's affiliates.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
4.1 Of SELLER. SELLER (which includes DTS) hereby represents and warrants to
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BUYER as follows and agrees with BUYER that the following representations
and warranties shall be true and correct on the Closing Date:
4.1.1 SELLER Organization. SELLER has been duly incorporated, and is
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validly existing as a corporation in good standing under the laws of
the State of California and has the corporate power to carry on its
business as now conducted and has full power and authority under
such laws to execute, deliver and perform this Agreement. Alphatec
USA, Inc. owns all of the shares of capital stock of DTS, free and
clear of all liens. The SELLER does not have any subsidiaries, other
than DTS. SELLER is not required to be qualified in any other
jurisdiction and all of the assets of the Business are located in
California.
4.1.2 Corporate Authority. SELLER has full power and authority to enter
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into this Agreement and the related agreements, to perform its
obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby, including, without
limitation, the execution and delivery of this Agreement, general
conveyances, bills of sale, assignments, and other documents and
instruments evidencing the conveyance of the Purchased Assets or
delivered in accordance with this Agreement and agreements related
hereto. No other proceedings on the part of SELLER or any affiliate
are necessary to authorize this Agreement and the related agreements
or to consummate the transactions contemplated hereby and thereby,
except as may be required under the Xxxx-Xxxxx-Xxxxxx Antitrust
Improvements Act of 1976, as amended ("HSR"). All corporate actions
have been taken by SELLER and each affiliated party that are
necessary for the due authorization, execution and delivery of this
Agreement and the performance of the obligations of SELLER
hereunder. This Agreement constitutes the legal, valid, and binding
obligation of SELLER, enforceable against SELLER in accordance with
its terms, subject
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to any equitable principles limiting the right to obtain specific
performance of certain obligations of SELLER hereunder. Except as
provided in Schedule 4.1.2 hereto, the execution and delivery of
this Agreement and such other agreements and instruments and the
consummation of the transactions contemplated hereby and thereby do
not and will not violate any law, regulation, rule, injunction or
court order, or the provisions of SELLER's Articles of Incorporation
or By-Laws, or of any note, indenture, mortgage, lease, license
agreement or other agreement or instrument to which SELLER or any
affiliated party is party or by which SELLER or any affiliated party
is bound or of which SELLER or any affiliated party is maker, or
result in the creation of any lien, charge or encumbrance upon the
Purchased Assets or any asset of DTS to be sold hereunder.
4.1.3 Land. Alphatec USA, Inc. is the owner of the Land in fee simple,
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except for (i) easements that are a matter of public record, (ii)
liens for taxes not yet due and payable and listed on Schedule
4.1.3, and (iii) any items listed on Schedule 4.1.3 attached hereto.
4.1.4 Consents. Except as provided in Schedule 4.1.4, attached hereto, no
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consent, approval, waiver, license, authorization or declaration of,
or filing or registration with, any person, firm, corporation or
other entity, including, without limitation, any lender, mortgagee,
governmental authority, bureau or agency is required in connection
with the execution, delivery and performance by SELLER of this
Agreement or the consummation of the transactions contemplated
hereby, except for HSR.
4.1.5 Litigation. Other than complaints and threats of litigation
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received from time to time from customers of SELLER, each of which
is listed on Schedule 4.1.5, and as otherwise specifically provided
in Schedule 4.1.5 hereto, to the best of the knowledge of the
officers of SELLER, SELLER is not in violation of, or in default
with respect to, any order, judgment or decree affecting the
Business or the Purchased Assets that would materially impair the
ability of BUYER to conduct the Business following the Closing Date,
nor is it required to take remedial action in order to avoid such
violation or default. There is no claim, investigation, litigation,
action, suit, or proceeding, administrative or judicial, pending or
threatened against SELLER or any officer or director of SELLER, or
involving the Purchased Assets or assets of DTS, at law or in
equity, before any federal, state, local, or foreign court, or
regulatory agency, or other governmental authority, including,
without limitation, any unfair labor practice or grievance
proceedings or otherwise. SELLER has not received any complaints
from any of its customers or suppliers within the last six months,
which complaints could reasonably be expected individually or in the
aggregate, to have a potential adverse effect on the Business,
Purchased Assets, prospects, operations, employee relations, rights
or condition of the SELLER.
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4.1.6 Leases. Schedule 4.1.6 contains a complete and correct list of all
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material leases under which SELLER is a party used in connection
with the Business. For purposes of this Section 4.1.6 a "material"
lease is a lease which provides for the payment of annual rent of
$50,000 or more. SELLER has made, or will make, available to BUYER a
complete and correct copy of each lease set forth in Schedule 4.1.6
and each such lease is in full force and effect. All rents and
additional rents due to date on each such lease have been paid
except as disclosed in Schedule 4.1.6 and, in the case of the lease
of real property, the lessee has had quiet enjoyment of the premises
since the commencement of the original term of such lease.
4.1.7 Employee Benefit Plans. Schedule 4.1.7 contains a true and complete
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list of each plan contract, program and arrangement evidencing an
employee benefit plan maintained, contributed to, or required to be
contributed to, by SELLER (and any other entity that is under common
control or affiliated with SELLER (an "ERISA Affiliate") within the
meaning of Section 4001 of the Employee Retirement Income Security
Act of 1984, as amended ("ERISA") and the rules and regulations
promulgated thereunder and/or Sections 414(b), (c), (m) or (l) of
the Internal Revenue Code of 1986, as amended the ("Code"), and the
rules and regulations promulgated thereunder) for the benefit of any
employee, director or agent employed, or retained with respect to
the Contract Assembly Business in the United States ("Plan
Beneficiaries"), whether or not any of the foregoing is funded,
whether or not required by law, whether formal or informal, whether
or not subject to ERISA, and whether or not legally binding
(collectively, the "Benefit Plans"). SELLER has no formal plan or
commitment, whether legally binding or not, to create any additional
plan with respect to the Business or modify or change any existing
Benefit Plan that would affect any Plan Beneficiary, except as
required by applicable law, including the Tax Reform Act of 1986, as
amended ("TRA"). SELLER has delivered to BUYER (i) true and complete
copies of all documents embodying or relating to the Benefit Plans,
all amendments to the Benefit Plans, and any trust or other funding
arrangement, and (ii) a copy of the most recent summary plan
description relating to each such Benefit Plan.
4.1.8 Absence of Certain Changes and Events. Since December 31, 1996,
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there has not been any material adverse change in the financial
condition, results of operation, assets, liabilities, business, or
prospects of SELLER or any occurrence, circumstance, or combination
thereof which reasonably could be expected to result in any such
material adverse change;
4.1.9 Undisclosed Liabilities. There are no debts, liabilities or
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obligations with respect to SELLER or to which the Purchased Assets
or assets of DTS are subject, liquidated, unliquidated, accrued,
absolute, contingent, or otherwise,
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that are not specifically identified in Schedule 2.4.1.1 or have
been retained by SELLER.
4.1.10 Inventory; Accounts Receivable. All Inventory of Alphatec USA,
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Inc. and all items to be delivered to Alphatec USA, Inc. or have
been retained by SELLER for Inventory after the Closing that are
subject to purchase commitments outstanding at the Closing, consist
of items that are or upon delivery will be good and merchantable
and of a quality and quantity presently usable and saleable in the
ordinary course of business. All of the Receivables are good and
fully collectible in the ordinary course of business and there are
no claims, setoffs or counterclaims in existence with respect
thereto.
4.1.11 Properties. SELLER has good, valid and marketable title to all
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property and Purchased Assets and assets of DTS, tangible and
intangible, purported to be owned by it, including the property and
Purchased Assets and assets of DTS reflected on the SELLER
Financial Statements (as defined in Section 4.1.27 herein). All
such property and Purchased Assets and assets of DTS purported to
be owned by SELLER are free and clear of all mortgages, liens,
charges, security interests or other encumbrances of any nature
whatsoever. All property and Purchased Assets and assets of DTS,
including machinery and equipment, owned, leased or otherwise used
by the SELLER are in good operating condition and repair,
reasonable wear and tear excepted, and are suitable and adequate
for use in the ordinary course of business and conform in all
material respects to all applicable laws. All leases are binding,
valid and enforceable in accordance with their terms subject to the
effect, if any, of (i) applicable bankruptcy and other similar laws
affecting the rights of creditors generally, and (ii) rules of law
governing specific performance, injunctive relief and other
equitable remedies, and there are no current defaults or events
which have occurred with which the giving of notice or lapse of
time or both would constitute a material default under any lease.
After the Closing, BUYER will be entitled to the continued use and
possession of the leased property by it, for the terms specified in
such leases and for the purposes for which such property is used.
There is no pending or threatened condemnation or similar
proceeding affecting any of the real property owned or leased by
SELLER.
4.1.12 Taxes.
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4.1.12.1 All Taxes (as hereinafter defined) due or payable by
SELLER, and all interest and penalties thereon, whether
disputed or not, other than Taxes which are not yet due
and payable, have been paid in full. All Tax returns,
statements, reports, forms and other documents required
to be filed in connection therewith have been duly and
timely filed (and no extension of any filing date
applicable thereto has been requested or granted) and
were
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correct and complete in all respects. All deposits required
by law to be made by SELLER with respect to employees' with
holding taxes have been duly made. SELLER is not delinquent
in the payment of any Tax, assessment or governmental charge
or deposit, and SELLER does not have any Tax deficiency or
claim currently pending, outstanding or asserted against it,
and there is no basis for any such Tax deficiency or claim.
There is no audit currently pending regarding any Taxes and
SELLER has not extended the period in which any Tax could be
assessed or collected.
4.1.12.2 No Tax is required to be withheld pursuant to Section 1445
of the Internal Revenue Code as a result of the transfers
contemplated by this Agreement, and SELLER is not a person
other than a United States person within the meaning of the
Code. There are no liens for Taxes upon the Purchased
Assets and assets of DTS except liens for current immaterial
amounts of Taxes not yet due. There is no contract,
agreement, plan or arrangement, including but not limited to
the provisions of this Agreement, covering any employee or
independent contractor or former employee or independent
contractor of SELLER that, individually or collectively,
could give rise to the payment by SELLER of any amount that
would not be deductible pursuant to Section 280G or Section
162 of the Code. None of the assets (including the
Purchased Assets) of SELLER (i) is property that is required
to be treated as owned by any other person pursuant to the
so-called "safe harbor lease" provisions of former Section
168(f)(8) of the Code, (ii) directly or indirectly secures
any debt the interest on which is tax exempt under Section
103(a) of the Code or (iii) is "tax exempt use property"
within the meaning of Section 168(h) of the Code. The
transactions contemplated herein are not subject to the tax
withholding provisions of Code Section 3406, or of
Subchapter A of Chapter 3 of the Code or of any other
provision of law in any jurisdiction.
4.1.12.3 No governmental entity (a "Taxing Authority") responsible
for the imposition of any Tax (domestic or foreign) has
asserted jurisdiction to impose any Taxes upon SELLER.
4.1.12.4 There is no contract, agreement, plan or arrangement,
including but not limited to the provisions of this
Agreement, covering any employee or independent contractor
or former employee or independent contractor of SELLER that,
individually or collectively, could give rise to the payment
by SELLER of any
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amount that would not be deductible pursuant to Section 280G
or Section 162 of the Code. None of the assets (including
the Purchased Assets) of SELLER (i) is property this is
required to be treated as owned by any other person pursuant
to the so-called "safe harbor lease" provisions of former
Section 168(f)(8) of the Code, (ii) directly or indirectly
secures any debt the interest on which is tax exempt under
Section 103(a) of the Code or (iii) is "tax exempt use
property" within the meaning of Section 168(h) of the Code.
The transactions contemplated herein are not subject to the
tax withholding provisions of Code Section 3406, or of
Subchapter A of Chapter 3 of the Code or of any other
provision of law in any jurisdiction. The SELLER is not and
has never been a member of a group permitted or required to
file consolidated Tax returns and is not party to any
agreement relating to the payment or sharing of liability
for Taxes. SELLER has not filed a consent under Section
341(f) of the Code.
4.1.12.5 For purposes of this Agreement, "Tax" (and, with correlative
meaning, "Taxes" and "Taxable") means (i) any net income,
alternative or add-on minimum tax, gross income, gross
receipts, sales, use, ad valorem, transfer, franchise,
profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, property,
environmental or windfall profit tax, custom, duty or other
tax, governmental fee or other like assessment or charge of
any kind whatsoever, together with any interest or any
penalty, addition to tax or additional amount imposed by any
Taxing Authority responsible for the imposition of any such
tax (domestic or foreign), (ii) any liability for the
payment of any amounts of the type described in (i) as a
result of being a member of an affiliated, consolidated,
combined or unitary group for any Taxable period and (iii)
any liability for the payment of any amounts of the type
described in (i) or (ii) as a result of any express or
implied obligation to indemnify any other person.
4.1.13 Compliance with Laws. SELLER has complied and is in compliance with
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all applicable foreign, federal, state, and local laws, statutes,
licensing requirements, rules, and regulations, and judicial or
administrative decisions applicable to the Business where the failure
to so comply could have a material adverse effect on the results of
operations or financial condition of SELLER, the Business or the
Purchased Assets. SELLER has been granted all licenses, permits
(temporary and otherwise), authorizations, and approvals from foreign,
federal, state, and local government regulatory bodies necessary to
carry on the
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Business as currently conducted, all of which are currently valid
and in full force and effect. All such licenses, permits,
authorizations, and approvals shall be transferred to BUYER
effective as of the Closing, and shall be valid and in full force
and effect to the same extent as if SELLER were continuing
operation of the Business. To the best of SELLER's knowledge,
there is no order issued, investigation, or proceeding pending or
threatened, or notice served with respect to any violation of any
law, ordinance, order, writ, decree, rule, or regulation issued by
any federal, state, local, or foreign court or governmental agency
or instrumentality applicable to the Business.
4.1.14 [Intentionally Omitted].
4.1.15 Contracts and Commitments.
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4.1.15.1 Set forth on Schedule 4.1.15.1 is a list of all
outstanding contracts, whether or not in writing, to
which SELLER is a party or to which any of the Purchased
Assets or DTS assets are subject that may: (i) involve
obligations (contingent or otherwise) of, or payments
to, SELLER in excess of $25,000; (ii) involve agreements
(written or unwritten) with suppliers and customers of
SELLER; (iii) involve the license of any proprietary
rights to or from SELLER; (iv) contain provisions
restricting and/or affecting the development,
manufacture, or distribution of the SELLER's products or
services; (v) relate to any aspect of the Business of
SELLER in which any other person who was or is an
officer, director, or employee of SELLER (or any person,
firm, partnership, trust, or corporation affiliated with
any such persons or any family members of such persons)
have a material interest; or (vi) involve agreements
(written or unwritten) on which the Business is
materially dependent.
4.1.15.2 SELLER has performed all of its obligations under the
terms of each such contract, and is not in default
thereunder. No event or omission has occurred which but
for the giving of notice or lapse of time or both would
constitute a default by any party thereto under any such
contract, where such default by any party could have an
adverse impact on the results of operations or financial
condition or prospects of SELLER, the Business or the
Purchased Assets. Each such contract is valid and
binding on all parties thereto and in full force and
effect. SELLER has received no notice of default,
cancellation, or termination in connection with any such
contract.
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4.1.16 Assets. The Purchased Assets include all intellectual property,
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inventory and all other property in which SELLER has any right,
title and interest. The Purchased Assets include all the assets
necessary to operate the Business in the same manner as the
Business was operated by SELLER prior to the Closing. The Purchased
Assets are suitable for the purpose or purposes for which they are
being used, are in good operating condition and in reasonable
repair, and free from any known defects, except such minor defects
as do not interfere with the continued use thereof. Each tangible
Purchased Asset has been serviced and maintained in accordance with
customary industry practices. Subject to normal wear and tear, such
plants, facilities, machinery, and equip ment are capable of and
are producing sound and merchantable products.
4.1.17 [Intentionally Omitted].
4.1.18 No Conflict or Default. Neither the execution and delivery of this
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Agreement or the related agreements, nor compliance with the terms
and provisions hereof and thereof, including without limitation,
the consummation of the transactions contemplated hereby and
thereby, will violate any statute, regulation, or ordinance of any
governmental authority, or conflict with or result in the breach of
any term, condition, or provision of the Articles of Incorporation
or Bylaws of SELLER, as presently in effect, or of any agreement,
deed, contract, mortgage, indenture, writ, order, decree, legal
obligation, or instrument to which SELLER is a party or by which it
or any of the Purchased Assets or assets of DTS are or may be
bound, or constitute a default (or an event which, with the lapse
of time or the giving of notice, or both, would constitute a
default) thereunder.
4.1.19 Labor Relations.
---------------
4.1.19.1 With respect to the Business, SELLER has complied with
Title VII of the Civil Rights Act of 1964, as amended,
the Fair Labor Standards Act, as amended, the
Occupational Safety and Health Act of 1970, as amended,
all applicable federal, state, and local laws, rules, and
regulations relating to employment, and all applicable
laws, rules and regulations governing payment of minimum
wages and overtime rates, and the withholding and payment
of taxes from compensation of employees.
4.1.19.2 There are no labor controversies pending or threatened
between SELLER and any of its employees.
4.1.19.3 SELLER has never entered into a collective bargaining
agreement or other labor union contract relating to the
Business and applicable to the employees.
13
4.1.19.4 There are no written employment or separation agreements,
or oral employment or separation agreements other than
those establishing an "at-will" employment relationship
between SELLER and any of the employees, except as set
forth in Schedule 4.1.19.4.
4.1.20 Environmental Matters. SELLER: (i) has obtained all applicable
---------------------
permits, licenses and other authorizations which are required under
foreign, federal, state or local laws relating to pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants or hazardous or toxic materials or wastes by SELLER
(or its agents); (ii) is in compliance with all terms and
conditions of such required permits, licenses and authorization,
and also is in compliance with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations,
schedules and timetables contained in such laws or contained in any
regulation, code, plan, order, decree, judgement, notice or demand
letter issued, entered, promulgated or approved thereunder; (iii)
is not aware of nor has received notice of any event, condition,
circumstance, activity, practice, incident, action or plan which is
reasonably likely to interfere with or prevent continued compliance
or which would give rise to any common law or statutory liability,
or otherwise form the basis of any claim, action, suit or
proceeding, based on or resulting from SELLER's (or any of its
agents') manufacture, processing, distribution, use, treatment,
storage, disposal, transport, or handling, or the emission,
discharge, or release into the environment, of any pollutant,
contaminant, or hazardous or toxic material waste; (iv) has taken
all actions necessary under applicable requirements of Federal,
state or local laws, rules or regulations to register any products
or materials required to be registered by SELLER (or any of its
agents) thereunder; and (v) is not aware of any contaminated soil
or groundwater at any of the properties owned or operated, leased
or previously owned or leased by SELLER. SELLER has disclosed to
BUYER in writing (i) all permits relating to pollution or
protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of
pollutants, contaminants, or hazardous or toxic materials or wastes
into ambient air, surface water, ground water, or land or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport, or handling of pollutants,
contaminants or hazardous or toxic materials or wastes by SELLER
(or its agents) its holds as of the date hereof, and (ii) all
documents relating to tests previously conducted or to be conducted
in the future for potential contamination at any of SELLER's
facilities, whether owned or leased, including soil and water
tests.
14
4.1.21 Miscellaneous.
-------------
4.1.21.1 SELLER is (and following the Closing shall remain) solvent,
generally able to pay its debts as they become due and in a
position where SELLER has reasonably sufficient working
capital compared to SELLER's business plans, needs, and
expectations. In making this representation, SELLER
acknowledges that it is using such terms and financial
standards in every sense in which such terms and standards are
used in the Bankruptcy Code (Title 11 of the United States
Code) and in the Uniform Fraudulent Transfer Act and Uniform
Fraudulent Conveyance Act, as in effect in each applicable
jurisdiction.
4.1.21.2 The consideration received by SELLER at the Closing is
reasonably equivalent to the value of the Purchased Assets and
the obligations of SELLER to BUYER in this Transaction. BUYER
has received no notice, knowledge or reason for inquiry from
SELLER (or, to the best of SELLER's knowledge and belief,
anyone else) of any information, fact, condition, event or
matter to contrary to such representations or otherwise
inconsistent with BUYER's good faith belief that BUYER is
paying in the ordinary and normal course of business a fair
and reasonable price for such Purchased Assets and
obligations.
Without limiting the generality of the foregoing, SELLER acknowledges that the
risk factors affecting the pricing of the Purchased Assets were independent of
SELLER's financial condition and circumstances, and BUYER did not unduly or
unfairly take advantage of SELLER's desire to sell the Purchased Assets. In all
respects, BUYER has conducted itself in good faith and consistent with
commercially reasonable standards for buyers in regularly conducted and
commercially reasonable sales.
4.1.22 Proprietary Rights.
------------------
4.1.22.1 SELLER owns all right, title and interest in and to or
is exclusively licensed or is otherwise entitled to
exercise, without restriction, all rights to all
patents, trademarks, trade names, service marks,
copyrights, mask works, trade secrets and other
intellectual property rights, and any applications or
registrations therefor, and all inventions, mask work
layouts, net lists, source code, object code,
schematics, technical drawings, technology, know-how,
processes, formulas, algorithms, computer software
programs, documentation, and all other tangible and
intangible information or material in any form, used
or currently proposed to be used in the Business or
which form part of the Purchased
15
Assets, without any conflict with or infringement of
the rights of others and free and clear of any liens,
encumbrances or security interests (collectively, the
"Intellectual Property Rights") and has the right to
use, sell, license, assign, transfer, convey or
dispose thereof or the products, processes and
materials covered thereby.
4.1.22.2 No person has asserted or threatened to assert any
claims with respect to the Intellectual Property
Rights (i) contesting the right of SELLER to use,
exercise, sell, license, transfer or dispose of any of
the Intellectual Property Rights or any products,
processes or materials covered thereby or (ii)
challenging the ownership, validity or enforceability
of any of the Intellectual Property Rights.
4.1.23 Certain Payments. In connection with the Business, SELLER has
----------------
not and no person directly or indirectly on behalf of it has
made or received any payment that was not legal to make or
receive.
4.1.24 Books and Records. The books and records of SELLER to which
-----------------
BUYER and its accountants and attorneys have been given access
are the true books and records of SELLER and truly and fairly
reflect the underlying facts and transactions in all material
respects.
4.1.25 Complete Disclosure. The copies of all instruments, agreements,
-------------------
other documents and written information delivered by SELLER to
BUYER or its accountants or counsel are and will be complete and
correct in all material respects as of the date of delivery
thereof. No representations or warranties made by SELLER in this
Agreement, nor any document, written information, statement,
financial statement, certificate or exhibit prepared and
furnished or to be prepared and furnished by them or its
representatives to BUYER pursuant hereto or the related
agreements in connection with the transactions contemplated
hereby or thereby, contains or will contain any untrue statement
of a material fact, or omits or will omit to state a material
fact necessary to make the statements or facts contained herein
or therein not misleading.
4.1.26 Customers and Suppliers. DTS is not aware nor has any reason to
------------------------
believe that any of DTS' ten largest customers during the twelve
months ended July 31, 1997 (determined on the basis of both
revenues and bookings during such period) has terminated, or
intends to materially reduce or terminate, the amount of its
business with DTS, and DTS has no reason to believe that such
termination or alteration would occur as a result of the
consummation of the transactions contemplated by this Agreement
or the related agreements.
16
4.1.27 Financial Statements. SELLER has furnished to BUYER a complete
--------------------
and accurate copy of its audited consolidated balance sheet as
of December 31, 1994, December 31, 1995 and December 31, 1996
and its audited consolidated statement of operations, cash flow
and shareholders' equity for each of its fiscal years ended
December 31, 1994, 1995, and 1996 (collectively, the "SELLER
Audited Financial Statements"). The SELLER Audited Financial
Statements have been prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and
fairly present the consolidated financial position of SELLER as
and at the dates thereof and SELLER's consolidated results of
operations and cash flows for the periods then ended. The notes
to the SELLER Audited Financial Statements as at and for each
such period set forth in reasonable detail SELLER's accounting
policies, principles and methods. SELLER has furnished to BUYER
a complete and accurate copy of Alphatec USA, Inc.'s (including
DTS) and DTS's on a stand alone basis, their respective
unaudited balance sheet as of June 30, 1997 and their respective
unaudited statement of operations, cash flow and shareholders'
equity for the six months ended June 30, 1997 and has furnished
to BUYER a balance sheet and statement of operations for
Alphatec USA, Inc. (excluding DTS) as of July 31, 1997
(collectively, the "SELLER Unaudited Financial Statements" and
collectively with the SELLER Audited Financial Statements, the
"SELLER Financial Statements"). The Company's revenue
recognition policies comply with GAAP and no current or former
customer has the right to return any products to the Company or
has any right of set off or counterclaim against the Company.
The SELLER Financial Statements have been prepared in accordance
with GAAP consistently applied, except for the absence of
footnotes, and fairly present the financial position of SELLER
and each such entity individually and collectively as and at the
dates thereof and SELLER's and each such entity's consolidated
results of operations and cash flows for the periods then ended.
4.2 Of BUYER. BUYER hereby represents and warrants to SELLER as follows and
--------
agrees with SELLER that the following representations and warranties shall
be true and correct on the Closing Date:
4.2.1 BUYER Organization. At the Closing date BUYER will be duly
------------------
incorporated and will be validly existing as a corporation in good
standing under the laws of the State of California, will have the
corporate power to carry on its business as now conducted and will
have full power and authority under such laws to execute, deliver
and perform this Agreement.
4.2.2 Corporate Authority. On or prior to the Closing Date, all corporate
-------------------
actions will have been taken by BUYER that are necessary to the due
authorization or ratification of the execution and delivery of this
Agreement and the performance of the BUYER hereunder. This Agreement
constitutes the legal,
17
valid and binding obligation of BUYER, enforceable against BUYER in
accordance with its terms, subject, as to the enforcement of
remedies, to applicable bankruptcy, reorganization, insolvency,
moratorium or other similar laws affecting the enforcement of
creditors' rights generally from time to time in effect, and subject
to any equitable principles limiting the right to obtain specific
performance of certain obligations of BUYER hereunder. Except as
required by BUYER's lenders, the entering into of this Agreement and
the consummation of the transactions contemplated hereby do not and
will not violate any law, regulation, rule, injunction or court
order, or the provisions of BUYER'S Articles of Incorporation or By-
Laws, or of any note, indenture, mortgage, lease license agreement
or other agreement or instrument to which BUYER is a party or by
which any of them is bound or of which any of them is maker.
4.2.3 Consents. Except for any filing that may be required under HSR or
--------
as required by BUYER'S lenders, no consent, approval, waiver,
license, authorization or declaration of, or filing or registration
with, any person, firm, corporation or other entity, including,
without limitation, any lender, mortgagee, governmental authority,
bureau or agency is required in connection with the execution,
delivery and performance by BUYER of this Agreement or the
consummation of the transaction contemplated hereby or thereby,
except under the HSR Act.
ARTICLE 5
CLOSING/PREPARATION FOR CLOSING
-------------------------------
5.1 Closing Date. Subject to Article 6 hereof, the closing of the transactions
------------
contemplated by this Agreement (the "Closing") shall be held at the offices
of SELLER at the LEASED PREMISES at 11:00 a.m. on the Closing Date, or at
such other time as may be mutually agreed to by the parties, unless the
date for the Closing is extended by mutual agreement of the parties (the
"Closing Date").
5.2 From the date of this Agreement until the Closing Date:
5.2.1 BUYER'S Access to Premises and Information. In order that BUYER may
------------------------------------------
have full opportunity to make such investigation as it shall desire
concerning the Business and the Purchased Assets, SELLER shall make
available management personnel familiar with the conduct of the
Business and the Purchased Assets and BUYER and its counsel,
accountants and other representatives shall be afforded access
during normal business hours to the properties, books, accounts,
records, contracts and other documents of SELLER relating the
Business and the Purchased Assets and the Assumed Obligations,
wherever located and shall be permitted to make abstracts from and
copies of
18
such books and records and documents. Prior to the Closing and if,
for any reason the transactions contemplated by this Agreement are
not consummated, thereafter until September 30, 2002, BUYER agrees
that it will not disclose to any third person (other than its
advisers or investors or lenders in respect of this transaction) or
use for its own benefit any nonpublic confidential information
relating to the Business that SELLER may have acquired during the
course of its investigation and examination of the Business, whether
acquired prior to or after the execution of this Agreement;
provided, however, that nothing herein shall prohibit disclosure of
-------- -------
information (i) generally known to the public, or which becomes
generally known to the public other than through a violation of this
Agreement, (ii) in the possession of BUYER, or (iii) coming into the
possession of BUYER will promptly return or destroy and cause its
representatives to return or destroy any property, books, records or
papers of SELLER and all abstracts and copies thereof which any of
them may have in its possession. Because the breach or attempted or
threatened breach of the obligations under this Section 5.2.1 will
result in immediate and irreparable injury to SELLER for which
SELLER will not have an adequate remedy at law, SELLER shall be
entitled, in addition to all other remedies, to a decree of specific
performance of this covenant and to a temporary and permanent
injunction enjoining such breach, without posting bond or furnishing
similar security.
5.2.2 Conduct of Business in Ordinary Course. SELLER shall cause the
--------------------------------------
Business to be operated in the ordinary course, consistent with past
practice, except as may be consented to in writing by BUYER.
5.2.3 Consents. SELLER shall use its best efforts to obtain all consents
--------
of and authorizations by third parties and to make all filings with
and give all notices to third parties that may be necessary or
required in order to consummate the sale of the Purchased Assets,
and shall take such additional actions as BUYER may request to
cooperate so that the transactions contemplated by this Agreement
may be expeditiously consummated.
5.2.4 Other Discussions. From the date hereof until the Closing, SELLER
-----------------
shall not, nor shall any of its representatives or affiliates on its
behalf, discuss, communicate or negotiate with any other party,
concerning the possible disposition of the Business or the Purchased
Assets or the assets of DTS or of SELLER. If SELLER or any such
representatives receives any inquiries from another party relating
to any proposed disposition of the Business or the Purchased Assets
following the date hereof, SELLER shall promptly (a) advise such
party that SELLER is not entitled to enter into any such discussions
or negotiations and (b) notify BUYER in writing of such inquiry.
SELLER understands that BUYER is relying on this covenant in
entering into this
19
Agreement and that BUYER is expending significant funds in order to
purchase the Purchased Assets.
5.2.5 Bulk Transfer Laws. SELLER shall comply with the California Uniform
------------------
Commercial Code - Bulk Transfers and any other applicable state bulk
transfer laws (collectively, the "Bulk Sales Provisions"), if
required, prior to the Closing and shall provide BUYER with written
documentation of such compliance. If SELLER cannot timely comply
with such bulk sales laws requirements BUYER hereby agrees to waive
compliance with such laws and SELLER agrees to indemnify and hold
BUYER's Indemnitees (as defined) harmless which they may suffer or
incur by virtue of such non-compliance. Such indemnification shall
survive the Closing and shall not be subject to the limitations on
the amount of indemnification or duration provided in Article 8
hereof.
5.2.6 Purchase or Retirement of Bank Debt. Prior to Closing, the BUYER
-----------------------------------
shall have the right, in its sole discretion, to purchase or retire
up to all of the debt of SELLER owed to Silicon Valley Bank,
Comerica/California and Comerica/International. Any and all amounts
so purchased or retired by BUYER reduce the Purchase Price on a
dollar-for-dollar basis. SELLER agrees to cooperate and enter into
any agreements necessary to give effect to the foregoing covenant.
5.2.7 Exhibits and Schedules to Agreement. BUYER and SELLER shall each
-----------------------------------
deliver to the other their respective Exhibits and Schedules
contemplated by this Agreement within eight days after executing
this Agreement. SELLER's Exhibits and Schedules must be in a form
reasonably satisfactory to BUYER, or BUYER shall have the right to
terminate this Agreement without liability or obligation.
ARTICLE 6
CONDITIONS TO CLOSING
---------------------
6.1 BUYER. The obligations of BUYER to close shall be subject to the
-----
satisfaction, or the waiver in writing by BUYER, on or prior to the Closing
Date, of all of the following conditions:
6.1.1 Deed. BUYER shall have received the Deed, executed by SELLER.
----
6.1.2 Xxxx of Sale. BUYER shall have received the Xxxx of Sale, executed
------------
by SELLER.
20
6.1.3 Assignment and Assumption. BUYER shall have received the Assignment
-------------------------
and Assumption Agreement, executed by SELLER.
6.1.4 Representations and Warranties. The representations and warranties
------------------------------
of SELLER contained in this Agreement shall be correct in all
respects on and as of the Closing Date with the same force and
effect as though such representations and warranties were made at
the Closing; and each and all of the covenants to be performed by
SELLER on or before the Closing Date pursuant to the terms hereof
shall have been duly performed.
6.1.5 No Liens. The Purchase Assets, the assets of DTS and the Business
--------
shall be delivered to BUYER free and clear of all material liens,
encumbrances, claims and the like.
6.1.6 Performance of Agreement. All covenants, conditions, and other
------------------------
obligations under this Agreement and the related agreements which
are to be performed or complied with by the SELLER, including Board
of Directors and stockholder approval, shall have been fully
performed and complied with at or prior to the Closing.
6.1.7 No Material Adverse Change. There shall have been no material
--------------------------
adverse change in the financial condition, business, or properties
of SELLER which materially and adversely affects the conduct of the
Business as presently being conducted or the financial condition,
business, or properties of SELLER since June 30, 1997.
6.1.8 Absence of Governmental or Other Objection. There shall be no
------------------------------------------
pending or threatened lawsuit challenging the transaction by any
body or agency of the federal, state, or local government or by any
third party, and the consummation of the transaction shall not have
been enjoined by a court of competent jurisdiction as of the Closing
and any applicable waiting period under any applicable federal law
shall have expired.
6.1.9 Evidence of Title. BUYER shall have received evidence, at or prior
-----------------
to the Closing, satisfactory to it of SELLER's title to all of the
Purchased Assets and right to fully convey all Purchased Assets free
and clear of any lien, encumbrances or restrictions on transfer.
6.1.10 HSR Act. Any waiting period (and any extension thereof) applicable
-------
to the consummation of the sale of Purchased Assets under HSR shall
have expired or been earlier terminated.
21
6.1.11 FIRPTA. BUYER shall have received a properly executed Foreign
------
Investment and Real Property Tax Act of 1980 ("FIRPTA")
Notification Letter, in form and substance satisfactory to BUYER.
6.1.12 Assets. On the date of Closing, SELLER shall have at least
------
$5,000,000 of fully and readily collectible accounts receivable and
cash and cash equivalents on hand and shall provide to BUYER a
Closing Date balance sheet indicating such amount.
6.1.13 Evidence of Debt Extinguishment. BUYER shall have received
-------------------------------
satisfactory written evidence that all intercompany accounts
between SELLER and parent and SELLER and Alphatec Electronics
Corporation have been properly eliminated and that any net
intercompany receivables owing to Alphatec and DTS by their
corporate parent or affiliate shall be properly recorded.
6.1.14 BUYER Board Approval. The Board of Directors of BUYER shall have
--------------------
approved the transactions contemplated by this Agreement.
6.1.15 Environmental Reports. BUYER shall have received environmental
---------------------
reports prepared by a firm reasonably acceptable to BUYER, such
reports to be in form and substance acceptable to BUYER. The costs
and expenses of such reports and the associated investigation and
testing shall be borne by SELLER.
6.1.16 Employment Agreements. Each of Xxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx
---------------------
Xxxxxx and Del Xxxxxxx shall have executed and delivered new
employment and non-competition agreements with DTS (each an
"Employment Agreement"). The terms of each Employment Agreement
shall provide, among other things, that (i) such agreement
supersedes and replaces all prior agreements between such employee
and DTS with respect to employment and compensation matters and
(ii) such employee releases and discharges DTS and ISE with respect
to any claims with respect to compensation, including, without
limitation, salary, bonuses, profit sharing and vacation accruals.
6.2 SELLER. The obligations of SELLER to be performed at the Closing shall be
------
subject to the satisfaction, or the waiver in writing by SELLER, on or
prior to the Closing Date of all of the following conditions:
6.2.1 Payment. SELLER shall have received payment of the Purchase Price
-------
specified in Section 3.1.
6.2.2 Assignment and Assumption. SELLER shall have received the
-------------------------
Assignment and Assumption Agreement, executed by BUYER.
22
6.2.3 Representations and Warranties. The representations and warranties
------------------------------
of BUYER contained in this Agreement shall be correct in all
material respects on and as of the Closing Date with the same force
and effect as though such representations and warranties were made
at the Closing Date, and each and all of the covenants to be
performed by BUYER on or before the Closing Date pursuant to the
terms hereof shall have been duly performed.
ARTICLE 7
COVENANTS
7.1 Additional Documentation. At any time and from time to time after the
------------------------
Closing Date, at BUYER's reasonable request and without further monetary
consideration, SELLER will execute and deliver such other instruments of
conveyance and transfer as BUYER reasonably may require more effectively to
convey to, transfer to, and vest in BUYER, or to put BUYER in possession
of, any or all of the assets and properties intended to be transferred,
conveyed or assigned to BUYER pursuant to the provisions of this Agreement.
7.2 Assumption of Obligations. To the extent that any of the commitments,
-------------------------
leases, purchase orders and contracts of the Business are not assignable
without the consent of another party and are "Assumed Liabilities," SELLER
and BUYER each agree to use reasonable efforts to obtain such consent to
the assignment hereof to BUYER. If such consent shall not be obtained for
any such commitments, leases, purchase orders or contracts, SELLER and
BUYER shall make suitable arrangements, without cost to SELLER, whereby
BUYER may nevertheless enjoy the benefits and rights of SELLER, and perform
the obligations of SELLER, thereunder.
ARTICLE 8
INDEMNIFICATION
---------------
8.1 SELLER'S Indemnification.
------------------------
8.1.1 SELLER agrees to indemnify and hold harmless BUYER, its affiliates
and its officers, directors, employees and agents, successors and
assigns (each a BUYER's Indemnitee" and collectively the "BUYER's
Indemnitees") from any and all damages (including punitive damages),
loses, expenses (including, without limitation, court costs,
arbitration fees and attorneys' fees and expenses of investigation
and all payments made pursuant to any agreement or legal requirement
to indemnify, hold harmless or exonerate any person), claims
(including amounts paid in settlement), demands, suits, causes of
action,
23
proceedings, judgments, fines, penalties and other liabilities or
obligations of any nature (including costs relating to the
enforcement of this Article 8, contingent or non-contingent,
liquidated or unliquidated, direct or indirect) (collectively,
"Losses"), incurred or sustained by or asserted against any of the
BUYER's Indemnitees with respect to or arising out of: (i) the
failure or breach of any of the SELLER's representations and
warranties made in Section 4.1 hereof to be true and correct in all
respects as of the Closing Date; (ii) the SELLER's failure or refusal
or inability to pay for all liabilities and obligations of SELLER,
other than the Assumed Liabilities that BUYER has agreed to assume
pursuant to Section 2.4 of this Agreement; and (iii) the breach of or
failure by SELLER to observe or perform any obligation, covenant or
agreement of SELLER under this Agreement; provided, however, that no
-------- -------
BUYER's Indemnitee shall be entitled to indemnification for Losses
under the provisions of this Section 8.1 unless and until the
aggregate amount of all Losses of the BUYER's Indemnitees as a group
under Section 8.1 shall have exceeded $100,000 in the aggregate, in
which event the BUYER's Indemnitees in the aggregate shall be
entitled to such indemnification only for all Losses in excess of
such amount. The indemnification obligations of SELLER for a breach
of its representations and warranties under this Section 8.1 shall
survive the Closing for a period of three (3) years after the
Closing.
8.1.2 Notwithstanding any investigation conducted at any time with regard
thereto by or on behalf of any party to this Agreement, all
representations, warranties, obligations, covenants, and agreements
of SELLER shall survive the execution, delivery, and performance of
this Agreement, unless otherwise specifically set forth in this
Agreement to the contrary. No investigation made by or on behalf of
BUYER with respect to SELLER shall be deemed to affect BUYER's
reliance on the representations, warranties, covenants and agreements
made by SELLER contained in this Agreement and shall not be a waiver
of BUYER's rights to indemnity as herein provided for the breach or
inaccuracy of or failure to perform or comply with any of SELLER's
representations, warranties, covenants or agreements under this
Agreement. All representations and warranties of each party set forth
in this Agreement shall be deemed to have been made again by such
party at and as of the Closing. Nothing in this Agreement shall be
construed as limiting in any way the remedies that may be available
to a party in the event of fraud relating to the representations,
warranties, agreements or covenants made by any other party in this
Agreement. SELLER shall have liabilities and obligations for Losses
with respect to claims submitted or notice of claims provided during
the time period of survivability of the specific representation,
warranty, covenant or agreement as set forth herein. Notwithstanding
the expiration date of the representations, warranties, covenants and
agreements set forth herein, if BUYER shall notify SELLER with
respect to the submission of a claim during the time period of
survivability of such representation, warranty, covenant or
agreement,
24
SELLER's liability or obligation for Losses shall continue in full
force and effect until settled to the other party's satisfaction with
respect to those claims timely made.
8.2 BUYER's Indemnification. BUYER agrees to indemnify and hold harmless
-----------------------
SELLER, its affiliates and its officers, directors, employees and agents,
successors and assigns (each a SELLER's "Indemnitee" and collectively,
"SELLER's Indemnitees") from all Losses incurred or sustained by or
asserted against any of SELLER's Indemnitees with respect to or arising out
of: (i) the failure of the BUYER's representations to be true and correct
in all material respects as of the Closing Date, provided, however, that
-------- -------
SELLER's Indemnitees shall be entitled to indemnification for Losses under
this Section 8.2: (i) only if and when, and to the extent that, such Losses
exceed $100,000 in the aggregate, in which event the BUYER's indemnitees in
the aggregate shall be entitled to such indemnification only for all Losses
in excess of such amount; (ii) the Assumed Liabilities; and (iii) the
breach of or failure to observe or perform any obligation of BUYER required
under this Agreement and the agreements contemplated hereby. The
indemnification obligations of BUYER pursuant to this Section 8.2 shall
survive the Closing as follows: With respect to clause (i), for three
years thereafter, and with respect to clauses (ii) and (iii), until such
time as the applicable statute of limitation has expired.
8.3 Notice and Defense. Any party or parties seeking indemnification under
------------------
this Article 8 (collectively, the "Indemnitee") shall, on each occasion
that indemnification is sought, give prompt written notice within the
prescribed survival period for such indemnification, of any claim, suit or
demand that the Indemnitee believes will or may give rise to
indemnification hereunder to BUYER, on behalf of all BUYER's Indemnitees,
on the one hand, or to SELLER, on behalf of all SELLER's Indemnitees, on
the other hand (the person to whom such notice of claim is given being
referred to herein as the "Indemnitor"). Except as hereinafter provided,
the Indemnitor shall be obligated to defend and to direct the defense
against such claim, suit or demand, in its name or in the name of the
Indemnitee at the Indemnitor's expense and with counsel of the Indemnitor's
own choosing and, so long as the Indemnitor is conducting such defense, the
Indemnitee shall not without the Indemnitor's written consent settle or
compromise or by affirmative action extend the statue of limitations with
respect to, and the Indemnitor shall have the right to settle or
compromise, any such claim, suit or demand; provided, however, that the
-------- -------
Indemnitor shall not, without the Indemnitee's written consent, settle or
compromise any claim or consent to any entry of judgment that does not
include as an unconditional term thereof the giving by the claimant or the
plaintiff to the Indemnitee of a release from all liability in respect of
such claim, in form and substance reasonably satisfactory to the
Indemnitee. The Indemnitee shall, at the Indemnitor's expense, cooperate
in the defense of any such claim, suit or demand. If the Indemnitor,
within a reasonable time after notice of a claim, fails to defend the
Indemnitee, the Indemnitee shall be entitled to undertake the defense of,
and to compromise or settle such claim at the expense of and for the
account and risk of the
25
Indemnitor, utilizing counsel of the Indemnitee's own choosing. No right
or remedy conferred in this Article 8 is intended to be exclusive of any
right or remedy available, now or hereafter, at law or in equity or
otherwise, to the parties hereto.
ARTICLE 9
MISCELLANEOUS
-------------
9.1 Cost. All costs and expenses, including attorneys' fees, incident to this
----
Agreement and the transactions contemplated herein shall be paid by the
party who incurred the same, whether or not the transactions contemplated
herein or therein are consummated. The parties hereto respectively
represent and warrant that they have not dealt in any manner with a broker,
agent or finder as regards the transaction set forth in this Agreement,
except the BUYER has retained two agents.
9.2 No Third-Party Benefit. The agreements contained herein are solely for the
----------------------
benefit of the parties hereto. No party, including employees, other than
such corporations and natural person and their respective permitted
assigns, shall be entitled to reply on this Agreement for any purpose.
9.3 Headings. The titles of the Articles and sections of this Agreement are
--------
for convenience of reference only and are not to be considered in
construing this Agreement.
9.4 Entire Agreement. This Agreement and any documents specifically referred
----------------
to herein constitute the entire understanding between the parties with
respect to the subject matter hereof, superseding all negotiations, prior
discussions and preliminary agreements.
9.5 Modification/Waiver. SELLER and BUYER may by subsequent written agreement,
-------------------
with each party acting at its sole and absolute discretion: (i) extend the
time for the performance of any of the obligations or other acts of the
parties here; (ii) waive any inaccuracies in the representations contained
in this Agreement; (iii) waive compliance with or modify any of the
covenants contained in this Agreement; (iv) waive or modify performance of
any of the obligations of any of the parties hereto; and (v) otherwise
amend this Agreement. Any agreement on the part of the party for any such
extension, modification, waiver or amendment shall be validly and
sufficiently authorized for the purpose of this Agreement if authorized by
proper officers of such party.
9.6 Representations/Warranties. There are no representations, warranties or
--------------------------
obligations of any kind made in connection with the transactions
contemplated hereby other than those expressed in this Agreement. It is
expressly understood and agreed that BUYER
26
and SELLER, and their respective affiliates, officers and/or agents, have
not made any warranty or agreement, express or implied, except as are
herein expressly incorporated, as to the tax consequences of this
transaction or the tax consequences of any transaction pursuant to or
arising out of this Agreement.
9.7 Assignment. No party hereto may assign its rights or delegate its
----------
responsibilities under this Agreement without the prior written consent of
the other party hereto. The terms of this Agreement shall, however, be
binding and legally enforceable against all successors and assigns, by law
or otherwise, including upon dissolution or merger.
9.8 Remedies of BUYER. SELLER agree that the Purchased Assets are unique and
-----------------
not otherwise readily available to BUYER. Accordingly, SELLER acknowledges
that, in addition to all other remedies to which BUYER is entitled, BUYER
shall have the right to enforce the terms of this Agreement by a decree of
specific performance.
9.9 Notices. All notices, requests, demands and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given when
delivered in person to the respective address listed below, or when faxed
to the respective address listed below, or two (2) business days after
mailed by certified mail, postage prepaid, return receipt requested to the
address listed below:
If to BUYER:
ISE LABS, INC.
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
with a copy to BUYER's counsel:
Xxxxxx Xxxxxxx, Esq.
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP
0000 Xxxx Xxxx
Xxxx Xxxx, XX 00000
If to SELLER:
ALPHATEC USA, INC.
0000 Xxxxxxxx Xxx
Xxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Attention: President
9.10 Attorneys' Fees. If any action at law or in equity is necessary to
---------------
enforce or interpret the terms of this Agreement or to protect the rights
obtained hereunder the prevailing
27
party shall be entitled to its reasonable attorneys' fees, costs, and
disbursements in addition to any other relief to which it may be entitled.
9.11 Cooperation and Records Retention. SELLER and BUYER shall (i) each provide
---------------------------------
the other with such assistance as may reasonably be requested by them in
connection with the preparation of any Tax return, statement, report, form
or other document (hereinafter collectively a "Tax Return"), or in
connection with any audit or other examination by any taxing authority or
any judicial or administrative proceedings relating to liability for
Taxes, (ii) each retain and provide the other, with any records or other
information which may be relevant to any such Tax Return, audit or
examination, proceeding or determination, and (iii) each provide the other
with any final determination of any such audit or examination, proceeding
or determination that affects any amount required to be shown on any Tax
Return of the other for any period. Without limiting the generality of the
foregoing, SELLER and BUYER shall retain, until the applicable statute of
limitations (including any extensions) have expired, copies of all Tax
Returns, supporting work schedules and other records or information which
may be relevant to such Tax Returns for all tax periods or portions
thereof ending before or including the Closing and shall not destroy or
otherwise dispose of any such records without first providing the other
party with a reasonable opportunity to review and copy the same. BUYER
shall keep the original copies of the records at its facilities in
California and elsewhere, if applicable, and, at SELLER's expense, shall
provide copies of the Records to SELLER upon SELLER's request. SELLER
shall provide BUYER with access to all of SELLER's books and records if
BUYER requests them from time to time.
9.12 Section 338(h)(10) Election.
---------------------------
9.12.1 SELLER shall, at the request of BUYER, join with BUYER in making a
timely election under Section 338(h)(10) of the Code and any
corresponding elections under state and local tax laws
(collectively, the "Election") with respect to the acquisition of
the DTS shares. BUYER and SELLER shall cooperate with each other
to take all actions necessary and appropriate (including filing
such forms, returns, elections, schedules and other documents as
may be required) to effect and preserve a timely Election in
accordance with Section 338(h)(10) of the Code or any successor
provisions (and all corresponding state and local tax laws). BUYER
and SELLER shall report the acquisition of the DTS shares pursuant
to this Agreement consistent with the Election.
9.12.2 In connection with the Election, within 90 days after Closing,
BUYER shall provide to SELLER a schedule which sets forth the
proposed allocation of the Purchase Price (and any deemed
assumption of liabilities for Tax purposes) among the assets of
DTS (the "Allocation Schedule"). Such allocations shall be made in
accordance with Section 338(h)(10) of the Code and any applicable
Treasury Regulations. The parties shall report the deemed sale of
assets of
28
DTS pursuant to the Election in a manner consistent with the
Allocation Schedule.
9.13 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the laws of the State of California. The parties hereto
consent and agree that the state and federal courts located within the
State of California shall have exclusive jurisdiction over any dispute
arising hereunder.
9.14 Equipment at Closing. SELLER shall furnish an equipment list to BUYER by
--------------------
September 1, 1997. In the event that the equipment supplied at Closing is
less than that set forth on the final equipment list at Closing, then
BUYER shall be repaid the amount of the net book value of the equipment
not supplied.
9.15 Purchase Price Escrow. At BUYER's option, the purchase price may be held
---------------------
in escrow with instructions to the escrow agent to discharge in order, the
following indebtedness, liability or obligations of Alphatec USA or DTS:
(i) to the extent not purchased or retired by BUYER pursuant to Section
5.2.6, all debts of SELLER owed to Silicon Valley Bank,
Comercia/California and Comerica/International, (ii) all accounts
payable--trade (excluding any accounts payable to affiliates) of DTS as of
the Closing Date for the transaction, (iii) all accounts payable--trade
(excluding any accounts payable to affiliates), short term capital lease,
short term equipment loan, long term capital lease and long term equipment
loan (excluding long term loan from affiliated entities), of Alphatec USA
as of the Closing Date for the transaction, as reflected on the audited
non-consolidated balance sheet of Alphatec USA as of such date, and (iv)
all amounts due and owing to DTS employees under their profit sharing
agreements as of the Closing Date for the proposed transaction.
9.16 Employee Benefits. Prior to Closing, SELLER shall pay all accrued
-----------------
salaries and bonuses (including profit sharing) and accrued vacation
amounts owed to all service providers of SELLER (including DTS).
29
IN WITNESS WHEREOF, the parties hereto have caused their respective names
to be hereunto subscribed as of the date and year first above written.
ISE LABS, INC.
By: /s/ Xxxxx Xxxxx
-----------------------------
Name: Xxxxx Xxxxx
-----------------------------
Title: President
-----------------------------
ALPHATEC USA, INC.
for itself and on behalf of
Digital Testing Services, Inc.
By: /s/ Xxxxxxx X. Xxxx
-----------------------------
Name: Xxxxxxx X. Xxxx
-----------------------------
Title: Vice President
-----------------------------
By: /s/ X X Xxxxxxx
-----------------------------
Name: X X Xxxxxxx
-----------------------------
Title: President
-----------------------------
Exhibit 2.1
The Registrant agrees to furnish supplementally a copy of any omitted
Exhibits, Attachment and Schedules to the Commission upon request.
