1
EXHIBIT 10.2
SHARE ACQUISITION AGREEMENT
THIS SHARE ACQUISITION AGREEMENT (this "Agreement") is made as of
August 6, 1998 by and between XXXX Technology, Inc. (the "Seller") and Fujitsu
Limited ("Buyer"; and together with the Seller, the "Parties").
WITNESSETH:
WHEREAS, the Seller is the beneficial owner of all of the issued and
outstanding shares of XXXX SEMICONDUCTORS (ISRAEL) LTD., a corporation
organized and existing under the laws of Israel ("RIL"); and
WHEREAS, the Seller is willing to sell to the Buyer, and the Buyer, in
reliance upon the representations and warranties of the Seller contained
herein, is willing to purchase from the Seller, all of the shares of RIL, on
the terms and subject to the conditions hereinafter provided.
NOW, THEREFORE, in consideration of the mutual agreements hereinafter
set forth, the Seller and the Buyer hereby agree as follows:
ARTICLE 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, and unless the
context otherwise requires:
(a) "Additional Share" means one Ordinary Share of RIL to
be issued by RIL to the Seller on or prior to the Closing Date in
connection with the conversion into equity of all outstanding
indebtedness, in the aggregate principal amount of $2,897,000, owed by
RIL to the Seller under the 1995 Note.
(b) "Audited Financial Statements" means the audited
balance sheets of RIL as of March 31, 1997 and 1998 and the audited
statements of income of RIL for the years then ended including all
notes thereto.
(c) "Benefits" means benefits of every description,
including, without limitation, salaries, directors' fees, vacation,
bonuses, commissions, profit sharing, pension, deferred compensation,
under any incentive scheme, automobile, reimbursement of expenses and
benefits in kind.
(d) "Closing" means the completion of the sale and
purchase of the Shares pursuant to Article 2.2 Closing. The purchase
and sale of the Shares shall take place at the offices of Xxxxxxxx &
Xxxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000-0000, at 9:00 a.m. (California time) on the Closing Date or at
such other place, time and/or date as the Parties may mutually agree
in writing. At the Closing, the Seller shall (1) deliver to the Buyer
a certificate or certificates representing the 10,000 Shares
currently held by the Seller plus the Additional Share to be issued
by RIL to the Seller on or prior to the Closing, and (2) deliver to
Mr. Hoshikawa, to be held in trust for the benefit of the Buyer, a
certificate representing the 1 Share currently held by Xxxx Xxxxxxx,
in each case together with duly executed stock transfer deeds,
against delivery by the Buyer to the Seller of the Purchase Price.
hereof.
(e) "Closing Date" shall be August 10, 1998, or such
other date as the Seller and the Buyer may agree upon in writing.
(f) "Dollars" or the sign "$" means the lawful currency
of the United States of America.
1
2
(g) "Employees" mean the employees of RIL whose names are
set forth in Exhibit A attached hereto.
(h) "Financial Statements" means the Audited Financial
Statements and the Unaudited Financial Statements, copies of which are
attached hereto as Exhibit B.
(i) "Material Adverse Effect" means any change or effect
that is reasonably likely to be materially adverse to the business,
assets, financial condition or results of operations of RIL or
reasonably likely to materially affect the ability of the Seller to
consummate the transactions contemplated hereby.
(j) "1995 Note" means the Secured Promissory Note, dated
_______, 1995, made by RIL in favor of the Seller.
(k) "Purchase Price" means the consideration specified in
Article 2.1 Sale and Purchase hereof payable by the Buyer to the
Seller for the sale by the Seller to the Buyer of the Shares.
(l) "RIL Agreements" means, collectively, any material
agreement, contract, understanding, arrangement, instrument (including
any note, guaranty, indemnity, power of attorney, or purchase or work
order), benefit plan or other undertaking, written or oral, to which
RIL is a party or by which its properties or assets are bound.
(m) "Security Interest" means, with respect to any asset,
any lien, pledge, hypothecation, charge, mortgage, security interest
or encumbrance of any kind or nature whatsoever in respect of such
asset.
(n) "Shares" means (i) the 10,001 issued and outstanding
Ordinary Shares of RIL and (ii) the Additional Share.
(o) "Unaudited Financial Statements" means the unaudited
balance sheet of RIL as of June 30, 1998 and the unaudited statement
of income of RIL for the one- (1-) month period then ended, including
all notes thereto.
ARTICLE 2. SALE AND PURCHASE OF SHARES
2.1 Sale and Purchase. Subject to the terms and conditions set
forth herein, the Seller agrees to sell to the Buyer and the Buyer agrees to
purchase from the Seller the Shares on the Closing Date for the aggregate sum
of TWO MILLION FIVE HUNDRED THOUSAND DOLLARS ($2,500,000), in immediately
available funds. Such payment shall be made on the Closing Date in Dollars by
wire transfer to the bank account designated by the Seller in writing not less
than five (5) days prior to the Closing Date.
2.2 Closing. The purchase and sale of the Shares shall take place
at the offices of Xxxxxxxx & Xxxxxxxx, 000 Xxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxxxxxxx 00000-0000, at 9:00 a.m. (California time) on the Closing
Date or at such other place, time and/or date as the Parties may mutually agree
in writing. At the Closing, the Seller shall (1) deliver to the Buyer a
certificate or certificates representing the 10,000 Shares currently held by
the Seller plus the Additional Share to be issued by RIL to the Seller on or
prior to the Closing, and (2) deliver to
2
3
Mr. Hoshikawa, to be held in trust for the benefit of the Buyer, a certificate
representing the 1 Share currently held by Xxxx Xxxxxxx, in each case together
with duly executed stock transfer deeds, against delivery by the Buyer to the
Seller of the Purchase Price.
ARTICLE 3. REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Seller. The Seller,
being aware that the Buyer has agreed to enter into this Agreement in reliance
on the representations and warranties contained in this Article 3.1
Representations and Warranties of the Seller, hereby represents and warrants to
the Buyer as of the date hereof and the Closing Date, subject to any exceptions
set forth in the Statement of Exceptions attached hereto as Exhibit 3.1, as
follows:
(a) Organization; Power and Authority.
(i) The Seller is a corporation duly organized,
validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and
authority to transact the business in which it is presently
engaged, to own, lease and operate all of the assets and
properties owned, leased or operated by it, to enter into and
perform its obligations under this Agreement and will have, at
the Closing, all requisite corporate power and authority to
sell the Shares and to otherwise perform and comply with all
of its obligations arising under this Agreement, except where
the failure of such would not have a Material Adverse Effect.
(ii) RIL is a corporation duly organized and
validly existing under the laws of Israel and has all
requisite corporate power and authority to transact the
business in which it is presently engaged, to own, lease and
operate all of the assets and properties owned, leased or
operated by it, and will have, at the Closing, all requisite
corporate power and authority to perform and comply with all
actions and agreements arising under this Agreement, except
where the failure of such would not have a Material Adverse
Effect. RIL does not own or lease any property or, to the
knowledge of the Seller, engage in any activity in any
jurisdiction which might require its qualification to do
business as a foreign corporation in any such jurisdiction
except where the failure of such would not have a Material
Adverse Effect. The Seller has furnished the Buyer or its
counsel with true, correct and complete copies (certified by
the Secretary or Assistant Secretary of the Seller) of (a)
RIL's Memorandum of Association, (b) RIL's Articles of
Association, (c) the minute books of RIL (containing records
of all meetings and consents in lieu of meetings of its
shareholders and the Board of Directors of RIL (and any
committees thereof) since the date of its incorporation and
(d) the stock transfer books of RIL. A copy of each of the
Memorandum of Association and the Articles of Association of
RIL is attached hereto as Exhibit 3.1(a)(ii).
(iii) The names of the officers and directors of
RIL are set forth in attached Exhibit 3.1(a)(iv).
3
4
(iv) All proper and necessary books of account,
minute books, registers and records have been maintained by
RIL and are in its possession, and each such book, register
and record contains materially accurate information relating
to all transactions to which RIL has been a party and which
should have been recorded therein, except where the failure of
such would not have a Material Adverse Effect.
(v) All returns, particulars, resolutions and
other documents required to be filed with or delivered to the
Registrar of Companies in respect of RIL have been properly
filed or delivered in a timely manner, except where the
failure of such would not have a Material Adverse Effect.
(b) Subsidiaries. RIL has no subsidiaries and does not
own (of record or beneficially) and has made no commitment to purchase
any shares or securities of, or otherwise make any investment in, any
other corporation, association, partnership or other entity and is not
a participant in any joint venture.
(c) Capitalization.
(i) The authorized capital stock of RIL consists
of 28,000 Ordinary Shares, of which 10,001 Ordinary Shares are
issued and outstanding. All of the outstanding Shares are duly
authorized and validly issued, fully paid and non-assessable
and the Additional Share, when issued, will be duly authorized
and validly issued, fully paid and non-assessable. No other
classes of capital stock of RIL are authorized or outstanding.
(ii) Except as set forth in attached Exhibit
3.1(c)(ii) and except for the Additional Share, there are no
outstanding rights, subscriptions, warrants, calls, preemptive
rights, options or other agreements of any kind to purchase or
otherwise to receive from or sell to RIL any of the
outstanding, authorized but unissued, unauthorized or treasury
shares of the capital stock or any other security of RIL, and
there is no security of any kind convertible into such capital
stock. Except as provided in this Agreement with respect to
the Additional Share, RIL has no obligation or agreement
under any contingency whatsoever to issue any equity, debt or
other security, or to pay, perform, guaranty, be responsible
for, or satisfy in whole or in part any debt, security,
obligation or agreement incurred or made by an individual or
entity other than RIL. RIL has no obligation under any
condition or contingency whatsoever to share its income with
anyone, or to make, accrue or set aside any payment or amount
measured in any way by any part or all of its sales or income
that would have a Material Adverse Effect. RIL is not
indebted to any of its employees in any amount other than for
accrued but unpaid compensation and benefits.
(iii) Subject to compliance with the terms of this
Agreement, upon the consummation of the transactions
contemplated hereby, the Shares will be freely transferable
and free and clear of all Security Interests, other than
Security
4
5
Interests arising hereunder or under agreements entered into
or actions taken by the Buyer, whenever taken.
(d) Compliance with Laws. RIL is not in violation of (a)
any applicable order, judgment, injunction, award or decree, or (b)
any law, ordinance or regulation or any other requirement of any
governmental or regulatory body, court or arbitrator applicable to the
business of RIL except for violations which would not have a Material
Adverse Effect. RIL has obtained all licenses, permits, orders and
approvals of any governmental or regulatory body (collectively,
"Permits") that are material to or necessary for the conduct of the
business of RIL, except where the failure of such would not have a
Material Adverse Effect. All of such Permits are in full force and
effect, no violations are or have been recorded in respect of any
Permit and no proceeding is pending or, to the best of each of the
Seller's knowledge, threatened to revoke or limit any such Permit that
would have a Material Adverse Effect. RIL has at all times carried on
its business and affairs in all material respects in accordance with
its Memorandum of Association and Articles of Association.
(e) Governmental Consents; Validity of Agreement; Binding
Effect.
(i) Except as provided in attached Exhibit
3.1(e)(i), no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or
filing with any governmental authority on the part of the
Seller or RIL is required in connection with the consummation
of the transactions contemplated by this Agreement. As of the
date hereof, all such filings have been duly made and are in
full force and effect, other than those which by their nature
are not required to be made prior to the Closing, all of which
shall be made within the time required therefor, and other
than those which the failure to make would not have a Material
Adverse Effect on the sale of the Shares contemplated by this
Agreement.
(ii) The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby by the Seller have been duly authorized by
all necessary corporate action on the part of each of the
Seller and RIL, including any action which may have been
required to be taken by the Board of Directors of the Seller
or RIL, and this Agreement, when executed, will constitute the
legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms, except
insofar as the enforcement hereof may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium and similar
laws affecting creditors' rights generally from time to time
in effect and subject to equitable principles of general
application (regardless of whether such enforcement is
considered in a proceeding at law or at equity).
(f) No Breach; Consents.
(i) Except as provided in attached Exhibit
3.1(f)(i), the execution and delivery of this Agreement does
not, and consummation of and compliance with the transactions
and agreements contemplated hereby will not, conflict with or
5
6
constitute a violation or breach of (a) the Certificate of
Incorporation or By-laws of the Seller, (b) the Memorandum of
Association or Articles of Association of RIL, (c) any
material contract or other instrument to which either the
Seller or RIL is a party or by which either the Seller or RIL
may be bound or by which the business, assets or properties of
RIL may be affected or secured, (d) any order, writ,
injunction, award or decree of any court, arbitrator or
governmental or regulatory body against or binding upon either
the Seller or RIL or upon the securities, properties or
business of RIL or (e) any statute, law, rule, permit or
regulation of any jurisdiction to which either the Seller or
RIL is subject the result of which would have a Material
Adverse Effect.
(ii) Except as provided in attached Exhibit
3.1(f)(ii), compliance with the terms of this Agreement does
not require the consent or agreement of any person who is not
a party of this Agreement, will not cause RIL to lose any
interest in or the benefit of any material asset, right,
license or privilege it presently owns or enjoys, will not
result in any indebtedness of RIL becoming due prior to its
stated maturity, and will not give rise to or cause to become
exercisable any option or similar rights.
(g) Financial Statements.
(i) The Audited Financial Statements and the
Unaudited Financial Statements are complete and correct and
fairly present the financial condition of RIL at the dates,
and the results of its operations for the periods, indicated
therein, have been prepared in accordance with Israeli
generally accepted accounting principles consistently applied,
and, except as stated therein, were not affected by any
extraordinary, exceptional or non-recurring item.
(ii) Since the date of the Unaudited Financial
Statements:
(A) RIL has not entered into any
material transaction which was not in the ordinary
course of its business;
(B) There has been no material adverse
change in the business, operations, assets,
liabilities, or condition (financial or otherwise) of
RIL;
(C) RIL has not (i) declared, accrued,
set aside or paid any dividend or made any other
distribution in respect of its shares, (ii)
repurchased, redeemed or otherwise reacquired any
shares of capital stock or other securities or (iii)
effected or been a party to any acquisition
transaction, recapitalization, reclassification of
shares, stock split, reverse stock split or similar
transaction;
(D) RIL has not increased the
compensation of any of its officers, or the rate of
pay of its employees as a group, except as part of
regular compensation increases in the ordinary course
of its business and except as agreed by Fujitsu;
6
7
(E) Except in the ordinary course of
RIL's business, there has not been any sale,
assignment, transfer or license of any of RIL's
right, title and interest in, to and under any of its
Intellectual Property (as defined below); and
(F) There has not been any damage,
destruction or loss, whether or not covered by
insurance, materially and adversely affecting the
assets, properties, financial condition, operating
results or business of RIL (as presently conducted).
(h) Properties and Assets. A list of RIL's material
properties and assets is contained in attached Exhibit 3.1 (h) or in
the notes to the Financial Statements, RIL has good and marketable
title to its assets, including, without limitation, those reflected in
the Financial Statements (other than those since disposed of in the
ordinary course of business), free and clear of all Security
Interests, except for (i) liens for taxes not yet due and payable or
being contested in good faith in appropriate proceedings, and (ii)
mechanic's, carrier's, worker's or other statutory liens arising or
incurred in the ordinary course of business and (iii) Security
Interests that are incidental to the conduct of its business or its
ownership of property which do not materially detract from the value
of the assets affected thereby or materially impair the use thereof by
RIL. With respect to the assets that are leased, to the Seller's
knowledge, RIL is in compliance with all material provisions of such
leases, such leases are valid and binding, and RIL holds leasehold
interests in such assets free and clear of all Security Interests,
except encumbrances which do not materially detract from the value of
the leased assets affected thereby or materially impair the use
thereof by RIL.
(i) Taxation.
(i) RIL has not received any final audits of its
Israeli tax returns.
(ii) RIL has timely filed all tax returns and
reports required by law. Such returns and reports reflect
RIL's good faith calculation of the amount of tax due, and RIL
has timely paid all amounts shown as due on such returns and
reports and whose due date has passed.
(iii) RIL is not engaged in a dispute with any
relevant taxation authority in relation to RIL's liability or
accountability for taxation, any claim made by it, any relief,
deduction or allowance afforded to it, or in relation to the
status or character of RIL under or for the purpose of any
provision of any legislation relating to taxation. The Seller
is not aware of any specific circumstances that it expects to
give rise to any dispute with any relevant taxation authority
in relation to RIL's liability or accountability for taxation,
any claim made by it, any relief, deduction or allowance
afforded to it, or in relation to the status of character of
RIL under or for the purpose of any provision of any
legislation relating to taxation, in each case where any such
dispute could have a material adverse effect on the assets or
business of RIL.
7
8
(j) Agreements.
(i) All the material RIL Agreements are listed in
attached Exhibit 3.1 (j)(i). RIL has provided the Buyer with
true, correct and complete copies of all of the written RIL
Agreements.
(ii) All of the RIL Agreements are in full force
and effect (except for (A) the Founders' Agreement, dated
August 1, 1995 (the "Founders' Agreement"), between the Seller
and Yoav Talgam ("Talgam") and (B) the 1995 Note, which will
be terminated on or before the Closing Date); and neither the
Seller nor RIL has received any notice of any intention to
terminate, repudiate or disclaim any RIL Agreement that would
have a Material Adverse Effect.
(iii) To the Seller's knowledge, neither RIL nor
any other party to any of the RIL Agreements is in breach or
in default in any material respect of its obligations
thereunder. No party to any of the RIL Agreements has
provided notice to the Seller or RIL to the effect that RIL
has failed to perform any of its obligations thereunder where
such failure would have a Material Adverse Effect.
(iv) Neither the Seller nor RIL has an agreement
(x) with any person regarding the consolidation or merger of
RIL with or into any such or another person, (y) with any
person regarding the sale, conveyance or disposition of all or
substantially all of the assets of RIL in a transaction or a
series of related transactions or (z) regarding any other form
of acquisition, liquidation, dissolution or winding up of RIL.
(v) RIL has not waived any of its material rights
or debts owed to it under any of the RIL Agreements.
(vi) Attached Exhibit (vi) Attached Exhibit
provides an accurate and complete breakdown and aging of all
accounts receivable, notes receivable and other receivables of
RIL as of June 29, 1998.
(k) Capital Expenditures and Commitments. Except as
disclosed in Exhibit 3.1(k) attached hereto or the Financial
Statements:
(i) RIL has not undertaken to make any capital
commitment, expenditure, or purchase in excess of $25,000.
(ii) RIL is not a party to any material hire, hire
purchase, credit sale or conditional sale agreement or any
contract providing for payment on deferred terms in respect of
assets purchased by RIL.
(iii) RIL has not given any guarantee, indemnity or
security for or otherwise agreed to become directly or
continently liable for any obligation of any other person.
8
9
(iv) Except for signature rights granted in the
ordinary course of RIL's business, RIL has not authorized any
person to bind or commit it to any material obligation.
(v) RIL has not applied for or received any grant
or allowance.
(vi) Litigation. RIL is not involved in any
civil, criminal or arbitration proceedings. To the Seller's
knowledge, no such proceedings and no claims of any nature are
pending or threatened by or against RIL or the directors of
RIL in respect whereof RIL is liable to indemnify such
director and there are no facts likely to give rise to any
such proceedings. In addition, there is no civil, criminal or
arbitration proceeding pending against the Seller or, to the
Seller's knowledge, threatened by or against the Seller that
challenges or may have the effect of preventing, delaying,
making illegal or otherwise interfering with the consummation
of the transactions contemplated by this Agreement and, to the
knowledge of the Seller, there are no facts likely to give
rise to any such proceedings.
(l) Employees.
(i) A list of the employment agreements with all
of the officers, employees (including the Employees) and
consultants of RIL is set forth in attached Exhibit 3.1(l)(i),
which agreements set forth all Benefits payable or which RIL
is bound to provide (whether now or in the future) to each
officer, employee and consultant of RIL. True, correct and
complete copies of each such agreement have been delivered to
the Buyer.
(ii) No Employee has been dismissed or has given
notice of termination of his or her employment.
(iii) The form of contracts delivered to the Buyer
are the contracts under which substantially all the officers,
employees and consultants of RIL at the date hereof are
engaged and include provisions relating to non-disclosure and
non-competition.
(iv) Except as disclosed in attached Exhibit
3.1(l)(iv), there are no agreements or arrangements for the
payment of any pensions, allowances, lump sums or other like
benefits on retirement or on death or termination or during
periods of sickness or disablement for the benefit of RIL or
for the benefit of the dependents of any such person in
operation at the date hereof that are payable by or the
obligation of RIL.
(v) The full amount of RIL's obligation to pay
severance to its employees is the subject of an appropriate
reservation in the Financial Statements.
(vi) There has been no labor dispute involving RIL
or its employees and none is pending or, to the Seller's
knowledge, threatened.
9
10
(vii) The total amount necessary to fund (a) all of
RIL's obligations to its employees (including the Employees)
through the Closing Date and (b) all of RIL's obligations to
Talgam under the Supplemental Employment and Retention
Agreement to be entered into by RIL and Talgam on or prior to
the Closing Date (assuming that the Closing Date occurs no
later than August 15, 1998) and in form and substance mutually
satisfactory to the Buyer and Talgam (the "Employment
Agreement") (whether before, on or after the Closing Date)
does not exceed $300,000.
(m) Debts and Loan Facilities.
(i) Except as disclosed in the Financial
Statements and except for the indebtedness owed by RIL to the
Seller under the 1995 Note, RIL does not have any overdrafts,
loans, guarantees or other financial facilities and there are
no debts owing by RIL other than debts which have arisen in
the ordinary course of business and which have arisen in the
ordinary course of business and which do not, individually or
in the aggregate, exceed $50,000.
(ii) Except as disclosed in the Financial
Statements, there are no debts owed to RIL, nor has RIL lent
any money which has not yet been repaid, other than debts
which have arisen in the ordinary course of business and which
in the aggregate do not exceed $50,000 or debts which are
adequately disclosed or reserved on the Financial Statements.
The Seller is not aware of any bad or doubtful debts on RIL's
books at the date hereof, except as disclosed on an Exhibit
hereto or the Financial Statements.
(iii) RIL is not in default under any instrument
constituting any indebtedness or under any guarantee of any
indebtedness.
(n) Intellectual Property.
(i) For purposes of this Agreement, "Intellectual
Property" means the following items of intangible and tangible
property:
(A) All right, title and interest in
letters patent or equivalent rights (including
utility patents, design patents and utility model
rights) and applications, including any reissue,
extension, division, continuations, or
continuation-in-part applications throughout the
world ("Patents");
(B) Trademarks, trade names, service
marks, designs, logos, trade dress, and trade styles,
whether or not registered, and all pending
applications for registration of the same, throughout
the world ("Trademarks");
(C) Copyrights, whether or not
registered, and all pending applications for
registration of the same, throughout the world
("Copyrights");
10
11
(D) Inventions, research records, trade
secrets (whether arising under common law, state law,
federal law or the laws of any foreign country),
confidential information, product designs,
engineering specifications and drawings, technical
information, formulae, customer lists, supplier
lists, market analyses, databases and other
industrial property ("Technical Information"); and
(E) Computer programs, including,
without limitation, computer programs embodied in
semiconductor chips ("Firmware") or otherwise
embodied, and related flow-charts, programmer notes,
updates and data, whether in object or source code
form ("Software").
(ii) The material Intellectual Property of RIL and
all pending patent applications of RIL are as listed in
attached Exhibit (n) Intellectual Property.
(iii) RIL either owns or has sufficient rights by
license or other grant of permission with respect to all
Intellectual Property necessary for its business as now
conducted. To the Seller's knowledge, RIL's use of the
Intellectual Property in its business as now conducted does
not infringe the rights of any third party. To the knowledge
of the Seller, there are no outstanding options, licenses or
agreements of any kind relating to the foregoing, nor is RIL
bound by or a party to any options, licenses or agreements of
any kind with respect to the Intellectual Property.
(iv) To the knowledge of the Seller, no
Intellectual Property, used or proposed to be used in the
business of RIL as currently conducted or contemplated, has
infringed or will infringe upon any intellectual property
rights of others and the use of such Intellectual Property in
the business of RIL, as currently conducted or contemplated,
will not constitute an infringement, misappropriation or
misuse of any intellectual property rights of any third party.
Neither the Seller nor RIL has received any written
communication alleging that RIL has violated, or that by
conducting its business it would violate, any Intellectual
Property.
(v) RIL has taken reasonable security measures,
including measures against unauthorized disclosure, to protect
the secrecy, confidentiality, and value of its trade secrets
and other Intellectual Property. No employee, director or
shareholder of RIL or employer of any such employee of RIL has
any rights with respect to the Intellectual Property used or
contemplated to be used by RIL.
(o) Full Disclosure. The disclosure of the Seller
contained in this Agreement and any Exhibit hereto contains no untrue
or misleading statement of any material fact and does not omit to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under
which they are made, accurate.
11
12
(p) Finders and Brokers. Neither the Seller nor RIL has
entered into any contract, arrangement or understanding with any
person, firm or corporation which will result in the obligation of the
Buyer to pay any finder's fees, brokerage or agent's commissions or
other like payments in connection with the negotiations leading to
this Agreement or the consummation of the transactions contemplated
hereby.
3.2 Representations and Warranties of the Buyer. The Buyer, being
aware that the Seller has agreed to enter into this Agreement in reliance on
the representations and warranties contained in this Article 3.2, hereby
represents and warrants to the Seller as of the date hereof and the Closing
Date as follows:
(a) Organization and Validity of this Agreement. The
Buyer is a corporation duly organized and validly existing under the
laws of Japan and has full corporate power and authority to enter into
and perform its obligations under this Agreement; has taken all
necessary corporate action required to enter into and perform its
obligations under this Agreement; and this Agreement has been duly
executed and delivered by the Buyer and constitutes the legal, valid
and binding obligation of the Buyer, enforceable against the Buyer in
accordance with its terms, except to the extent that enforceability
may be limited by applicable bankruptcy, reorganization, insolvency,
moratorium and similar laws affecting creditors' rights generally from
time to time in effect and subject to equitable principles of general
application (regardless of whether such enforcement is considered in a
proceeding at law or at equity). No other action by the Buyer will be
necessary to authorize the execution and delivery of this Agreement
and the consummation of the transactions contemplated herein, except
where the failure to take any such action would not have a Material
Adverse Effect.
(b) Finders and Brokers. The Buyer has not entered into
any contract, arrangement or understanding with any person, firm or
corporation which will result in the obligation of the Seller to pay
any finder's fees, brokerage or agent's commissions or other like
payments in connection with the negotiations leading to this Agreement
or the consummation of the transactions contemplated hereby.
(c) Adequate Financing. The Buyer has funds sufficient
to pay the Purchase Price.
(d) Litigation. There is no civil, criminal or
arbitration proceeding pending against the Buyer or, to the Buyer's
knowledge, threatened by or against the Buyer that challenges or may
have the effect of preventing, delaying, making illegal or otherwise
interfering with the consummation of the transactions contemplated by
this Agreement and, to the knowledge of the Buyer, there are no facts
likely to give rise to any such proceedings.
3.3 NO OTHER WARRANTIES. EXCEPT AS PROVIDED IN THIS ARTICLE
ARTICLE 3 OR OTHERWISE EXPRESSLY STATED IN THIS AGREEMENT, NEITHER PARTY IS
MAKING ANY REPRESENTATIONS OR WARRANTIES, EXPRESS OR IMPLIED, INCLUDING,
WITHOUT LIMITATION, ANY WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR
PURPOSE. NEITHER PARTY SHALL BE LIABLE FOR
12
13
ANY INDIRECT, SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES, INCLUDING BUT NOT
LIMITED TO LOSS OF PROFIT OR LOSS OF USE, WITH RESPECT TO ANY CLAIMS ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
ARTICLE 4. COVENANTS
4.1 Covenants of the Seller. The Seller covenants and agrees with
the Buyer as follows:
(a) Non-Solicitation. For a period of one year from the
Closing Date, the Seller shall not directly or indirectly solicit,
encourage or take any other action which is intended to induce or
encourage, or has the effect of inducing or encouraging, any of the
Employees to terminate his or her employment with RIL.
(b) Operation of RIL. From the date of this Agreement
until the Closing Date, the Seller shall cause RIL to carry on its
business in the ordinary course and not to sell or dispose of any of
its assets or properties in excess of an aggregate of $25,000 (whether
or not in the ordinary course), except with the prior written consent
of the Buyer. From the date of this Agreement until the Closing Date,
the Seller shall cause RIL to refrain from making any commitments,
bids or binding offers, or entering into any contract involving a
payment by RIL in excess of an aggregate of $25,000 (whether or not in
the ordinary course), except with the prior written consent of the
Buyer. Prior to the Closing, no amendments shall be made to RIL's
Memorandum of Association and Articles of Association, except with the
prior written consent of the Buyer.
(c) Investigation by the Buyer. To the extent necessary
to permit the Buyer to conduct such investigation as the Buyer deems
necessary or advisable to familiarize itself with the business and
properties of RIL and its financial and legal condition, the Seller
shall permit the Buyer and its authorized representatives to have
reasonable access to RIL's premises, books and records, and shall
cause RIL's officers promptly to furnish the Buyer or its
representatives such financial and operating data and other
information, with respect to the business and properties of RIL, as
the Buyer may reasonably request.
(d) Further Assurances. After the Closing, the Seller,
upon the Buyer's reasonable request from time to time, shall take such
further actions and execute and deliver such further instruments of
conveyance and transfer as may be necessary or desirable to assure,
complete and evidence the full and effective conveyance and transfer
to the Buyer of the Shares and to effectuate the purposes of this
Agreement.
(e) Public Announcements. The Seller shall consult with
the Buyer regarding the wording and substance of all press releases,
announcements or other public statements to be made by the Seller with
respect to this Agreement or the transactions contemplated hereby.
(f) Loan. Prior to the Closing, (i) the Seller shall
make an additional loan to RIL pursuant to the 1995 Note in an amount
equal to $450,000, and (ii) the aggregate
13
14
principal amount of indebtedness owed by RIL to the Seller pursuant to
the 1995 Note (including the amount advanced pursuant to the preceding
sentence) shall be converted into the Additional Share, any accrued
and unpaid interest on the 1995 Note shall be forgiven by the Seller,
and the 1995 Note shall be cancelled.
4.2 Covenants of the Buyer. The Buyer covenants and agrees with
the Seller as follows:
(a) Offer of Employment to Employees. On or promptly
following the Closing, the Buyer agrees to cause (i) the board of
directors of RIL to adopt resolutions authorizing (x) the granting of
increases by RIL to the base salary of those Employees who are
employed by RIL as engineers not exceeding twenty-five percent (25%)
of the base salary payable to such Employees prior to July 15, 1998
and (y) the change of the name of RIL to "Fujitsu Microelectronics
Israel Ltd." and (ii) RIL to offer to each Employee (other than
Talgam) at Closing the opportunity to continue his or her employment
with RIL on the terms set forth in the Employment Agreement between
RIL and each such Employee (as in effect immediately prior to the
Closing and in the form provided by the Seller to the Buyer) subject
to (x) in the case of those Employees who are employed by RIL as
engineers, the granting of increases, effective as of July 15, 1998,
to the base salary not exceeding twenty-five percent (25%) of the base
salary payable to each such Employee prior to July 15, 1998, (y) the
termination of RIL's General Employee Option Plan and all options
thereunder (whether vested or unvested) and (z) the implementation of
a long-term incentive plan on terms to be approved by RIL board of
directors. The Buyer also agrees to cause RIL to offer to Talgam at
Closing the opportunity to continue his employment with RIL on the
terms set forth in the Employment Agreement.
(b) Operation of RIL. The Buyer hereby confirms that it
is its intention to cause RIL to be operated after the Closing
substantially in accordance with the terms and conditions of the
Memorandum of Understanding attached as Exhibit C.
(c) Press Announcements. The Buyer shall consult with
the Seller regarding the wording and substance of all press releases,
announcements or other public statements to be made by the Buyer with
respect to this Agreement or the transactions contemplated hereby.
ARTICLE 5. CONDITIONS TO THE CLOSING
5.1 Conditions to the Seller's Obligation. The obligations of the
Seller under this Agreement shall be subject to the satisfaction (or written
waiver by the Seller) of each of the following conditions prior to Closing:
(a) Representations and Warranties. The representations
and warranties of the Buyer contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement
and the Closing Date;
(b) Performance of Obligations of the Buyer. All
obligations of the Buyer to be performed on or prior to Closing shall
have been duly performed;
14
15
(c) Governmental Approvals. All governmental approvals
necessary for the performance of this Agreement shall have been
obtained, and such approvals shall be in full force and effect as of
the Closing Date, except the failure of which would not have a
Material Adverse Effect; and
(d) No Injunction. There shall not be in effect, as of
the Closing Date, any injunction or other order of any court or other
tribunal having jurisdiction over the Seller, RIL or the Buyer that
prohibits the sale of the Shares to the Buyer or the consummation of
any of the transactions contemplated by this Agreement.
5.2 Conditions to the Buyer's Obligation. The obligations of the
Buyer under this Agreement shall be subject to the satisfaction (or written
waiver by the Buyer) of each of the following conditions prior to Closing:
(a) Representations and Warranties. The representations
and warranties of the Seller contained in this Agreement shall be true
and correct in all material respects as of the date of this Agreement
and the Closing Date;
(b) Performance of Obligations of the Seller. All
obligations of the Seller to be performed on or prior to Closing shall
have been duly performed;
(c) Governmental Approvals. All governmental approvals
necessary for the performance of this Agreement shall have been
obtained, and such approvals shall be in full force and effect as of
the Closing Date, except the failure of which would not have a
Material Adverse Effect. RIL shall have sent a letter (in form and
substance satisfactory to Fujitsu) to the Israeli Investment Center
seeking the approval of the Investment Center of the sale of the
Shares by the Seller to the Buyer pursuant to this Agreement and
confirmation that RIL shall maintain its status, after the Closing, as
an "approved enterprise" under the Israeli Law for the Encouragement
of Capital Investments, 5719-1989;
(d) No Injunction. There shall not be in effect, as of
the Closing Date, any injunction or other order of any court or other
tribunal having jurisdiction over the Seller, RIL or the Buyer that
prohibits the sale of the Shares to the Buyer or the consummation of
any of the transactions contemplated by this Agreement;
(e) Share Certificates. Certificates representing all of
the Shares, together with duly executed stock transfer deeds, shall
have been delivered as provided in Section 2.2;
(f) Board Resolutions of the Seller. A certified copy of
the resolutions of the Board of Directors of each of the Seller and
RIL approving the execution and delivery of this Agreement by the
Seller and the performance by the Seller and RIL of its respective
obligations hereunder shall have been duly delivered to the Buyer;
(g) Founders' Agreement and 1995 Note. The Seller and
Talgam shall have terminated the Founders' Agreement, all outstanding
principal indebtedness owed by RIL to the Seller under the 1995 Note
shall have been converted into the Additional Share, all
15
16
accrued but unpaid interest on the 1995 Note shall have been forgiven
by the Seller, and the 1995 Note shall have been cancelled, each in a
manner and on terms reasonably satisfactory to the Buyer;
(h) Employment Agreement. RIL and Talgam shall have
entered into an Employment Agreement;
(i) Employment of Employees. The Seller shall have
delivered to the Buyer a certificate substantially in the form of
either attached Exhibit X-0, X-0 or D-3 executed by each Employee
(other than Talgam) confirming his or her continued employment with
RIL after the Closing Date on substantially the same terms as
currently in effect (except for the availability of options to
purchase capital stock of the Seller and, in the case of those
Employees who are employed as engineers, the base salary);
(j) Consents. All consents and waivers of third parties
necessary or appropriate for the consummation of the transactions
contemplated by this Agreement shall have been obtained and such
consents shall be in full force and effect on the Closing Date, except
for those which would not have a Material Adverse Effect;
(k) Cash. The Seller shall have made the loan to RIL
contemplated by Section 4.1(f) of this Agreement and, as of July 31,
1998 (after giving effect to such loan), RIL shall have cash on hand
in an amount equal to at least $500,000 (after paying in full RIL's
payroll through that date);
(l) Board of Directors. The Buyer shall have received
written evidence that each director of RIL other than Talgam has
resigned, effective on the Closing Date;
(m) Recordation of Share Transfer Deed. All necessary
procedures shall have been taken by either RIL and/or the Seller to
duly record the Share Transfer Deed, dated March 6, 1998, made by
Xxxxx Xxxx to Xxxx Xxxxxxx (in trust for the Seller) on the books and
records of RIL and to duly notify the Israeli Registrar of Companies
of such conveyance;
(n) Talgam Bonus. If signing of this Agreement occurs on
or before August 7, 1998, the Seller shall have paid to Talgam a bonus
in the amount of $185,000; and
(o) Compliance Certificate. An executive officer of the
Seller shall deliver to the Buyer a certificate certifying that each
of the conditions in this Article 5 has been fulfilled.
5.3 Best Efforts. The Parties shall use their best efforts to
cause the conditions within their respective control to be satisfied, as soon
as possible and no later than the Closing Date. If the foregoing conditions to
the Closing are not satisfied in full or waived on or prior to August 15, 1998,
this Agreement, except for Articles 4.1(e) and 7.1, shall terminate and be of
no further force and effect.
16
17
ARTICLE 6. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS,
INDEMNIFICATION AND TERMINATION
6.1 Indemnification. The Seller shall indemnify and hold the
Buyer and RIL harmless against, and shall reimburse the Buyer and RIL for any
loss or damage including, without limitation, attorneys fees reasonably
incurred, arising out of any misrepresentation of the Seller under this
Agreement, or any misrepresentation in, or omission from, any certificate or
other instrument furnished or to be furnished to the Buyer pursuant to this
Agreement.
6.2 Limitation of Liability. The representations and warranties
of the Parties in Article 3 shall expire six (6) months after the Closing Date
and shall thereafter be of no further force or effect. In addition, the
Seller's maximum liability to the Buyer for any breach of its representations
and warranties hereunder shall be the Purchase Price. In no event shall the
Seller be required to obtain a bond or other assurance of performance as to the
contingent liability represented by its obligation under the representations
and warranties set forth in Article 3.1.
6.3 Termination. In the event that a Party (the "defaulting
Party") should default in the performance of any of the covenants or
obligations to be performed by it hereunder, or any condition to the obligation
of a Party (the "non-defaulting Party") to consummate the sale or purchase of
the Shares hereunder is not performed or fulfilled to the reasonable
satisfaction of the non-defaulting Party, then the non-defaulting Party shall
have the right upon service on the defaulting Party of written notice to such
effect, to terminate this Agreement on or prior to Closing; provided, however,
that, if such default, non-performance or non-fulfillment is reasonably capable
of remedy, the defaulting Party shall have the right, during the ten (10) day
period after receipt of such written notice, to perform such covenant or
obligation or to correct or satisfy the condition precedent necessary to the
consummation of this Agreement, in all cases to the reasonable satisfaction of
the non-defaulting Party.
ARTICLE 7. MISCELLANEOUS PROVISIONS
7.1 Expenses. Each Party will bear its own costs and expenses,
including legal fees, in connection with the negotiation of this Agreement and
the consummation of the transactions contemplated hereby.
7.2 Tax. Any tax, duty, recordation expense or other charge
imposed in connection with the sale of the Shares, the conversion into equity
of the outstanding indebtedness owed by RIL to the Seller under the 1995 Note
or otherwise under or in connection with this Agreement, including, without
limitation, any stamp tax, shall be borne and paid by the Seller.
7.3 Assignment. Neither Party hereto may assign any right or
obligation hereunder to any third party without the prior written consent of
the other Party.
7.4 Notice. All notices required or permitted under this
Agreement will be in writing, will reference this Agreement and will be deemed
given: (a) when delivered personally; (b) when sent by confirmed facsimile;
(c) ten (10) days after having been sent by registered or certified air mail,
return receipt requested, postage prepaid; or (d) the third business day after
deposit with a commercial overnight carrier specifying next-day delivery, with
written verification of receipt. All communications will be sent to the
address set forth below (or to such
17
18
other address as may be designated by a Party by giving written notice to the
other Party pursuant to this Article 7.4):
If to the Seller:
XXXX Technology, Inc.
0000 Xxxxxxx 000X, Xxxxx 000,
Xxxxxx, Xxxxx 00000-0000
X.X.X.
Facsimile: (000) 000-0000
Attention: President
If to the Buyer:
Fujitsu Limited
1-1 Kamikodanaka 4-chome,
Xxxxxxxx-xx, Xxxxxxxx-xxx,
Xxxxxxxx-xxx, 000-00
Xxxxx
Facsimile: (044) 754-3786
Attention: Xx. Xxxxxxxx Xxxxx
7.5 Entire Agreement and Modification. This Agreement and the
Exhibits attached hereto constitute the entire agreement of the Parties, and
supersede any and all prior negotiations, correspondence, understandings and
agreements between the Parties, respecting the subject matter hereof. This
Agreement may only be amended, modified or supplemented by a written instrument
signed by both Parties.
7.6 No Implied Waivers. No purported waiver by either Party of
any default by the other Party of any term or provision contained herein shall
be deemed to be a waiver of such term or provision unless the waiver is in
writing and signed by the waiving party. No such waiver shall in any event be
deemed a waiver of any subsequent default under the same or any other term or
provision contained herein.
7.7 Governing Law. This Agreement is to be construed in
accordance with and governed by the internal laws of the State of California
(as permitted by Section 1646.5 of the California Civil Code or any similar
successor provision) without giving effect to any choice of law rule that would
cause the application of the laws of any jurisdiction other than the internal
laws of the State of California to the rights and duties of the Parties.
7.8 Arbitration. Any dispute, controversy or claim arising our of
or relating to this Agreement or the subject matter hereof, or the
interpretation, enforceability, validity, performance, breach or termination
hereof or thereof, including, without limitation, this arbitration clause,
shall be solely and finally settled by arbitration in Los Angeles, California
in accordance with the commercial arbitration rules of the American Arbitration
Association, as modified by the provisions of this Article 7.8. Each Party
waives any rights to bring any such dispute, controversy or claim in any other
forum or proceeding, including, without limitation, the
18
19
International Trade Commission of the United States or any other administrative
or judicial forum. The arbitration shall be conducted in accordance with such
rules by three arbitrators selected by the Parties (if the Parties are able to
agree within thirty (30) days) and otherwise selected in accordance with such
rules. Each of the arbitrators appointed shall have at least five (5) years'
experience in the field that is the principal subject matter of the dispute.
After soliciting the views of the Parties, the arbitrators shall order such
discovery as they may deem reasonable for a full and fair understanding of the
facts and issues raised in the arbitration. The arbitration, including the
proceeding, pleadings and evidence in connection therewith, shall be maintained
as confidential. An award rendered in connection with the arbitration shall be
final and binding on the Parties, and any judgment upon such an award may be
entered in any court of competent jurisdiction. The award shall be in writing
and shall provide written reasons in detail or the award unless the Parties
agree otherwise. The award shall also provide for the fees and expenses of the
arbitrators and for the reasonable attorneys' fees and expenses of the
prevailing Party, as determined by the arbitrators, all to be borne by the
non-prevailing Party.
7.9 No Third Party Benefits. Nothing in this Agreement shall be
construed to confer on any person or entity not a party hereto any right,
remedy or claim hereunder.
7.10 Interpretation. The headings appearing in this Agreement are
inserted for convenience of reference only and shall not affect the
interpretation of this Agreement. References to Articles and Exhibits are,
unless otherwise stated, references to Articles of and Exhibits to this
Agreement, and references to this Agreement are references to this Agreement
including the Exhibits.
7.11 Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original instrument but all of which, taken
together, shall constitute one and the same instrument.
IN WITNESS WHEREOF, the Parties have caused this Agreement to be
executed by their duly authorized representatives as of the date first above
written.
XXXX TECHNOLOGY, INC. FUJITSU LIMITED
By: /s/ XXXX X. XXXXXXX By: /s/ XXXXXXX XXXXXXXX
--------------------------- --------------------------
Name: Xxxx X. Xxxxxxx Name: Xxxxxxx Xxxxxxxx
Title: President and Title: Senior Vice President
Chief Executive Officer
21
