ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT (the "Agreement") is made as of August 14,
1998, by and between GATEFIELD CORPORATION, a Delaware corporation, with its
principal executive offices at 00000 Xxxxxxx Xxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000
("GateField") and ACTEL CORPORATION, a California corporation, with offices at
000 Xxxx Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000 ("Actel").
RECITALS
WHEREAS, the Design Services Business Unit of GateField, located at 000
Xxxxxx Xxxx, Xxxxx 000, Xx. Xxxxxxxxx, Xxx Xxxxxx, is engaged in the business of
providing prototyping design services and verification services for electronic
systems, integrated circuits and other electronic components (the "Design
Services Business").
WHEREAS, GateField desires to sell and Actel desires to purchase all right,
title and interest of GateField in and to all of the assets of GateField used in
the Design Services Business, other than the Excluded Assets (as defined below).
WHEREAS, GateField desires to license to Actel and Actel desires to license
from GateField the Retained Intellectual Property (as defined below) used in the
Design Services Business.
NOW, THEREFORE, in consideration of the mutual promises, covenants and
representations set forth herein, and for other good and valuable consideration,
the parties hereby agree as follows:
ARTICLE I
PURCHASE AND SALE OF ASSETS
Section 1.1 DESCRIPTION OF ASSETS TO BE ACQUIRED. Upon the terms and
subject to the conditions set forth in this Agreement, subject to Section 1.2
hereof, at the Closing (as defined in Section 3.1 hereof), GateField shall
convey, sell, transfer, assign and deliver to Actel, and Actel shall purchase
from GateField, all right, title and interest of GateField in and to all of the
properties and assets (of every kind, nature, character and description, whether
real, personal or mixed, whether tangible or intangible, whether accrued,
contingent or otherwise and wherever situated) of GateField used in the Design
Services Business (the "Purchased Assets"), including:
(a) CAPITAL EQUIPMENT AND HARD ASSETS. All capital equipment and
other hard assets including but not limited to computer systems and related
proprietary documentation listed on Schedule 1.1(a) attached hereto;
(b) INVENTORY AND WORK IN PROGRESS. All inventory and work in
progress, including samples, displays and/or prototypes, listed on Schedule
1.1(b) attached hereto;
(c) ASSIGNED CONTRACTS. All right, title, interest and claims of
GateField to those agreements, licenses, unfilled orders and commitments listed
on Schedule 1.1(c) attached hereto (the "Assigned Contracts");
(d) ACCOUNTS RECEIVABLE. All right, title and interest of GateField
in and to the accounts receivable of the Design Services Business listed on
Schedule 1.1(d) attached hereto (the "Accounts Receivable");
(e) TRADEMARKS, SERVICE MARKS, TRADE NAMES AND BRAND NAMES. All
trademarks, trade names and service marks (and all applications therefor), brand
names, trade dress, logos, product names and other identifying marks or
packaging and their associated goodwill relating to the Design Services Business
listed on Schedule 1.1(e) attached hereto (the "Trademarks");
(f) PATENTS. The issued and pending patents and patent applications
relating to the Design Services Business listed on Schedule 1.1(f) attached
hereto (the "Patents");
(g) FACILITIES. All fixtures, furniture, office equipment, leases of
real and personal property and other assets related to the facilities located at
000 Xxxxxx Xxxx, Xxxxx 000, Xx. Xxxxxxxxx, Xxx Xxxxxx listed on Schedule 1.1(g)
attached hereto (the "Facilities");
(h) OTHER ASSETS. All other assets listed on Schedule 1.1(h)
attached hereto, which shall include the cash balance in the amount of $3,000
held in the GateField Imprest Account, and all of the books and records, sales
brochures, marketing analyses, customer files, lists of customers, outstanding
written customer orders, purchase orders and other customer commitments, lists
of suppliers and vendors and mailing lists, of the Design Services Business
("Other Assets"); and
(i) DESIGN SERVICE TECHNOLOGY. All software, technical knowledge and
information, know-how, formulae, designs, process technology, trade secrets,
mask works and copyrights (including all applications and registrations with
respect thereto), inventions, inventor's work papers and notebooks, disclosure
of inventions, research and development in progress, artwork and all other
proprietary information and similar intangible rights in each case issued under
or created, established, governed, or protected by the laws of any jurisdiction
in the world (including all claims for damages for past infringement by any
other Person of any of the foregoing, with the right to xxx for and collect the
same, and including all goodwill associated therewith) owned or controlled by
GateField that are currently used by GateField exclusively in the Design
Services Business listed on Schedule 1.1(i) attached hereto (together with the
Trademarks and Patents, the "Design Service Technology").
The items, property and rights described in (a) through (i) above shall be
collectively referred to as the "Purchased Assets."
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Section 1.2 EXCLUDED ASSETS. Notwithstanding anything to the contrary
in Section 1.1 hereof, the parties hereto agree that the Purchased Assets shall
not include any of the items set forth in Schedule 1.2 attached hereto (the
"Excluded Assets").
Section 1.3 ASSUMPTION OF LIABILITIES; EXCLUDED LIABILITIES. Actel
hereby agrees to assume and satisfy in full the following obligations and
liabilities of GateField (collectively, the "Assumed Liabilities"): (i) all
obligations and liabilities of GateField under the Assigned Contracts; and
(ii) those obligations and liabilities of GateField set forth in Schedule 1.3
hereto. Actel expressly does not and shall not assume or become liable for any
liabilities (including but not limited to, any and all liabilities related to
Taxes), obligations, litigation, disputes, debts, payables, counterclaims,
rights of set-off or return, or commitments or claims (including, but not
limited to, any claims of persons employed by GateField prior to the Closing for
employee pay or benefits or any claims arising out of GateField's termination of
employment of any of its employees) whether known, unknown, accrued, absolute,
contingent, matured, unmatured or other, of GateField or any other Person
(collectively, "Liabilities"), except for the Assumed Liabilities.
For purposes of this Agreement, "Person" means an individual, partnership,
corporation, limited liability corporation, association, joint stock company,
trust, joint venture, unincorporated organization, or governmental entity (or
any department, agency, or political subdivision thereof).
Section 1.4 LICENSE GRANTS.
(a) LICENSE GRANT TO ACTEL. Subject to the terms and conditions of
this Agreement, GateField hereby grants to Actel a non-exclusive, worldwide,
royalty-free, fully paid up, perpetual, non-transferable (except pursuant to
Section 1.4(a)(iii) hereof), irrevocable right and license under the Retained
Intellectual Property for Actel (A) to use, reproduce, modify, create derivative
works of and otherwise exploit the source code for GateField's Target Silicon
Software and Concept Silicon Software (the "Source Code"), compile the Source
Code and modifications and derivative works thereof into object code form and
distribute such object code and (B) to internally use 10 copies of the object
code version of GateField's ASIC Master 4 and ASIC Master 5 Software, in
connection with the operation of the Design Services Business.
For purposes of this Agreement, "Retained Intellectual Property" means the
source and object code for GateField's Target Silicon Software and Concept
Silicon Software and the object code for the ASICmaster Software, as well as all
documentation, technical knowledge and information, and know-how with respect
thereto.
(i) SUBLICENSES. The licenses granted to Actel in Section
1.4(a) shall include the right for Actel to grant sublicenses to the Retained
Intellectual Property to its customers pursuant to licenses entered into by
Actel in its conduct of the Design Services Business.
(ii) NO IMPLIED LICENSES. Nothing herein shall be construed to
grant to Actel, by estoppel, implication, or otherwise, any right, title,
interest or license in or to any know-how, trade
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secrets, or other intellectual property owned or controlled by GateField other
than as expressly granted in this Section 1.4.
(iii) ASSIGNMENT. Actel may not assign any of the rights or
licenses granted pursuant to Section 1.4(a) hereof to any third party without
the prior written consent of GateField, except (i) as provided in Section
1.4(a)(i) hereof, (ii) to the acquiror of 50% or more of the voting stock of
Actel or all or substantially all of the assets of Actel (provided that such
acquiror is not a direct competitor of GateField), (iii) in connection with the
sale of the Design Services Business to a third party and (iv) in connection
with Actel's proposed reincorporation into the State of Nevada. Any attempted
assignment in conflict with this Section 1.4(a)(iii) shall be null and void.
(b) GRANT OF LICENSE BACK TO GATEFIELD. Subject to the terms and
conditions of this Agreement, Actel hereby grants to GateField a non-exclusive,
worldwide, royalty-free, fully paid up, non-transferable, perpetual, irrevocable
right and license for GateField to use, reproduce, modify, create derivative
works of, distribute and otherwise exploit the source code for the Reusable
Subcircuit Modules purchased by Actel pursuant to this Agreement, in connection
with the operation of GateField's business.
(i) NO RIGHT TO SUBLICENSE. Nothing contained in this
Section 1.4(b) shall imply the grant of any right to GateField to sublicense any
of the Design Services Technology to any third party.
(ii) NO IMPLIED LICENSES. Nothing herein shall be construed
to grant to GateField, by estoppel, implication, or otherwise, any right, title,
interest or license in or to any know-how, trade secrets, or other intellectual
property owned or controlled by Actel other than as expressly granted in this
Section 1.4(b). Nothing herein shall be construed to grant to GateField, by
estoppel, implication, or otherwise, any right to take any action which would
violate the terms of the Covenant Not to Compete contained in Section 5.11
hereof.
(iii) NON-EXCLUSIVE LICENSE. GateField agrees and acknowledges
that Actel shall have the right to exploit the Design Services Technology in any
manner that Actel deems advisable.
Section 1.5 NON-ASSIGNMENT OR SUBCONTRACTING OF CERTAIN ASSIGNED
CONTRACTS.
(i) Notwithstanding anything to the contrary in this Agreement, to
the extent that the assignment of any of the Assigned Contracts shall require
the consent of any other party (or in the event that any of the same shall be
nonassignable or unable to be subcontracted), neither this Agreement nor any
action taken pursuant to its provisions shall constitute an assignment or
subcontract or an agreement to assign or subcontract if such assignment or
subcontract or attempted assignment or subcontract would constitute a breach
thereof or result in the loss or diminution thereof; provided, however, that in
each such case, GateField shall use commercially reasonable efforts to obtain
the consent of such other party to an assignment to Actel as soon as possible
after the Closing.
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(ii) PERFORMANCE BY GATEFIELD; PAYMENT. Until such consents are
obtained, Actel shall be entitled to receive from GateField the economic and
other benefits under such Assigned Contract or order to the extent possible, and
Actel shall bear the economic and other obligations under such Assigned Contract
or order (and thus be obligated to perform services for, and provide products
to, GateField as may be required to enable GateField to perform under such
Assigned Contract or order). GateField shall cooperate with Actel in any
arrangement mutually designed by GateField and Actel to perform Actel's
obligations with respect to such Assigned Contract after the Closing, which
arrangements may include performance by GateField of such Assigned Contract on a
subcontract basis or enforcement, for the account and benefit of Actel, of any
and all rights of GateField or Actel against any other Person arising out of the
breach or cancellation by such other Person or otherwise, all of such actions to
be at the direction of GateField and to be at the expense of GateField, except
that to the extent GateField performs under an Assigned Contract, GateField may
retain revenue from such Assigned Contract sufficient to cover its subcontract
expense. GateField shall transfer to Actel any revenues received for performance
of and under any such unassigned contract, subject to the exception in the prior
sentence, and shall reimburse Actel for all costs and expenses, including
increased obligations, resulting from an inability of GateField to assign such
Assigned Contracts to Actel and receive the benefits of such assignment.
Section 1.6 SOFTWARE DELIVERABLES. All software included in the
Purchased Assets or licensed to Actel pursuant to Section 1.4(a) hereof shall be
transmitted electronically by GateField to Actel.
ARTICLE II
PURCHASE PRICE
Section 2.1 CONSIDERATION. Upon the terms and subject to the conditions
set forth herein, at the Closing, Actel shall purchase from GateField for the
consideration described in Section 2.2 hereof, all right, title and interest in
and to the Purchased Assets and assume the Assumed Liabilities from GateField,
and GateField shall sell, transfer, assign and deliver to Actel the Purchased
Assets, Assumed Liabilities and Retained Intellectual Property.
Section 2.2 PURCHASE PRICE. Actel shall purchase the Purchased Assets
for a purchase price (the "Purchase Price") which shall consist of an Initial
Payment and the Earn-Out Payments, as such terms are defined in paragraphs
2.2(a) and 2.2(b) hereof, respectively.
(a) INITIAL PAYMENT. An initial payment (the "Initial Payment") will
be paid to GateField by Actel by wire transfer at the Closing, to an account
designated by GateField prior to the Closing, in the amount of Five Million
Dollars ($5,000,000) subject to adjustments pursuant to Section 2.2(a)(i) below.
(i) ADJUSTMENT BASED ON ACCOUNTS PAYABLE. No later than
twenty-four (24) hours prior to the Closing, GateField shall cause to be
prepared and shall provide to Actel a list, attached
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hereto as Schedule 2.2(a)(i), of the accounts payable outstanding as of the
Closing Date which relate exclusively to the Purchased Assets (the "Accounts
Payable"). To the extent that the aggregate amount of Accounts Payable set
forth on Schedule 2.2(a)(i) is greater than the aggregate amount of Accounts
Receivable assumed by Actel in connection herewith, Actel shall reduce the
Initial Payment by an amount equal to the difference between the Accounts
Payable and the Accounts Receivable. To the extent that the aggregate amount of
Accounts Payable is less than the aggregate amount of Accounts Receivable
assumed by Actel in connection herewith, Actel shall increase the Initial
Payment by an amount equal to the difference between the Accounts Receivable and
the Accounts Payable. Any adjustment made to the Initial Payment pursuant to
this Section 2.2(a)(i) shall be referred to herein as the "Closing Date
Adjustment Amount."
(A) If Actel and GateField cannot mutually agree on the
determination of the Closing Date Adjustment Amount on or prior to the Closing,
then an amount equal to the average of the Closing Date Adjustment Amount
proposed by each party shall be withheld from the Initial Payment, and the
parties shall negotiate in good faith for a period of ten (10) days after the
Closing Date to arrive at a determination of the Closing Date Adjustment Amount.
If the parties do not reach resolution during such ten (10) day period, then
Actel and GateField may proceed to arbitration under the rules then in effect of
the American Arbitration Association. The determination of the arbitrator(s)
shall be binding, final and conclusive on the parties. The expenses in
connection with any arbitration shall be borne equally by the parties unless
determined otherwise by the arbitrator(s). The amount determined to be the
Closing Date Adjustment Amount pursuant to this Section 2.2(a)(i) shall be paid
as soon as possible after the parties reach such determination, without
interest, by wire transfer or as otherwise specified by the other party.
(b) EARN-OUT PAYMENTS. Additional payments (the "Earn-Out Payments")
will be made to GateField by Actel, if due pursuant to this Section 2.2(b), with
respect to each of the twelve (12) consecutive calendar quarters beginning with
the quarter ending December 31, 1998 and ending with the quarter ending
September 30, 2001 (the "Earn-Out Period"). Each Earn-Out Payment will be
calculated and paid following the end of each calendar quarter during the
Earn-Out Period as follows:
(i) In the event that the Quarterly Profit (as defined below)
for such quarter is greater than the Threshold Amount (as defined below), Actel
shall pay GateField 50% of the difference between the Quarterly Profit and the
Threshold Amount.
(ii) In the event that the Quarterly Profit for such quarter is
less than or equal to the Threshold Amount, or there is a Quarterly Loss, there
shall be no Earn-Out Payment made by Actel to GateField with respect to such
quarter.
(iii) The "Threshold Amount" shall initially be $250,000.
Subsequent to the first quarter with respect to which any Earn-Out Payment is
due, Earn-Out Payments shall be calculated on a cumulative basis in the manner
described in this Section 2.2 (b)(iii). In the event that the Quarterly Profit
with respect to a quarter is greater than $0 but less than or equal to the
Threshold Amount, then the Threshold Amount shall be increased by an amount
equal to the difference between the Threshold
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Amount and the Quarterly Profit. In the event that there is a Quarterly Loss in
a quarter, the Threshold Amount shall be increased by the sum of $250,000 plus
the absolute value of the Quarterly Loss. Such adjusted Threshold Amounts shall
be carried forward into subsequent quarters until an Earn-Out Payment is earned,
at which time the Threshold Amount shall be reset to $250,000. In no event
shall the Threshold Amount be less than $250,000.
(iv) Notwithstanding the foregoing, in no event shall the
aggregate amount of Earn-Out Payments exceed $1,000,000. In addition, any
amounts payable pursuant to Claims (as defined in Section 8.3 hereof) which are
offset against Earn-Out Payments pursuant to the provisions of Section 8.10
hereof, and any amounts offset against Earn-Out Payments pursuant to Section 2.3
hereof, shall be included in the calculation of the aggregate amount of Earn-Out
Payments made pursuant to this Section 2.2.
(v) As used in this Agreement,
(A) "Quarterly Revenue" means the total revenue represented
by invoices issued by the Design Services Business during a quarter in
accordance with GateField's current revenue recognition policy for the Design
Services Business, which the parties agree is the following:
(1) revenue is recognized on cost plus fixed fee and
time and materials contracts upon the issuance of invoices to customers on a
monthly basis, based upon hours of services performed under the contract; and
(2) revenue is recognized on fixed price contracts
upon the issuance of invoices to customers on a monthly basis, based upon
certain milestones.
(B) "Expenses" means all costs incurred (in accordance with
and consistent with the current accounting policies in use by the Design
Services Business) by the Design Services Business with respect to a quarter,
including, but not limited to, all employee salaries, benefits and bonuses,
costs related to the lease of real and personal property, costs related to the
depreciation of purchased real and personal property, utilities and other
building related costs, equipment expense, consulting fees, reasonable travel
and entertainment and other costs incurred by the Design Services Business, but
shall not include any overhead costs of Actel which have not been incurred for
the direct benefit of the Design Services Business or any goodwill amortization
or provision for income taxes; and
(C) "Quarterly Profit" means the Quarterly Revenue for a
quarterly period, less Expenses. If such calculation produces a negative
number, the amount of such negative number shall be "Quarterly Loss."
(vi) By way of example, if the Quarterly Profit for the Design
Services Business for the first full fiscal quarter following the Closing is
$250,000, no Earn-Out Payment would be due for such quarter. If the Quarterly
Profit in the next fiscal quarter is $350,000, the Earn-Out Payment would be
equal to 50% of $350,000 less $250,000, or $50,000. If the Quarterly Profit in
the
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next fiscal quarter is $150,000, no Earn-Out Payment would be due for such
quarter and the Threshold Amount would be increased by the difference between
$250,000 and $150,000, or $100,000, for a new Threshold Amount of $350,000. If
the Quarterly Profit in the next fiscal quarter is $350,000, the Earn-Out
Payment would equal the difference between $350,000 and $350,000 or $0, and the
Threshold Amount would be equal to $250,000.
(vii) Actel shall make all Earn-Out Payments due to GateField
within thirty (30) days after the end of the fiscal quarter for which such
payment is due. Payments may be made by check. Whether or not a payment is
made, Actel shall provide GateField with a written statement signed by Actel's
Chief Financial Officer within thirty (30) days after the end of each fiscal
quarter during the Earn-Out Period showing in reasonable detail the supporting
calculations for the payment or nonpayment.
Section 2.3 RIGHTS OF SET-OFF AGAINST EARN-OUT PAYMENTS.
(a) UNCOLLECTIBLE ACCOUNTS RECEIVABLE. If any of the Accounts
Receivable listed on Schedule 1.1(d) attached hereto is determined by Actel not
to be collectible, Actel shall have the right to reduce and offset any future
Earn-Out Payments earned by GateField pursuant to Section 2.2 hereof by the
entire amount of such Account Receivable which is determined not to be
collectible. Prior to offsetting any amount against the Earn-Out Payments,
Actel shall notify GateField of the nature and amount of any such offset.
(b) BREACH OF COVENANT NOT TO COMPETE. In the event that
GateField breaches the terms of its Covenant Not to Compete set forth in
Section 5.11 hereof, Actel shall have the right to reduce and offset any
future Earn-Out Payments earned by GateField pursuant to Section 2.2 hereof
by the reasonable costs and fees (including attorneys' fees and expenses)
incurred in connection with the enforcement by Actel of the Covenant Not to
Compete against GateField.
Section 2.4 GATEFIELD'S AUDIT RIGHTS DURING EARN-OUT PERIOD. GateField
shall have the right to inspect and/or audit the books and records which support
amounts used in calculating each Earn-Out Payment. This right shall be
exercisable by GateField by notifying Actel in writing at any time until ninety
(90) days after the end of the Earn-Out Period. Upon receiving such notice from
GateField, Actel shall have forty-five (45) days to make available such books
and records for GateField's inspection. If after making such inspection or
audit, it is determined by an independent auditor mutually selected by Actel and
GateField that any Earn-Out Payment was understated, then Actel shall pay the
balance of the Earn-Out Payment. If after making such inspection or audit, it
is determined that any Earn-Out Payment was overstated, then GateField shall
refund to Actel the amount overpaid. If it is determined by an independent
auditor that such Earn-Out Payment was understated or overstated by five percent
(5%) or more, then Actel shall pay the cost of such audit. If it is determined
by an independent auditor that such Earn-Out Payment was understated or
overstated by less than five percent (5%), then GateField shall pay the cost of
such audit.
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Section 2.5 CONDUCT OF ACTEL'S BUSINESS. Nothing in this Agreement
shall affect Actel's ability to operate its business and Design Services
Business in a manner that Actel deems advisable. Without limiting the
foregoing, nothing in this Agreement shall obligate Actel to operate its
business or the Design Services Business in such a manner as to generate or
maximize the Earn-Out Payments.
Section 2.6 ALLOCATION. The Purchase Price shall be allocated among
the Purchased Assets by Actel in accordance with applicable law for all tax
purposes and in any and all filings, declarations and reports with the Internal
Revenue Service ("IRS") or other tax authority in respect thereof. The parties
agree not to take a position contrary to the allocation schedule on any tax
return or any documents (including Form 8594) filed by any of said parties with
federal, state, foreign or local authorities.
Section 2.7 POST-CLOSING SALE OF DESIGN SERVICES BUSINESS. From and
after the Closing Date until September 30, 2001, in the event that Actel enters
into a transaction with a third party to sell all or substantially all of the
Purchased Assets to such third party (a "Post-Closing Sale"), to the extent that
the purchase price paid by such third party (the "Sale Price") to acquire the
Purchased Assets exceeds $5,000,000, then on the closing date of the
Post-Closing Sale, Actel shall pay GateField an amount equal to 50% of the Sale
Price less (x) any transaction costs incurred by Actel in connection with the
Post-Closing Sale, (y) any amounts already paid to GateField pursuant to the
Earn-Out Payments or offset against the Earn-Out Payments, and (z) the amount by
which the Threshold Amount in effect on the closing date of such Post-Closing
Sale exceeds $250,000; PROVIDED, HOWEVER, that in no event shall any amount
payable to GateField pursuant to this Section 2.7 exceed $1,000,000 less (A) the
aggregate amount paid to GateField pursuant to Earn-Out Payments or off-set
against the Earn-Out Payments and (B) the amount by which the Threshold Amount
in effect on the closing date of the Post-Closing Sale exceeds $250,000.
ARTICLE III
CLOSING
Section 3.1 CLOSING. The closing for the transactions contemplated by
this Agreement (the "Closing") shall take place on August 14, 1998 (the
"Closing Date") at the offices of Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx
Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx or such other time and place as mutually agreed
upon by the parties.
Section 3.2 DELIVERY BY GATEFIELD. At the Closing, GateField and Actel
shall take such actions and execute and deliver such agreements, bills of sale
and other instruments and documents as necessary or appropriate to effect the
transactions contemplated by this Agreement in accordance with its terms,
including, without limitation, the following:
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(a) GateField, through its officers, agents and employees, shall
deliver to Actel all right, title and interest in the Purchased Assets,
including the assignment to Actel of all right title and interest in and to the
Design Services Technology in accordance with Article I hereof.
(b) GateField and Actel shall execute and deliver the Additional
Agreements (as defined in Article VI hereof).
(c) GateField shall deliver or cause to be delivered to Actel a
release of all mortgages, liens, security interests, pledges, negative pledges,
encumbrances, assessments or liabilities for assessment, title retention
agreements, title insurance exceptions, restrictions or restraints on transfer,
defects of title, charges in the nature of a lien or security interest, or
options (whether consensual, statutory or otherwise) (each a "Lien" and
collectively, the "Liens") on the Purchased Assets other than Permitted
Encumbrances (as defined below).
(d) Other than Permitted Encumbrances (as defined below), GateField
and Actel shall deliver or cause to be delivered to one another such other
instruments and documents necessary or appropriate to evidence the due
execution, delivery and performance of this Agreement and such other separate
instruments of sale, assignment or transfer that Actel may reasonably deem
necessary or appropriate in order to perfect, confirm or evidence in Actel title
to all or any part of the Purchased Assets free of any Liens (other than Assumed
Liabilities and Permitted Encumbrances).
(e) GateField shall deliver to Actel evidence reasonably satisfactory
to Actel that the parties to the Assigned Contracts listed on Schedule 1.1(c)
have agreed to the assignment of such Assigned Contracts to Actel (without any
modification, other than such modifications satisfactory to Actel in its sole
discretion), except as set forth on Schedule 5.8 hereto.
Section 3.3 DELIVERY BY ACTEL. At the Closing, Actel shall deliver to
GateField the Initial Payment equal to Five Million Dollars ($5,000,000) in
cash, subject to any adjustment pursuant to Section 2.2(a)(i) hereof.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF ACTEL. Actel hereby
represents to GateField that:
(a) ORGANIZATION. Actel is a corporation duly organized, validly
existing and in good standing under the laws of California.
(b) AUTHORIZATION. Actel has full corporate power and authority to
enter into this Agreement and the Additional Agreements, to perform its
obligations hereunder and thereunder, and to
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consummate the transactions contemplated hereby and thereby. Actel has taken
all necessary and appropriate corporate action with respect to the execution,
delivery and performance of this Agreement and the Additional Agreements, and
this Agreement and the Additional Agreements constitute valid and binding
obligations of Actel, enforceable in accordance with their terms except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization or
other laws affecting creditors' rights and remedies generally and rules of law
governing specific performance, injunctive relief and other equitable remedies.
(c) BROKER FEES. Actel is not obligated to pay any fees or expenses
of any broker or finder in connection with the origin, negotiation or execution
of this Agreement or in connection with any of the transactions contemplated
hereby.
(d) NO VIOLATION. Neither the execution of this Agreement or the
Additional Agreements, nor the performance hereof or thereof by Actel, nor the
consummation of the transactions contemplated hereby or thereby will:
(i) conflict with or result in any breach or violation of the terms of any
decree, judgment, order, law or regulation of any court or other governmental
body, now in effect, applicable to Actel; (ii) conflict with, or result in, with
or without the passage of time or the giving of notice, any breach of any of the
material terms, conditions and provisions of, or constitute a material default
under, or result in the creation of any material Lien upon any material
indenture, mortgage, lease, agreement or other instrument to which Actel is a
party or by which it is bound; or (iii) violate or conflict with any provision
of Actel's Articles of Incorporation or Bylaws. No consent, approval or
authorization of, or declaration, filing or registration with, any government or
regulatory authority is required to be made or obtained in order to permit the
execution, delivery and performance of this Agreement or the Additional
Agreements by Actel, or the consummation of the transactions contemplated by
this Agreement or the Additional Agreements.
Section 4.2 REPRESENTATION AND WARRANTIES OF GATEFIELD. GateField
hereby represents and warrants to Actel that, except as set forth in the
separate disclosure schedule delivered by GateField to Actel attached hereto as
EXHIBIT A (the "GateField Disclosure Schedule"):
(a) CORPORATE ORGANIZATION OF GATEFIELD. GateField is a corporation
duly organized, validly existing and in good standing under the laws of
Delaware, and has all requisite power and authority to conduct the Design
Services Business in the places where the Design Services Business is now
conducted.
(b) AUTHORIZATION OF GATEFIELD. GateField has full corporate power
and authority to enter into this Agreement and the Additional Agreements and 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, the Additional Agreements, general
conveyances, bills of sale, assignments, and other documents and instruments
evidencing the conveyance of the Purchased Assets and delivered in accordance
with Section 3.2 hereof (the "Closing Documents"). GateField has taken all
necessary and appropriate corporate action with respect to the authorization,
execution and delivery of this Agreement, the Additional Agreements and the
Closing Documents. No
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authorization on the part of GateField's stockholders is necessary in connection
with the transactions contemplated by this Agreement. No other corporate
proceedings on the part of GateField are necessary to authorize this Agreement
or to consummate the transactions contemplated hereby. This Agreement and the
Additional Agreements constitute valid and binding obligations of GateField,
enforceable in accordance with their terms except as limited by applicable
bankruptcy, insolvency, moratorium, reorganization or other laws affecting
creditors' rights and remedies generally and rules of law governing specific
performance, injunctive relief and other equitable remedies.
(c) BROKERS' AND FINDERS' FEES. GateField is not obligated to pay
any fees or expenses of any broker or finder in connection with the origin,
negotiation or execution of this Agreement or the Additional Agreements in
connection with any transactions contemplated hereby or thereby.
(d) CONTRACTS. Schedule 1.1(c) lists all contracts, agreements,
commitments and other arrangements to which GateField is a party or by which
GateField or any of the Purchased Assets is bound which are necessary for the
conduct of the Design Services Business as presently conducted. GateField has
delivered to Actel a correct and complete copy of each written agreement (as
amended to date) listed in Schedule 1.1(c). With respect to each such
agreement: (A) the agreement is a legal, valid and binding obligation of
GateField in full force and effect in all respects, and enforceable by GateField
in accordance with its terms (except as may be limited to laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or equitable
remedies), and will continue to be legal, binding, enforceable, in full force
and effect following the Closing on terms identical to those in effect
immediately prior to Closing; (B) GateField is not in breach or default under
the agreement and, to the best knowledge of GateField, no other party to the
agreement is in breach or default of the agreement, and no event has occurred,
which with notice or lapse of time would constitute a breach or default, or
permit termination, modification, or acceleration, under the agreement;
(C) GateField has not, and to the best knowledge of GateField, no other party to
the Agreement has, repudiated any provision of the agreement; and (D) GateField
does not have any reason to believe that the service called for thereunder
cannot be supplied in accordance with its terms.
(e) TITLE TO PROPERTY. GateField has good and marketable title to,
or a valid leasehold interest in, the Purchased Assets, free and clear of all
Liens except for permitted encumbrances listed on Section 4.2(e) of the
GateField Disclosure Schedule attached hereto (the "Permitted Encumbrances").
At the Closing, Actel will obtain good and marketable title to the Purchased
Assets, free and clear of all Liens except for the Permitted Encumbrances. The
Purchased Assets are in good operating condition and repair, except for
reasonable wear and tear, and are suitable and adequate for use in the ordinary
course of business of the Design Services Business. The leases (the "Leases")
listed on Schedule 1.1(g) attached hereto are binding, valid and enforceable in
accordance with their terms (except as may be limited by laws of general
application relating to bankruptcy, insolvency and the relief of debtors and
rules of law governing specific performance, injunctive relief or 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 by GateField under any of the Leases. Immediately
after the Closing, Actel will be entitled to the continued use and possession of
the property subject to the Leases
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pursuant to the terms thereof. There is no pending or, to the best knowledge of
GateField, threatened condemnation or similar proceeding affecting any of the
real property subject to the Leases. GateField has access to all utilities,
including water and sewer, necessary to operate the Design Services Business in
the normal course as presently conducted and there are no unpaid assessments for
the installation thereof or charges for making connection thereto that have not
been fully paid which would have a Material Adverse Effect on the Design
Services Business. To the best knowledge of GateField, there are no ordinances
pending or contemplated authorizing improvements, the cost of which might be
assessed against the property subject to the Leases.
For purposes of this Agreement, "Material Adverse Effect" means any event,
change or effect which is or would be materially adverse to the business,
operations, properties, assets (including intangible assets), financial
condition, prospects or results of operation of the Design Services Business.
(f) ASSETS. The Purchased Assets include all the assets necessary to
operate the Design Services Business in the same manner as the Design Services
Business was operated by GateField prior to the Closing, other than the Excluded
Assets. 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 materially
interfere with the continued use thereof. Each tangible Purchased Asset has
been serviced and maintained in accordance with customary industry practices.
There are no existing contracts, agreements, commitments or arrangements with
any Person to acquire any of the assets or properties of GateField used in the
Design Services Business (or any interest therein) except for this Agreement and
licenses of certain Intellectual Property Rights to customers of the Design
Services Business entered into during the ordinary course of business of the
Design Services Business. GateField has made available for inspection by Actel
all reports and documents in GateField's possession pertaining to the condition
of the Purchased Assets. The Purchased Assets do not constitute more than half
of GateField's inventory and equipment measured by the value of the Purchased
Assets on the date of this Agreement.
(g) INTELLECTUAL PROPERTY RIGHTS.
(i) Section 4.2(g)(i)(A) of the GateField Disclosure Schedule
identifies and provides a brief description of all Design Service Technology.
Section 4.2(g)(i)(B) of the GateField Disclosure Schedule identifies and
provides a brief description of all Intellectual Property Rights owned by any
other Person and licensed to or used by GateField in connection with the Design
Services Business (except for any software that is licensed to GateField under
any third party software license that is generally available to the public) and
identifies the license agreement or other agreement under which such software,
products or other Intellectual Property Right is being licensed to or used by
GateField.
For purposes of this Agreement, "Intellectual Property Rights" means all
current and future patents and other patent rights, trademarks, trade names,
service marks, software, technical knowledge and information, know-how,
formulae, designs, process technology, trade secrets, mask work rights and
copyrights (including all applications and registrations with respect thereto),
inventions, inventor's work
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papers and notebooks, disclosure of inventions, research and development in
progress, moral rights, artwork and all other proprietary information and
similar intangible rights in each case issued under or created, established,
governed, or protected by the laws of any jurisdiction in the world.
(ii) The Design Service Technology and the license to the
Retained Intellectual Property contained in Section 1.4(a) hereof constitute all
of the Intellectual Property Rights necessary to enable Actel to conduct the
Design Services Business in the manner in which such business is currently being
conducted. Except in the ordinary course of business consistent with past
practice, GateField has not licensed or otherwise made available any of the
Design Service Technology to any Person. GateField has not entered into any
covenant not to compete or contract limiting its ability to exploit fully any of
the Design Service Technology or to transact the Design Services Business in any
market or geographical area or with any Person.
(iii) GateField is not obligated to make any payment to any
Person for the use or other exploitation of any Design Service Technology.
GateField has taken all reasonable measures and precautions necessary to protect
and maintain the confidentiality and secrecy of all Design Service Technology
and otherwise to maintain and protect the value of all Design Service
Technology.
(iv) Each Intellectual Property Right embodied in the Design
Service Technology which constitutes a patent, trademark, service xxxx,
copyright or other Intellectual Property Right that is registered with any
federal or state governmental body or agency is valid and subsisting and no
fraud or misrepresentation was made in connection with any such registration.
All required maintenance, annuity and similar fees with respect to such
registrations have been fully and timely paid.
(v) GateField has not at any time by or in the course of
conducting the Design Services Business, interfered with, infringed,
misappropriated, violated or made any unlawful use of any Intellectual Property
Rights of any other Person in any respect; except, however, that with respect to
Intellectual Property Rights that are patents and other patent rights, to the
best knowledge of GateField, GateField has not at any time by or in the course
of conducting the Design Services Business, interfered with, infringed,
misappropriated, violated or made any unlawful use of any patent rights of any
other Person in any respect. GateField has not received since its
inception, with respect to the Design Services Business, any charge, complaint,
claim, demand, or notice or other communication (in writing or otherwise) of any
actual, alleged, possible or potential interference, infringement,
misappropriation, violation or unlawful use of, any Intellectual Property Right
owned by any other Person (including any claim that GateField must license or
refrain from using any Intellectual Property Rights of any other Person). To the
best knowledge of GateField, no other Person is interfering with, infringing,
misappropriating or making any unlawful use of, and no Intellectual Property
Right owned by any other Person conflicts with, any Design Service Technology.
(vi) Each contract under which any Design Service Technology is
licensed to GateField is legal, valid, binding and enforceable (except as may be
limited to laws of general application relating to bankruptcy, insolvency and
the relief of debtors and rules of law governing specific performance,
injunctive relief or equitable remedies), is in full force and effect, is fully
paid up,
-14-
and will continue to be legal, binding, enforceable, in full force and effect
and fully paid following the Closing on terms identical to those in effect
immediately prior to Closing, except as may be modified by the licenses
contained in Section 1.4 hereof. GateField is not in breach of or default with
respect to any such contract, has not received any notice or communication (in
writing or otherwise) related to any potential or alleged breach or default, and
to the best knowledge of GateField, no other Person is in breach of or default
with respect to any such contract.
(vii) GateField has the right to license to Actel all
Intellectual Property Rights subject to the licenses contained in Section 1.4(a)
hereof, and GateField has all right, power and authority to enter into the
licenses granted pursuant to the licenses contained in Section 1.4(a) hereof.
(viii) Except as set forth in Section 4.2(g)(viii) of the
GateField Disclosure Schedule and other than in the ordinary course of business
consistent with past practice, GateField has not incurred (and there is no
reasonable basis to believe that GateField will incur) any liability under any
indemnification or similar provision relating to infringement or
misappropriation of any third party's Intellectual Property Right pursuant to
any Assigned Contract.
(h) COMPLIANCE WITH LAW. GateField is in compliance in all material
respects with all foreign, federal, state and local laws, statutes, licensing
requirements, rules and regulations, and judicial or administrative decisions
applicable to the Design Services Business. GateField has been granted any and
all licenses, permits (temporary and otherwise), authorization and approvals
from federal, state, and local government regulatory bodies necessary to carry
on the Design Services Business as currently conducted, all of which are
currently valid and in full force and effect in all material respects. All of
such licenses, permits, authorizations, and approvals shall be transferred to
Actel effective as of the Closing, and shall be valid and in full force and
effect to the same extent as if GateField were continuing operation of the
Design Services Business. There is no order issued, investigation or proceeding
pending, or to the best knowledge of GateField, 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 Design Services
Business or the Purchased Assets.
(i) NO VIOLATION. Neither the execution, delivery and performance of
this Agreement or the Additional Agreements or the other documents and
instruments to be executed and delivered by GateField pursuant hereto or
thereto, nor the consummation of the transactions contemplated hereby or thereby
will: (i) conflict with or result in any breach or violation of the terms of
any decree, judgment, order, law or regulation of any court or other
governmental body, now in effect, applicable to GateField or the Purchased
Assets; (ii) conflict with, or result in, with or without the passage of time or
the giving of notice, any breach of any of the material terms, conditions and
provisions of, or constitute a material default under, or result in the creation
of any material Lien upon any of the Purchased Assets pursuant to, any
indenture, mortgage, lease, agreement or other instrument to which GateField is
a party or by which it or any of the Purchased Assets are bound; (iii) permit
the acceleration of the maturity of any indebtedness of GateField secured by the
Purchased Assets; (iv) violate or conflict with any provision of GateField's
Certificate of Incorporation, Bylaws, or similar organizational instruments; or
(v) give
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rise to any dissenters rights or other claims from GateField stockholders. No
consent, approval or authorization of, or declaration, filing or registration
with, any government or regulatory authority is required to be made or obtained
in order to permit the execution, delivery or performance of this Agreement or
the Additional Agreements by GateField, or the consummation of the transactions
contemplated by this Agreement or the Additional Agreements.
(j) LITIGATION. Neither GateField nor, to the best knowledge of
GateField any officer, director, employee or agent of GateField, is a party to
any pending or, to the best knowledge of GateField, threatened action, suit,
proceeding or investigation, at law or in equity or otherwise in, for or by any
court or other governmental body involving: (i) the Purchased Assets, (ii) the
Design Services Business or (iii) the transactions contemplated by this
Agreement or the Additional Agreements. There is no claim, investigation,
litigation, action, suit, or proceeding, administrative or judicial, pending or,
to the best knowledge of GateField, threatened against GateField or, to the best
knowledge of GateField, any officer, director, employee or agent of GateField
involving the Purchased Assets, 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. GateField has not received any notice of any such
proceeding.
(k) TAXES. All Taxes (as hereinafter defined) due or payable by
GateField, and all interest and penalties thereon, whether disputed or not, have
been paid in full. All Tax returns, statements, reports, forms and other
documents required to be filed in connection with the Taxes related to the
Purchased Assets or the Design Service Business have been duly and timely filed
(and no extension of any filing date applicable thereto has been requested or
granted) and were correct and complete in all respects. All amounts required to
be withheld and all deposits required by law to be made by GateField with
respect to employee withholding Taxes have been duly made (insofar as the
failure to pay such Taxes could result in any Liability to Actel). GateField is
not delinquent in the payment of any Tax, assessment or governmental charge or
deposit, and GateField does not have any 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 GateField has not extended the period in which any Tax could be assessed or
collected. No tax is required to be withheld pursuant to Section 1445 of the
Code as a result of the transfers contemplated by this Agreement, and GateField
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 except liens for
current Taxes not yet due. None of the Assumed Liabilities could give rise to
the payment by GateField of any amount that would not be deductible pursuant to
Section 280G of the Code. None of the Purchased Assets (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(b) of the Code. 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
-16-
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) related or attributable in each case to
the Purchased Assets or the Design Services Business, (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.
(l) ENVIRONMENTAL COMPLIANCE. With respect to the operations of the
Design Services Business, (i) GateField is and has been in compliance with
Environmental Laws and GateField has not received any notice of any alleged
claim, violation of or liability under any Environmental Law which has not
heretofore been cured or for which there is any remaining liability; (ii)
GateField has not received notice of any Environmental Claim filed or threatened
against it, or against any Person whose liability for any Environmental Claim
GateField has retained or assumed either contractually or by operation of law
and there are no past or present actions, activities, circumstances, conditions,
events or incidents, that could reasonably be expected to form the basis of any
Environmental Claim against GateField or against any Person whose liability for
any Environmental Claim GateField has retained or assumed either contractually
or by operation of law; (iii) GateField has not disposed of, emitted,
discharged, handled, stored, transported, used or released any Hazardous
Materials, arranged for the disposal, discharge, storage or release of any
Hazardous Materials, or exposed any employee or other individual to any
Hazardous Materials or condition so as to give rise to any liability or
corrective or remedial obligation under any Environmental Laws; and (iv) to the
best knowledge of GateField, no Hazardous Materials are present in, on, or under
any properties owned, leased or used at any time (including both land and
improvements thereon) by GateField, or for its business, and no reasonable
likelihood exists that any Hazardous Materials will come to be present in, on,
or under any properties owned, leased or used at any time (including both land
and improvements thereon) by GateField, so as to give rise to any material
liability or corrective or remedial obligation under any Environmental Laws.
For the purposes of this Agreement, "Environmental Claim" means any notice,
claim, act, cause of action or investigation by any Person or governmental or
private entity alleging potential liability arising out of, based on or
resulting from (A) the presence, or release into the environment, or exposure of
any Person to Hazardous Materials or (B) any violation, or alleged violation, of
any Environmental Law. "Environmental Laws" means all national, provincial,
local and foreign laws, regulations or permit requirements relating to
protection of human health or the environment. "Hazardous Materials" means
chemicals, pollutants, contaminants, wastes, toxic substances, radioactive and
biological materials, asbestos-containing materials, hazardous substances,
petroleum and petroleum products or any fraction thereof.
(m) ACCURACY OF DOCUMENTS AND INFORMATION. The copies of all
instruments, agreements, other documents and written information furnished to
Actel by GateField are complete and correct in all respects. Subject to the
qualifications set forth in Section 4.2(n) [Projections] below, no
representations or warranties made by GateField in this Agreement or the
Additional Agreements, nor any Closing Document or Schedule furnished to Actel
or its agents pursuant to this Agreement or the Additional Agreements contains
any untrue statement of a material fact, or omits or will omit to state
-17-
a material fact necessary to make the statements or facts contained herein or
therein not misleading. GateField has not provided to Actel any U.S. government
classified information regarding any of GateField's contracts.
(n) PROJECTIONS.
(i) GateField has delivered to Actel certain projections dated
as of June 30, 1998 which include GateField's projected revenues and costs and
expenses for the Design Services Business for the fiscal quarter ended June 30,
1998, the six-month period ending December 31, 1998 and the fiscal year ending
December 31, 1999 (the "Projections"). The Projections were prepared by
GateField in good faith, and GateField believes there is a reasonable basis for
such projections, and that the assumptions underlying the projections were
reasonable as of the date of the Projections and are reasonable as of the date
hereof.
(o) NOTES AND ACCOUNTS RECEIVABLE. All notes and accounts receivable
of GateField related to the Design Services Business, all of which are reflected
properly on the books and records of GateField, are valid receivables subject to
no setoffs, defenses or counterclaims, are current and collectible in accordance
with their terms at their recorded amounts.
(p) ABSENCE OF CERTAIN CHANGES AND EVENTS. Since March 31, 1998,
there has not been:
(i) Any material adverse change in the business, financial
condition, results of operation, assets, liabilities or prospects of the Design
Services Business or any occurrence, circumstance, or combination thereof which
reasonably could be expected to result in any such adverse change;
(ii) Any event, including, without limitation, shortage of
materials or supplies, fire, explosion, accident, requisition or taking of
property by any governmental agency, flood, drought, earthquake or other natural
event, riot, act of God or the public enemy, or damage, destruction or other
casualty, whether covered by insurance or not, which has had or could reasonably
be expected to have a Material Adverse Effect on the Design Services Business or
the Purchased Assets;
(iii) Any transaction relating to the Design Services Business
which was entered into or carried out by GateField other than in the ordinary
course of business consistent with past practice;
(iv) Any material change made by GateField in its method of
operating the Design Services Business or its accounting practices relating
thereto;
(v) Any mortgage, pledge, lien, security interest,
hypothecation, charge or other encumbrance imposed or agreed by GateField to be
imposed on or with respect to the Purchased Assets other than the Permitted
Encumbrances;
-18-
(vi) Any sale, lease or disposition of, or any agreement to
sell, lease or dispose of any of the Purchased Assets, other than sales, leases
or dispositions in the ordinary course of business consistent with past
practice;
(vii) Any employment contract or collective bargaining
agreement, written or oral, entered into by GateField or modification by
GateField of the terms of any existing such contract or agreement related to any
Employee (as defined in Section 4.2(s) hereof);
(viii) Any increase in the base compensation or change in
employment terms of any Employee except in the ordinary course of business
consistent with past practice;
(ix) Any action taken by GateField to adopt, amend, modify, or
terminate any bonus, profit-sharing, incentive, severance, or other plan,
contract, or commitment for the benefit of any Employee except in the ordinary
course of business consistent with past practice;
(x) Any material adverse change or, to the best knowledge of
GateField, any threat of any material adverse change, in GateField's relations
with, or any loss or, to the best knowledge of GateField, any threat of loss, of
any of the Design Services Business's major customers, distributors, suppliers
or dealers;
(xi) Any material damage, destruction or loss (whether or not
covered by insurance) to the Purchased Assets;
(xii) Any adverse modification, waiver, change, amendment,
release, rescission, accord and satisfaction or termination of, or with respect
to, any Assigned Contract;
(xiii) Any labor disputes or disturbances materially adversely
affecting the business, financial condition, results of operation, assets,
liabilities or prospects of the Design Services Business, including, without
limitation, the filing of any petition or charge of unfair labor practices with
the National Labor Relations Board;
(xiv) Any waivers of any material rights under the Assigned
Contracts;
(xv) Any dispositions or abandonment of any Design Service
Technology or rights thereto or application therefor other than in the ordinary
course of business consistent with past practice;
(xvi) Any license or sublicense of any rights granted by
GateField under or with respect to any Design Service Technology other than in
the ordinary course of business consistent with past practice;
(xvii) Any change made or authorized in the charter or bylaws
of GateField that would have an adverse affect on the Design Services Business;
or
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(xviii) Any commitment to do any of the foregoing.
(q) ABSENCE OF UNDISCLOSED LIABILITIES. There are no debts,
liabilities or obligations with respect to the Design Services Business assumed
by Actel pursuant to this Agreement or to which the Purchased Assets are
subject, whether liquidated, unliquidated, accrued, absolute, contingent or
otherwise, other than the Assumed Liabilities.
(r) THIRD PARTY CONSENTS. No consent, approval, or authorization of
any third party on the part of GateField is required in connection with the
consummation of the transactions contemplated hereunder except as listed in
Section 4.2(r) of the GateField Disclosure Schedule.
(s) EMPLOYEES. Section 4.2(s) of the GateField Disclosure Schedule
attached hereto contains a list of all employees of the GateField Design
Business immediately prior to the Closing (the "Employees"), all independent
contractors and consultants performing services specifically for the Design
Services Business, all sales representatives of the GateField Design Business,
and all persons receiving commissions from GateField in connection with the
GateField Design Business, including the location where the same are employed,
together with their respective current rates of compensation. No Employee of
the GateField Design Business has any claim against GateField (whether under
federal, state, local or foreign Law, under any employee agreement or otherwise)
on account of or for (a) overtime pay, other than overtime pay for the payroll
period ending on or after the Closing Date, (b) wages or salaries,
(c) vacations, time off or pay in lieu of vacation or time off, including
vacation or time off (or pay in lieu thereof) earned with respect to the current
fiscal year of GateField, or (d) severance or other termination payments.
GateField has performed and undertaken all acts necessary in connection with the
transactions contemplated by this Agreement to comply with the applicable
provisions of the Worker Adjustment and Retraining Notification Act ("WARN").
(i) Each Employee has entered into and executed GateField's
standard form of Invention Assignment and Confidentiality Agreement
("Proprietary Information Agreement"). Each Proprietary Information Agreement
is legal, valid, binding and enforceable (except as may be limited to laws of
general application relating to bankruptcy, insolvency and the relief of debtors
and rules of law governing specific performance, injunctive relief or equitable
remedies), and in full force and effect immediately prior to the Closing.
GateField has not utilized in the conduct of the Design Services Business prior
to the Closing, and does not believe it will be necessary for Actel to utilize
in the conduct of the Design Services Business after the Closing, any inventions
of any Employee in which any such Employee has an ownership interest.
(t) LABOR RELATIONS.
(i) With respect to the Design Services Business, GateField has
not failed to comply in any respect 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, 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. GateField has
not failed to
-20-
comply in any material respect with any other applicable federal, state and
local laws, rules and regulations relating to employment.
(ii) There are no labor controversies pending or, to the best
knowledge of GateField, threatened between GateField and any of the Employees
or any labor union or other collective bargaining unit representing any of
the Employees. To the best knowledge of GateField, no union activity of any
type, including solicitation of employees, has taken place at GateField.
GateField is not a party to or bound by any collective bargaining agreements
or arrangements. GateField has no policies or practices which would, and has
taken no actions to, limit or prohibit in any way any union organizing
efforts.
(u) PENSION, PROFIT SHARING, ETC. The GateField Investment Plan
401(k) Plan ("Plan") is the only "Employee Pension Benefit Plan" as defined in
Section 3(2) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") which is or has been maintained, contributed to, or required to be
contributed to, by GateField or any other Person under common control with
GateField within the meaning to Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended (the "Code") (an "ERISA Affiliate") for the
benefit of any Employee. The Plan has received a favorable determination letter
from the IRS as to the qualified status under the Tax Reform Act of 1986 and
subsequent legislation and nothing has occurred since the IRS issued a favorable
determination on the Plan that would cause the IRS to change its favorable
determination. All contributions required by law or the Plan have been timely
made. No event of the type set forth in Section 4043(b) of ERISA has occurred
and is continuing with respect to the Plan other than as may result from the
transactions contemplated hereby. There are no material claims, investigations
or lawsuits which have been asserted or instituted against the assets of
GateField under the Plan and no reasonable basis for any such claim or lawsuit
exists. The Plan is being maintained, operated, and administered in all
material respects in accordance with its terms and all provisions of ERISA
(including rules and regulations thereunder) and other applicable laws. No
"prohibited transaction," within the meaning of Section 4975 of the Code or
Sections 406 and 407 of ERISA, and not otherwise exempt under Section 408 of
ERISA, has occurred with respect to the Plan. The Plan can be amended,
terminated or otherwise discontinued after the Closing Date in accordance with
its terms, without liability to Actel, GateField or any ERISA Affiliate (other
than ordinary administration expenses). There are no audits, inquiries or
proceedings pending or, to the best of the knowledge of GateField or any ERISA
Affiliates, threatened by the Internal Revenue Service or the Department of
Labor with respect to the Plan. Neither GateField nor any ERISA Affiliate is
subject to any penalty or tax with respect to the Plan under Section 502(i) of
ERISA or Sections 4975 through 4980 of the Code.
(v) INTERESTED PARTY RELATIONSHIPS. GateField does not have any
material financial interest, direct or indirect, in any supplier or customer or
any other party to any Assigned Contract.
(w) CERTAIN PAYMENTS. In connection with the Design Services
Business, GateField has not and, to the best knowledge of GateField, no Person
directly or indirectly on behalf of GateField, has made or received any payment
that was not legal to make or receive.
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(x) BOOKS AND RECORDS. The books and records of GateField to which
Actel and its accountants and attorneys have been given access are the true and
correct books and records of GateField and accurately reflect the underlying
facts and transactions in all material respects.
ARTICLE V
COVENANTS
Section 5.1 CONFIDENTIALITY.
(a) CONFIDENTIAL INFORMATION.
(i) CONFIDENTIALITY OBLIGATIONS OF GATEFIELD. From and after
the date hereof, except as required by law, statute, rule or regulation,
GateField and its employees, officers, directors and agents hereby agree not to
(A) disclose any confidential information provided by Actel to GateField and its
employees, officers, directors and agents pursuant to the terms of the
Nondisclosure Agreement between Actel and GateField dated as of June 23, 1998;
(B) disclose to any Person in any manner, directly or indirectly, any
confidential information or data related to or concerning the Design Services
Business or the Purchased Assets, whether of a technical or commercial nature;
or (C) use, or permit or assist, by acquiescence or otherwise, any Person,
association, firm, corporation or other to use, in any manner, directly or
indirectly, any confidential information described in phrases (A) or (B) of this
subsection (i), except where such information is at the time generally known to
the public and did not become generally known through any breach of any
provision of this Section 5.1(a)(i).
(ii) CONFIDENTIALITY OBLIGATIONS OF ACTEL. From and after the
date hereof, except as required by law, statute, rule or regulation, Actel and
its employees, officers, directors and agents hereby agree not to (A) disclose
any confidential information provided to Actel by GateField and its employees,
officers, directors and agents pursuant to the terms of the Nondisclosure
Agreement between Actel and GateField dated as of June 23, 1998 (other than
information provided to Actel that is related to the Design Services Business or
the Purchased Assets, or provided to Actel pursuant to the licenses granted in
Section 1.4 hereof); or (B) use, or permit or assist, by acquiescence or
otherwise, any Person, association, firm, corporation or other to use, in any
manner, directly or indirectly, any confidential information descibed in phrase
(A) of this subsection (ii), except where such information is at the time
generally known to the public and did not become generally known through any
breach of any provision of this Section 5.1(a)(ii).
(b) PUBLIC ANNOUNCEMENT. The parties hereto hereby agree to maintain
the confidentiality of the terms and conditions of this Agreement, except to the
extent disclosure is required by law, statute, rule or regulation, provided,
however, that the parties hereto hereby agree to issue a mutually agreeable
joint press release upon the Closing of the transactions contemplated hereby.
Each party will review and agree to the text of such press release and any other
public announcement related to this Agreement or the transactions contemplated
hereby prior to the release thereof. The parties hereto
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acknowledge that GateField and Actel may be obligated to file this Agreement
with the Securities and Exchange Commission ("SEC") and the Nasdaq National
Market and, in its discretion, may request confidential treatment for such
period of time and for such items as it deems appropriate.
Section 5.2 DOCUMENTS AND RECORDS. At any time and from time to time
after the Closing, as soon as practicable but in any event within ten (10) days
after any request by Actel, GateField shall deliver, or cause to be delivered,
to Actel such historical financial information and data and such other
information and data concerning the operations of the Design Services Business
prior to the Closing, and shall render such cooperation and use commercially
reasonable efforts to cause its independent public accountants to render such
cooperation as Actel shall reasonably request, in order to enable Actel to
complete and file all federal, state or foreign forms and reports which it may
be required to file with respect to the operations of the Design Services
Business prior to the Closing or to respond to audits by any taxing authorities
with respect to such operations.
Section 5.3 TRANSFER OF CUSTOMERS AND ASSIGNED CONTRACT.
(a) INTENT. It is the intent of parties hereto that all of
GateField's backlog, if any, relating to the Design Services Business be
transferred to Actel. Accordingly, the parties agree to use commercially
reasonable efforts to facilitate such transfer of customers as soon as possible.
(b) PURCHASE ORDER DATA. GateField shall provide or make available
to Actel, upon Actel's reasonable request, a list of all outstanding written
customer orders, purchase orders and other customer commitments from GateField's
current customers, and the names of all such customers, which relate to the
Design Services Business (the "Current Customers").
(c) TRANSFER OF ORDERS; ASSIGNMENTS. Subject to the terms and
conditions of this Agreement, GateField and Actel agree to use commercially
reasonable efforts to (i) conduct joint contacts with the Current Customers (as
appropriate) for the purpose of attempting to obtain such customers' consent to
transfer orders from GateField to Actel (or to issue new orders to Actel for the
same or similar items) (ii) assign GateField's rights and benefits under the
Assigned Contracts to Actel, (iii) novate such Assigned Contracts requiring
novation to effect an assignment thereof and (iv) transfer GateField's
performance obligations under the Assigned Contracts to Actel subject to the
provisions of Section 1.5 hereof.
Section 5.4 ACCOUNTS PAYABLE AND ACCOUNTS RECEIVABLE.
(i) From and after the Closing Date, in the event that
GateField pays any outstanding Account Payable listed in Schedule 2.2(a)(i)
attached hereto, Actel shall reimburse GateField cash in the actual amount paid
by GateField, as soon as possible after receipt by Actel of documents necessary
and appropriate to evidence such payment by GateField.
(ii) From and after the Closing Date, in the event that
GateField receives any payments of any Accounts Receivable listed in Schedule
1.1(d) attached hereto, GateField shall pay
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Actel cash in the actual amount received and collected by GateField, as soon as
possible after receipt of documents necessary and appropriate to evidence the
amount received by GateField in payment thereof.
(iii) Actel agrees to use commercially reasonable efforts to
collect the Accounts Receivable after the Closing.
Section 5.5 ADDITIONAL DOCUMENTS AND FURTHER ASSURANCES. Each party
hereto, at the request of another party hereto, shall execute and deliver such
other instruments and use commercially reasonable efforts to do and perform such
other acts and things as may be necessary or desirable for effecting completely
the consummation of this Agreement and the transactions contemplated hereby.
Section 5.6 ACCESS BY GATEFIELD TO INFORMATION. With respect to the
books and records relating to the Design Services Business maintained by
GateField prior to the Closing, where there is a legitimate purpose not
injurious to Actel, including, without limitation, an audit of GateField by the
Internal Revenue Service or any other taxing authority, Actel shall allow
GateField or its representatives appropriate access to such books and records
during regular business hours of the Design Services Business, upon reasonable
notice.
Section 5.7 TAXES.
(a) SALES TAX. GateField and Actel shall each pay one half of any
sales, use and other transfer taxes or other charges or duties arising out of
the purchase and sale of the Purchased Assets pursuant to this Agreement.
(b) TAX RETURNS. GateField shall be responsible for and pay when due
(i) all of GateField's Taxes attributable to or levied or imposed upon the
Purchased Assets relating or pertaining to period (or that portion of any
period) ending on or prior to the date of the Closing (including without
limitation any personal property Taxes attributable to any period or portion
thereof prior to the Closing) and (ii) all Taxes attributable to, levied or
imposed upon, or incurred in connection with the assets, operations or employees
of the Design Services Business for any period (or portion of any period)
through the date of Closing. GateField and Actel shall timely file within the
time period for filing, or any extension granted with respect thereto, all of
their respective Tax returns required to be filed in connection with the
purchase and sale of the Purchased Assets and any such portion of such Tax
returns connected therewith shall be true and correct and completed in
accordance with applicable laws.
Section 5.8 INDEMNIFICATION FOR UNASSIGNED PURCHASED ASSETS.
Schedule 5.8 attached hereto lists each Purchased Asset (including Assigned
Contracts) for which consent to assignment to Actel was required pursuant to
this Agreement, and for which consent was not obtained by GateField on or prior
to the Closing. GateField shall use commercially reasonable efforts to obtain
such consents. GateField hereby agrees to indemnify, defend and hold harmless
Actel and each of its affiliates, subsidiaries, officers, directors,
stockholders, successors and assigns (collectively, "Affiliates"), against any
and all losses, liabilities, damages, demands, claims, suits, actions, judgments
or causes of action, assessments,
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costs and expenses actually suffered or incurred by Actel or any of its
Affiliates, including, without limitation, interest, penalties, reasonable
attorneys' fees and reasonable expenses incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever (collectively, "Assignment Damages") asserted against, resulting to,
imposed upon or incurred by such parties, directly or indirectly, by reason of
or resulting from (i) any failure by GateField to obtain consent for the
assignment to Actel of any Assigned Contract listed on Schedule 5.8 hereof and
(ii) any suit, action or other proceeding brought by any governmental entity or
any other Person arising out of, or in any way related to, any of the matters
which are the subject of indemnification under clause (i) above. Actel and
GateField shall adhere to the procedures set forth in Sections 8.5 and 8.7 of
this Agreement in connection with any rights to indemnification arising under
this Section 5.8. Notwithstanding anything to the contrary contained in this
Section 5.8, (x) the aggregate liability of GateField under this Section 5.8 and
Article VIII hereof shall not exceed that portion of the Purchase Price actually
paid to GateField by Actel, and (y) GateField shall not be liable to indemnify
Actel for any Assignment Damages except to the extent that the cumulative amount
of the Assignment Damages actually incurred by Actel hereunder exceed the sum of
Twenty Thousand Dollars ($20,000).
Section 5.9 ASSIGNMENTS OF TRADEMARKS, PATENT RIGHTS AND COPYRIGHTS.
GateField and Actel agree to use their best efforts to file the Assignment of
Trademarks and Assignment of Patent Rights with the Patent and Trademark Office
("PTO") promptly after the Closing. With respect to any unregistered trademarks
and copyrights of GateField included in the Purchased Assets, upon the request
and at the expense of Actel, GateField agrees to use all commercially reasonable
efforts to take, or cause to be taken, all actions, and to do or cause to be
done, and to assist and cooperate with Actel in doing, all things necessary,
proper or advisable to register such trademarks and copyrights with the PTO or
the Copyright Office, as appropriate.
Section 5.10 ADMINISTRATIVE SUPPORT. GateField agrees to supply
administrative support of up to two (2) people at $75 per hour for up to an
aggregate of twenty (20) hours per week for up to sixty (60) days after Closing
to assist in the transfer of the Design Services Business to Actel, or longer as
mutually agreed by the parties hereto.
Section 5.11 COVENANT NOT TO COMPETE. GateField, for itself and its
successors and assigns, covenants and agrees with Actel that, for the period
(the "Covenant Term") commencing on the Closing Date and ending on the earliest
of (i) four (4) years after the Closing Date; (ii) the date of termination of
the Product Marketing Agreement by Actel; and (iii) the date of termination of
the Product Marketing Agreement by GateField due to a Bad Faith Breach (as such
term is defined in the Product Marketing Agreement) of such Agreement by Actel,
it will not, anywhere in the world:
(a) own, manage, operate or control, or participate in the
ownership (whether through equity or phantom equity or appreciation mechanisms),
or have any interest in as an employee, consultant, advisor, agent, owner,
partner, co-venturer, principal, director, stockholder, lender in any business
or enterprise that provides prototyping design services and verification
services for electronic systems, integrated circuits and other electronic
components ("Design Services"); PROVIDED, HOWEVER, the foregoing shall not
prohibit the ownership, in the aggregate, directly or indirectly, of less than
five
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percent (5%) of any class of securities of a business or enterprise that is
engaged in Design Services so long as such business or enterprise is listed on a
national securities exchange or traded publicly in the over-the-counter market;
(b) solicit or participate in the solicitation of any Person or
entity to engage in any aspect of providing Design Services; or
(c) employ or retain (as a consultant, employee or otherwise),
or participate in the solicitation of, any Person who is employed or retained by
Actel to perform services for the Design Service Business at any time during the
Covenant Term, or any Person who was employed in the Design Services Business
immediately prior to the Closing.
(d) EXCEPTIONS TO COVENANT. Notwithstanding anything else
contained herein to the contrary, the parties hereto agree that the Covenant Not
to Compete contained in this Section 5.11 shall not apply to the following
activities:
(i) the provision by GateField of Design Services to
a licensee of any of GateField's products that (i) are not Distribution Products
or (ii) are Embedded Products (as such terms are defined in the Product
Marketing Agreement);
(ii) the provision by GateField of Design Services
following the closing of an Acquisition (as hereinafter defined) of GateField by
a third party that was engaged in the provision of Design Services prior to such
acquisition; and
(iii) the provision by GateField of Design Services
following the closing of an Acquisition by GateField of a third party, provided
that no more than 25% of the revenues of such party for such party's fiscal year
immediately preceding such Acquisition were directly or indirectly attributable
to the provision of Design Services.
For purposes of this subsection (d), "Acquisition" of a party
means (x) a merger, consolidation, reorganization, stock purchase or similar
transaction in which the stockholders of the acquired party before such
transaction own less than 50% of the voting stock of the surviving or acquiring
entity immediately after such transaction, (y) a transaction in which the
acquiror of a party obtains the right to elect a majority of the Board of
Directors of the acquired party, or (z) the sale or disposition of all or
substantially all of the assets of the acquired party.
(e) INJUNCTIVE RELIEF. The parties hereto acknowledge that any
breach of the foregoing covenants (collectively, the "Covenant Not to Compete")
cannot adequately be compensated with money damages, and that in the event of a
breach of the Covenant Not to Compete, Actel shall be entitled to all remedies
at law or in equity which are available, including, without limiting the
generality of the foregoing, injunctive relief (without any bond or other
security required), or any other appropriate decree of specific performance,
without the necessity of showing that monetary damages would not
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provide an adequate remedy, and that such remedies shall not be exclusive and
shall be in addition to any other remedy which Actel may have as a result of
such violation.
(f) SCOPE OF THE COVENANT. The parties hereto agree that the
duration and geographical scope of the Covenant Not to Compete are not broader
than the scope of the Design Services Business and are reasonable given the
nature of the Design Services Business. Should the Covenant Not to Compete be
adjudged to any extent invalid by any competent court, said Covenant will be
deemed modified to the extent necessary to render it enforceable; PROVIDED,
HOWEVER, such modification is authorized only to the extent required to cause
such provision to be enforceable.
Section 5.12 EMPLOYEES.
(a) RETAINED EMPLOYEES. Immediately after the Closing,
GateField shall terminate employment of the Employees named in Schedule 5.12
attached hereto. Actel assumes no obligation hereunder to hire any Employee
after the Closing. GateField agrees to use commercially reasonable efforts to
enforce the Proprietary Information Agreements against each Employee after the
Closing.
(b) RETAINED RESPONSIBILITIES. GateField agrees to satisfy, and
use commercially reasonable efforts to cause its insurance carriers to satisfy,
all claims of GateField's employees, including, but not limited to, all claims
for benefits, whether insured or otherwise (including, but not limited to,
worker's compensation, life insurance, medical and disability programs), under
GateField's employee benefit plans brought by, or in respect of, the employees,
arising out of events occurring prior to the Closing Date, in accordance with
the terms and conditions of such programs or applicable workers' compensation
statutes. Actel shall not assume any of the employee benefit and employee stock
incentive plans of GateField in which any employee of GateField has participated
on or prior to the Closing Date, and Actel shall have no liability whatsoever to
any employees of GateField with respect to accrued or future benefits under any
such employee plans, whether or not any of such employees are offered employment
by, or become employees of, Actel.
Section 5.13 INJUNCTIVE RELIEF. GateField and Actel acknowledge and
agree that their respective remedies at law for any breach of their respective
obligations under this Article V hereof would be inadequate, and agree and
consent that temporary and permanent injunctive relief may be granted in a
proceeding which may be brought to enforce any provision of this Article V
without the necessity of proof of actual damage.
ARTICLE VI
ADDITIONAL AGREEMENTS
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Section 6.1 PRODUCT MARKETING AGREEMENT. At the Closing, GateField and
Actel shall enter into the Product Marketing Agreement attached hereto as
EXHIBIT B and made a part hereof (the "Product Marketing Agreement").
Section 6.2 SERIES C PREFERRED STOCK PURCHASE AGREEMENT. At the
Closing, GateField and Actel shall enter into the Series C Preferred Stock
Purchase Agreement attached hereto as EXHIBIT C and made a part hereof (the
"Stock Purchase Agreement").
Section 6.3 AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT. At the
Closing, GateField and Actel shall enter into the Amended and Restated
Registration Rights Agreement attached hereto as EXHIBIT D and made a part
hereof (the "Rights Agreement").
Section 6.4 ASSIGNMENT OF TRADEMARKS. At the Closing, GateField and
Actel shall enter into the Assignment of Trademarks attached hereto as EXHIBIT E
and made a part hereof (the "Assignment of Trademarks").
Section 6.5 ASSIGNMENT OF PATENT RIGHTS. At the Closing, GateField and
Actel shall enter into the Assignment of Patent Rights attached hereto as
EXHIBIT F and made a part hereof (the "Assignment of Patent Rights").
Section 6.6 XXXX OF SALE. At the Closing, GateField shall execute and
deliver to Actel the Xxxx of Sale attached hereto as EXHIBIT G and made a part
hereof (the "Xxxx of Sale").
Section 6.7 AGENCY AGREEMENT. At the Closing, GateField shall execute
and deliver to Actel the Agency Agreement attached hereto as EXHIBIT H and made
a part hereof (the "Agency Agreement"). The Agency Agreement, Product Marketing
Agreement, Stock Purchase Agreement, Rights Agreement, Assignment of Trademarks,
Assignment of Patent Rights and Xxxx of Sale shall be collectively referred to
herein as the "Additional Agreements."
ARTICLE VII
CONDITIONS TO OBLIGATIONS AT THE CLOSING
Section 7.1 CONDITIONS TO ACTEL'S OBLIGATION AT THE CLOSING. The
obligations of Actel to close the transactions contemplated by this Agreement
are subject to the fulfillment at or before the Closing of each of the following
conditions:
(a) The representations and warranties made by GateField in this
Agreement and the statements contained in any schedule delivered in connection
herewith or in any instrument, list, certificate or writing delivered by
GateField pursuant to this Agreement shall be true and correct in all material
respects at and as of the Closing Date.
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(b) GateField shall have performed and complied with all agreements,
obligations, covenants and conditions required by this Agreement to be so
performed or complied with by GateField prior to or at the Closing.
(c) GateField shall have procured all of the third party consents
specified in Section 4.2(s) of the GateField Disclosure Schedule, and the
parties hereto shall have received all required authorizations, consents, and
approvals of governments and governmental agencies (except as contemplated by
Section 1.4 hereof).
(d) No action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or the Additional Agreements,
(B) cause any of the transactions contemplated by this Agreement or the
Additional Agreements to be rescinded following consummation, (C) materially
adversely affect the right of Actel to control the Design Services Business
following the Closing Date, or (D) affect adversely the right of Actel to own
the Purchased Assets (including without limitation the Design Service
Technology) and to operate the Design Services Business, and no such injunction,
judgment, order, decree, ruling or charge shall be in effect and no law,
statute, ordinance, rule, regulation or order shall have been enacted, enforced
or entered which has caused or will likely cause any of the effects under clause
(A), (B), (C), or (D) of this Section 7.1(d) to occur.
(e) The Chief Executive Officer of GateField shall have delivered to
Actel a certificate to the effect that each of the conditions specified above in
Sections 7.1(a)-(d) (inclusive) is satisfied in all respects.
(f) Xxxx Xxxxxxxx shall have executed and delivered an Employment
Agreement in the form and substance satisfactory to Actel and such agreement
shall be in full force and effect.
(g) Actel shall have received from counsel to GateField an opinion in
form and substance as set forth in EXHIBIT 7.1(g) attached hereto, addressed to
Actel, and dated as of the Closing Date (the "GateField Legal Opinion").
(h) Actel shall have received a release for all of the Purchased
Assets subject to a Lien from Coast Business Credit.
(i) GateField and Actel shall have executed and delivered the
Additional Agreements.
(j) Actel shall have received such other separate instruments of
sale, assignment or transfer that Actel may reasonably deem necessary or
appropriate in order to perfect, confirm or evidence in Actel title to all or
any part of the Purchased Assets.
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Section 7.2 CONDITIONS TO GATEFIELD'S OBLIGATIONS AT THE CLOSING.
The obligations of GateField to close the transactions contemplated by this
Agreement are subject to the fulfillment at or before the Closing of each of the
following conditions:
(a) The representations and warranties of Actel set forth in Section
4.1 above shall be true and correct in all material respects at and as of the
Closing Date.
(b) Actel shall have performed and complied with all agreements,
obligations and conditions required by this Agreement to be so performed or
complied with by it prior to or at the Closing.
(c) The Chief Financial Officer of Actel shall have delivered to
GateField a certificate to the effect that each of the conditions specified
above in Sections 7.2(a)-(b) is satisfied in all respects.
(d) GateField and Actel shall have executed and delivered the
Additional Agreements.
(e) No action, suit, or proceeding shall be pending before any court
or quasi-judicial or administrative agency of any federal, state, local, or
foreign jurisdiction or before any arbitrator wherein an unfavorable injunction,
judgment, order, decree, ruling, or charge would (A) prevent consummation of any
of the transactions contemplated by this Agreement or the Additional Agreements,
or (B) cause any of the transactions contemplated by this Agreement or the
Additional Agreements to be rescinded following consummation, and no such
injunction, judgment, order, decree, ruling or charge shall be in effect and no
law, statute, ordinance, rule, regulation or order shall have been enacted,
enforced or entered which has caused or will likely cause any of the effects
under clause (A) or (B) of this Section 7.2(e) to occur.
(f) Actel shall have received from the General Counsel of Actel an
opinion in form and substance as set forth in EXHIBIT 7.2(f) attached hereto,
addressed to GateField, and dated as of the Closing Date (the "Actel Legal
Opinion").
ARTICLE VIII
INDEMNIFICATION
Section 8.1 SURVIVAL. Notwithstanding any investigation conducted at
any time with regard thereto by or on behalf of either party, all
representations, warranties, covenants and agreements of each party in this
Agreement shall survive the Closing of the transactions contemplated by this
Agreement for a period of one (1) year after the Closing except for (i) the
obligations set forth in Section 4.2(k) [Taxes] which shall survive for a period
of ninety (90) days following the expiration of the period of limitations
applicable to each respective Tax, and (ii) the obligations set forth in Section
5.8 [Unassigned Assets] which shall continue in full force and effect
perpetually. Neither the period of survival nor the liability of a party with
respect to such party's representations and warranties under this Agreement
shall
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be reduced by any investigation made at any time by or on behalf of the other
party and shall not be construed as a waiver of such party's rights to indemnity
as herein provided for the breach of, inaccuracy of, or failure to perform or
comply with any of such party's representations and warranties under this
Agreement. If written notice of a Claim (as defined in Section 8.3 hereof) has
been given prior to the expiration of the applicable representations and
warranties, then the relevant representations and warranties shall survive as to
such Claim until the Claim has been finally resolved.
Section 8.2 SOLE REMEDY. Except as otherwise set forth in this
Agreement, the indemnification obligations hereunder shall be the sole and
exclusive remedy for any of the indemnified parties for any breach of any
representation, warranty, agreement or covenant hereunder provided that 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.
Section 8.3 INDEMNIFICATION BY GATEFIELD. Subject to the terms and
conditions of this Article VIII, GateField hereby agrees to indemnify, defend
and hold harmless Actel and each of its Affiliates against any and all losses,
liabilities, damages, demands, claims, suits, actions, judgments or causes of
action, assessments, costs and expenses actually suffered or incurred by Actel
or any of its Affiliates, including, without limitation, interest, penalties,
reasonable attorneys' fees and reasonable expenses incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever (collectively, "Damages") asserted against, resulting to,
imposed upon or incurred by such parties, directly or indirectly, by reason of
or resulting from:
(a) any failure by GateField to perform any of its agreements or
covenants under this Agreement or under any of the Closing Documents or other
documents or instruments delivered by GateField pursuant to this Agreement;
(b) any breach of any representation or warranty of GateField
contained in or made pursuant to this Agreement;
(c) any Liability of GateField (other than the Assumed Liabilities)
to which Actel or any of its Affiliates may become subject that arises directly
or indirectly from, relates directly or indirectly to, results directly or
indirectly from or attaches directly or indirectly to, the Purchased Assets;
(d) the operation of the Design Services Business on or at any time
prior to the Closing; and
(e) any suit, action or other proceeding brought by any governmental
entity or any other Person arising out of, or in any way related to, any of the
matters referred to in this Section 8.3 and which are the subject of
indemnification under clauses (a) through (d) of this Section 8.3, other than
the Assumed Liabilities (collectively with the claims set forth in Section 8.4,
"Claims").
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Section 8.4 INDEMNIFICATION BY ACTEL. Subject to the terms and
conditions of this Article VIII, Actel hereby agrees to indemnify, defend and
hold harmless GateField and its Affiliates from and against all Damages asserted
against, resulting to, imposed upon or incurred by GateField or any of its
Affiliates, directly or indirectly, by reason of or resulting from:
(a) any failure by Actel to perform any of its agreements or
covenants under this Agreement or under any of the Closing Documents or other
documents or instruments delivered by Actel pursuant to this Agreement;
(b) any breach of any representation or warranty of Actel contained
in or made pursuant to this Agreement;
(c) any failure of Actel to perform and discharge the Assumed
Liabilities on a timely basis;
(d) the operation of the Design Services Business after the Closing;
and
(e) any suit, action or other proceeding brought by any governmental
entity or other Person arising out of, or in any way related to any of the
matters referred to in this Section 8.4 and which are the subject of
indemnification under clauses (a) through (d) hereof.
Section 8.5 INDEMNIFICATION PROCEDURES. The obligations and
liabilities of either party to indemnify the other under Section 8.3 or 8.4
hereof shall be subject to the following terms and conditions:
(a) In the event that an indemnified party suffers Damages, the
indemnified party shall within thirty (30) days of discovering such Damages
provide the indemnifying party with written notice thereof ("Notice of
Claim"). The Notice of Claim shall state in reasonable detail the nature of
the Claim, the specific provisions in this Agreement alleged to have been
breached, the amount of the Claim for indemnification and method of
computation thereof. Such amount shall represent the indemnified party's
good faith estimate of the Damages. The indemnifying party shall have thirty
(30) days from receipt of the Notice of Claim to accept or reject the claim
for indemnification. Any claim for Damages accepted by the indemnifying
party or any Claim determined as valid under the Claim procedure set forth
below, shall be deemed "Established Damages" for the purposes of this
Agreement. If a Notice of Claim is given, and no rejection is received
within thirty (30) days from receipt of the Notice of Claim, then the
indemnifying party shall be deemed to have accepted such Claim.
(b) If the indemnifying party rejects a Claim within such thirty (30)
day period, the parties shall, in good faith, attempt to negotiate a resolution
of such Claim within thirty (30) days thereafter (the "Resolution Period"). If
the parties do not reach resolution during the Resolution Period, then the
indemnified party may, within thirty (30) days after the end of the Resolution
Period proceed to submit such Claim to arbitration under the rules then in
effect of the American Arbitration Association. The determination of the
arbitrator(s) shall be binding, final and conclusive on the parties.
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The expenses in connection with any arbitration shall be borne equally by the
parties unless determined otherwise by the arbitrator(s). If as a result of
such arbitration it is determined that the indemnifying party is obligated for
such Damages, the amount set by such arbitration shall be the amount of the
Established Damages and the indemnifying party shall owe such amount. If as a
result of such arbitration it is determined that the indemnifying party has no
obligation to indemnify, the indemnifying party shall have no further liability
on the Claim.
Section 8.6 [Intentionally omitted.]
Section 8.7 THIRD PARTY CLAIMS. The obligations and liabilities of the
indemnifying party under this Article VIII with respect to Damages arising from
Claims of any third party which are subject to the indemnification provided for
in this Article VIII (a "Third Party Claim") shall be subject to the following
additional terms and conditions:
(a) If an indemnified party shall receive notice of the assertion or
commencement of any Third Party Claim, the indemnified party shall promptly give
the indemnifying party notice of such Third Party Claim; PROVIDED, HOWEVER, that
the failure to provide such notice shall not release the indemnifying party from
any of its obligations under this Article VIII except to the extent the
indemnifying party is materially prejudiced by such failure, and shall not
relieve the indemnifying party from any other obligation or liability that it
may have to any indemnified party otherwise than under this Article VIII.
(b) If any Third Party Claim referred to in Section 8.7(a) is brought
against an indemnified party and it gives notice to the indemnifying party of
the commencement of such Third Party Claim, the indemnifying party will be
entitled to participate in such Third Party Claim and, to the extent that it
wishes (unless the indemnifying party is also a party to such Third Party Claim
and reasonably determines in good faith that joint representation would be
inappropriate), to assume the defense of such Third Party Claim with counsel
reasonably satisfactory to the indemnified party and, after notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such Third Party Claim, the indemnifying party will not be liable to
the indemnified party under this Article VIII for any fees of other counsel or
other expenses with respect to the defense of such Third Party Claim, in each
case subsequently incurred by the indemnified party in connection with the
defense of such Third Party Claim.
(c) If the indemnifying party, within a reasonable time after notice
of any Third Party Claim, fails to defend such Third Party Claim, the
indemnified party will (upon further notice to the indemnifying party) have the
right to undertake the defense of such Third Party Claim on behalf of and for
the account and risk of the indemnifying party, subject to the right of the
indemnifying party to assume the defense of such Third Party Claim at any time
prior to settlement, compromise or final determination thereof. The party who
is not undertaking the defense of a Third Party Claim may, at its sole expense,
participate in (but not control) such defense. No compromise or settlement of
any Third Party Claim shall be affected by the indemnifying party without the
indemnified party's consent, which
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shall not be unreasonably withheld or delayed; and the indemnified party will
have no liability with respect to any compromise or settlement of any Third
Party Claim effected without its consent.
Section 8.8 LIMITATIONS OF INDEMNIFICATION. Notwithstanding anything
herein to the contrary, (i) the maximum aggregate liability of any party under
this Article VIII shall not exceed that portion of the Purchase Price actually
paid to GateField by Actel, and (ii) GateField and Actel shall not be liable to
indemnify the other party for any Damages except to the extent that the
cumulative amount of the Damages actually incurred by the other party hereto
actually exceeds the sum of One Hundred Thousand Dollars ($100,000); PROVIDED,
HOWEVER, when such Damages reach $100,000, the indemnified party shall be
entitled to be indemnified against and compensated and reimbursed for all such
Damages.
Section 8.9 TAX EFFECTS OF LOSSES; MEANING OF AFTER-TAX BASIS.
(a) In calculating any Damages for which indemnification is provided
under this Article VIII, such indemnification payment shall be made on an
after-tax basis such that the amount of any such losses shall in each case be
reduced to take account of Net Tax Benefit to the indemnified party arising from
the payment of or relating to any such Damages, as described in and subject to
paragraph (b) below.
(b) As used herein, the term "Net Tax Benefit" means (1) the actual
federal, state and local tax savings that have resulted from any tax deduction
or tax credit that (i) the indemnified party has claimed or is entitled to claim
on a Federal, state or local income tax return filed for the tax year of such
party in which the Damages are paid or incurred and (ii) is directly
attributable to such Damages, less (2) the additional tax liability (whether
resulting from an inclusion in income or a reduction in available deductions)
attributable to the making of the indemnification payment.
Section 8.10 RIGHT OF SET-OFF. Upon final adjudication or settlement of
Claim for indemnification made by Actel under this Article VIII, Actel may, at
its option, retain the amount payable in full or partial satisfaction of such
Claim and reduce and offset any Earn-Out Payment due or that could be due in the
future to GateField pursuant to Section 2.2 hereof, up to the total amount
payable in satisfaction of such Claim. Prior to offsetting any amount against
the Earn-Out Payments, Actel shall notify GateField of the nature and amount of
any offset. If the amount payable to Actel in satisfaction of the Claim is
greater than the total Earn-Out Payments due and that may become due in the
future to GateField under Section 2.2 hereof, then Actel shall be entitled to
offset any amount not able to be set-off against the Earn-Out Payments against
payments due to GateField pursuant to the terms of the Product Marketing
Agreement.
ARTICLE IX
GENERAL
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Section 9.1 ENTIRE AGREEMENT. This Agreement, the exhibits and
schedules hereto, and the documents referred to herein embody the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof, and supersede all prior and contemporaneous agreements and
understandings, oral or written, relative to said subject matter, except that
the Nondisclosure Agreement signed by the parties shall survive as an
independent agreement.
Section 9.2 BINDING EFFECT; ASSIGNMENT. This Agreement and the various
rights and obligations arising hereunder shall inure to the benefit of and be
binding upon GateField, its successors and permitted assigns, and Actel and its
successors and permitted assigns. This Agreement and the Additional Agreements
shall be assignable by Actel in connection with its proposed reincorporation
into the State of Nevada.
Section 9.3 NOTICE. All notices and other communications required or
permitted under this Agreement shall be deemed to have been duly given and made
if in writing and if served either by personal delivery to the party for whom
intended or by being deposited, postage prepaid, certified or registered mail,
return receipt requested, in the United States mail bearing the address shown in
this Agreement for, or such other address as may be designated in writing
hereafter by, such party:
If to GateField, to: GateField Corporation
00000 Xxxxxxx Xxxxxxx
Xxxxxxx, XX 00000
Attention: President and CEO
with a copy to: Xxxxxx Godward LLP
Five Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxx, Esq.
If to Actel, to: Actel Corporation
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attention: President and CEO
with a copy to: Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxxx, Xx., Esq.
Section 9.4 CAPTIONS. The Article and Section headings of this
Agreement are inserted for convenience only and shall not constitute a part of
this Agreement in construing or interpreting any provision hereof.
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Section 9.5 EXPENSES OF TRANSACTION; ATTORNEYS' FEES. GateField and
Actel shall each pay their own respective costs and expenses incurred in
connection with this Agreement, and the transactions contemplated hereby. In
the event of any litigation or arbitration or other judicial proceedings arising
out of this Agreement, the prevailing party in any such proceeding shall be
entitled to recover from the other reasonable attorney fees and all costs
incurred by such party in such proceeding.
Section 9.6 WAIVER; CONSENT. This Agreement may not be changed,
amended, terminated, augmented, rescinded or discharged (other than by
performance), in whole or in part, except by a writing executed by the parties
hereto, and no waiver of any of the provisions or conditions of this Agreement
or any of the rights of a party hereto shall be effective or binding unless such
waiver shall be in writing and signed by the party claimed to have given consent
thereto. Except to the extent that a party hereto may have otherwise agreed in
writing, no waiver by that party of any condition of this Agreement or breach
hereunder or thereunder shall be deemed to be a waiver of any other condition or
subsequent or prior breach of the same or any other obligation or representation
by the other party, nor shall any forbearance by the first party to seek a
remedy for any noncompliance or breach by the other party be deemed to be a
waiver by the first party of its rights and remedies with respect to such
noncompliance or breach.
Section 9.7 NO THIRD-PARTY BENEFICIARIES. Except as otherwise expressly
provided for in this Agreement, nothing herein, expressed or implied, is
intended or shall be construed to confer upon or give to any person, firm,
corporation or legal entity, other than the parties hereto, any rights, remedies
or other benefits under or by reason of this Agreement.
Section 9.8 COUNTERPARTS. This Agreement may be executed simultaneously
in multiple counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
Section 9.9 GENDER. Whenever the context requires, words used in the
singular shall be construed to mean or include the plural and vice versa, and
pronouns of any gender shall be deemed to include and designate the masculine,
feminine or neuter gender.
Section 9.10 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall
be interpreted as if such provision were so excluded and shall be enforceable
in accordance with its terms.
Section 9.11 GOVERNING LAW. This Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of
California, as applied to contracts entered into and to be performed solely
within the state.
Section 9.12 OTHER REMEDIES. Any and all remedies herein expressly
conferred upon a party will be deemed cumulative with and not exclusive of any
other remedy conferred hereby, or by law or equity upon such party, and the
exercise by a party of any one remedy will not preclude the exercise of
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any other remedy. Other than equitable remedies available to any party or
claims based on fraud, Article VIII hereto shall be the sole remedy of any party
hereto for breaches of representations, warranties, covenants and agreements set
forth in this Agreement.
Section 9.13 SCHEDULE AND EXHIBIT LIST. The following schedules and
exhibits are incorporated into this Agreement by reference:
Schedule 1.1(a) Capital Equipment and Hard Assets
Schedule 1.1(b) Inventory and Work in Progress
Schedule 1.1(c) Assigned Contracts
Schedule 1.1(d) Accounts Receivable
Schedule 1.1(e) Trademarks
Schedule 1.1(f) Patents
Schedule 1.1(g) Facilities
Schedule 1.1(h) Other Assets
Schedule 1.1(i) Design Service Technology
Schedule 1.2 Excluded Assets
Schedule 1.3 Assumed Liabilities
Schedule 2.2(a)(i) Accounts Payable
Schedule 5.8 Unassigned Assets
Schedule 5.12 List of Design Services Business Employees
Exhibit A GateField Disclosure Schedule
Exhibit B Product Marketing Agreement
Exhibit C Stock Purchase Agreement
Exhibit D Rights Agreement
Exhibit E Assignment of Trademarks
Exhibit F Assignment of Patent Rights
Exhibit G Xxxx of Sale
Exhibit H Agency Agreement
Exhibit 7.1(g) Form of GateField Legal Opinion
Exhibit 7.2(f) Form of Actel Legal Opinion
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
GATEFIELD CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Chief Executive Officer
ACTEL CORPORATION
By: /s/ Xxxx X. East
----------------------------------
Name: Xxxx X. East
Title: President and Chief Executive Officer
