EXHIBIT 2.1
ASSET ACQUISITION AGREEMENT
THIS ASSET ACQUISITION AGREEMENT ("Agreement") is made by and between,
TEGAL CORPORATION, a Delaware corporation, with principal offices at 0000 Xxxxx
XxXxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxx 00000-0000 ("Purchaser"), and FIRST
DERIVATIVE SYSTEMS, INC., a California corporation, with principal offices at
000-X Xxxxxxxx Xx., Xxxxxx, XX 00000 (the "Seller") effective the 28th day of
April 2004 (the "Effective Date"), for the purpose of transferring to Purchaser
all of Seller's right, title and interest in and to those assets described in
EXHIBIT A AND A-1 attached hereto (the "Transferred Assets"), as well as the
liabilities listed in EXHIBIT B (the "Assumed Liabilities"). After the
consummation of the transactions contemplated by this Agreement (the "Asset
Sale"), Seller intends to dissolve and distribute its assets to Seller's
creditors and shareholders (the "Seller Shareholders"). The dissolution and
distribution shall be referred to herein as the "Dissolution" and, together with
the Asset Sale, the "Transactions."
In consideration of the mutual obligations specified in this Agreement,
the parties agree to the following:
1. DELIVERY. Subject to the terms and conditions set forth in this
Agreement, effective as of the Closing (as defined in Section 4 of this
Agreement), Seller shall sell, convey, transfer and assign to Purchaser all
rights, title and interest in and to the Transferred Assets, free and clear of
all liens, claims or encumbrances. Seller shall take all action as may be
reasonably necessary, proper or advisable to put Purchaser in ownership,
possession, and operating control of the Transferred Assets, without demanding
any further consideration therefor, including execution, acknowledgment and
recordation of specific assignments, oaths, declarations and other documents on
a country-by-country basis and such other instruments of sale, transfer,
conveyance, and assignment as Purchaser and its counsel may reasonably request.
Subject to the terms and conditions set forth in this Agreement, effective as of
the Closing, Seller shall grant to Purchaser the irrevocable power of attorney
to represent Seller where such representation is legally permissible, without
restrictions towards legal entities and natural persons, public authorities and
courts, to do, sign under hand (or, as required, under personal seal), deliver,
receive and perform all and any acts, matters, statements and things which may
be necessary to put Purchaser in ownership, possession, and operating control of
the Transferred Assets, including execution, acknowledgment and recordation of
specific assignments, oaths, declarations and other documents on a
country-by-country basis and such other instruments of sale, transfer,
conveyance, and assignment as may be required for this purpose. Under this power
of attorney, Purchaser shall be entitled to enter into transactions on behalf of
Seller with itself in its own name or in its capacity as attorney-in-fact of a
third party and, therefore, Purchaser shall be released from any prohibition or
restriction of self dealing which may exist under any applicable law.
2. LIABILITIES NOT TO BE ASSUMED. Subject to the terms and conditions set
forth in this Agreement, effective as of the Closing (as defined in Section 4 of
this Agreement), Purchaser shall assume the Assumed Liabilities. Purchaser shall
not assume any other debts, liabilities, obligations or contracts of Seller,
whether known or unknown and whether due or to become due, and all such debts,
liabilities, obligations and contracts shall be and remain the responsibility of
Seller. Without limiting the generality of the foregoing, Purchaser shall not
assume and Seller shall not be deemed to have transferred to Purchaser the
following debts, liabilities, obligations and contracts of Seller:
2.1 TAXES ARISING FROM TRANSACTION. Any United States, foreign,
state or other taxes applicable to, imposed upon or arising out of the transfer
of the Transferred Assets to Purchaser and the other transactions contemplated
by this Agreement, including but not limited to any income, transfer, sales,
use, gross receipts or documentary stamp taxes.
2.2 INCOME AND FRANCHISE TAXES. Any liability or obligation of
Seller for all taxes of any kind, including, without limitation, those on or
measured by or referred to as income, gross receipts, sales, use, ad valorem,
franchise, profits, license, withholding, payroll, employment, excise,
severance, stamp, occupation, premium, value added, property or windfall profits
taxes, customs, duties or similar fees, assessments or charges of any kind
whatsoever, together with any interest, penalty or additions thereto, whether
disputed or not ("Tax" or "Taxes").
2.3 INSURED CLAIMS. Any liability of Seller insured against, to the
extent such liability is or will be paid by an insurer.
2.4 PRODUCT LIABILITY. Any liability or obligation of Seller arising
out of or in any way relating to or resulting from any product licensed or
distributed prior to the Effective Date (including any liability or obligation
of Seller for claims made for injury to person, damage to property or other
damage, whether made in product liability, tort, breach of warranty or
otherwise).
2.5 LITIGATION MATTERS. Any liability or obligation with respect to
any suits, actions, claims or proceedings to which Seller is a party.
2.6 INFRINGEMENTS. Any liability of Seller to a third party under
its intellectual property or other proprietary rights, including, but not
limited to, claims arising out of the manufacture, use or sale of goods or
apparatus, the performance of services, or the copying, modifying, distributing,
performing or displaying of any work.
2.7 TRANSACTION EXPENSES. All liabilities, costs, obligations or
expenses incurred by Seller in connection with this Agreement and the
transactions contemplated herein, including fees payable to X.X. Xxxxxxx, LLP
(including Messrs. Xxxxxxx and Xxxxxx) for services rendered in connection with
this Agreement.
2.8 LIABILITY FOR BREACH. Liabilities and obligations of Seller for
any breach or failure to perform any of Seller's covenants and agreements
contained in, or made pursuant to, this Agreement, or, prior to the Closing, any
other contract.
2.9 VIOLATION OF LAW. Liabilities and obligations of Seller for any
violation of or failure to comply with any statute, law, rule, regulation,
order, writ, injunction or decree of any court or governmental authority.
2.10 CREDITORS' AND SHAREHOLDERS' CLAIMS. Liabilities and
obligations of Seller to any creditors or shareholders of Seller.
3. PURCHASE PRICE. At the Closing, Purchaser will pay to Seller an
aggregate of One Million Four Hundred Ten Thousand Six Hundred and Forty-two
(1,410,632) shares (the "Tegal Shares") of Purchaser's common stock in exchange
for the Transferred Assets and Assumed Liabilities (the "Purchase Price").
Twenty percent (20%) of the Tegal Shares (the "Escrow Shares") shall be placed
in escrow as security for the payment of the indemnification obligation of
Seller in accordance with Section 11 of this Agreement.
4. CLOSING. The closing of the purchase and sale of the Transferred Assets
and assumption of the Assumed Liabilities hereunder (the "Closing") shall take
place at the offices of Xxxxxx & Xxxxxxx LLP 000 Xxxxxxxxxx Xx., Xxxxxxxxxx
00000, as soon as practicable, but in no event later than three (3) days after
satisfaction or waiver of the last of the conditions set forth in Section 8 of
this Agreement, or at such other time or place as the parties hereto may agree
in writing (the "Closing Date"). At the Closing, Purchaser and Seller shall
deliver the documents set forth in Section 8 of this Agreement.
5. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller hereby represents and
warrants to Purchaser, subject to such exceptions as are specifically set forth
in the disclosure schedules (referencing the appropriate section and paragraph
numbers) supplied by Seller to Purchaser (the "Schedules") and dated as of the
date hereof, as follows:
5.1 AUTHORIZATION OF TRANSACTION. With the exception of stockholder
approval (which Seller intents to solicit as soon as reasonably practicable
after the Effective Date), the execution and delivery of this Agreement and the
consummation of the transactions contemplated hereby have been duly authorized
by all necessary corporate action on the part of Seller, and no further actions
are required on the part of Seller to authorize the Agreement, any related
agreements to which it is a party and the transactions contemplated hereby. This
Agreement has been duly executed and delivered by Seller and constitutes the
valid and binding obligation of Seller, enforceable against Seller in accordance
with its terms.
5.2 NONCONTRAVENTION. The execution and delivery of this Agreement
by Seller do not, and, the consummation of the transactions contemplated hereby
does not, conflict with or result in any violation of, or default under (with or
without notice or lapse of time, or both), or give rise to a right of
termination, cancellation, modification or acceleration of any obligation or
loss of any benefit under (i) any provision of the charter documents or bylaws
(or like document) of Seller, (ii) any contract or other agreement or
instrument, permit, concession, franchise or license to which Seller is a party
or any of its properties or assets are subject, or (iii) any judgment, order,
decree, statute, law, ordinance, rule or regulation applicable to Seller or its
properties or assets.
5.3 CONSENTS. No consent, waiver, approval, order or authorization
of, or registration, declaration or filing with, any court, administrative
agency or commission or other federal, state, county, local or other foreign
governmental authority, instrumentality, agency or commission is required by or
with respect to Seller in connection with the execution and delivery of this
Agreement or the consummation of the transactions contemplated hereby.
5.4 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement (not
to compete or otherwise), commitment, judgment, injunction, order or decree to
which Seller is a party or otherwise binding upon Seller which has or may have
the effect of materially prohibiting or impairing the practice or conduct of the
Seller's business as currently conducted. Seller has not entered into any
agreement under which Seller is restricted in a material manner from selling,
licensing or otherwise distributing any of its technology or products associated
with or related to its business as currently conducted or providing services to,
customers or potential customers or any class of customers, in any geographic
area, during any period of time or in any segment of the market.
5.5 TITLE OF PROPERTIES; ABSENCE OF LIENS AND ENCUMBRANCES;
CONDITION. Seller has good and valid title to all of the Transferred Assets, and
the power to sell the Transferred Assets free and clear of any liens, claims or
encumbrances. The tangible Transferred Assets are in good condition and repair,
subject to normal wear and tear.
5.6 INTELLECTUAL PROPERTY.
a. There are no proceedings or actions before any court,
tribunal (including the PTO or equivalent authority anywhere in the world)
related to any of the Seller's intellectual property (including, but not limited
to, all patents, patent applications, trademarks, trademark applications,
copyrights, copyright applications, trade secrets and know-how) which is part of
the Transferred Assets ("Transferred IP").
b. Each item of Transferred IP is free and clear of any liens
and encumbrances.
c. Seller owns exclusively, and has good title to all works of
authorship and mask works and all associated copyrights that are used or
embodied in, the Transferred IP.
d. Seller has not transferred ownership of or granted any
license of or right to use or authorized the retention of any rights to use any
Transferred IP to any other person or entity.
e. The Transferred IP constitutes all of the intellectual
property owned by Seller.
f. There are no contracts, licenses or agreements to which
Seller is a party with respect to any of the Transferred IP or by which any item
of Transferred IP is bound.
g. Each item of Transferred IP is valid and subsisting, all
necessary registration, maintenance and renewal fees in connection with
Transferred IP have been paid and all necessary documents and certificates in
connection with Transferred IP have been filed with the relevant authorities.
h. There are no contracts, licenses or agreements between
Seller and any other person or entity with respect to Transferred IP under which
there is any dispute, or to the knowledge of the Seller, any threatened dispute
regarding the scope of such agreement, or performance under such agreement
including any disputes or, to the knowledge of the Seller, threatened disputes
in the ordinary course of business.
i. To the knowledge of the Seller, no person or entity is
infringing or misappropriating Transferred IP.
j. Seller has taken reasonable steps that are required to
protect Seller's rights in confidential information and trade secrets of Seller
associated with or related to its business.
k. No Transferred IP is subject to any proceeding or
outstanding decree, order, judgment, agreement or stipulation that restricts in
any manner the use, transfer or licensing thereof by Seller or may affect the
validity, use or enforceability of Transferred IP.
l. Seller is not required to make or accrue any royalty
payment, commission, licensing fee or other payment to any third party in
connection with the Transferred IP. Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Purchaser, by
operation of law or otherwise will result in (i) Purchaser granting to any third
party any right or license, (ii) Purchaser being bound by, or subject to, any
non-compete or other restriction on the operation or scope of its businesses, or
(iii) Purchaser being obligated to pay any royalties or other amounts to any
third party. Except for the finder's fee payable to X.X.Xxxxxxx, LLP, Seller has
not incurred, nor will it incur, directly or indirectly, any liability for
brokerage or finders' fees or agents' commissions or any similar charges in
connection with the Agreement or any transaction contemplated hereby. Seller has
delivered or made available true and complete copies of each existing document
(or summaries of same) that has been requested by counsel to Purchaser.
m. No order has been made or petition presented, or resolution
passed for the winding-up or liquidation of Seller and there is not outstanding:
(i) any petition or order for the winding-up of Seller; (ii) any appointment of
a receiver over the whole or part of the undertaking of assets of Seller; (iii)
to the knowledge of Seller, any petition or order for administration of Seller;
(iv) any voluntary arrangement between Seller and any of its creditors; (v) any
distress or execution or other process levied in respect of Seller which remains
undischarged; and (vi) any unfulfilled or unsatisfied judgment or court order
against Seller.
n. There are no circumstances which would entitle any person
or entity to present a petition for the winding up or administration of Seller
or to appoint a receiver over the whole or any part of the undertaking or assets
of Seller.
o. Seller is not deemed unable to pay its debts within the
meaning of applicable law.
p. No university or government funds or research were used in
developing any of the Transferred IP.
q. To Seller's knowledge (but without having performed any
patent or trademark search) no use of the Transferred IP consistent with the
Seller's use of the Transferred IP prior to its sale hereunder does now or will
in the future, infringe, misappropriate or violate the intellectual property
rights or other rights of any other person.
5.7 LEGAL AND OTHER COMPLIANCE. Seller is in compliance with all
material applicable laws (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings, and charges thereunder) of
foreign, federal, state, local, and foreign governments (and all agencies
thereof) applicable to its business, and no action, suit, proceeding, hearing,
investigation, charge, complaint, claim, demand, or notice has been filed or
commenced against it alleging any failure so to comply.
5.8 TAX MATTERS. Seller has duly and timely filed with the
appropriate taxing authorities all tax returns to be filed, and all such tax
returns are complete and accurate in all material respects. All material taxes
owed by Seller, whether or not shown on any tax return, have been paid. Seller
is currently not the beneficiary of any extension of time within which to file
any tax return. No material claim has been made by an authority in a
jurisdiction where Seller does not file tax returns that such entity is or may
be subject to taxation by that jurisdiction. No deficiencies for taxes have been
claimed, proposed or assessed by any tax authority against Seller. There are no
pending or, to the knowledge of Seller, threatened audits, investigations,
disputes or claims or other actions for or relating to any liability for taxes
with respect to Seller, and there are no matters under discussion with any
governmental entity, or known to Seller, with respect to taxes that are likely
to result in a material additional liability for taxes with respect to Seller.
Seller has delivered or made available to Purchaser complete and accurate copies
of all examination reports and statements of deficiencies assessed against or
agreed to by Seller since September 22, 1999. Seller has not waived any statute
of limitations in respect of taxes or agreed to any extension of time with
respect to a tax assessment or deficiency. There are no liens for taxes (other
than for current taxes not yet due and payable) on any of the assets. Seller has
no liability for the taxes of any other person, corporation or entity under
Treasury Regulations Section 1.1502-6 or any other similar provision of state,
local, U.S. or foreign law, as a transferee or successor, by contract or
otherwise. There are no tax sharing agreements or similar arrangements
(including indemnity arrangements) with respect to or involving Seller, the
Transferred Assets or Seller's business and after the Effective Date, none of
Seller, the Transferred Assets or Seller's business shall be bound by any such
tax-sharing agreements or similar arrangements or have any liability thereunder
for amounts due in respect of periods prior to the Effective Date.
5.9 NO MATERIAL ADVERSE EFFECT. Since January 30, 2004 no event or
series of events has or have occurred that would, individually or in the
aggregate, have a material adverse effect on the business, operations,
properties or financial condition of the Seller. There is no condition,
circumstance, or situation that would prohibit or otherwise interfere with the
ability of the Seller to perform any of its obligations under this Agreement.
5.10 ELIGIBILITY FOR REGULATION D. Seller does not have more than
thirty-five (35) stockholders and creditors that do not meet the definition of
"accredited investors" as defined in Regulation D of the Securities Act of 1933,
as amended ("Regulation D").
6. REPRESENTATIONS AND WARRANTIES OF PURCHASER.
6.1 ORGANIZATION OF PURCHASER. Purchaser is duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation.
6.2 AUTHORITY FOR AGREEMENT. Purchaser has all requisite corporate
power and authority to enter into this Agreement and to consummate the
transactions contemplated hereby. The execution and delivery of this Agreement
and the consummation of the transactions contemplated hereby have been duly
authorized by all necessary corporate action on the part of Purchaser. This
Agreement has been duly executed and delivered by Purchaser and constitutes the
valid and binding obligations of Purchaser, enforceable against it in accordance
with its terms.
6.3 PUBLIC FILINGS. Purchaser has filed with the Securities and
Exchange Commission ("SEC") and made available to Seller all forms, reports and
documents required to be filed by Purchaser with the SEC during the two years
prior to the Effective Date (collectively, the "Public Filings"). The Public
Filings (i) at the time filed, complied in all material respects with the
applicable requirements of the Securities Act of 1933 as amended (the
"Securities Act"), and the Securities and Exchange Act of 1934 as amended (the
"Exchange Act"), as the case may be and (ii) did not at the time they were filed
(or if amended or superseded by a filing prior to the date of the Agreement,
then on the date of such filing) contain any untrue statement of a material fact
or omit to state a material fact required to be stated in such Public Filings or
necessary in order to make the statements in such Public Filings, in the light
of the circumstances under which they were made, not misleading.
6.4 FORM S-3 QUALIFICATION. As of the Effective Date, Purchaser
qualifies to use Form S-3 under the Securities Act to register the Tegal Shares.
7. TAX FREE REORGANIZATION TREATMENT.
7.1 The parties intend the Transaction to qualify as a
reorganization under Section 368(a) of the Code. However, neither Purchaser nor
Seller makes any representation or warranty to the other or to any of Seller's
stockholders regarding the tax treatment of the Transaction or whether the
Transaction will qualify as a reorganization under the Code. Each of Seller, the
Seller's stockholders and Purchaser acknowledges that it is relying on its own
advisors in connection with the Tax treatment of the Transaction and the other
transactions contemplated by this Agreement. Seller, the Seller's stockholders
and Purchaser each agree to use their respective best efforts to cause the
Transaction to qualify, and will not take any actions which to their knowledge
could reasonably be expected to prevent the Transaction from qualifying, as a
reorganization under Section 368(a) of the Code.
7.2 Each of Seller, the Seller's stockholders and Purchaser shall
report the Transaction as a reorganization within the meaning of Section 368 of
the Code, unless otherwise required pursuant to a "determination" within the
meaning of Section 1313(a) of the Code.
8. CLOSING.
8.1 CONDITIONS TO SELLER'S OBLIGATIONS TO CLOSING. The obligation of
Seller to effect the transactions contemplated hereby is subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
a. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any governmental entity that prohibits, restrains, enjoins or restricts the
consummation of the transactions contemplated hereby;
b. Any notices to, approvals from or other requirements of any
governmental entity necessary to consummate the transactions contemplated hereby
and to operate the business after the Closing in all material respects as it was
operated prior thereto shall have been given, obtained or complied with, as
applicable;
c. The representations and warranties of Purchaser contained
in this Agreement shall have been true and correct in all material respects at
and as of the Effective Date and shall be true and correct in all material
respects at and as of the Closing Date with the same effect as if made at and as
of the Closing Date (except to the extent such representations specifically
related to an earlier date, in which case such representations shall be true and
correct in all material respects as of such earlier date) and, at the Closing,
Purchaser shall have delivered to Seller a certificate to that effect, executed
by two officers of Purchaser (the "Purchaser's Officers' Certificate");
d. Each of the covenants and obligations of Purchaser to be
performed at or before the Closing Date pursuant to this Agreement shall have
been duly performed in all material respects at or before the Closing Date, and
the Purchaser's Officers' Certificate shall contain a statement to that effect;
e. The transactions contemplated by this Agreement shall have
been approved by the requisite vote of Seller's stockholders;
f. Purchaser shall have executed and delivered to Seller all
of the documents identified in Section 8.3.a. below; and
g. At the Closing Date, Purchaser shall qualify to use Form
S-3 under the Securities Act to register the Tegal Shares.
8.2 CONDITIONS TO PURCHASER'S OBLIGATION TO CLOSING. The obligation
of Purchaser to effect the transactions contemplated hereby is subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions:
a. No statute, rule, regulation, executive order, decree,
ruling or injunction shall have been enacted, entered, promulgated or enforced
by any governmental entity that prohibits, restrains, enjoins or restricts the
consummation of the transactions contemplated hereby;
b. Any notices to, approvals from or other requirements of any
governmental entity necessary to consummate the transactions contemplated hereby
and to operate the business after the Closing in all material respects as it was
operated prior thereto shall have been given, obtained or complied with, as
applicable;
c. The representations and warranties of Seller contained in
this Agreement shall have been true and correct in all material respects at and
as of the Effective Date and shall be true and correct in all material respects
at and as of the Closing Date with the same effect as if made at and as of the
Closing Date (except to the extent such representations specifically related to
an earlier date, in which case such representations shall be true and correct in
all material respects as of such earlier date) and, at the Closing, Seller shall
have delivered to Purchaser a certificate to that effect, executed by two
officers of Seller (the "Seller's Officers' Certificate");
d. Each of the covenants and obligations of Seller to be
performed at or before the Closing Date pursuant to this Agreement shall have
been duly performed in all material respects at or before the Closing Date, and
the Seller's Officers' Certificate shall contain a statement to that effect; and
e. Seller shall have executed and delivered to Purchaser all
of the documents identified in Section 8.3.b. below.
f. Purchaser shall have entered into employment agreements
with each of Xxxx Xxxxxx and Xxxxxx Xxxxxx, substantially in the form attached
hereto as EXHIBIT C.
g. Purchaser shall have received delivery of a balance sheet
and statement of profits and losses for Seller's fiscal year ended June 30, 2003
and for the ten months ending April 30, 2004, certified by an officer of Seller
as a fair and accurate presentation of Seller's financial condition and
operations.
h. Purchaser shall have received an Intercreditor Agreement
executed between Seller, on one hand, and Xxxx Xxxxxx, Xxxx XxxXxxxxx, Xxxxxxx
Xxxxxxxxx and Xxxxxxx Xxxxxxx (the "Secured Creditors"), on the other hand, in
which Secured Creditors acknowledge that any security interest held by any of
them in any of the Transferred Assets shall terminate at Closing, and in which
Seller and Secured Creditors covenant to take all reasonable measures necessary
to assist Purchaser in obtaining unfettered title to the Transferred Assets at
Closing and, if necessary, after the Closing.
i. Purchaser shall have received a Lockup Agreement executed
among the Purchaser, Seller and Xxxx Xxxxxx, substantially in the form of
EXHIBIT D.
j. Purchaser shall have received documentation from the
Seller, to Purchaser's satisfaction, demonstrating that no more than thirty-five
creditors and stockholders of Seller fail to qualify as "accredited investors"
as defined in Regulation D.
8.3 DELIVERIES AT CLOSING.
a. BY PURCHASER. At the Closing, Purchaser shall deliver the
following to Seller: (i) a certificate representing the Tegal Shares less the
X.X. Xxxxxxx shares (as defined below), (ii) the Purchaser's Officers'
Certificate, (iii) the countersigned Indemnity Escrow Agreement (as defined in
Section 11 of this Agreement), (iv) the countersigned Xxxx of Sale and
Assignment and Assumption Agreement substantially in the form attached hereto as
EXHIBIT E (the "Xxxx of Sale"), (v) the countersigned Registration Rights
Agreement (as defined in Section 9 of this Agreement), and (vi) to X.X. Xxxxxxx,
LLP, a certificate representing one hundred and five thousand seven hundred and
ninety-seven (105,797) shares of Tegal common stock (the "X.X.Xxxxxxx Shares").
b. BY SELLER. At the Closing, Seller shall deliver the
following to Purchaser: (i) the Transferred Assets and Assumed Liabilities, (ii)
the countersigned Indemnity Escrow Agreement (as defined in Section 11 of this
Agreement), (iii) the countersigned Xxxx of Sale, (iv) the countersigned
Registration Rights Agreement (as defined in Section 9 of this Agreement), (v)
the Seller's Officers' Certificate; (vii) documents executed by the Secured
Creditors which authorize Purchaser to file statements with the Secretary of
State of California terminating all of the Secured Creditors' security interests
in any of the Transferred Assets.
9. POST-CLOSING COVENANTS REGARDING REGISTRATION OF TEGAL SHARES. Subject
to the terms and conditions set forth in the Registration Rights Agreement
substantially in the form attached hereto as EXHIBIT F (the "Registration Rights
Agreement"), Purchaser shall prepare and file a registration statement on Form
S-3 with the Securities and Exchange Commission no later than ninety (90) days
after the Closing Date to enable Seller and/or its stockholders, except those
which are subject to further restrictions as described therein, to sell the
Tegal Shares. The costs of such registration shall be borne by Purchaser.
Purchaser covenants to use its best efforts to remain qualified to use Form S-3
during such ninety (90) days.
10. TERMINATION.
10.1 RIGHT TO TERMINATE. This Agreement may be terminated and the
transactions contemplated hereby may be abandoned at any time prior to the
Closing:
a. by mutual written consent of Purchaser and Seller;
b. by Purchaser or Seller if (i) any governmental entity shall
have issued a final order, decree or ruling, or taken any other final action,
restraining, enjoining or otherwise prohibiting the transactions contemplated
hereby and such order, decree, ruling or other action is or shall have become
nonappealable; or (ii) the transactions contemplated by this Agreement have not
been consummated on or before June 30, 2004 (the "Final Date"), provided that no
party may terminate this Agreement pursuant to this clause (ii) if such party's
failure to fulfill any of its obligations under this Agreement shall have been
the reason that the Closing Date shall not have occurred on or before the Final
Date;
c. by Seller if (i) Purchaser breaches any representation or
warranty set forth in this Agreement in any material respect or if any such
representation or warranty shall have become untrue such that the condition set
forth in Section 8.2.c. would be incapable of being satisfied by the Final Date,
provided that Seller has not breached any of its representations and warranties
or obligations hereunder in any material respect; or (ii) Purchaser materially
breaches any of its covenants or agreements hereunder and Purchaser has not
cured such breach within ten (10) business days after notice by Seller thereof,
provided that Seller has not breached any of its representations and warranties
or obligations hereunder in any material respect;
d. by Purchaser if (i) Seller breaches any representation or
warranty set forth in this Agreement in any material respect or if any such
representation or warranty shall have become untrue such that the condition set
forth in Section 8.1.c. would be incapable of being satisfied by the Final Date,
provided that Purchaser has not breached any of its representations and
warranties or obligations hereunder in any material respect; or (ii) Seller
materially breaches its covenants or agreements hereunder, and Seller has not
cured such breach within ten (10) business days after notice by Purchaser
thereof, provided that Purchaser has not breached any of its representations and
warranties or obligations hereunder in any material respect; or
e. by Purchaser if any Secured Creditors at any time make any
effort to assert any of its rights under the Business Loan Agreements or
Security Agreements to which it is a party with Seller, including, but not
limited to, the submission of a demand to Seller by any Secured Creditor for the
stock or assets of Seller in satisfaction of Seller's liabilities under any
Business Loan Agreement or Security Agreement.
10.2 EFFECT OF TERMINATION. In the event of the termination and
abandonment of this Agreement pursuant to Section 10.1, this Agreement shall
forthwith become void and have no effect without any liability on the part of
any party hereto or any of its affiliates, directors, officers and stockholders
except that Seller shall be obligated to repay the loans and accrued interest
advanced to the Seller by Purchaser under that certain secured loan agreement
between Purchaser and Seller dated as of February 9, 2004. Nothing contained in
this Section 10.2 shall relieve any party from liability for any breach of this
Agreement prior to such termination.
11. INDEMNIFICATION.
11.1 GENERAL SURVIVAL. Regardless of any investigation made by
Purchaser, the representations and warranties of the Seller contained in this
Agreement shall survive the execution and delivery of this Agreement for a
period beginning on the date hereof and ending at 5:00 p.m., California time, on
April 28, 2005 (the "Survival Period").
11.2 INDEMNIFICATION OF INDEMNITEES; INDEMNIFICATION GENERALLY.
a. Subject to Section 11.1, from and after the Closing Date,
Purchaser and its affiliates, officers, directors, stockholders, representatives
and agents (collectively, the "Indemnitees") shall be indemnified and held
harmless by the Seller and, following the Dissolution, jointly and severally by
Seller's Shareholders, from and against and in respect of any and all losses
incurred by, resulting from, arising out of, relating to, imposed upon or
incurred by Purchaser or any other Indemnitee by reason of: (i) any material
inaccuracy in or breach of any of Seller's representations, warranties,
covenants or agreements contained in this Agreement as of the date of this
Agreement or as of the Closing Date; or (ii) any material misrepresentation
contained in the attached disclosure schedule or in any other written statement
or certificate furnished to Purchaser or any other Indemnitee by or on behalf of
Seller in connection with the transactions contemplated by this Agreement. For
purposes of this Agreement, the term "Losses" means any and all deficiencies,
judgments, settlements, demands, claims, suits, actions or causes of action,
assessments, liabilities, losses, damages (whether direct, indirect, incidental
or consequential), interest, taxes, fines, penalties, costs, expenses (including
reasonable legal, accounting and other costs and expenses of professionals)
incurred in connection with investigating, defending, settling or satisfying any
and all demands, claims, actions, causes of action, suits, proceedings,
assessments, judgments or appeals, and in seeking indemnification therefor, and
interest on any of the foregoing from the date incurred until paid at five
percent (5%) per annum; provided however, that the Indemnitees may not recover
any losses unless or until the amount of all Losses under this Agreement exceeds
Twenty Five Thousand Dollars ($25,000), in which case, Indemnitees shall be
entitled to recover all Losses incurred, including those Losses incurred prior
to the Twenty Five Thousand Dollar ($25,000) threshold. For purposes of any
Indemnification Claim, the amount of any Losses shall be determined without
regard to any reference to any materiality or dollar qualifiers or thresholds
contained in the representations, warranties, covenants or agreements of the
Seller.
b. Subject to Section 11.1, subsequent to the Closing, the
Seller, and following the Dissolution, Seller's Shareholders jointly and
severally, shall indemnify, defend, save and hold the Indemnitees harmless from
and against (i) any and all Taxes of Seller with respect to any Tax year or
portion thereof ending on or before the Closing Date (or for any Tax year
beginning before and ending after the Closing Date to the extent allocable (as
determined in the following sentence) to the portion of such period beginning
before and ending on the Closing Date), and (ii) the unpaid Taxes of any person,
corporation or entity (other than Seller) under Treasury Regulations Section
1.1502-6 (or any similar provision of state, local or foreign law), as a
transferee or successor, by contract, or otherwise, and (iii) any and all Losses
incurred in connection with, arising out of, resulting from, or incident to any
of the Taxes described in the foregoing clauses (i) and (ii); provided, however,
that this Section 11.2(b) shall be the exclusive remedy for indemnification for
any of the Taxes described in this Section 11.2(b). For purposes of the
preceding sentence, in the case of any Taxes that are imposed on a periodic
basis and are payable for a Tax period that includes (but does not end on) the
Closing Date, the portion of such Tax that relates to the portion of such Tax
period ending on the Closing Date shall (i) in the case of any Taxes other than
Taxes based upon or related to income or receipts, be deemed to be the amount of
such Tax for the entire Tax period multiplied by a fraction the numerator or
which is the number of days in the Tax period ending on the Closing Date and the
denominator of which is the number of days in the entire Tax period, and (ii) in
the case of any Tax based upon or related to income or receipts be deemed equal
to the amount which would be payable if the relevant Tax period ended on the
Closing Date.
c. Any claims for indemnification hereunder must be set forth
in writing, contain a reasonably detailed description of the nature of and the
events or circumstances underlying the claim for indemnification hereunder and
be received by Seller not later than the expiration of the applicable Survival
Period (an "Indemnification Claim"). The failure of an Indemnitee to give notice
of any claim for indemnification promptly, but within the Survival Period, shall
not adversely affect such Indemnitee's right to indemnity hereunder except and
to the extent that the Seller is prejudiced as a result of such failure. If an
Indemnitee makes an Indemnification Claim, such Claim shall be resolved in
accordance with the indemnity escrow agreement substantially in the form
attached hereto as EXHIBIT G (the "Indemnity Escrow Agreement"). The Seller's
liability for indemnification under this Section 11 shall be limited to the
Escrow Shares.
12. EXCLUSIVITY AND CONFIDENTIALITY AGREEMENTS. Purchaser and Seller
hereby agree to a period of exclusivity until the Closing or termination of this
Agreement, whichever occurs first, in which Seller covenants to refrain from
entering into any negotiations, agreements or understandings with any party
other than Purchaser with respect to any disposition of the Transferred Assets
or any business combination involving Seller, which includes, but is not limited
to, an asset sale or merger. Purchaser and Seller additionally hereby agree that
the Non-Disclosure Agreement executed between them shall remain in full force
and effect until the Closing, and that neither Purchaser or Seller shall
disclose the existence of and any terms of this Agreement to the public or any
third party; provided, however, that Purchaser is hereby permitted to disclose
the existence and terms of this Agreement in connection with (i) its legal
obligations, including disclosure in its periodic reports filed with the
Securities and Exchange Commission; and (ii) its earnings announcements and any
related press releases, conference calls or other earnings-related disclosures.
13. POST-CLOSING COVENANT REGARDING SELLER'S DISSOLUTION. Seller hereby
agrees to execute and finalize the Dissolution no later than six months
following the Closing Date. Seller additionally covenants to Purchaser that
Seller will not, in connection with the Dissolution nor under any other
circumstances, distribute the Tegal Shares to more than thirty-five (35)
stockholders and creditors that do not meet the definition of "accredited
investors" as defined in Regulation D of the Securities Act of 1933, as amended
("Regulation D"). Seller agrees that any breach of these covenants shall be
subject to the indemnification obligations of Seller in Section 11 of this
Agreement.
14. GENERAL. Neither party may assign its rights or obligations under this
Agreement without the prior written consent of the other party. Any assignment
in violation hereof shall be null and void. This Agreement and exhibits attached
hereto constitute the parties' final, exclusive and complete understanding and
agreement with respect to the subject matter of this Agreement, and supersede
all prior and contemporaneous understandings and agreements relating to its
subject matter, including, without limitation, that certain Non-Binding Letter
of Intent entered into by and between Seller and Purchaser dated January 30,
2004 (which Non-Binding Letter of Intent is hereby terminated, regardless of
whether the Closing occurs). This Agreement may not be waived, modified, amended
unless mutually agreed upon in writing by the parties. In the event any
provision of this Agreement is found to be legally unenforceable, such
unenforceability shall not prevent enforcement of any other provision of the
Agreement. This Agreement shall for all purposes be governed by and interpreted
in accordance with the laws of the State of California as those laws are applied
to contracts entered into and to be performed entirely in California by
California residents. Any judicial action or proceeding arising hereunder or
relating hereto shall be brought in, and parties hereby consent to the
exclusive, personal jurisdiction of, the State and federal courts located in
Petaluma, California. Any notices required or permitted hereunder shall be given
to the appropriate party at the address specified below or at such other address
as the party shall specify in writing. Such notice shall be deemed given upon
personal delivery, or sent by facsimile, certified or registered mail, postage
prepaid, three (3) days after the date of mailing or immediately upon
confirmation of facsimile delivery. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was not
performed in accordance with the terms hereof and that the parties shall be
entitled to specific performance of the terms hereof, in addition to any other
remedy at law or equity without the necessity of demonstrating the inadequacy of
monetary damages. PURCHASER AND SELLER HEREBY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN ANY
LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT,
TORT OR ANY OTHER THEORY). PURCHASER AND SELLER HEREBY (A) CERTIFY THAT NO
REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY
OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK
TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGE THAT IT AND THE OTHER
PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date set forth above.
SELLER: PURCHASER:
FIRST DERIVATIVE SYSTEMS, INC. TEGAL CORPORATION
/s/ Xxxx Xxxxxx /s/ Xxxxxxx X. Xxxxxx
----------------------------------- ---------------------------------
Xxxx Xxxxxx, Chairman and President Xxxxxxx X. Xxxxxx, Chairman & CEO
000-X Xxxxxxxx Xx. 0000 Xxxxx XxXxxxxx Xxxx.
Xxxxxx, XX 00000 Xxxxxxxx, XX 00000-0000
Fax: (000) 000-0000 Fax: (000) 000-0000
SIGNATURE PAGE TO THE
ASSET ACQUISITION AGREEMENT
EXHIBITS
--------
TO ASSET ACQUISITION AGREEMENT
------------------------------
EXHIBIT A TRANSFERRED ASSETS
EXHIBIT A-1 PATENTS AND PATENT APPLICATIONS
EXHIBIT B ASSUMED LIABILITIES LIST
EXHIBIT C FORM OF EMPLOYMENT AGREEMENT
EXHIBIT D LOCKUP AGREEMENT
EXHIBIT E XXXX OF SALE AND ASSIGNMENT AND ASSUMPTION AGREEMENT
EXHIBIT F REGISTRATION RIGHTS AGREEMENT
EXHIBIT G INDEMNITY ESCROW AGREEMENT
