EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
AMONG
SEMTECH CORPORATION,
SEMTECH ACQUISITION CORP.,
GAMMA INC.
(dba ECI SEMICONDUCTOR),
AND
THE SHAREHOLDERS OF
GAMMA INC.
October 4, 1995
TABLE OF CONTENTS
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Page
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ARTICLE 1 DEFINITIONS................................................. 2
ARTICLE 2 THE MERGER.................................................. 7
2.1 The Merger.................................................. 7
2.2 Articles of Incorporation; By-laws.......................... 8
2.3 Directors and Officers...................................... 8
2.4 Exchange of Shares.......................................... 8
2.5 The Closing................................................. 9
ARTICLE 3 REPRESENTATIONS AND WARRANTIES CONCERNING THE
SHAREHOLDERS................................................ 10
3.1 Ownership of Shares......................................... 10
3.2 Execution and Delivery...................................... 10
3.3 No Conflicts................................................ 10
3.4 No Brokers.................................................. 11
3.5 Investment Representations.................................. 11
ARTICLE 4 REPRESENTATIONS AND WARRANTIES CONCERNING ECI............... 12
4.1 Organization and Good Standing;
Execution and Delivery....................................... 12
4.2 No Conflicts................................................ 13
4.3 Capitalization.............................................. 13
4.4 Financial Statements........................................ 14
4.5 Title to Property; Encumbrances............................. 14
4.6 Accounts Receivable......................................... 16
4.7 Inventories................................................. 16
4.8 Trademarks, Patents, Etc.................................... 17
4.9 Banking and Insurance....................................... 18
4.10 Indebtedness................................................ 18
4.11 Judgments; Litigation....................................... 19
4.12 Income and Other Taxes...................................... 19
4.13 Questionable Payments....................................... 20
4.14 Employee Benefit Matters.................................... 20
4.15 No Undisclosed Liabilities.................................. 21
4.16 Permits, Licenses, Etc...................................... 21
4.17 Regulatory Filings.......................................... 22
4.18 [INTENTIONALLY LEFT BLANK]................................. 22
4.19 Material Contracts; No Defaults............................. 22
4.20 Absence of Certain Changes.................................. 22
4.21 Employees and Labor Matters................................. 24
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4.22 Affiliations................................................ 24
4.23 Principal Customers and Suppliers........................... 25
4.24 Compliance with Law......................................... 25
4.25 Product Returns............................................. 25
4.26 Product Liability and Product Warranty...................... 26
4.27 Corporate Records........................................... 26
4.28 Hazardous Materials......................................... 26
4.29 No Brokers.................................................. 27
4.30 Disclosure.................................................. 28
ARTICLE 5 REPRESENTATIONS AND WARRANTIES OF SEMTECH................... 28
5.1 Organization and Good Standing Semtech of
5.2 Organization, Ownership and Good............................ 28
Standing of Acquisition..................................... 28
5.3 Execution and Delivery...................................... 28
5.4 No Conflicts................................................ 29
5.5 Disclosure.................................................. 29
5.6 Issuance of Semtech Stock................................... 29
5.7 Effect of Merger............................................ 29
5.8 No Liabilities.............................................. 29
5.9 Capitalization of Semtech................................... 29
5.10 Capitalization of Acquisition............................... 30
5.11 Access to Information....................................... 30
5.12 Registration Matters........................................ 30
ARTICLE 6 CONDUCT OF BUSINESS PENDING CLOSING......................... 31
6.1 Qualification............................................... 31
6.2 Ordinary Course............................................. 31
6.3 Organic Changes............................................. 31
6.4 Indebtedness................................................ 32
6.5 Accounting.................................................. 32
6.6 Compliance with Legal Requirements.......................... 32
6.7 Disposition of Assets....................................... 32
6.8 Compensation................................................ 32
6.9 Modification or Breach of Agreements; New Agreements........ 33
6.10 Capital Expenditures........................................ 33
6.11 Consents.................................................... 33
6.12 Maintain Insurance.......................................... 33
6.13 Discharge................................................... 33
6.14 Actions..................................................... 34
6.15 Permits..................................................... 34
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6.16 Tax Assessments and Audits.................................. 34
ARTICLE 7 ADDITIONAL COVENANTS........................................ 34
7.1 Covenants of the Shareholders............................... 34
7.2 Covenants of Semtech........................................ 35
7.3 Access and Information...................................... 36
7.4 Expenses.................................................... 37
7.5 Certain Notifications....................................... 37
7.6 Publicity; Employee Communications.......................... 37
7.7 Further Assurances.......................................... 37
7.8 Competing Offers; Merger or Liquidation..................... 38
7.9 Inconsistent Action......................................... 38
7.10 Post-Termination Employment................................. 38
7.11 Pooling Restrictions on Transactions in Semtech Stock....... 39
ARTICLE 8 CONDITIONS PRECEDENT TO CLOSING............................. 40
8.1 Conditions of Semtech....................................... 40
8.2 Conditions of the Shareholders.............................. 42
ARTICLE 9 TERMINATION................................................. 43
9.1 Termination................................................. 43
9.2 Effect of Termination....................................... 44
ARTICLE 10 INDEMNIFICATION............................................. 44
10.1 Survival of Representations and Warranties.................. 44
10.2 Indemnification............................................. 45
10.3 Third Party Claims.......................................... 46
10.4 Escrow Agent................................................ 47
10.5 Rights of Shareholders...................................... 48
10.6 Termination of Escrow Account............................... 48
10.7 Shares in Escrow Account.................................... 48
ARTICLE 11 GENERAL PROVISIONS.......................................... 49
11.1 Notices..................................................... 49
11.2 Severability................................................ 50
11.3 Entire Agreement............................................ 50
11.4 Successors and Assigns...................................... 50
11.5 Amendment................................................... 50
11.6 Waiver...................................................... 50
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11.7 Counterparts................................................ 51
11.8 Recitals, Schedules and Annexes............................. 51
11.9 Construction................................................ 51
11.10 Governing Law.............................................. 51
11.11 Disclosure on Schedules.................................... 51
11.12 Opportunity to Seek Counsel................................ 51
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AGREEMENT AND PLAN OF MERGER
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THIS AGREEMENT AND PLAN OF MERGER is entered into as of October 4,
1995, among SEMTECH ACQUISITION CORP., a California corporation ("Acquisition"),
SEMTECH CORPORATION, a Delaware corporation ("Semtech"), GAMMA INC. (dba ECI
Semiconductor), a California corporation ("ECI"), and XXXXXXX XXXXX, XXXXXXX
XXXXXX, XXX XXXXXXX, XXXX XXXXXX, AND EXTEK COMPANY, a Virginia corporation
(collectively, the "Shareholders").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, Semtech is in the business of manufacturing, selling and
distributing semiconductor devices and ECI is in the business of manufacturing
and selling semiconductor devices;
WHEREAS, Semtech desires to acquire ECI to integrate and complement
its existing business and technology;
WHEREAS, the Shareholders collectively own all of the issued and
outstanding shares of common stock of ECI (the "ECI Stock");
WHEREAS, Semtech has formed Acquisition for the purpose of acquiring
ECI;
WHEREAS, the parties hereto desire that Acquisition be merged with and
into ECI upon the terms and subject to the conditions contained in this
Agreement;
AGREEMENT
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NOW, THEREFORE, in consideration of the premises and the respective
representations, warranties, covenants, agreements and conditions hereinafter
set forth, and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
ARTICLE 1
DEFINITIONS
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Unless otherwise defined herein or the context otherwise requires, the
terms defined in this Article 1 shall have the meanings herein specified for all
purposes of this Agreement, applicable to both the singular and plural forms of
any of the terms herein defined. Unless otherwise indicated, any reference
herein to a "Section", "Article," "Annex" or "Schedule" shall mean the
applicable section, article, annex or schedule of or to this Agreement. All
accounting terms used in this Agreement not defined in this Article 1 shall,
except as otherwise provided for herein, be construed in accordance with
generally accepted accounting principles.
"Action" shall mean any actual or threatened claim, action, suit,
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arbitration, hearing, inquiry, proceeding, complaint, charge or investigation by
or before any Governmental Entity, mediator or arbitrator and any appeal from
any of the foregoing.
"Affiliate" of a Person shall mean any Person that directly or
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indirectly controls, is controlled by, or is under common control with, the
indicated Person.
"Agreement" shall mean this Agreement and Plan of Merger.
---------
"Agreement of Merger" shall mean an agreement of merger substantially
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in the form of Annex A-1 attached hereto and otherwise complying with the
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requirements of Section 1101 of the CGCL.
"Balance Sheet" and "Balance Sheet Date" shall have the meaning
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assigned to such terms in Section 4.4(a).
"CGCL" shall mean the General Corporation Law of the State of
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California.
"Code" shall mean the Internal Revenue Code of 1986, as amended.
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"Closing" and "Closing Date" have the meaning assigned to such terms
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in Section 2.5.
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"Covenant Not To Compete" shall have the meaning assigned to such
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term in Section 8.1(f).
"Damages" shall mean any and all losses, liabilities, obligations,
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costs, expenses, damages or judgments of any kind or nature whatsoever
(including reasonable attorneys', accountants' and experts' fees, disbursements
of counsel, and other costs and expenses incurred pursuing indemnification
claims under Article 10 hereof).
"Effective Time" shall have the meaning assigned to such term in
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Section 2.5.
"ERISA" shall mean the Employee Retirement Income Security Act of
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1974, as amended from time to time.
"Escrow Agreement" shall mean an escrow agreement substantially in
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the form of Annex H attached hereto.
"Environmental Laws" shall mean all Legal Requirements pertaining to
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the protection of the environment, the treatment, emission and discharge of
gaseous, particulate and effluent pollutants and the use, handling, storage,
treatment, removal, transport, transloading, cleanup, decontamination, discharge
and disposal of Hazardous Materials, including, without limitation, those
statutes, laws, rules and regulations set forth below in the definition of
"Hazardous Material."
"Governmental Entity" shall mean any local, state, federal or foreign
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(i) court, (ii) government or (iii) governmental department, commission,
instrumentality, board, agency or authority, including the Internal Revenue
Service and other taxing authorities.
"Hazardous Material" shall mean any flammable, ignitable, corrosive,
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reactive, radioactive or explosive substance or material, hazardous waste, toxic
substance or related material and any other substance or material defined or
designated as a hazardous or toxic substance, material or waste by any
Environmental Law currently in effect or as amended or promulgated in the future
and shall include, without limitation:
(a) those substances included within the definitions of
"hazardous substances", "hazardous materials", "toxic substances" or "solid
waste" in the Comprehensive Environmental Response, Compensation and
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Liability Act of 1980, as amended, 42 U.S.C. Sections 9601 et seq., the Resource
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Conservation and Recovery Act, 42 U.S.C. Sections 6901 et seq., and the
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Hazardous Materials Transportation Act, 49 U.S.C. Sections 1801 et seq., and in
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the regulations promulgated pursuant thereto;
(b) those substances defined as "hazardous wastes" in Section
25117 of the California Health and Safety Code, or as "hazardous substances" in
Section 25316 of the California Health and Safety Code, and in the regulations
promulgated pursuant thereto;
(c) those substances listed in the United States Department of
Transportation Table (49 CFR 172.101 and amendments thereto) or by the
Environmental Protection Agency (or any successor agency) as hazardous
substances (40 CFR Part 302 and amendments thereto);
(d) such other substances, materials and wastes that are or
become regulated under applicable local, state or Federal laws or regulations,
or which are or become classified as hazardous or toxic under any Legal
Requirement; and
(e) any material, waste or substance that is, in whole or in
part, (i) petroleum, asbestos, polychlorinated biphenyls, methylene chloride,
trichloroethylene, 1, 2-trans-dichloroethylene, dioxins or dibenzofurans, (ii)
designated as an "extremely hazardous substance" pursuant to Section 302 of the
Emergency Planning and Community Right-to-Know Act of 1986, as amended, or (iii)
designated as a "hazardous substance" pursuant to Section 311 of the Clean Water
Act, 33 U.S.C. Sections 1251 et seq. (33 U.S.C. (S) 1321) or listed pursuant to
-- ---
Section 307 of the Clean Water Act (33 U.S.C. (S) 1317), or Section 112 or other
Section of the Clean Air Act, as amended.
"IRS" shall mean the United States Internal Revenue Service.
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"Indebtedness" shall mean, when used with reference to any Person,
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without duplication, (i) any liability of such Person created or assumed by such
Person, or any Subsidiary thereof, (A) for borrowed money, (B) evidenced by a
bond, note, debenture or similar instrument (including a purchase money
obligation, deed of trust or mortgage) given in connection with the acquisition
of, or exchange for, any property or assets (other than inventory or similar
property acquired and consumed in the Ordinary
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Course), including securities and other Indebtedness, (C) in respect of letters
of credit issued for such Person's account (D) for the payment of money as
lessee under leases that should be, in accordance with generally accepted
accounting principles, recorded as capital leases for financial reporting
purposes; (ii) any liability of others described in the preceding clause (i)
guaranteed as to payment of principal or interest by such Person or in effect
guaranteed by such Person through an agreement, contingent or otherwise, to
purchase, repurchase or pay the related Indebtedness or to acquire the security
therefor; (iii) all liabilities or obligations secured by a Lien upon property
owned by such Person and upon which liabilities or obligations such Person
customarily pays interest or principal, whether or not such Person has not
assumed or become liable for the payment of such liabilities or obliga tions;
and (iv) any amendment, renewal, extension, revision or refunding of any such
liability or obligation; provided, however, that Indebtedness shall not include
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any liability for compensation of such Person's employees or for inventory or
similar property acquired and consumed in the Ordinary Course or for services.
"Leased Real Property" shall mean all real property, including
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Structures, currently leased by ECI.
"Legal Requirement" shall mean any statute, law, ordinance, rule,
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regulation, permit, order, writ, judgment, injunction, decree or award issued,
enacted or promulgated by any Governmental Entity or any arbitrator.
"Lien" shall mean all liens (including judgment and mechanics' liens,
----
regardless of whether liquidated), mortgages, assessments, security interests,
easements, claims, pledges, trusts (constructive or other), deeds of trust,
options or other charges, encumbrances or restrictions.
"Material Adverse Effect" shall mean a material adverse effect on the
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business, financial condition, properties, profitability, prospects or
operations of ECI.
"Merger" shall mean the merger of Acquisition into ECI in accordance
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with the terms and conditions of this Agreement and the relevant provisions of
the CGCL.
"Officers' Certificate" shall mean an officers' certificate of
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Acquisition and ECI substantially in the form of Annexes A-2 and A-3,
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respectively, and otherwise
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complying with the requirements of Sections 173 and 1103 of the CGCL.
"Ordinary Course" shall mean, when used with reference to ECI, the
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ordinary course of ECI's business, consistent with past practices.
"Permit" shall have the meaning assigned to such term in Section 4.16.
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"Permitted Liens" shall mean (a) Liens for ad valorem real or personal
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property taxes or assessments not at the time due and (b) Liens in respect of
pledges or deposits under workers' compensation laws or similar legislation,
carriers', warehousemen's, mechanics', laborers' and materialmen's and similar
liens, if the obligations secured by such Liens are not then delinquent.
"Person" shall mean all natural persons, corporations, business
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trusts, associations, companies, partnerships, joint ventures, Governmental
Entities and any other entities.
"Phase I Report" shall mean the Phase I environmental report dated
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September 15, 1995 with respect to the Leased Real Property prepared by
Xxxxxxxxxx Xxxxxx at the request of Semtech.
"Plan" shall mean any "employee benefit plan" within the meaning of
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Section 3(3) of ERISA and any other written or oral employee benefit plan,
arrangement, practice, contract, policy, or program (other than arrangements
merely involving the payment of wages) which are or at any time have been
established, maintained, or contributed to by ECI or any ERISA Affiliate for the
benefit of current or former employees, with respect to which ECI or an ERISA
Affiliate has or may in the future have any liability or obligation to
contribute or make payments of any kind.
"Principal Shareholders" shall mean Xxxxxxx Xxxxx, Xxxxxxx Xxxxxx,
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Xxx Xxxxxxx and Xxxx Xxxxxx.
"Securities Act" shall mean the Securities Act of 1933, as amended.
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"Structure" shall mean any facility, building, plant, factory,
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office, warehouse structure or other improvement.
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"Subsidiary" of a Person shall mean any corporation, partnership,
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association or other business entity at least 50% of the outstanding voting
power of which is at the time owned or controlled directly or indirectly by such
Person or by one or more of such subsidiary entities, or both.
"Surviving Corporation" shall have the meaning assigned to such term
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in Section 2.1(a).
"Tax" shall mean any Federal, state, local or foreign income, gross
---
receipts, license, payroll, unemployment, excise, severance, stamp, occupation,
premium, windfall profits, environmental (including, without limitation, taxes
under Code Section 59A), customs duties, capital stock, franchise, profits,
withholding, social security (or similar), employment, disability, real
property, personal property, sales, use, transfer, registration, value added,
alternative or add-on minimum, estimated tax or other tax, assessment or charge
of any kind whatsoever, including, without limitation, any interest, fine
penalty or addition thereto, whether disputed or not.
"Tax Return" shall mean any return, declaration, report, claim for
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refund or information, or statement relating to Taxes, and any exhibit,
schedule, attachment or amendment thereto.
ARTICLE 2
THE MERGER
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2.1 The Merger. (a) At the Effective Time, in accordance with the
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provisions of this Agreement and the CGCL, Acquisition shall be merged with and
into ECI, and ECI shall be the surviving corporation of the Merger (herein
sometimes referred to as the "Surviving Corporation") and shall continue its
corporate existence under the laws of the State of California. At the Effective
Time, the separate existence of Acquisition shall cease.
(b) At the Effective Time, the Surviving Corporation shall possess
all the rights, privileges, immunities, powers, franchises, properties and
assets of Acquisition and ECI, and shall become liable for all the debts,
liabilities and duties of Acquisition and ECI to the same extent as if said
debts, liabilities and duties had
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been incurred or contracted by it, all as provided in the CGCL. The name of the
Surviving Corporation shall be "Semtech Santa Xxxxx Corp."
2.2 Articles of Incorporation; By-laws. (a) The articles of
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incorporation of Acquisition in effect immediately prior to the Effective Time
shall be the articles of incorporation of the Surviving Corporation until
amended in accordance with the provisions thereof and as provided by law,
provided, however, that the name of the Surviving Corporation as set forth in
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its articles of incorporation shall be changed to "Semtech Santa Xxxxx Corp."
(b) The by-laws of Acquisition in effect immediately prior to the
Effective Time shall be the by-laws of the Surviving Corporation until amended
in accordance with the provisions thereof and as provided by law.
2.3 Directors and Officers. (a) The directors of Acquisition shall
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be the directors of the Surviving Corporation until their respective successors
are duly elected and qualified.
(b) The officers of Acquisition immediately prior to the Effective
Time shall be the initial officers of the Surviving Corporation, each to hold
office from the Effective Time until their respective successors are duly
selected by the directors of the Surviving Corporation.
2.4 Exchange of Shares. (a) At the Effective Time, each share of
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ECI Stock outstanding as of the Closing Date (excluding shares held by ECI as
treasury stock, which shares shall be cancelled and extinguished at the
Effective Time) shall, by virtue of the Merger and without any action on the
part of Semtech, Acquisition, ECI or the holder thereof, be exchanged for and
converted into fully paid and nonassessable voting common shares, par value $.01
per share, of Semtech ("Semtech Stock"), at the exchange rate of 775,000 shares
of Semtech Stock, for 147,566 shares of ECI Stock. The exact number of shares
of Semtech Stock each Shareholder shall be entitled to receive in exchange for
its shares of ECI Stock based on the above exchange rate is set forth in Annex B
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hereto. Each share of Semtech Stock issued pursuant to this section shall be
fully paid and nonassessable.
(b) At the Effective Time, each share of capital stock of Acquisition
outstanding as of the Closing Date
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shall thereupon be converted into and become one share of common stock of the
Surviving Corporation. Each share of such common stock issued pursuant to this
section shall be fully paid and nonassessable.
2.5 The Closing. The closing of the Merger and the other
-----------
transactions contemplated by this Agreement (the "Closing") shall take place at
the offices of ECI, 0000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 at 10:00
a.m., California time on October 4, 1995 or at such other place, time and date
as may be agreed by the parties hereto in writing, such date being generally
referred to herein as the "Closing Date." At the time of the Closing,
Acquisition and ECI shall cause the Agreement of Merger, together with the
Officers' Certificates and any other documents required by law to effect the
Merger, to be filed and recorded with the Secretary of State of the State of
California in accordance with the provisions of Section 1103 of the CGCL and
shall take any and all other lawful actions and do any and all other lawful
things necessary to cause the Merger to become effective (the date and time of
the filing of the Agreement of Merger, together with any such other documents,
being referred to as the "Effective Time").
At the Closing:
(a) Each Shareholder shall deliver or cause to be delivered to
Semtech:
(i) a certificate or certificates represent ing all of the
issued and outstanding shares of ECI Stock which is being exchanged by such
Shareholder pursuant to Section 2.4 hereof; and
(ii) all of the documents, certificates, and instruments required
to be delivered, or caused to be delivered, by such Shareholder pursuant to
Section 8.1 hereof.
(b) Semtech shall deliver or cause to be delivered to each of the
Shareholders:
(i) a certificate representing the number of shares of Semtech
Stock for which the ECI Stock previously held by such Shareholder shall be
exchanged pursuant to Section 2.4 hereof, free and clear of all Liens; and
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(ii) all of the documents, certificates, and instruments required
to be delivered, or caused to be delivered, by Semtech pursuant to Section 8.2
hereof.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
CONCERNING THE SHAREHOLDERS
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Each of the Shareholders hereby severally, and not jointly, represents
and warrants to, and covenants and agrees with, Semtech and Acquisition that:
3.1 Ownership of Shares. Such Shareholder owns of record and
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beneficially the number of shares of ECI Stock set forth opposite the name of
such Shareholder on Annex B hereto, and has, and at all times prior to and as of
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the Closing such Shareholder will have, good and marketable title to such shares
free and clear of all Liens. None of the ECI Stock held by such Shareholder is
subject to any proxy, voting trust or other agreement or arrangement with
respect to the voting thereof.
3.2 Execution and Delivery. All consents, approvals, authorizations
----------------------
and orders necessary for the exe cution, delivery and performance by such
Shareholder of this Agreement (including, without limitation, the transfer of
the shares of ECI Stock to be exchanged by such Shareholder hereunder) have been
duly and lawfully obtained, and such Shareholder has, and at the Closing will
have, full right, power, authority and capacity to execute, deliver and perform
this Agreement. This Agreement has been duly executed and delivered by such
Shareholder and constitutes a legal, valid and binding agreement of such
Shareholder enforceable against such Shareholder in accordance with its terms.
3.3 No Conflicts. The execution, delivery and performance of this
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Agreement by such Shareholder and the consummation by such Shareholder of the
transactions contemplated hereby will not conflict with or result in a breach or
violation of any term or provision of, or (with or without notice or passage of
time, or both) constitute a default under, any indenture, mortgage, deed of
trust, trust (constructive and other), loan agreement or other agreement or
instrument to which such Shareholder is a party or by which such Shareholder or
such Shareholder's shares are
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bound, or to such Shareholder's actual knowledge without investigation, violate
any material Legal Requirement applicable to or binding upon such Shareholder.
3.4 No Brokers. No broker, finder or similar agent has been employed
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by or on behalf of such Shareholder in connection with this Agreement or the
transactions contemplated hereby, and such Shareholder has not entered into any
agreement or understanding of any kind with any person or entity for the payment
of any brokerage commission, finder's fee or any similar compensation in
connection with this Agreement or the transactions contemplated hereby.
3.5 Investment Representations.
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(a) Such Shareholder is acquiring the Semtech Stock to be
acquired by it hereunder for its own account, not as nominee or agent for
investment and not with a view to, or for resale in connection with, any
distribution or public offering thereof within the meaning of the Securities
Act, except pursuant to an effective registration statement under the Securities
Act.
(b) Such Shareholder understands that (i) the Semtech Stock has
not been registered under the Securities Act by reason of a specific exemption
therefrom and may not be transferred or resold except as set forth below; and
(ii) each certificate representing the Semtech Stock will be endorsed with the
following legends:
(A) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED UNLESS THERE IS AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES OR
THE COMPANY RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE
SECURITIES REASONABLY SATISFACTORY TO THE COMPANY, STATING THAT SUCH SALE,
TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND
PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT;
(B) The legend as set forth in Section 7.11 hereof; and
(C) Any legend required to be placed thereon by applicable federal or
state securities laws.
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(c) Without limiting the representations of Semtech contained
herein, such Shareholder has been furnished with such materials and has been
given access to such information relating to Semtech as it or its qualified
representative has requested and has been afforded the opportunity to ask
questions regarding Semtech, as such Shareholder has found necessary or
desirable.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
CONCERNING ECI
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The Principal Shareholders hereby jointly and severally represent and
warrant to, and covenant and agree with, Semtech and Acquisition that:
4.1 Organization and Good Standing; Execution and Delivery.
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(a) ECI has been duly organized and is existing as a corporation
in good standing under the laws of the State of California with full power and
authority (corporate and other) to own and lease its properties and to conduct
its business as currently conducted. ECI has not qualified as a foreign
corporation for the transaction of business in any jurisdiction outside the
State of California and has not engaged in any activity which would require any
such qualification.
(b) ECI has no Subsidiary nor owns or controls, or has any other
equity investment with a fair market value in excess of $10,000 in, directly or
indirectly, any corporation, joint venture, partnership, association or other
entity.
(c) All Board of Directors' and shareholders' approvals and
other material consents, approvals, authorizations and orders necessary for the
execution, delivery and performance by ECI of this Agreement have been duly and
lawfully obtained, and ECI has, and at the Closing will have, full right, power,
authority and capacity to execute, deliver and perform this Agreement. This
Agreement has been duly executed and delivered by ECI and constitutes a legal,
valid and binding agreement of ECI enforceable against ECI in accordance with
its terms.
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4.2 No Conflicts. The execution, delivery and performance of this
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Agreement and the consummation of the transactions contemplated hereby will not
(a) conflict with or result in a breach or violation of any term or provision
of, or constitute a default under (with or without notice or passage of time, or
both), or otherwise give any Person a basis for accelerated or increased rights
or termination or nonperformance under, any indenture, mortgage, deed of trust,
loan or credit agreement, or any arrangement or agreement listed in Section 4.19
hereof, except where such conflict, breach or default would not have a Material
Adverse Effect, (b) result in the violation of the provisions of the Articles of
Incorporation or Bylaws of ECI or, to the Principal Shareholders' knowledge, any
Legal Requirement applicable to or binding upon it, the violation of which would
have a Material Adverse Effect, (c) result in the creation or imposition of any
Lien upon any property or asset of ECI or (d) otherwise cause a Material Adverse
Effect.
4.3 Capitalization. The authorized capital stock of ECI consists
--------------
solely of 1,000,000 shares of common stock, no par value, of which only the
number of shares listed on Annex B are, and on the Closing Date will be, issued
-------
and outstanding. All of such shares have been duly authorized and validly issued
and are fully paid, nonassessable and outstanding and are held by the Principal
Shareholders, free and clear of all Liens, in the respective amounts reflected
in Annex B hereto. Except as set forth in Schedule 4.3, there are (i) no
-------
existing options, warrants, rights, calls or commitments of any character
relating to any capital stock of ECI, and (ii) no outstanding securities or
other instruments convertible into or exchangeable for any capital stock of ECI
and no commitments to issue such securities or instruments; and no Person has
any right of first refusal, preemptive right, subscription right or similar
right with respect to any capital stock of ECI. The offer, issuance and sale of
the shares of ECI Stock were (i) exempt from the registration and prospectus
delivery requirements of the Securities Act, (ii) registered or qualified (or
exempt from registration or qualification) under the registration or
qualification requirements of all applicable state securities laws and (iii) to
the Principal Shareholders' knowledge, accomplished in conformity with all other
Legal Requirements.
-13-
4.4 Financial Statements.
--------------------
(a) Schedule 4.4(a) hereto contains true and complete copies of
(i) the balance sheet (the "Balance Sheet") of ECI at June 30, 1995 (the
-------------
"Balance Sheet Date"), and the related statements of income, shareholders'
------------------
equity and cash flows for the 12 month period then ended, and (ii) the balance
sheets of ECI at June 30, 1992, 1993, 1994, and the related statements of
income, shareholders' equity and cash flow for each of the fiscal years then
ended, all as reviewed by Ireland, San Filippo & Company, along with the report
thereon of such firm (the financial statements described in clause (i) and (ii)
above are collectively referred to as the "Financial Statements").
--------------------
(b) The Financial Statements present fairly and accurately the
financial condition of ECI as of the dates indicated therein and the results of
operations and changes in financial position of ECI for the periods specified
therein, have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis during the periods covered thereby and
prior periods, have been derived from the accounting records of ECI.
4.5 Title to Property; Encumbrances.
-------------------------------
(a) Schedule 4.5(a) is a list of fixed assets of ECI. ECI has,
and immediately prior to the Closing will have, good, valid and marketable title
in fee simple to all fixed assets reflected on Schedule 4.5(a), free and clear
of all Liens except Permitted Liens.
(b) ECI does not own and has never owned in the past any real
property.
(c) Schedule 4.5(c) contains a list of all real property and
personal property leases and material licenses under which ECI is the lessee or
licensee. ECI has never been a lessee of any real property or Structure other
than the Leased Real Property. All leases and licenses pursuant to which ECI
leases or licenses from others real or personal property are valid, subsisting
in full force and effect in accordance with their respective terms, and to the
Principal Shareholders' knowledge there is not, under any real property or
personal property lease or material license, any existing default or event of
default (or event that, with notice or passage of time, or both, would
constitute a default, or would constitute a basis of force
-----
-14-
majeure or other claim of excusable delay or nonperfor xxxxx). True and
-------
complete copies of all written real property and written personal property
leases and material licenses listed on Schedule 4.5(c) have been delivered to
Semtech heretofore. Except as set forth in Schedule 4.5(c), to the Principal
Shareholders' knowledge, no such lease or material license will require the
consent of the lessor or licensor to or as a result of the consummation of the
transactions contemplated by this Agreement. For the purposes of this Section
4.5(c), (i) a "lease" shall include a sublease and (ii) a "material license"
shall mean a license in writing requiring aggregate payments in excess of
$10,000.
(d) All personal property owned by ECI and all personal property
held by ECI pursuant to personal property leases is in good operating condition
and repair, subject only to ordinary wear and tear, has been operated, serviced
and maintained properly and is suitable and appropriate for the use thereof
made. The Leased Real Property, the fixed assets and inventory described in
Sections 4.5(a), 4.5(c) and 4.7 comprise all of the real property and personal
property which are material to the conduct of business of ECI.
(e) Except as set forth in Schedule 4.5(e):
(i) No notice of violation of any Legal Requirement, or
of any covenant, condition, restriction or easement affecting any Leased Real
Property or with respect to the use or occupancy thereof, has been given by any
Person to ECI or any Principal Shareholder.
(ii) To the Principal Shareholders' knowledge, all of the
Structures leased by ECI (A) are in good operating condition and repair, (B) are
adequate and suitable for the purposes for which they are currently used, and
(C) are supplied with utilities and other services necessary for the operation
of such Structures, and the business conducted by ECI therein, including gas,
electricity, water, telephone, sanitary sewer and storm sewer;
(iii) To the knowledge of the Principal Shareholders, no
condemnation proceeding is pending or threatened which would impair the
occupancy, use or value of any Leased Real Property;
-15-
(iv) There are currently no (i) leases, subleases,
licenses, concessions or other agreements, written or oral, granting to any
other Person the right to acquire, use or occupy any portion of any Leased Real
Property, (ii) outstanding options or rights of first refusal to lease or
purchase all or any portion of Leased Real Property or interest therein or other
real property other than as set forth in the leases described on Schedule
4.5(c), and (iii) Persons (other than ECI) in possession of any Leased Real
Property; and
(v) With respect to each item of Leased Real Property, ECI
has not sold, transferred or subjected to a Lien (other than Permitted Liens)
such Leased Real Property or any interest therein.
4.6 Accounts Receivable. All accounts receivable of ECI reflected in
-------------------
the Balance Sheet and all accounts receivable of ECI that have arisen since the
Balance Sheet Date (except such accounts receivable as have been collected since
such dates) are valid and enforceable claims, and the goods and services sold
and delivered that gave rise to such accounts were sold and delivered in
conformity with all applicable express and implied warranties, purchase orders,
agreements and specifications. Such accounts receivable of ECI are subject to
no valid defense, offset or counterclaim and are fully collectible within thirty
days after the Closing Date, except to the extent of the allowance for doubtful
accounts reflected on the Balance Sheet. Schedule 4.6 contains a true and
complete aging of ECI's accounts receivable as of the Balance Sheet Date.
4.7 Inventories. Schedule 4.7 sets forth a summary of work-in-
-----------
process and finished goods inventories of ECI, and the average weekly production
rate for the month of August 1995, expressed in terms of numbers of wafer starts
per week. Except as described in Schedule 4.7, ECI has good, valid and
marketable title to all inventories set forth or reflected in the Balance Sheet
or acquired by ECI since the Balance Sheet Date. Such inventories consist of a
quality and quantity usable and saleable in the Ordinary Course, except for
slow-moving, damaged or obsolete items and materials of below standard quality,
all of which have been written down to net realizable market value or in respect
of which adequate reserves have been provided, in each case as reflected, in the
Balance Sheet. The value at which inventories are carried on the Balance Sheet
reflect the normal inventory valuation policy of ECI, as applicable, in
accordance with generally accepted accounting principles
-16-
and on a basis consistent with that of preceding periods. There is no reason to
believe that ECI will be unable to obtain, in the foreseeable future in the
desired quantity and quality, the raw materials, supplies or component products
required for the manufacture, assembly, production or sale of its products
including, without limitation, inventory which historically has been imported.
4.8 Trademarks, Patents, Etc.
------------------------
(a) Except to the extent not material to its operations, ECI
does not own any registered patents, trade names, trademarks, service marks or
copyrights, nor has it been granted a material license or right with respect to
the foregoing.
(b) Neither ECI nor any Principal Shareholder has received any
notice of claims or demands of any Person pertaining to any Actions that are
pending, and to the Principal Shareholders' knowledge, there are no such Actions
threatened, which challenge the rights of ECI in respect of any trade secrets,
know-hows, processes, discoveries, developments, designs, techniques,
inventions, confidential data and other information which are material to the
conduct of the business of ECI (collectively herein, "Proprietary Information").
-----------------------
ECI owns the Proprietary Information free and clear of any right, equity or
claim of others. ECI has caused all of its employees to sign a confidentiality
or similar agreement in an effort to protect the secrecy, confidentiality and
value of all Proprietary Information.
(c) Schedule 4.8(c) contains a true and complete list and
description of all material licenses of or rights to Proprietary Information
granted to ECI by others or to others by ECI. Except as described in Schedule
4.8(c), (i) ECI has not sold, transferred, assigned, licensed or subjected to
any Lien, any Proprietary Infor mation or any interest therein, and (ii) ECI is
not obligated or under any liability whatever to make any payments by way of
royalties, fees or otherwise to any owner or licensor of, or other claimant to,
any Proprietary Information. For purposes of this Section 4.8, a "material
license" shall mean a license in writing requiring aggregate payments in excess
of $10,000.
-17-
4.9 Banking and Insurance.
---------------------
(a) Schedule 4.9(a) contains a true and complete list of the
names and locations of all financial institutions at which ECI maintains a
checking account, deposit account, securities account, safety deposit box or
other deposit or safekeeping arrangement, the numbers or other identification of
all such accounts and arrangements and the names of all persons authorized to
draw against any funds therein.
(b) ECI has provided Semtech with true and complete copies of
all insurance policies and bonds and self insurance arrangements currently in
force that cover or purport to cover risks or losses to or associated with ECI's
business, operations, premises, properties, assets, employees, agents and
directors and certificates from ECI's insurance agent to the effect that the
workers' compensa tion, general liability and property insurances of ECI are
currently in force. To the Principal Shareholders' knowledge, ECI has no
obligation, liability or other commitment relating to any contract of insurance
containing a provision for retrospective rating or adjustment of ECI's premium
obligation, except for workers' compensation insurance.
4.10 Indebtedness.
------------
(a) True and complete copies of all instruments and documents
evidencing, creating, securing or otherwise relating to Indebtedness of ECI have
been delivered to Semtech heretofore. Except as described in Schedule 4.10(a),
to the Principal Shareholders' knowledge, no event has occurred and no condition
has become known to ECI or any Principal Shareholder (including the transactions
contemplated hereby) that constitutes or, with notice or passage of time, or
both, would constitute a default or a basis of force majeure or other claim of
----- -------
accelerated or increased rights, termination, excusable delay or nonper formance
by ECI or any other Person under any instrument or document relating to or
evidencing Indebtedness that would entitle any Person to require ECI to pay any
portion of the principal amount of such Indebtedness prior to the scheduled
maturity thereof. Except as set forth in Schedule 4.10(a), to the Principal
Shareholders' knowledge, no instrument or document evidencing, creating,
securing or otherwise relating to Indebtedness will require the consent of any
Person to or as a result of the consummation of the trans actions contemplated
by this Agreement.
-18-
(b) None of ECI's directors, employees or shareholders have
guaranteed any currently outstanding Indebtedness of ECI.
4.11 Judgments; Litigation.
---------------------
(a) There is no outstanding judgment, order, decree, award,
stipulation or injunction of any Governmental Entity or arbitrator against or
affecting ECI or its properties, assets or business or any Action pending
against or affecting ECI or its properties, assets or business, in any of such
cases, of which ECI or any Principal Shareholder has received notice or of which
any Principal Shareholder has knowledge, and to the Principal Shareholders'
knowledge, there is no such Action threatened or a basis for the institution of
any such Action which, if decided adversely, would have a Material Adverse
Effect.
(b) To the Principal Shareholders' knowledge, there is no (i)
outstanding judgment, order, decree, award, stipulation or injunction of any
Governmental Entity or arbitrator against or affecting any officer or director
of ECI relating to ECI or its business, or (ii) Action pending or threatened
against ECI's officers or directors relating to ECI or its business.
4.12 Income and Other Taxes. Except as set forth on Schedule 4.12:
----------------------
(a) All Tax Returns required to be filed through and including
the date hereof in connection with the operations of ECI have been properly and
timely filed. ECI has not requested any extension of time within which to file
any Tax Return, which Tax Return has not since been filed. Semtech has
heretofore been furnished by ECI with true, correct and complete copies of each
Tax Return of ECI with respect to the past three taxable years, and of all
reports of, and communications from, any Governmental Entities relating to such
period.
(b) To Principal Shareholders' knowledge, all Taxes reflected on
Tax Returns or withheld and deposited in connection with the operations of ECI
have been duly and timely paid or deposited by ECI. ECI has properly withheld or
collected all amounts required by law for income Taxes and employment Taxes
relating to its employees, creditors, and other third parties, and for sales
Taxes on sales, and has properly and timely remitted such withheld or collected
amounts to the appropriate Governmental Entity.
-19-
(c) To the Principal Shareholder's knowledge, ECI has made
adequate provision on its books of account for all Taxes with respect to its
business, properties and operations through the Balance Sheet Date, and the
accruals for Taxes in the Balance Sheet are adequate to cover all liabilities
for Taxes of ECI through the Balance Sheet Date.
(d) ECI has never (i) had a tax deficiency proposed, asserted or
assessed against it (ii) executed any waiver of any statute of limitations on
the assessment or collection of any Taxes, or (iii) been delinquent in the
payment of any Taxes (other than payment of estimated taxes in fiscal year
ending June 30, 1995).
(e) No Tax Return of ECI (other than sales tax returns from 1988
through 1994) has been audited or the subject of other Action by any
Governmental Entity. ECI has not received any notice from any Governmental
Entity of any pending examination or any proposed deficiency, addition,
assessment, demand for payment or adjustment relating to or affecting ECI or its
assets or properties.
4.13 Questionable Payments. Neither ECI nor any of its directors,
---------------------
officers, agents, employees or other Person associated with or acting on behalf
of ECI has (a) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity, (b)
made any direct or indirect unlawful payments to government officials or
employees, or foreign government officials or employees, from corporate funds,
(c) established or maintained any unlawful or unrecorded fund of corporate
monies or other assets, or (d) made or received any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
4.14 Employee Benefit Matters.
------------------------
(a) Schedule 4.14 contains a true and complete list of all Plans,
copies of which have been delivered previously to Purchaser.
(b) To the Principal Shareholders' knowledge, all Plans are in
material compliance with all applicable requirements of ERISA, the Code and any
other Legal Requirement. To the Principal Shareholders' knowledge, ECI has
performed all material obligations required to be performed by it under ERISA,
the Code and any other
-20-
applicable Legal Requirement and under the terms of each Plan.
(c) ECI does not maintain or make contributions to any pension,
profit sharing or other employee retirement benefit plan. ECI has no material
liability with respect to any such plan (including, without limitation, any
unfunded liability or any accumulated funding deficiency) or any material
liability to the Pension Benefit Guaranty Corporation or under Title IV of ERISA
with respect to a multi-employer pension benefit plan, nor would ECI have any
such liability if any such plan were terminated or if ECI withdrew, in whole or
in part, from any multi-employer plan.
4.15 No Undisclosed Liabilities. To the Principal Shareholders'
--------------------------
knowledge, except (i) to the extent set forth or provided for in the Balance
Sheet or the notes thereto, (ii) as set forth on Schedule 4.15 or (iii) for
Taxes accrued between the Balance Sheet Date and the Closing Date and for non-
material current liabilities incurred since the Balance Sheet Date in the
Ordinary Course, ECI has no liabilities (including Indebtedness), whether
accrued, absolute, contingent or otherwise, whether due or to become due and
whether the amounts thereof are readily ascertainable or not, or any unrealized
or anticipated losses from any commitments of a contractual nature, includ ing
Taxes with respect to or based upon the transactions or events occurring at or
prior to the Closing which would have a Material Adverse Effect.
4.16 Permits, Licenses, Etc. Except where it would otherwise not
----------------------
cause a Material Adverse Effect, ECI possesses, and is operating in compliance
with, all franchises, licenses, permits, certificates, authorizations, rights
and other approvals of Governmental Entities necessary to (i) occupy, maintain,
operate and use the Leased Real Property as it is currently used, (ii) conduct
its business as currently conducted, and (iii) maintain and operate its Plans
(the "Permits"). Schedule 4.16 contains a true and complete list of all Permits
-------
the revocation, suspension or limitation of which would have a Material Adverse
Effect. Each Permit has been lawfully and validly issued, and no proceeding is
pending or threatened looking toward the revocation, suspension or limitation of
any Permit. To the Principal Shareholders' knowledge, the con summation of the
transactions contemplated by this Agreement will not result in the revocation,
suspension or limitation of any Permit and to the Principal Shareholders'
knowledge, no Permit will require the consent of its issuing authority
-21-
to or as a result of the consummation of the transactions contemplated hereby.
4.17 Regulatory Filings. To the Principal Shareholders' knowledge,
------------------
ECI has made all required regis trations and filings with and submissions to all
applicable Governmental Entities relating to the operations of ECI as currently
conducted, including, without limitation, all such applicable Governmental
Entities having jurisdiction over any matters pertaining to conservation or
protection of the environment, and the treatment, discharge, use, handling,
storage or production, or disposal of Hazardous Materials. To the Principal
Shareholders' knowledge, all such registrations, filings and submissions were in
compliance with all Legal Requirements (including all Environmental Laws) and
other requirements when filed, no material deficiencies have been asserted by
any such applicable Governmental Entities with respect to such registrations,
filings or submissions.
4.18 [INTENTIONALLY LEFT BLANK]
4.19 Material Contracts; No Defaults. Schedule 4.19 contains a true
-------------------------------
and complete list of all material contracts, agreements, commitments, binding
arrangements and instruments to which ECI is a party and true and complete
copies of all such contracts, agreements, commitments, binding arrangements and
instruments have been delivered to Semtech. For purposes of this Section 4.19,
"material" shall mean any contract, agreement, commitment or binding arrangement
(i) entered into other than in the ordinary course of business, or (ii) entered
into in the ordinary course of business where the amount involved exceeds
$10,000, excluding however, in the case of either clause (i) or (ii), any
contract, agreement, commitment, binding arrangement or instrument terminable at
the option of ECI upon notice of 30 days or less and any agreements relating to
the transfer of certain vehicles of ECI previously approved by Semtech. There
has not been any material default in any obligation to be performed by ECI under
any such contract, agreement, commitment, binding arrangement or instrument, and
ECI has not waived any material right thereunder or with respect thereto, that
would cause a Material Adverse Effect.
4.20 Absence of Certain Changes. Since the Balance Sheet Date, except
--------------------------
as disclosed in Schedule 4.20, ECI has not: (i) incurred any debts, obligations
or liabilities, other than incurred in the Ordinary Course
-22-
which, individually or in the aggregate, are not material; (ii) subjected to or
permitted a Lien (other than a Permitted Lien) upon or otherwise encumbered any
of its assets, tangible or intangible; (iii) sold, transferred, licensed or
leased any of its assets or properties except in the Ordinary Course or as
otherwise agreed to by Semtech; (iv) discharged or satisfied any Lien other than
a Lien securing, or paid any obligation or liability other than, current
liabilities shown on the Balance Sheet and current liabilities incurred since
the Balance Sheet Date, in each case in the Ordinary Course; (v) cancelled or
compromised any debt owed to or by or claim of or against it, or waived or
released any right of material value other than in the Ordinary Course; (vi)
suffered any physical damage, destruction or loss (whether or not covered by
insurance) outside the Ordinary Course causing a Material Adverse Effect; (vii)
entered into any material transaction or otherwise committed or obligated itself
to any capital expenditure other than in the Ordinary Course and other than in
connection with the purchase of the EPI reactor and the metal etcher, which have
been consented to by Semtech; (viii) to the Principal Shareholders' knowledge,
made or suffered any change in, or condition affecting, its condition (financial
or otherwise), properties, profitability, prospects or operations other than
changes, events or conditions in the Ordinary Course, none of which
(individually or in the aggregate) has had or may have a Material Adverse
Effect; (ix) except as requested by Semtech, made any change in the accounting
principles, methods, records or practices followed by it or depreciation or
amortization policies or rates theretofore adopted; (x) other than in the
Ordinary Course, made or suffered any amendment or termination of any material
contract, agreement, lease or license to which it is a party; (xi) paid, or made
any accrual or arrangement for payment of, any severance or termination pay to,
or entered into any employment or loan or loan guarantee agreement with, any
current or former officer, director or employee or consul tant; (xii) other than
annual increases in salary consistent with past practices, paid, or made any
accrual or arrangement for payment of, any increase in compensation, bonuses or
special compensation of any kind to any employee other than pursuant to an
agreement disclosed on Schedule 4.21(a) or other than in the Ordinary Course, or
paid, or made any accrual or arrangement for payment of, any increase in
compensation, bonuses or special compensation of any kind to any officer or
director of ECI or any consultant to ECI; (xiii) made or agreed to make any
charitable contributions; (xiv) changed or suffered change in any benefit plan
or
-23-
labor agreement affecting any employee of ECI otherwise than to conform to Legal
Requirements; or (xv) entered into any agreement or otherwise obligated itself
to do any of the foregoing.
4.21 Employees and Labor Matters.
---------------------------
(a) Schedule 4.21(a) contains a true and complete list of all
contracts, agreements, plans (other than the Plans), arrangements, commitments
and understand ings (formal and informal) pertaining to terms of employ ment,
compensation, bonuses, profit sharing, stock purchases, stock repurchases, stock
options, commissions, incentives, loans or loan guarantees, severance pay or
benefits, use of ECI's property and related matters of ECI with any current or
former officer, director, employee or consultant, and true and complete copies
of all such contracts, agreements, plans, arrangements and understandings have
been delivered to Semtech heretofore.
(b) There are no labor, collective bargaining, union or similar
agreements under or by which ECI is obligated.
(c) Except as set forth on Schedule 4.21(c), neither Surviving
Corporation, Semtech nor ECI will have any responsibility for continuing any
person in the employ (or retaining any person as a consultant) of ECI from and
after the Closing.
(d) There is not occurring or, to the Principal Shareholders'
knowledge, threatened, any strike, slow down, picket, work stoppage or other
concerted action by any union or other group of employees or other persons
against ECI or its premises or products. To the Principal Shareholders'
knowledge, no union or other labor organization has attempted to organize any of
the employees of ECI.
(e) To the Principal Shareholders' knowledge, ECI has complied
with all Legal Requirements relating to employment and labor, and, to the
knowledge of the Principal Shareholders, no facts or circumstances exist that
could provide a reasonable basis for a claim of wrongful termination by any
current or former employee of ECI against ECI.
4.22 Affiliations. None of the Principal Shareholders, any officer,
------------
director or key employee of ECI
-24-
or any associate or Affiliate of ECI or any of such Persons has, directly or
indirectly, (i) an interest in any Person that (A) furnishes or sells, or
proposes to furnish or sell, services or products that are furnished or sold by
ECI or (B) purchases from or sells or furnishes to, or proposes to purchase from
or sell or furnish to, ECI any goods or services or (ii) a beneficial interest
in any contract or agreement to which ECI is a party or by which ECI or any of
the assets of ECI are bound or affected.
4.23 Principal Customers and Suppliers.
---------------------------------
(a) Since the Balance Sheet Date, none of the top ten customers
that have purchased goods or services from ECI during each of the last two
fiscal years has ter minated its relationship with or adversely curtailed its
purchases from ECI or indicated (for any reason) its intention so to terminate
its relationship or curtail its purchases.
(b) Since the Balance Sheet Date, none of the top ten suppliers
from whom ECI purchased goods or services during the twelve months ended on the
Balance Sheet Date has terminated its relationship with or adversely curtailed
its accommodations, sales or services to ECI or indicated (for any reason) its
intention to terminate such relationship or curtail its accommodations, sales or
services.
4.24 Compliance with Law. To the Principal Shareholders' knowledge,
-------------------
except as set forth in Schedule 4.24, ECI (i) has never violated, has never
conducted its business or operations in violation of, and has never used or
occupied its properties or assets in violation of, any Legal Requirement, (ii)
has never been alleged to be in violation of any Legal Requirement, and (iii)
has not received any notice of any alleged violation of, nor any citation for
noncompliance with, any Legal Requirement, the violation or alleged violation of
which, in any of such cases, has had or would have a Material Adverse Effect.
4.25 Product Returns. ECI has not experienced any product returns
---------------
which have had a Material Adverse Effect. The Principal Shareholders have no
knowledge of any possible product returns which are likely to have a Material
Adverse Effect.
-25-
4.26 Product Liability and Product Warranty. No express warranties
--------------------------------------
are provided with respect to the products sold or services rendered by ECI. ECI
has not suffered any product liability claims.
4.27 Corporate Records. The copies or originals of the Articles of
-----------------
Incorporation and Bylaws and all amendments thereto, and minute books and stock
records of ECI previously delivered to, or made available for inspection by,
Semtech are true, complete and correct.
4.28 Hazardous Materials. Except as set forth in the Phase I Report:
-------------------
(a) To the Principal Shareholders' knowledge, ECI has not, and
no previous owner or operator of the Leased Real Property or any real property
or Structure previously leased by ECI has, stored, generated, used, manufactured
or treated any Hazardous Material on such property other than such Hazardous
Materials as are customarily used in the semiconductor manufacturing business
and which have been used in compliance with all applicable Environmental Laws.
(b) To the Principal Shareholders' knowledge, ECI has not, and
no previous owner or operator of the Leased Real Property or any real property
or Structure previously leased by ECI has, transported or arranged for the
transportation of any Hazardous Materials from such property other than
Hazardous Materials which are or were being transported from such property for
disposal, treatment or recycling in the normal course of ECI's business and in
compliance with all applicable Environmental Laws.
(c) To the Principal Shareholders' knowledge, ECI has not, and
no previous owner or operator of the Leased Real Property or any real property
or Structure previously leased by ECI has, released, deposited, spilled,
discharged or disposed of any Hazardous Materials on or under such property or
any property adjoining any Leased Real Property.
(d) To the Principal Shareholders' knowledge, the Leased Real
Property and ECI's operations conducted thereon are in material compliance with
all Environmental Laws applicable thereto.
(e) Neither ECI nor any Principal Shareholder has received any
notice, citation, summons or
-26-
order and to the Principal Shareholders' knowledge, no complaint has been filed,
no penalty has been assessed and no investigation or review is pending or
threatened, by any Governmental Entity, with respect to (i) any alleged
violation by ECI of any Environmental Law, (ii) any alleged failure by ECI to
have any environmental permit, certificate, license, approval, registration or
authori zation required in connection with its business or properties, or (iii)
any use, possession, generation, treatment, storage, recycling, transportation,
release or disposal by ECI of any Hazardous Material.
(f) ECI has not received any request for information, notice of
claim, demand or notification that it is or that indicates that it may be a
"potentially responsible party" with respect to any investigation or remediation
of any threatened or actual release of any Hazardous Material.
(g) Except for the acid neutralization pass-through system at
000 Xxxxxxxx Xxxxxx, Xxxxx Xxxxx, Xxxxxxxxxx, to the Principal Shareholders'
knowledge, no underground storage tanks are, or have been, located on the Leased
Real Property or on any real property or Structure previously leased by ECI.
(h) No notice has been received by ECI with respect to the
listing or proposed listing of the Leased Real Property on the National
Priorities List promulgated pursuant to CERCLA, CERCLIS or any similar state
list of sites requiring investigation or cleanup.
(i) ECI has delivered to Semtech copies of any environmental
inspection reports, investigations, studies, tests, reviews or other analyses
with respect to the Leased Real Property which are in ECI's possession or
control.
4.29 No Brokers. No broker, finder or similar agent has been employed
----------
by or on behalf of ECI in connection with this Agreement or the transactions
contemplated hereby, and ECI has not entered into any agreement or understanding
of any kind with any person or entity for the payment of any brokerage
commission, finder's fee or any similar compensation in connection with this
Agreement or the transactions contemplated hereby.
-27-
4.30 Disclosure.
----------
(a) No representation or warranty of any Principal Shareholder
in this Agreement and no information contained in any Schedule or other writing
delivered pursuant to this Agreement or at the Closing contains or will contain
any untrue statement of a material fact.
(b) To the extent that any representation or warranty in this
Article 4 is qualified to any Principal Shareholder's "knowledge," "knowledge"
shall mean the actual knowledge of such Principal Shareholder, but after making
only reasonable inquiries of ECI's officers and directors responsible for that
aspect of ECI's operations and business to which such representation or warranty
relates and without any further investigation or inquiry. Furthermore, for
purposes of this Article 4, the knowledge of a Principal Shareholder shall not
be imputed to any other Principal Shareholder.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF SEMTECH
-----------------------------------------
Semtech hereby represents and warrants to, and covenants and agrees
with, each of the Shareholders that:
5.1 Organization and Good Standing of Semtech. Semtech has been duly
-----------------------------------------
organized and is existing as a corporation in good standing under the laws of
the State of Delaware with full corporate power and authority to enter into this
Agreement and to consummate the transactions contemplated hereby.
5.2 Organization, Ownership and Good Standing of Acquisition.
--------------------------------------------------------
Acquisition is a wholly-owned subsidiary of Semtech and has been duly organized
and is existing as a corporation in good standing under the laws of the State of
California with full corporate power and authority to enter into this Agreement
and to consummate the transactions contemplated hereby. Acquisition has
conducted no business other than for the purpose of consummating the
transactions contemplated by this Agreement.
5.3 Execution and Delivery. This Agreement has been duly authorized
----------------------
by all necessary corporate action on the part of Semtech and Acquisition,
respectively, has been
-28-
duly executed and delivered by, and constitutes the legal, valid and binding
agreement of, Semtech and Acquisition, respectively, enforceable against each of
them in accordance with its terms.
5.4 No Conflicts. The execution, delivery and performance of this
------------
Agreement by Semtech and Acquisition, respectively, and the consummation thereby
of the transactions contemplated hereby will not conflict with or result in the
violation of the provisions of the Certificate of Incorporation or Bylaws of
Semtech or the Articles of Incorporation or Bylaws of Acquisition, respectively.
5.5 Disclosure. The information contained in this Agreement and in
----------
any writing furnished to the Shareholders pursuant hereto, when taken together
with Semtech's annual report on Form 10-K for its fiscal year ended January 31,
1995, and quarterly reports on Form 10-Q for its fiscal quarters ended April 30,
1995 and July 31, 1995, does not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or herein or
necessary to make the statements therein or herein, in light of the
circumstances under which they were made, not misleading.
5.6 Issuance of Semtech Stock. Each share of Semtech Stock issued to
-------------------------
the Shareholders hereunder has been duly authorized, and upon issuance pursuant
to the terms of the Merger and as provided herein, will be validly issued, fully
paid and nonassessable, and, based in part on the representations of the
Shareholders contained herein, will be issued in compliance with applicable
state and federal securities laws, free and clear of all liens.
5.7 Effect of Merger. Upon completion of the Merger, the Surviving
----------------
Corporation will possess all of the rights, properties and assets of Acquisition
and ECI. Semtech has no present intention to liquidate any significant portion
of the assets of the Surviving Corporation or discontinue the historic lines of
business of ECI or Acquisition.
5.8 No Liabilities. Acquisition has no liabilities, other than
--------------
liabilities arising under this Agreement.
5.9 Capitalization of Semtech. The authorized capital stock of
-------------------------
Semtech consists solely of 15,000,000 shares of common stock, $.01 par value, of
which 5,045,039
-29-
are, and on the Closing Date will be, issued and outstanding. All of such shares
have been duly authorized and validly issued and are fully paid and
nonassessable Except as set forth in Schedule 5.9, there are (i) no existing
options, warrants, rights, calls or commitments of any character relating to any
capital stock of Semtech, and (ii) no outstanding securities or other
instruments convertible into or exchangeable for any capital stock of Semtech
and no commitments to issue such securities or instruments; and no Person has
any right of first refusal, preemptive right, subscription right or similar
right with respect to any capital stock of Semtech.
5.10 Capitalization of Acquisition. The authorized capital stock of
-----------------------------
Acquisition consists solely of 100,000 shares of common stock, of which 10,000
are, and on the Closing Date will be, issued and outstanding. All of such
shares have been duly authorized and validly issued and are fully paid and
nonassessable. There are (i) no existing options, warrants, rights, calls or
commitments of any character relating to any capital stock of Acquisition, and
(ii) no outstanding securities or other instruments convertible into or
exchangeable for any capital stock of Acquisition and no commitments to issue
such securities or instruments; and no Person has any right of first refusal,
preemptive right, subscription right or similar right with respect to any
capital stock of Acquisition.
5.11 Access to Information. Without limiting the representations of
---------------------
the Shareholders contained herein, Semtech has been furnished with such
materials and has been given access to such information relating to ECI as it or
its representatives have requested and has been afforded the opportunity to ask
questions regarding ECI, all as Semtech has found necessary or desirable.
5.12 Registration Matters. As of the date hereof:
--------------------
(a) Except for shares covered by its stock option and other
employee plans, Semtech (i) has no outstanding securities that are the subject
of an effective registration statement under the Securities Act, and (ii) has
taken no action to register any of its securities (except as contemplated by
Section 8.2(c) hereof).
(b) There are currently no outstanding registration rights
relating to any of Semtech's securities, except for the Registration Rights
Agreement to be entered
-30-
into between Semtech and the Shareholders pursuant to Section 8.2(c) hereof.
(c) Except as contemplated by the Merger and as otherwise
disclosed to the Shareholders in writing, in the past 12 months, Semtech has not
engaged in any discussions or negotiations contemplated to result in any
strategic transaction outside the ordinary course of business.
ARTICLE 6
CONDUCT OF BUSINESS PENDING CLOSING
-----------------------------------
During the period commencing on the date hereof and continuing through
the Closing Date, ECI and the Shareholders covenant and agree (except as
expressly contemplated by this Agreement or to the extent that Semtech shall
otherwise expressly consent in writing) that:
6.1 Qualification. ECI shall maintain all qualifications to transact
-------------
business and remain in good standing in California.
6.2 Ordinary Course. Subject to the provisions of Section 6.10
---------------
hereof, ECI shall conduct its business in, and only in, the Ordinary Course
(excluding any transaction between ECI on the one hand, and any of its officers,
directors, employees or Shareholders, on the other hand) and, to the extent
consistent with such business, shall preserve intact its current business
organizations, and shall use its best efforts to keep available the services of
its current officers and employees and preserve its relationships with
customers, suppliers and others having business dealings with it to the end that
its goodwill and going business value shall be unimpaired at the Closing Date.
ECI shall maintain its properties and assets in good condition and repair.
6.3 Organic Changes. ECI shall not (a) amend its Articles of
---------------
Incorporation or Bylaws (or equivalent documents), (b) acquire by merging or
consolidating with, or agreeing to merge or consolidate with, or purchase
substantially all of the stock or assets of, or otherwise acquire any business
or any corporation, partnership, association or other business organization or
division thereof (c) enter into any partnership or joint venture, (d) declare,
set aside, make or pay any dividend or other
-31-
distribution in respect of its capital stock or purchase or redeem, directly or
indirectly, any shares of its capital stock (e) issue or sell any shares of its
capital stock of any class or any options, warrants, conversion or other rights
to purchase any such shares or any securities convertible into or exchangeable
for such shares, or (f) liquidate or dissolve or obligate itself to do so.
6.4 Indebtedness. Subject to the provisions of Section 6.10 hereof,
------------
ECI shall not incur any Indebtedness, sell any debt securities or lend money to
or guarantee the Indebtedness of any Person. ECI shall not restructure or
refinance its existing Indebtedness.
6.5 Accounting. Except to the extent requested by Semtech, ECI shall
----------
not make any change in the accounting principles, methods, records or practices
followed by it or depreciation or amortization policies or rates theretofore
adopted by it. ECI shall maintain its books, records and accounts in accordance
with generally accepted accounting principles applied on a basis consistent with
that of prior periods.
6.6 Compliance with Legal Requirements. ECI shall use its reasonable
----------------------------------
best efforts to comply promptly with all requirements that applicable law may
impose upon it and its operations which become known to the officers of ECI and
with respect to the transactions contemplated by this Agreement, and shall
cooperate promptly with, and furnish information to, Semtech in connection with
any such requirements imposed upon Semtech, or upon any of its affiliates, in
connection therewith or herewith.
6.7 Disposition of Assets. ECI shall not sell, transfer, license,
---------------------
lease or otherwise dispose of, or suffer or cause the encumbrance by any Lien
upon any of its properties or assets, tangible or intangible, or any interest
therein, except for sales of inventory in the Ordinary Course.
6.8 Compensation. ECI shall not (a) adopt or amend in any material
------------
respect any collective bargaining, bonus, profit-sharing, compensation, stock
option, pension, retirement, deferred compensation, employment or other plan,
agreement, trust, fund or arrangement for the benefit of employees (whether or
not legally binding) other than to comply with any Legal Requirement or (b) pay,
or make any accrual or arrangement for payment of, any increase in compensation,
bonuses or special compensation of any kind,
-32-
or any severance or termination pay to, or enter into any employment or loan or
loan guarantee agreement with, any current or former officer, director, employee
or consultant of ECI.
6.9 Modification or Breach of Agreements; New Agreements. Subject to
----------------------------------------------------
the provisions of Section 6.10 hereof, ECI shall not terminate or modify, or
commit or cause or suffer to be committed any act that will result in a material
breach or violation of any term of or (with or without notice or passage of
time, or both) constitute a default under or otherwise give any person a basis
for non-performance under, any indenture, mortgage, deed of trust, loan or
credit agreement, lease, license or other agreement, instrument, arrangement or
understanding, written or oral, disclosed in this Agreement or the Schedules
hereto. ECI shall refrain from becoming a party to any contract or commitment
other than in the Ordinary Course. ECI shall meet all of its contractual
obligations in accordance with their respective terms.
6.10 Capital Expenditures. Except for (i) capital expenditures or
--------------------
commitments necessary to maintain its properties and assets in good condition
and repair (the amount of which shall not exceed $10,000 in the aggregate) and
(ii) the purchase of the EPI reactor and metal etcher which have been consented
to by Semtech, ECI shall not purchase or enter into any contract to purchase any
capital assets without the prior written consent of Semtech.
6.11 Consents. ECI shall use its best efforts to obtain any consent,
--------
authorization or approval of, or exemption by, any Person requested by Semtech
(including those that may apply to the items listed on Schedules 4.5(c), 4.10
and 4.16) in connection with the transactions contemplated hereby or the taking
of any action in connection with the consummation thereof.
6.12 Maintain Insurance. ECI shall maintain its Policies in full
------------------
force and effect and shall not do, permit or willingly allow to be done any act
by which any of the Policies may be suspended, impaired or cancelled.
6.13 Discharge. ECI shall not cancel, compromise, release or
---------
discharge any claim of ECI upon or against any person or waive any right of ECI
of material value, and not discharge any Lien (other than Permitted Liens) upon
any asset of ECI or compromise any debt or other obligation of
-33-
ECI to any person other than Liens, debts or obligations with respect to current
liabilities of ECI.
6.14 Actions. ECI shall not institute, settle or agree to settle any
-------
Action before any Governmental Entity.
6.15 Permits. ECI shall use its reasonable best efforts to maintain
-------
in full force and effect, and comply with, all Permits.
6.16 Tax Assessments and Audits. ECI shall furnish promptly to
--------------------------
Semtech a copy of all notices of proposed assessment or similar notices or
reports that are received from any taxing authority and which relate to ECI's
operations for periods ending on or prior to the Closing Date. The Shareholders
shall cause ECI to promptly inform Semtech of any investigation, audit or other
proceeding by a Governmental Entity in connection with any Taxes, assessment,
governmental charge or duty and the results of any settlement or final
determination in any such proceeding.
ARTICLE 7
ADDITIONAL COVENANTS
--------------------
7.1 Covenants of the Shareholders. During the period from the date
-----------------------------
hereof through the Closing Date, each Shareholder agrees to:
(a) use its reasonable best efforts to comply promptly with all
requirements that applicable Legal Requirements may impose upon it with respect
to the transactions contemplated by this Agreement, and shall cooperate promptly
with, and furnish information to, Semtech in connection with any such
requirements imposed upon Semtech or upon any of its affiliates in connection
therewith or herewith;
(b) use its reasonable best efforts to obtain (and to cooperate
with Semtech in obtaining) any consent, authorization or approval of, or
exemption by, any Person required to be obtained or made by such Shareholder in
connection with the transactions contemplated by this Agreement;
-34-
(c) use its reasonable best efforts to bring about the
satisfaction of the conditions precedent to Closing set forth in Section 8.1 of
this Agreement;
(d) promptly advise Semtech orally and, within three business
days thereafter, in writing of any change in ECI's business or condition that
has had or which such Shareholder reasonably believes is likely to have a
Material Adverse Effect; and
(e) deliver to Semtech prior to the Closing a written statement
disclosing any untrue statement in this Agreement or any Schedule hereto (or
supplement thereto) or document furnished pursuant hereto, promptly upon the
discovery of such untrue statement accompanied by a written supplement to any
Schedule to this Agreement that may be affected thereby; provided, however, that
-------- -------
the disclosure of such untrue statement shall not prevent Semtech from
terminating this Agreement pursuant to Section 9.1(c) hereof at any time at or
prior to the Closing in respect of any original untrue or misleading statement.
7.2 Covenants of Semtech. During the period from the date hereof to
--------------------
the Closing Date, Semtech shall:
(a) comply promptly with all requirements that applicable Legal
Requirements may impose upon it with respect to the transactions contemplated by
this Agreement, and shall cooperate promptly with, and furnish information to,
the Shareholders in connection with any such require ments imposed upon the
Shareholders or ECI or upon any of ECI's affiliates in connection therewith or
herewith;
(b) use its reasonable best efforts to obtain any consent,
authorization or approval of, or exemption by, any Person required to be
obtained or made by Semtech in connection with the transactions contemplated by
this Agreement;
(c) use its reasonable best efforts to bring about the
satisfaction of the conditions precedent to Closing set forth in Section 8.2 of
this Agreement;
(d) promptly advise the Shareholders orally and, within three
business days thereafter, in writing of any change in Semtech's business or
condition that has had or which Semtech reasonably believes is likely to have a
material adverse effect on Semtech and its subsidiaries, taken as a whole; and
-35-
(e) deliver to the Shareholders, prior to the Closing a written
statement disclosing any untrue statement in this Agreement or any Schedule
hereto (or supplement thereto) or document furnished pursuant hereto, promptly
upon the discovery of such untrue statement, accom panied by a written
supplement to any Schedule to this Agreement that may be affected thereby;
provided, however, that the disclosure of such untrue statement shall not
-------- -------
prevent the Shareholders from terminating this Agreement pursuant to Section
9.1(d) hereof at any time at or prior to the Closing in respect of any original
untrue or misleading statement.
7.3 Access and Information.
----------------------
(a) During the period commencing on the date hereof and
continuing through the Closing Date, the Shareholders shall cause ECI (i) to
afford to Semtech and to Semtech's accountants, counsel, investment bankers and
other representatives, reasonable access to all of its properties, books,
contracts, commitments, records and personnel, (ii) after the issuance of any
required public announcement to authorize Semtech and such representatives of
Semtech to talk directly with ECI's customers and (iii) to furnish promptly to
Semtech all information concerning its business, properties and personnel, as
Semtech may reasonably request from time to time.
(b) Except to the extent permitted by the provisions of Section
7.6 hereof, Semtech shall hold in confidence, and shall use reasonable efforts
to ensure that its employees and representatives hold in confidence, all such
information supplied to it by the Shareholders or ECI concerning ECI and shall
not disclose such information to any third party except as may be required by
any Legal Requirement and except for information that (i) is or becomes
generally available to the public other than as a result of disclosure by
Semtech or its representatives, (ii) becomes available to Semtech or its
representatives from a third party other than the Shareholders or ECI, and
Semtech or its representatives have no reason to believe that such third party
is not entitled to disclose such information, (iii) is known to Semtech or its
representa tives on a non-confidential basis prior to its disclosure by any
Shareholder or ECI or (iv) is made available by any Shareholder or ECI to any
other Person on a non-restricted basis. Semtech's obligations under the
foregoing sentence shall expire on the Closing Date or, if the Closing does not
occur, two (2) years after the date hereof.
-36-
7.4 Expenses. All costs and expenses (including, without limitation,
--------
all legal fees and expenses and fees and expenses of any brokers, finders or
similar agents) incurred in connection with this Agreement and the transactions
contemplated hereby shall be paid by the party incurring the same; provided,
however, that the costs and expenses incurred by or for the benefit of ECI shall
not exceed $25,000. Without limiting the generality of the foregoing,
Shareholders shall pay for all legal fees and other expenses which are incurred
in connection with their respective personal financial, legal or other matters,
and shall not pass such expenses on to ECI.
7.5 Certain Notifications. At all times from the date hereof to the
---------------------
Closing Date, each party shall promptly notify the others in writing of the
occurrence of any event that will or may result in the failure to satisfy any of
the conditions specified in Article 8 hereof.
7.6 Publicity; Employee Communications. At all times prior to the
----------------------------------
Closing Date, each party shall obtain the consent of all other parties hereto
prior to issuing, or permitting any of its directors, officers, employees or
agents to issue, any press release or other information to the press, employees
of ECI, employees of Semtech or any third party with respect to this Agreement
or the transactions contemplated hereby; provided, however, that no party shall
-------- -------
be prohibited from supplying any information to any of is representatives,
agents, attorneys, advisors, financing sources and others to the extent
necessary to complete the transactions contemplated hereby so long as such
representatives, agents, attorneys, advisors, financing sources and others are
made of and agree to be bound by the terms of this Section 7.6. Nothing
contained in this Agreement shall prevent any party to this Agreement at any
time from furnishing any required information to any Govern mental Entity or
authority pursuant to a Legal Requirement or from complying with its legal or
contractual obligations.
7.7 Further Assurances.
------------------
(a) Subject to the terms and conditions of this Agreement, each
of the parties hereto agrees to use all reasonable efforts to take, or cause to
be taken, all action, and to do, or cause to be done, all things necessary,
proper or advisable under applicable Legal Requirements, to consummate and make
effective the transactions contemplated by this Agreement.
(b) If at any time after the Closing any further action is
necessary or desirable to carry out the purposes of this Agreement, the
Shareholders and the proper officers or directors of Semtech, as the case may
be, shall take or cause to be taken all such necessary or convenient action and
execute, and deliver and file, or cause to be executed, delivered and filed, all
necessary or convenient documentation.
7.8 Competing Offers; Merger or Liquidation. The Shareholders agree
---------------------------------------
that they will not, and will cause ECI not to, directly or indirectly, through
any officer, director, agent or otherwise, solicit, initiate or encourage
discussions with, or the submissions of bids, offers or proposals by, any Person
with respect to an acquisition of ECI or its assets or capital stock or a merger
or similar transaction, and the Shareholders will not, and will not permit ECI
to, engage any broker, financial adviser or consultant with an incentive to
initiate or encourage proposals or offers from other parties. Furthermore, the
Shareholders shall not, and shall not permit ECI to, directly or indirectly,
through any officer, director, agent or otherwise, engage in negotiations
concerning any such transaction with, or provide information to, any Person
other than Semtech and its representatives with a view to engaging, or preparing
to engage, that Person with respect to any matters in this Section.
7.9 Inconsistent Action. The Shareholders shall not take or suffer
-------------------
to be taken, and shall not permit ECI to take or cause or suffer to be taken,
any action that would cause any of the representations or warranties of any of
the Shareholders in this Agreement to be untrue, incorrect, incomplete or
misleading.
7.10 Post-Termination Employment. Each Shareholder acknowledges and
---------------------------
agrees that after the Closing (a) neither Semtech nor ECI shall be required to
employ or retain any employee of ECI or any other Person, and (b) Semtech, in
its sole and absolute discretion, may cause ECI to retain all, some, or none of
such employees. Notwith standing the foregoing, (i) the Surviving Corporation
and the Shareholders agree that simultaneously with the Closing, ECI shall enter
into employment agreements with Xxxxxxx Xxxxxx, Xxx Xxxxxxx, and Xxxx Xxxxxx,
respectively, substantially in the forms of Annex C-1, C-2 and C-3,
--------- --- ---
respectively, and (ii) Semtech agrees to comply with any applicable requirements
of the Worker Adjustment and Retraining Notification Act.
-38-
7.11 Pooling Restrictions on Transactions in Semtech Stock. Semtech
-----------------------------------------------------
has informed the Shareholders that it is a material factor to Semtech in
entering into this Agreement that the transactions contemplated by this
Agreement be treated as a pooling-of-interests under generally accepted
accounting principles. Therefore, notwithstanding any other provision of this
Agreement, prior to the publication and dissemination by Semtech of consolidated
financial results which include results of combined operations of ECI and
Semtech for at least thirty days on a consolidated basis following the Closing
Date, the Shareholders shall not sell or otherwise transfer or dispose of, or
otherwise reduce their risk in, any shares of the Semtech Stock received by the
Shareholders (including, by way of example and not limitation, engaging in put,
call, short-sale, straddle or similar market transactions). Shareholders
covenant and agree with Semtech to hold their shares of Semtech Stock until the
publication and dissemination of financial statements by Semtech which include
the results of at least thirty (30) days of combined operations of Semtech and
the Surviving Corporation. Additionally, the certificates evidencing the
Semtech Stock to be received by the Shareholders will bear a legend
substantially in the form set forth below:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED, AND SEMTECH CORPORATION SHALL NOT BE REQUIRED
TO GIVE EFFECT TO ANY ATTEMPTED SALE, TRANSFER OR ASSIGNMENT PRIOR TO
THE PUBLICATION AND DISSEMINATION OF FINANCIAL STATEMENTS BY SEMTECH
CORPORATION WHICH INCLUDE THE RESULTS OF AT LEAST THIRTY (30) DAYS OF
COMBINED OPERATIONS OF SEMTECH CORPORATION AND THE COMPANY ACQUIRED BY
SEMTECH FOR WHICH THESE SHARES ARE ISSUED. UPON THE WRITTEN REQUEST
OF THE STOCKHOLDERS DIRECTED TO SEMTECH CORPORATION, AND SATISFACTION
OF COVENANTS SET FORTH IN SECTION 7.11 OF THAT CERTAIN AGREEMENT AND
PLAN OF MERGER DATED AS OF OCTOBER 4, 1995. SEMTECH CORPORATION
AGREES TO REMOVE THIS RESTRICTIVE LEGEND (AND ANY STOP ORDER PLACED
WITH THE TRANSFER AGENTS).
Semtech covenants that the publication and dissemination of Semtech's
financial statements described
-39-
above shall occur no later than March 15, 1996 and following such publication,
Semtech agrees to cause its transfer agent and registrar to remove the foregoing
legend from the Semtech Stock received by the Shareholders upon the request of
the Shareholders. Semtech acknowledges that the Shareholders and ECI make no
representations and warranties as to whether the transactions contemplated by
this Agreement will be treated as a pooling-of-interests under generally
accepted accounting principles.
ARTICLE 8
CONDITIONS PRECEDENT TO CLOSING
-------------------------------
8.1 Conditions of Semtech. Notwithstanding any other provision of
---------------------
this Agreement, the obligations of Semtech to consummate the transactions
contemplated hereby shall be subject to the satisfaction, at or prior to the
Closing Date, of the following conditions:
(a) There shall not be instituted and pending or threatened any
Action before any Governmental Entity (i) challenging or otherwise seeking to
restrain or prohibit the consummation of the transactions contemplated hereby or
(ii) seeking to prohibit the direct or indirect ownership or operation by
Semtech of all or a material portion of the business or assets of ECI, or to
compel Semtech or ECI to dispose of or hold separate all or a material portion
of the business or assets of ECI or Semtech;
(b) The representations and warranties of each of the
Shareholders in this Agreement shall be true and correct in all respects on and
as of the Closing Date with the same effect as if made on the Closing Date and
each of the Shareholders and ECI shall have complied with all covenants and
agreements and satisfied all conditions to be performed or satisfied on or prior
to the Closing Date by the Shareholders or ECI, respectively;
(c) Each Principal Shareholder (other than Xxxxxxx Xxxxx) shall
have entered into an employment agreement with ECI substantially in the forms of
Annex C-1, C-2 and C-3, respectively.
----- --- --- ---
(d) Semtech shall have received from Xxxxxxx & Xxxxxx, counsel
for Xxxxxxx Xxxxx, a written opinion dated
-40-
the Closing Date and addressed to Semtech, in substantially the form attached as
Annex D hereto;
-------
(e) Semtech shall have received from each Shareholder a Closing
certificate dated the Closing Date in substantially the form attached as Annex
-----
E-1 hereto;
---
(f) Semtech shall have received a certifi cate of the Secretary
of ECI in substantially the form attached as Annex F-1 hereto;
---------
(g) Each Principal Shareholder shall have entered into a
Covenant Not To Compete with Semtech and the Surviving Corporation in
substantially the forms of Annex G-1, G-2, G-3 and G-4, respectively
--------- --- --- ---
(collectively, the "Covenant Not To Compete");
-----------------------
(h) The Shareholders shall have entered into an Escrow Agreement
with Semtech in substantially the form of Annex H hereto;
-------
(i) Semtech shall have concluded (through its representatives,
accountants, counsel and other experts) an investigation of the business,
condition (financial and other), properties, assets, prospects, operations and
affairs of ECI and shall be satisfied, in its sole discretion, with the results
thereof;
(j) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments, releases and documents referenced herein or
incident to the transactions contemplated hereby shall be in form and substance
satisfactory to Semtech and its counsel;
(k) No act, event or condition shall have occurred after the
date hereof which Semtech determines has had or could have a Material Adverse
Effect;
(l) Semtech shall have received from ECI the balance sheet of
ECI at August 31, 1995 and the related statements of income, shareholders'
equity and cash flows for the two month period then ended;
(m) ECI shall have received from third parties all consents
specifically requested by Semtech; and
-41-
(n) Semtech shall have been satisfied that the transactions
contemplated hereby may be treated as a pooling-of-interests under generally
accepted accounting principles.
8.2 Conditions of the Shareholders. Notwithstanding any other
------------------------------
provision of this Agreement, and except as set forth below, the obligations of
the Share holders to consummate the transactions contemplated hereby shall be
subject to the satisfaction, at or prior to the Closing, of the following
conditions:
(a) There shall not be instituted and pending or threatened any
Action before any Governmental Entity (i) challenging or otherwise seeking to
restrain or prohibit the consummation of the transactions contemplated hereby or
(ii) seeking to prohibit the direct or indirect ownership or operation by
Semtech of all or a material portion of the business or assets of ECI, or to
compel Semtech or ECI to dispose of or hold separate all or a material portion
of the business or assets of ECI or Semtech;
(b) The representations and warranties of Semtech in this
Agreement shall be true and correct in all respects on and as of the Closing
Date with the same effect as if made on the Closing Date and Semtech shall have
complied with all covenants and agreements and satisfied all conditions on its
part to be performed or satisfied on or prior to the Closing Date;
(c) Semtech shall have duly executed and delivered to the
Shareholders a Registration Rights Agreement substantially in the form of Annex
-----
I attached hereto;
--
(d) Each Principal Shareholder (other than Xxxxxxx Xxxxx) shall
have entered into an Employment Agreement with ECI in substantially the forms of
Annex C-1, C-2 and C-3, respectively;
--------- --- ---
(e) The Shareholders shall have received from Semtech a Closing
certificate dated the Closing Date in substantially the form attached as Annex
-----
E-2 hereto;
---
(f) The Shareholders shall have received a certificate of the
Secretary of Acquisition in substantially the form attached as Annex F-2 hereto;
---------
-42-
(g) Each Principal Shareholder shall have entered into their
respective Covenant Not to Compete.
(h) The Shareholders shall have concluded on their own (or
through their representatives, accountants, counsel and other experts) an
investigation of the business, condition (financial and other), properties,
assets, prospects, operations and affairs of Semtech and shall be satisfied, in
their sole discretion, with the results thereof;
(i) All corporate and other proceedings and actions taken in
connection with the transactions contemplated hereby and all certificates,
opinions, agreements, instruments, releases and documents referenced herein or
incident to the transactions contemplated hereby shall be in form and substance
satisfactory to the Shareholders and their counsel; and
(j) No act, event or condition shall have occurred after the
date hereof which the Shareholders determine has had or could have a material
adverse effect upon Semtech and its subsidiaries taken as a whole.
ARTICLE 9
TERMINATION
-----------
9.1 Termination. This Agreement may be termi nated at any time prior
-----------
to the Closing:
(a) by mutual written consent of Semtech and the Shareholders;
(b) by the Shareholders, on the one hand, or by Semtech, on the
other hand, by written notice to the other party or parties hereto if the merger
shall not have been consummated on or before October 30, 1995 (or such later
date as Semtech and the Shareholders may agree), provided that in the case of a
termination under this clause (b), the party or parties terminating this
Agreement shall not then be in material breach of any of their obligations under
this Agreement;
(c) by Semtech if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by any Shareholder
or ECI under this Agreement or (ii) any of the conditions precedent to Closing
set forth in
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Section 8.1 have not been met on the Closing Date, and, in each case, Semtech is
not then in material default of its obligations hereunder; or
(d) by the Shareholder or Shareholders holding a majority of the
ECI Stock currently outstanding if (i) there has been a material
misrepresentation, breach of warranty or breach of covenant by Semtech under
this Agreement or (ii) any of the conditions precedent to Closing set forth in
Section 8.2 have not been met on the Closing Date, and, in each case, such
Shareholder or Shareholders are then in material default of such Shareholder's
obligations hereunder.
9.2 Effect of Termination.
---------------------
(a) In the case of any termination of this Agreement, the
provisions of Section 7.3 and 7.4 shall remain in full force and effect.
(b) Upon termination of this Agreement as provided in Section
9.1 (a), except as stated in subsection (a) above, this Agreement shall
forthwith become void and there shall be no liability or obligation on the part
of any party hereto or their respective directors, officers, employees, agents
or other representatives.
(c) In the event of termination of this Agreement as provided in
Section 9.1(b), (c) or (d) hereof, such termination shall be without prejudice
to any rights that the terminating party or parties may have against the
breaching party or parties or any other person under the terms of this Agreement
or otherwise.
ARTICLE 10
INDEMNIFICATION
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10.1 Survival of Representations and Warranties.
------------------------------------------
(a) The representations and warranties of the parties hereto
contained in this Agreement or in any writing delivered pursuant hereto or at
the Closing shall survive the Closing and the consummation of the transactions
contemplated hereby (and any examination or investigation by or on behalf of any
party hereto) until (i) the date of the first audit report of the financial
statements containing combined operations of Semtech and the Surviving
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Corporation, for those items expected to be encountered in the audit process and
(ii) the first anniversary of the Closing Date for other items.
(b) No Action may be commenced with respect to any
representation, warranty, covenant or agreement in this Agreement, or in any
writing delivered pursuant hereto, unless written notice, setting forth in
reasonable detail the claimed breach thereof, shall be delivered pursuant to
Section 11.1 to the party or parties against whom liability for the claimed
breach is charged on or before the termination of the survival period specified
in Section 10.1(a) for such representation, warranty, covenant or agreement.
10.2 Indemnification. Subject to the limitations set forth in this
---------------
Article 10:
(a) The Principal Shareholders covenant and agree to defend,
indemnify and hold harmless Semtech and the Surviving Corporation from and
against any Damages (to the extent of such Principal Shareholder's pro rata
share of such Damages based upon his proportionate interest in ECI) arising out
of or resulting from: (i) any inaccuracy in or breach of any representation or
warranty made by the Principal Shareholders in this Agreement (other than in
Article 3 hereof) or in any writing delivered pursuant to this Agreement or at
the Closing; (ii) the failure of the Principal Shareholders or ECI to perform or
observe fully any covenant, agreement or provision to be performed or observed
by such Principal Shareholders or ECI pursuant to this Agreement or the Covenant
Not to Compete or any other written agreement entered into pursuant hereto; or
(iii) any Taxes owed or accrued by ECI arising from the conduct of its business
for all periods prior to the Balance Sheet Date.
(b) Each Shareholder severally covenants and agrees to defend,
indemnify and hold harmless Semtech and the Surviving Corporation from and
against any Damages arising out of or resulting from any inaccuracy in or breach
of any representation or warranty made by such Shareholder in Article 3 of this
Agreement.
(c) Semtech covenants and agrees to defend, indemnify and hold
harmless the Shareholders from and against any Damages arising out of or
resulting from: (i) any inaccuracy in or breach of any representation or
warranty, made by Semtech in this Agreement or in any writing delivered pursuant
to this Agreement or at the
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Closing; or (ii) the failure by Semtech or Acquisition to perform or observe any
covenant, agreement or condition to be performed or observed by it pursuant to
this Agreement.
(d) Notwithstanding any other provision of this Agreement, the
obligation of the Shareholders to indemnify Semtech and the Surviving
Corporation under this Article 10 shall apply (i) only to the extent that the
amount of Damages due the party being indemnified exceeds, for all claims,
losses, expenses, obligations and liabilities, an accumulated total of
$250,000.00 in the aggregate and (ii) only to the amounts in excess of such
accumulated total.
10.3 Third Party Claims.
------------------
(a) If any party entitled to be indemnified pursuant to Section
10.2 (an "Indemnified Party") receives notice of the assertion by any third
-----------------
party of any claim or of the commencement by any such third person of any Action
(any such claim or Action being referred to herein as an "Indemnifiable Claim")
-------------------
with respect to which another party hereto (an "Indemnifying Party") is or may
------------------
be obligated to provide indemnification, the Indemnified Party shall promptly
notify the Indemnifying Party in writing (the "Claim Notice") of the
------------
Indemnifiable Claim; provided, that the failure to provide such notice shall not
--------
relieve or otherwise affect the obligation of the Indemnifying Party to provide
indemnification hereunder, except to the extent that any Damages directly
resulted or were caused by such failure.
(b) The Indemnifying Party shall have thirty days after receipt
of the Claim Notice to undertake, conduct and control, through counsel of its
own choosing, and at its expense, the settlement or defense thereof, and the
Indemnified Party shall cooperate with the Indemnifying Party in connection
therewith; provided, that (i) the Indemnifying Party shall permit the
--------
Indemnified Party to participate in such settlement or defense through counsel
chosen by the Indemnified Party (subject to the consent of the Indemnifying
Party, which consent shall not be unreasonably withheld), provided that the fees
and expenses of such counsel shall not be borne by the Indemnifying Party, and
(ii) the Indemnifying Party shall not settle any Indemnifiable Claim without the
Indemnified Party's consent. So long as the Indemnifying Party is vigorously
contesting any such Indemnifiable Claim in good faith, the Indemnified Party
shall not pay or settle such claim without the
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Indemnifying Party's consent, which consent shall not be unreasonably withheld.
(c) If the Indemnifying Party does not notify the Indemnified
Party within thirty days after receipt of the Claim Notice that it elects to
undertake the defense of the Indemnifiable Claim described therein, the
Indemnified Party shall have the right to contest, settle or compromise the
Indemnifiable Claim in the exercise of its reasonable discretion; provided, that
--------
the Indemnified Party shall notify the Indemnifying Party of any compromise or
settlement of any such Indemnifiable Claim.
(d) Anything contained in this Section 10.3 to the contrary
notwithstanding, the Shareholders shall not be entitled to assume the defense
for any Indemnifiable Claim (and shall be liable for the reasonable fees and
expenses incurred by the Indemnified Party in defending such claim) if the
Indemnifiable Claim seeks an order, injunction or other equitable relief or
relief for other than money damages against Semtech which Semtech determines,
after conferring with its counsel, cannot be separated from any related claim
for money damages and which, if successful, would adversely affect the business,
properties or prospects of ECI; provided, however, if such equitable relief
-------- -------
portion of the Indemnifiable Claim can be so separated from that for money
damages, the Shareholders shall be entitled to assume the defense of the portion
relating to money damages.
10.4 Escrow Agent. The parties hereto agree that pursuant to the
------------
Escrow Agreement, at the time of the Closing, there shall be established an
escrow account ("Escrow Account") with Bank of America NT&SA (hereinafter along
with any successor escrow agent referred to as "Escrow Agent"), into which there
shall be returned and held from the Semtech Stock to be issued by Semtech to the
Shareholders pursuant to this Agreement, in proportion to the Shareholders'
respective percentage holdings of the Semtech Stock issued at the Closing, a
total number of 50,000 shares of Semtech Stock. Each Shareholder shall furnish
to the Escrow Agent an appropriate number of stock powers (with signatures
guaranteed) in favor of Semtech covering the number of shares issued to it to be
held in the Escrow Account. All claims of indemnification for which Semtech
shall become entitled hereunder (or any claim which Semtech may have against the
Shareholders under (i) applicable environmental or similar laws for
contribution, cost recoveries or implied indemnity for any liability with
respect to any environmental claim, or (ii) common law
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