EXHIBIT 10.2
AMENDMENT NO. 1 TO
THE PURCHASE AGREEMENT
This Amendment No. 1 to the Purchase Agreement dated as of May 25, 2005
(this "Amendment") to that certain Purchase Agreement, dated March 30, 2005 (the
"Original Agreement"), by and among International Displayworks, Inc., a Delaware
corporation ("IDW"); International Displayworks (Hong Kong) Limited, a Hong Kong
company and a wholly owned subsidiary of IDW ("IDW HK"); Three-Five Systems,
Inc., a Delaware corporation ("TFS"); TFS International, Ltd., a company formed
under the laws of Bermuda and a wholly owned subsidiary of TFS ("TFSI"); and
Three-Five Systems (Beijing) Co., Ltd., a corporate entity formed under the laws
of the People's Republic of China and a wholly owned subsidiary of TFSI
("TFSB"). IDW, IDW HK, TFS, TFSB, and TFSI are referred to individually herein
as a "Party" and collectively herein as the "Parties."). Capitalized terms used
herein and not otherwise defined shall have the meaning assigned in the Original
Agreement.
WITNESSETH:
WHEREAS, the Parties desire to clarify, amend and restate certain terms
and conditions as provided for herein with an effective date as set forth below.
NOW, THEREFORE, for and in consideration of the mutual promises and
conditions made herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Parties hereby
agree as follows:
1. Designated Assets. The term "Designated Assets" set forth under
Section 1 of the Original Agreement is hereby amended in its entirety to read as
follows:
"Designated Assets" means all right, title, and interest in and to (a)
all TFT tooling and related documents for business conducted by TFSB, and
(b) all of the assets of Three-Five Systems, Pacific, Inc., TFS Manila as
set forth in Exhibit A, unless owned by TFSB."
Accordingly, Exhibit A-Designated Assets of the Original Agreement is
hereby amended to include "all TFT tooling and related documents."
2. Inventory. Section 2(c)(iii) of the Original Agreement is hereby
amended in its entirety to read as follows:
"(iii) Inventory Payment. All inventory shall be transferred to IDW at
Closing and all transferred inventory shall be tracked by IDW. Under no
circumstances shall IDW be obligated to use any of the transferred
inventory. Notwithstanding the foregoing, IDW shall be required to use each
line item of the transferred inventory before it uses any newly purchased
identical inventory line item. In the event, IDW uses the transferred
inventory it may use such inventory without any payment to TFS so long as
the value of the used inventory does not exceed $2 million ("Initial
Inventory"). The inventory shall be valued at the market value of the
inventory when consumed. For any used inventory in excess of the Initial
Inventory, IDW shall pay TFS for the used inventory at the market value
when consumed. Commencing on the Closing Date and terminating one (1) year
from the Closing Date (the "Anniversary Date"), IDW shall track the
inventory used during each ninety (90) day period. After each ninety (90)
day period ("Inventory Audit Period"), IDW shall identify the amount of
inventory used during such period, if any, and make a payment to TFS for
any used inventory in excess of the Initial Inventory ("Inventory
Payment"). If TFS desires to review any information relating to the
Inventory Payment or lack thereof, for a period of thirty (30) days from
the end of the respective Inventory Audit Period, TFS shall have the right
to review such information at IDW's corporate office in Roseville,
California, provided, however, (i) TFS shall provide IDW with reasonable
prior written notice, (ii) the review shall take place in person at a
reasonable time and in a manner so as not to interfere with the normal
operations of IDW, (iii) no copies of any documents shall be made without
the prior written consent of IDW, (iv) any such review will be subject to
supervision by IDW, and (v) TFS shall bear the sole expense of any such
review. All information relating to IDW that is not known to the public or
identified by IDW as confidential shall be deemed "confidential." In
connection with any confidential information of IDW or IDW HK, TFS shall
not disclose or use the confidential information for any purpose or in any
manner whatsoever and shall execute a confidential non-disclosure agreement
at IDW's request. At the end of the one year period, at the election of
TFS, IDW will ship and transfer all unused inventory to TFS at TFS sole
expense."
3. Assumption of Certain Liabilities. Section 2(a) of the Original
Agreement is hereby amended in its entirety to read as follows:
"(a) The Purchase. On and subject to the terms and conditions of this
Agreement, TFS shall cause to be transferred to IDW HK, and IDW shall cause
IDW HK to (i) acquire the TFSB Transferred Interest and the Designated
Assets, and (ii) assume the liabilities set forth on Schedule C ("Assumed
Liabilities") and cause to be executed a document evidencing such
assignment of the Assumed Liabilities to IDW, which shall include any
consents necessary to effectuate such an assignment."
4. Covenant. Section 5(d)(i)(D) of the Original Agreement is hereby amended in
its entirety to read as follows:
"To maintain separate schedules and records relating to the Continuing
Business in order to allow verification of the results of the operations of
the Continuing Business throughout the Earn-Out Period for purposes of
calculating the Earn-Out. In connection therewith, forty-five (45) days
after the end of each quarter, commencing with the quarter ending July 31,
2005, IDW shall provide TFS with a quarterly report (the "Quarterly
Report") of the revenues generated by customers on specified products as
set forth on Schedules 1 and 2; and customers not listed on Schedules 1 or
2 ("Category 3 Customers"). If TFS desires to review any information
relating to a Quarterly Report, for a period of thirty (30) days from the
end of the respective quarter, TFS shall have the right to review such
information at IDW's corporate office in Roseville, California, provided,
however, (i) TFS shall provide IDW with reasonable prior written notice,
(ii) the review shall take place in person at a reasonable time and in a
manner so as not to interfere with the normal operations of IDW, (iii) no
copies of any documents shall be made without the prior written consent of
IDW, (iv) any such review will be subject to supervision by IDW, and (v)
TFS shall bear the sole expense of any such review. All information
relating to IDW that is not known to the public or identified by IDW as
confidential shall be deemed "confidential." In connection with any
confidential information of IDW or IDW HK, TFS shall not disclose or use
the confidential information for any purpose or in any manner whatsoever
and shall execute a confidential non-disclosure agreement at IDW's
request."
5. Effect of Amendment. Except as expressly amended hereby, the
Original Agreement is in all respects ratified and confirmed, and all the terms,
conditions and provisions thereof shall remain in full force and effect. To the
extent that there are any inconsistencies between this Amendment and the
Original Agreement, the terms and provisions of this Amendment shall control.
6. Retroactive Effect. The foregoing amendments shall have effect
retroactive as of execution and delivery of the Original Agreement on March 30,
2005.
7. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall be deemed to constitute one instrument.
8. Facsimile. Executed copies of this Amendment may be exchanged via
facsimile, and such signatures shall be deemed as originals.
IN WITNESS WHEREOF, this Amendment is executed and appended to the
Original Agreement as of the effective date set forth above.
International Displayworks, Inc.
a Delaware corporation
By: __________________________
Name:________________________
Title:_________________________
International Displayworks (Hong Kong) Limited,
a Hong Kong company
By: __________________________
Name:________________________
Title:_________________________
Three-Five Systems, Inc.,
a Delaware corporation
By: __________________________
Name:________________________
Title:_________________________
TFS International, Ltd.,
a company formed under the laws of Bermuda
By: __________________________
Name:________________________
Title:_________________________
Three-Five Systems (Beijing) Co., Ltd.,
a corporate entity formed under the laws of
the People's Republic of China
By: __________________________
Name:________________________
Title:_________________________
