EXHIBIT 4.16
ASSET PURCHASE AGREEMENT
BETWEEN
STMICROELECTRONICS N.V.
ST MICROELECTRONICS LTD.
AND
TIOGA TECHNOLOGIES LTD.
DATED AS OF
APRIL 28, 2003
ASSET PURCHASE AGREEMENT
THIS ASSET PURCHASE AGREEMENT ("AGREEMENT") is entered into as of April 28,
2003, by and between STMicroelectronics N.V. ("ST NV"), a Dutch corporation with
its registered office at WTC Schiphol Airport, Xxxxxxxx Xxxx. 000, 0000 XX
Xxxxxxxx Airport, Amsterdam, The Netherlands acting through its Swiss Branch
located at 00, Xxxxxx xx Xxxxx xxx Xxxxxx, 0000 Xxxx-xxx-Xxxxxx, Xxxxxx,
Xxxxxxxxxxx; ST Microelectronics Ltd., with registered offices at 0 Xxxxxxxx
Xx., Xxxxxxx, Xxxxxx ("ST LTD." and, collectively with ST NV, "ST", or the
"BUYER") and Tioga Technologies Ltd., a public company registered under the laws
of the State of Israel with offices at 000 Xxxxxxxx Xxxxx Xxxx, Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxxxxx ("TIOGA" or the "SELLER").
WHEREAS, The parties have entered into (i) a Technology Transfer Agreement
(the "TTA"), (ii) a Development, Marketing and Services Agreement (the "SERVICES
AGREEMENT"), and (ii) an Option Agreement (the "OPTION AGREEMENT") each dated
February 14th 2002; and have executed Addendums to the TTA and the Services
Agreement on May 15, 17 and 19, 2002;
WHEREAS, In accordance with the Option Agreement, Buyer gave Seller an
irrevocable Notice of Exercise of the Call Option (as such term is defined in
the Option Agreement) to purchase substantially all of the assets of Tioga; and
WHEREAS, Seller wishes to sell and transfer to Buyer and Buyer wishes to
purchase from Seller, all of the right, title and interest in and to all of the
Acquired Assets (as defined below) of Seller, in consideration of the purchase
price described herein, all in accordance with the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual agreements
and covenants hereinafter set forth, the parties agree as follows:
1. DEFINITIONS
In addition to terms elsewhere defined in this Agreement, the following
capitalized terms shall have the following meaning:
1.1. "ACQUIRED ASSETS" -has the meaning set forth in Section 2.3
below.
1.2. "AFFILIATE" - means, in the case of Seller, Tioga
Technologies Inc. ("Tioga Inc.") and Silicon Value (S.V.)
Ltd. (in liquidation); and, in the case of Buyer, any
corporation, partnership, or other entity that, directly or
indirectly, owns, is owned by, or is under common ownership
with, ST, for so long as such ownership exists. For the
purposes of the foregoing, "own," "owned," or "ownership"
shall mean ownership of more than fifty (50%) of the stock
or other equity interests entitled to vote for the election
of directors or an equivalent governing body and entity that
is directly or indirectly controlled by, under common
control with or that controls the subject party.
1.3. "CONSIDERATION" - has the meaning set forth in Section 3
herein.
1.4. "CLOSING" - has the meaning set forth in Section 4.1 below.
1.5. "CLOSING DATE" - means the Effective Date.
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1.6. "CONFIDENTIAL INFORMATION" - means all proprietary
information and/or data of Seller relating to its business,
and/or Acquired Assets, including in any form whatsoever,
tangible or intangible, including information in oral,
visual or computer database form, not made available by
Seller to the general public, including without limitation
any Intellectual Property.
1.7. "DAMAGES" - as defined in Section 10.1.
1.8. "EFFECTIVE DATE"- the date of this Agreement.
1.9. "EMPLOYEES" - the officers or employees (including former
officers or employees) of Seller.
1.10. "EXCLUDED ASSETS" - has the meaning set forth in Section 2.3
below.
1.11. "EXCLUDED LIABILITIES" - has the meaning set forth in
Section 2.5 below.
1.12. "INDEMNIFIABLE AMOUNTS" - as defined in Section 10.1 below.
1.13. "INTELLECTUAL PROPERTY" - means all right, title and
interest of Seller and its Affiliates in, to, and under all
Patents, design patents, Trademark, technology designs,
know-how, copyrights, mask works, service marks trade dress,
and applications for any of the foregoing. For the purpose
of this Agreement, Intellectual Property shall also include
Confidential Information and research and development
programs and work in process.
1.14. "GAAP" - means generally accepted accounting principles.
1.15. "INVENTORY" - means all raw materials and supplies,
manufactured and purchased parts, goods in process, and
finished goods, as detailed in SCHEDULE 1.15.
1.16. "LIABILITY" - means any liability (whether known or unknown,
whether asserted or unasserted, whether absolute or
contingent, whether accrued or unaccrued, whether liquidated
or unliquidated, and whether due or to become due).
1.17. "MATERIAL" - means unless otherwise specifically provided in
this Agreement a change or effect that gives rise to an
expense, liability, or damage in an aggregate amount in
excess of $50,000.
1.18. "MATERIAL ADVERSE EFFECT" means (a) any change, development
or effect (individually or in the aggregate) in the general
affairs, management, business, results of operations,
condition (financial or otherwise), assets, or liabilities
(whether or not the result thereof would be covered by
insurance), relating solely to the Seller and not to the
economy or to the semiconductor industry in general, that
would be Material and adverse to Seller, or (b) any fact or
development that would (individually or in the aggregate),
prevent Seller from performing any Material obligations it
has under this Agreement.
1.19. "ORDINARY COURSE OF BUSINESS" - means the ordinary course of
business consistent with past custom and practice (including
with respect to quantity and frequency). For the purpose of
this Agreement (i) employment and consulting contracts or
amendments thereto containing any 'golden parachute'
provisions or the like; (ii) contracts with labor unions;
(iii) transactions with Affiliates; (iv) loan agreements;
(v) agreements pursuant to which Seller has given any
indemnification, Security Interest or otherwise agreed to
become directly or contingently liable for any obligation of
any person; (vi) application for, request for extension, or
receipt of any grant or allowance from any governmental
agency or authority, or any third party; (vii) agreements
relating to the acquisition, disposition or disclosure of
the Intellectual Property or Confidential Information
relating to the Seller (other than this Agreement and
standard distribution and licensing rights relating to the
Seller's products); and (viii) any fairness opinion in
connection with this transaction, shall not be considered to
be contracts entered into in the Ordinary Course of
Business.
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1.20. "PATENTS" - means all patents invented, acquired or filed by
Seller and its Affiliates, that are currently held or owned
by Seller or its Affiliates, including utility and design
patents, patent applications, provisional applications and
similar filings in any jurisdiction, and any divisions,
continuations, or reissues thereof. For purposes of this
Agreement "Patents" shall also include all patents set forth
in Exhibit 1.20 attached hereto.
1.21. "SECURITY INTEREST" - means any mortgage, pledge, lien,
hypothecation, encumbrance, charge, claim or other security
interest of any kind or character, direct or indirect,
whether accrued, absolute, contingent or otherwise.
1.22. "SELLER LIABILITIES" - means all Liabilities of Seller and
Seller's Affiliates.
1.23. "TAX"-means any taxes, duties, fines and levies imposed on
or charged to the Seller and/or the Affiliates by any state,
municipal, regional, local, national, foreign or other
authority including direct and indirect taxes, corporate
income tax, withholding tax, value added tax, sales tax,
insurance premium tax, customs duties, excise tax, real and
personal property tax, occupancy tax, registration and stamp
duties, environmental tax, capital tax, transfer tax, social
security contributions, withholding tax in respect of
employees, or any other tax, duties or charges and any
interest for late payment, penalties, sanctions and
increases in respect of the foregoing.
1.24. "TRADEMARKS" - means the trademarks, trade names, logos,
trademark applications, domain names, and other marks used
and/or registered by Seller.
1.25. "TRANSFERRED CONTRACTS" - has the meaning set forth in
Section 2.3(e) below.
1.26. "UNFUNDED EMPLOYEE RELATED LIABILITIES"- as defined in
Section 3.1 below.
2. THE TRANSACTION
2.1. PURCHASE AND SALE OF ACQUIRED ASSETS. Subject to the terms
and conditions of this Agreement, Buyer hereby purchases
from Seller, and Seller hereby sells, transfers, assigns,
conveys, and delivers to Buyer, free and clear of all liens,
mortgages, deeds, trusts, escrows, security interests,
encumbrances, claims, leases and charges, all of Seller's
right, title and interest in and to all of the Acquired
Assets, as defined in Section 2.3 below.
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2.2. [RESERVED].
2.3. ACQUIRED ASSETS. The "ACQUIRED ASSETS" mean all of Seller's
assets and properties of every kind, nature and character
(whether real, personal or mixed, whether tangible or
intangible, whether absolute, accrued, contingent, fixed or
otherwise and wherever situated), including the goodwill
related thereto, operated, owned, licensed or leased by
Seller, and any accounts and notes receivable, real estate,
equipment, inventory, goods as well as Intellectual
Property, products and design wins; provided, however that
to the extent that any Acquired Asset for which assignment
to Buyer is provided herein, is not assignable without the
consent of another party, this Agreement shall not
constitute an assignment or an attempted assignment thereof
if such assignment or attempted assignment would constitute
a breach thereof. All consents to assignment obtained by
Tioga are set forth in Exhibit 4.3(b)(6). Notwithstanding
the above, the Acquired Assets shall not include (i) cash or
cash equivalents (such as marketable securities and short
term investments), (ii) the Consideration hereunder, and
(iii) all other amounts due from Buyer or its Affiliates to
Seller pursuant to the TTA, if any, and the Services
Agreement, and (iv) any shares or other equity interest in
Seller's affiliates or participatory interests in third
parties (the "EXCLUDED ASSETS"). Without limiting the
generality of the foregoing definition of Acquired Assets,
the Seller's Acquired Assets include the following with
respect to the Seller:
(a) All accounts, notes and any other amounts receivable by
the Seller from any third parties in respect of or
relating to the Acquired Assets as of the Closing Date
(excluding any of the Excluded Assets);
(b) All rights in the Intellectual Property.
(c) All tangible materials, documentation and technical
information comprising the Intellectual Property,
products, design wins, and Confidential Information
transferred hereunder; and all such documentation,
instruments and information owned or held by Seller and
related to the Acquired Assets which may be necessary or
useful in connection with Buyer's conduct of the Acquired
Assets after the Closing.
(d) All Inventory, wherever located;
(e) All rights under all contracts written or oral, including
memoranda of understandings, licenses, commitments, sale
and purchase orders, guarantees, leases and other
documents entered into by Seller with third parties,
including (without limitation) with its customers,
suppliers, Employees, government agencies and entities,
excluding the Orckit Debenture (the "TRANSFERRED
CONTRACTS");
(f) All of Seller's rights under its agreements with
Employees, including with respect to the Employees'
obligations of confidentiality, non-compete and the
assignment of inventions;
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(g) All of Seller's permits, licenses, franchises, product
registrations, filings, authorizations, approvals and
indicia of authority (and pending applications for any
thereof) (i) to conduct the operations of the Acquired
Assets and to own, manufacture, construct, operate and
maintain any product, fixture, facility, equipment,
vehicle, machinery or installation of the Acquired Assets,
or (ii) to store, transport, dispose of, market or sell
any goods or any substance used, handled, produced,
disposed of, marketed or sold in the operation of the
Acquired Assets, as issued by any governmental agency or
instrumentality;
(h) Reserve related assets, and rights in and with respect to
the assets associated with any liability or obligation
with respect to the Employees, and any insurance policies
relating thereto (including manager's insurance policy -
'Bituach Menahalim', and study funds - 'Keren
Hishtalmut');
(i) All tools, machinery and equipment owned by Seller,
whether in the possession of Seller or its vendors;
(j) All rights under vehicle lease agreements;
(k) All office furnishings, equipment, including computer
equipment, telephone numbers, fixtures and supplies owned
by Seller;
(l) All real property, whether owned or leased by Seller and
used or held for use in its business, including all land,
buildings, rights and privileges relating thereto;
(m) All performance and other bonds, security and other
deposits, and advances maintained for use in the conduct
of the Seller's business;
(n) All claims and other prepayments, including security
deposits, guarantees and other retentions held by third
parties with respect to the Transferred Contracts as of
the Closing Date;
(o) All books and records relating to the Acquired Assets
(whether kept or maintained by Seller or any third
parties), including, without limitation, copies of all
lists of design wins, customers and suppliers, records
with respect to costs and pricing, Inventory and
equipment, business development plans, advertising
materials, catalogues, sales materials and records,
purchasing materials and records, and personnel records
with respect to Employees hired by Buyer;
(p) A copy of Tioga's accounting books, records, ledgers and
electronic data processing materials;
(q) All information systems, programs, software and
documentation thereof (including all electronic data
processing systems, program specifications, source codes,
logs, input data and report layouts and formats, record
file layouts, diagrams, functional specifications and
narrative descriptions, flow charts and other related
material) owned by Seller;
(r) All claims deposits, prepayments, refunds, causes of
action, and rights of set off (including any such item
relating to the payment of taxes);
(s) Prepaid expenses, deferred charges and cash advanced by
customers and rights to volume rebates due from suppliers;
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(t) All other assets, properties, rights and claims related to
the operations of Seller or which arise in or from the
conduct thereof; provided, however, that the definition of
Acquired Assets shall not include any of the Excluded
Assets.
The parties agree that all the Acquired Assets set forth in
Sections 2.3(b) and 2.3(c) shall be acquired by, and transferred to,
ST NV, subject to applicable OCS rules and regulations; and all other
Acquired Assets shall be acquired by, and transferred to, ST Ltd.
2.4. ASSUMPTION OF LIABILITIES. Subject to the terms and
conditions of this Agreement, Buyer hereby assumes,
discharges and becomes solely responsible for all Seller
Liabilities, excluding only the Excluded Liabilities (as
defined below).
2.5. EXCLUDED LIABILITIES. Notwithstanding anything contained
herein to the contrary, Buyer shall not assume or be bound
by or otherwise be responsible for (i) the Seller's
consolidated financial indebtedness including, without
limitation, any Liability of Seller or Seller's Affiliates
with respect to the Orckit Debenture, overdrafts, actually
drawn amounts with respect to revolving credit facilities,
long term and short term debt, capital leases and any other
outstanding liability requiring either payment of interest
thereon or repayment of a principal amount, and any accrued
interest thereon, (ii) Liabilities of Seller towards
Seller's Affiliates or of Seller's Affiliates towards
Seller, (iii) any Tax Liability (other than with respect to
VAT as set forth in Section 9.9 of this Agreement), (iv) all
amounts payable by Seller to the Israeli Office of Chief
Scientist ("OCS") with respect to the consideration received
or receivable by Seller from Buyer under the Services
Agreement, including any interest or penalties associated
therewith, (v) any Liability deriving from post-Closing
actions of Seller, (vi) any Liability of Seller or Seller's
Affiliates actually known to Seller or Seller's Affiliates
and not disclosed to Buyer in the Disclosure Schedule or the
Closing Financial Statements; and (vii) any Liabilities that
are deemed excluded under Section 7 hereto (the "EXCLUDED
LIABILITIES") and such Excluded Liabilities shall remain the
obligation of the Seller.
3. CONSIDERATION
3.1. CONSIDERATION. In consideration for the Acquired Assets,
Buyer shall pay Seller an aggregate amount of US$12,000,000,
reduced by the aggregate amount, as of the Closing Date, of
(i) Unfunded Employee-Related Liabilities (as defined
hereunder) (ii) overdue current liabilities that have not
been paid as of the Closing Date under their respective
original terms of payment, (iii) accounts receivable due for
payment after the Closing Date that were collected in
advance, sold or factored to financial institutions for
advance collection, and (iv) any increase of Liabilities or
decrease of assets, not in the Ordinary Course of Business,
reported in the Closing Financial Statements as compared to
Liabilities and assets reported in the unaudited balance
sheet as of March 31, 2003 (the "REFERENCE BALANCE SHEET",
attached under Schedule 3.1) (the "Consideration"). The
Consideration includes an amount of $8 million paid by ST NV
to Seller in consideration of the Intellectual Property
transferred to ST NV herein. The Consideration shall be
supplemented by Value Added Tax ("VAT"), to the extent
applicable. "UNFUNDED EMPLOYEE RELATED LIABILITIES" shall
include, but not be limited to, all amounts, if any, that
have not been paid or deposited with the Employees'
respective pension plans or managers' insurance policies in
the manner required pursuant to such plans or policies or
applicable law including but not limited to severance
payments, unused accrued vacation days, special bonus
payments, salary payments, extra hours payments, early
notice payments and all other benefits or compensations
under Israeli law or agreements (collectively, "EMPLOYEE
RELATED LIABILITIES"). Notwithstanding the foregoing, any
Employee Related Liabilities for which accrual has been
properly made in the Closing Financial Statements in
accordance with US GAAP, shall be excluded from the
definition of Unfunded Employee Related Liabilities. For the
avoidance of doubt, if such Unfunded Employee Related
Liabilities were computed based on the December 31, 2002
audited financial statements attached as part of Schedule
5.6, there would be no Unfunded Employee Related
Liabilities.
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3.2. The Consideration shall be determined in accordance with the
following procedure:
(i) Promptly after Closing the Seller shall deliver to Buyer
the Closing Financial Statements, as defined in
Section 5.6;
(ii) Buyer shall deliver to Seller a draft computation of the
Consideration, as promptly as possible after the receipt
of the Closing Financial Statements and in any event
within thirty (30) days thereafter; Seller (and Seller's
auditors) shall give the Buyer full access to those books
of account, documents, files and papers remaining with the
Seller as reasonably required to prepare the draft
computation of the Consideration;
(iii) Seller shall review the draft computation of the
Consideration submitted by the Buyer and within thirty
(30) days of receipt thereof shall inform the Buyer
whether or not it agrees with the draft computation of the
Consideration, giving written details of its reasons in
case of disagreement;
(iv) If Seller disagrees with the draft computation of the
Consideration, then Seller and Buyer, with assistance of
their respective auditors shall, following the Seller's
notification of any matters in dispute to the Buyer
pursuant to subparagraph (iii) above, have a period of
fifteen (15) days to agree on the Consideration;
(v) If the parties are unable to reach an agreement as to the
Consideration within the above period of fifteen (15)
days, the parties shall appoint Ernst & Young LLP, New
York (the "Expert"), whose sole duties shall be to settle
the disputed adjustments and to determine the
Consideration (the parties are aware of the fact that
Ernst & Young Israel is the Seller's CPA);
(vi) The Expert shall limit its investigation to the matters on
which the parties disagree and shall have access to any
books of account, documents, files and papers which it may
request and to employees of Buyer and Seller, as required
to perform its duty. The Expert shall issue its final
determination concerning the Consideration as promptly as
possible and in any event within fifteen (15) days after
its appointment referred to in subparagraph (v); and
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(vii) The final determination made by Buyer and Seller or, if
applicable, by the Expert, shall be final and binding on
the parties and the parties irrevocably undertake to
approve and accept the determination made jointly by the
Buyer and the Seller or by the Expert (as the case may be)
and to implement the payment of any sum, if any, to be
made in connection therewith.
3.3. All amounts received by the Seller after the Closing Date in
respect of the Acquired Assets shall accrue to the benefit
of the Buyer, and all amounts payable after the Closing Date
in respect of the Acquired Assets shall be a liability of
the Buyer.
3.4. PAYMENT OF CONSIDERATION. The Consideration is payable as
follows:
(a) Concurrently with the execution of this Agreement, Buyer
shall deliver to Seller's bank account, Account No. 85842,
Bank Hapoalim Ltd., Branch No. 690, Swift Code XXXXXXXX
GLM, in immediately available funds, an amount equal to
$12 million plus VAT, to the extent applicable (the
"PROVISIONAL CONSIDERATION"), less an amount of
US$1,800,000 (the "ESCROW AMOUNT"), which shall be
deposited in escrow according to the Escrow Agreement.
Such amount shall be delivered to the Seller on the later
of (i) thirty days following the Closing Date, and (ii)
twenty days following receipt by ST NV (at the address set
forth below) of the Closing Financial Statements, subject
to the provisions of Article 10 herein, and in accordance
with the provisions of the Escrow Agreement attached
hereto as EXHIBIT 3.4.
(b) Following the final determination of the Consideration as
outlined under Section 3.2, Seller shall pay in cash the
difference between the Provisional Consideration and the
Consideration, within 15 days of the final determination
of the Consideration. In case of failure by Seller to pay
in cash to Buyer such difference within 15 days from the
final determination of the Consideration, Buyer will have
the right to withdraw such amount from the Escrow Account,
if the Escrow Period has not already lapsed, and Seller
shall promptly refund the amount withdrawn into the Escrow
Account. Nothing in this section (b) shall be deemed to
have the effect of extending the Escrow Period beyond the
period set forth in Section 10.
(c) The Consideration shall be paid in United States Dollars.
All sums payable to Seller hereunder shall be made by way
of a wire transfer, of immediately available funds, to
Seller's bank account, pursuant to the wiring instructions
set forth in this Agreement, or by such other form of
payment as is mutually agreed by Seller and Buyer.
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4. THE CLOSING
4.1. CLOSING. Subject to the terms and conditions of this
Agreement, the sale and purchase contemplated hereby (the
"CLOSING") shall take place at such time as this Agreement
has been executed by both parties and all deliverables set
forth in Section 4.3 have been duly delivered and no
execution of this Agreement or delivery of any deliverable
shall be deemed effective until such time as all such
deliverables have been delivered.
4.2. TERMINATION OF THE SERVICES AGREEMENT. The Services
Agreement is hereby terminated and expired, including
without limitation the provisions of section 4.3 and 3
thereof, provided that such termination will not affect the
obligations of the parties under the Services Agreement that
have arisen prior to such termination.
4.3. DELIVERIES AND TRANSACTIONS AT THE CLOSING. Concurrently
with the execution of this Agreement, the following
transactions shall occur and the following documents will be
delivered:
(a) DELIVERY BY BUYER. Buyer shall:
(i) deliver to Seller the Provisional Consideration less
the Escrow Amount which shall be held in escrow, as
set forth in Section 3.4(a) above, and
(ii) deposit the amount of US$1,800,000 with the escrow
agent in accordance with the Escrow Agreement attached
hereto as EXHIBIT 3.4; AND
(iii) deliver to Seller a duly executed copy of the Rights
and Obligations Form ("Tofes Hovot Ve'Zehuyot") of the
OCS, in the form attached as Exhibit 4.3(b)(8)(I)
hereto.
(b) DELIVERY BY SELLER. Seller shall deliver to Buyer:
(1) [RESERVED].
(2) COMPLIANCE CERTIFICATE- A certificate signed by
the Seller's CEO, in the form attached hereto as
EXHIBIT 4.3 (b) (2), certifying that the items
set forth in Sections 4.3(b)(1), 4.3(b)(3),
4.3(b)(4) 4.3(b)(5) and 4.3(b)(11) have been
duly satisfied, in the form agreed to by Buyer
and Seller's counsel.
(3) ORCKIT'S PLEDGE. A duly certified letter from
Orckit attached hereto as EXHIBIT 4.3 (b)(3),
confirming the release of all kind of pledges
that Orckit has on any of the Acquired Assets or
on the Seller's assets.
(4) IP ASSIGNMENT. The Company has delivered an
executed Power of Attorney with respect to the
assignment of Intellectual Property Rights, in
the form attached hereto as EXHIBIT 4.3(b)(4).
(5) IP TRANSFER: A duly executed transfer deed with
respect to all tangible material, documentation
and technical information in English, comprising
the Intellectual Property, products, design
wins, and Confidential Information transferred
hereunder in the form attached hereto as EXHIBIT
4.3 (b)(5).
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(6) ASSIGNMENT LETTERS. Irrevocable assignment
letters in the form attached hereto as EXHIBIT
4.3 (b)(6), duly executed by Seller,
transferring to Buyer all of Seller's rights,
title and interest in and to the Transferred
Contracts.
(7) LEASEHOLD ASSIGNMENTS. Assignments (with
Lessor's consent thereto, to the extent
required) of leasehold interests in any leased
real property included in the Acquired Assets,
attached hereto as EXHIBIT 4.3 (b)(7).
(8) SELLER'S REQUIRED CONSENTS. Documents reasonably
satisfactory to Buyer, evidencing receipt of
approval from governmental authorities required
for the consummation of the transactions
contemplated hereby, as follows: (i) the
approval of the Chief Scientist of the Israeli
Ministry of Industry and Commerce attached
hereto as EXHIBIT 4.3 (b)(8)(I); (ii) Seller's
notification to the Investment Center attached
hereto as EXHIBIT 4.3 (b)(8)(II).
(9) OPINION. An opinion of Naschitz, Xxxxxxx & Co.,
counsel of Seller in the form attached hereto as
Exhibit 4.3(b)(9), dated as of the Closing Date.
(10) RELEASE. An executed copy of the release letter
in the form attached hereto as Exhibit
4.3(b)(10), releasing and discharging Buyer and
its Affiliates from any and all claims against
and liabilities of Seller and/or its Affiliates
that are Excluded Liabilities.
(11) SELLER'S EMPLOYEES. Documents evidencing the
termination of all of Seller's current Employees
who are not listed in Exhibit 4.3(b)(11), as
well as the signature of the current Employees
who are listed in Exhibit 4.3(b)(11) ("Retained
Employees") on Buyer's 'Welcome Letter'.
(12) OCS. A duly executed copy of the Rights and
Obligations Form ('Tofes Hovot Ve'Zehuyot") of
the Office of Chief Scientist, in the form
attached as Exhibit 4.3(b)(8)(i) hereto; and a
duly executed copy of Seller's withdrawal of its
applications for OCS grants listed in Exhibit
4.3(b)(12)(ii).
(13) ADDITIONAL DOCUMENTS. Such other endorsements,
instruments, certificates or documents executed
by Seller or its Affiliates as may be necessary
or appropriate to carry out the sale, transfer,
conveyance, and assignment contemplated hereby,
as Buyer and its counsel may reasonably request.
5. REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that the statements contained in
this Section 5 and the information contained in the disclosure schedule
attached as EXHIBIT 5 hereto with regard to the Acquired Assets (the
"DISCLOSURE SCHEDULE") are correct and complete as of the date of this
Agreement, except as set forth in the Disclosure Schedule. For all purposes
hereunder, the Disclosure Schedule shall include Exhibits 1, 1A, and 2 and 4
of the TTA, and Exhibit 1 of the Services Agreement, which are incorporated
in the Disclosure Schedule by reference. For purposes of this Section 5,
the term Seller shall also include Seller's Affiliates.
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5.1. ORGANIZATION OF SELLER. Seller and its Affiliates are
corporations duly organized, validly existing, and in good
standing under the laws of their respective jurisdictions.
Seller has the corporate power and authority to own, lease
or operate all properties and assets now owned, leased or
operated by it and to carry on its businesses as now
conducted. Seller has delivered to Buyer complete and
accurate copies of its Articles of Association, as amended
and in effect on the date hereof.
5.2. AUTHORIZATION OF TRANSACTION. Seller has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its
obligations hereunder and thereafter. Without limiting the
generality of the foregoing, the board of directors of
Seller has duly authorized the execution, delivery, and
performance of this Agreement by Seller. This Agreement
constitutes the valid and legally binding obligation of
Seller, enforceable in accordance with its terms and
conditions.
5.3. NO CONTRAVENTION. Neither the execution and the delivery of
this Agreement, nor the consummation of the transactions
contemplated hereby, will (i) violate any constitution,
statute, regulation, rule, injunction, judgment, order,
decree, ruling, charge, or other restriction of any
government, governmental agency, or court to which Seller is
subject or any provision of the Articles of Association of
Seller; (ii) except as set forth in Section 5.3 of the
Disclosure Schedule, conflict with, result in a breach of,
constitute a default under, result in the acceleration of,
create in any party the right to accelerate, terminate,
modify, or cancel any Transferred Contract, or (iii) result
in any lien against the Acquired Assets.
5.4. CONSENTS, ETC. Except as set forth in Section 5.4 of the
Disclosure Schedule, Seller does not need to give any notice
to, make any filing with, or obtain any authorization,
consent, or approval of any government, governmental agency
or any third party in order to consummate the transactions
contemplated by this Agreement. Except as set forth in
Section 5.4 to the Disclosure Schedule, no consent,
approval, license, permit, declaration, registration or
authorization of the action by, or filing with, any person,
or entity including any court, governmental or regulatory
authority, commission, board, administrative agency or
non-governmental third party, on the part of Seller, is
required in connection with the execution and performance of
this Agreement or the consummation of the transactions
contemplated hereunder.
5.5. TITLE TO ASSETS. Except as set forth in Section 5.5 of the
Disclosure Schedule, the Seller has good and marketable
title to, or a valid leasehold interest in all of the
properties and Acquired Assets, free and clear of all
Security Interests, or restrictions on transfer. The Seller
further represents that the Seller's Affiliates do not own
any of the Acquired Assets or any assets that are used for
the operation of the business of the Seller. Seller has not
solicited, directly or indirectly, any offer to be acquired.
12
5.6. FINANCIAL STATEMENTS. Seller has previously delivered to
Buyer, true and completed copies of the following financial
statements (collectively, the "FINANCIAL STATEMENTS"):
accurate and complete copies of its audited consolidated
balance sheets as of December 31, 2002, 2001 and 2000, and
the related audited consolidated statements of operations,
stockholders' equity, and cash flows for each of the years
then ended, and the notes thereto, together with the report
thereon of Ernst & Young, LLP independent auditors as
attached hereto under SCHEDULE 5.6. Seller will deliver to
Buyer audited consolidated financial statements of the
Seller for the period ending as of the Closing Date
("CLOSING FINANCIAL STATEMENTS"). The Financial Statements
(including the notes thereto) and the Closing Financial
Statements have been (and, in the case of the Closing
Financial Statements, will be) prepared according to the
applicable law and United States GAAP applied on a
consistent basis throughout the periods covered, present
fairly the financial condition of the Seller as of such
dates and the results of operations of the Seller for such
periods, are correct and complete in accordance with US
GAAP, and are consistent with the books and records of
Seller and its Affiliates (which books and records are
correct and complete). Each delivered balance sheet fully
sets forth all assets and liabilities of the business
existing as of its date which, under US GAAP, should be set
forth therein, and each delivered statement of earnings sets
forth the items of income and expense of the business which
should appear therein under US GAAP. The trade accounts and
other receivables of Seller which are classified as current
assets on the balance sheets are bona fide receivables, were
acquired in the ordinary course of business, are stated in
accordance with US GAAP and, subject to the reserve for
doubtful accounts, need not be written-off as uncollectible.
The inventories of Seller reflected on the balance sheets
have been valued in accordance with US GAAP, and the value
of obsolete materials and materials of below standard
quality has been written down or reserved against in
accordance with US GAAP. There have been no write-ups of
inventories or other assets. Seller has no liabilities other
than (i) those set forth or reserved against in the Closing
Financial Statements, and (ii) those disclosed on Schedule
5.6. Seller's books of account have been kept accurately in
the ordinary course of business, the transactions entered
therein represent bona fide transactions, and the revenues,
expenses, assets and liabilities of Seller have been
properly recorded in such books.
5.7. ABSENCE OF CERTAIN CHANGES. Except as set forth in Section
5.7 to the Disclosure Schedule, there have been no Material
changes to any material agreements, obligations or
commitments of the Seller since December 31, 2002. Since
December 31, 2002, Seller has conducted the business in the
Ordinary Course, consistent with past practices and there
has not been any Material Adverse Effect other than as
detailed in section 5.7 to the Disclosure Schedule.
5.8. ORDINARY COURSE. Except as set forth in Section 5.8 to the
Disclosure Schedule, there are no liabilities that arose and
became known to Seller since December 31, 2002 that are not
in the Ordinary Course of Business.
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5.9. UNDISCLOSED LIABILITIES. The Seller does not have any
undisclosed Liability (and it does not know of any basis for
any present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
any of them giving rise to any liability). A Liability shall
be deemed undisclosed if it is not disclosed in the
Disclosure Schedule or in the Closing Financial Statements.
5.10. LEGAL COMPLIANCE. To the Seller's best knowledge, the Seller
has complied with all applicable laws with regard to the
Acquired Assets (including rules, regulations, codes, plans,
injunctions, judgments, orders, decrees, rulings and charges
there under) of federal, state, local, and foreign
governments (and all agencies thereof). No action, suit,
proceeding, hearing, investigation, charge, complaint,
claim, demand, or notice has been filed or commenced against
any of them alleging any failure so to comply. There are no
judgments outstanding and unsatisfied against Seller or the
Acquired Assets.
5.11. TAX MATTERS.
Excluding any non compliance with or inaccuracy in the
following Tax representations which would not adversely affect
Buyer's liabilities to Tax authorities or other Israeli or U.S.
governmental agencies, and subject to outstanding VAT matters
which will be handled in accordance with section 9.9 hereof,
Seller hereby represents that:
(a) The Seller and its Affiliates have at all times complied,
in all material respects, with all laws and regulations in
respect of Tax, including without limitation the terms of
any agreement reached with any applicable authority. The
Seller and its Affiliates have duly filed or caused to be
duly filed all Tax returns that are required to be filed
in all applicable jurisdictions, and each such Tax return
was and remains true, complete and correct in all material
respects and does not contain any errors, omissions,
inaccurate statement or lapses.
(b) The Seller and its Affiliates have timely paid or will
have timely paid all Tax due and payable prior to or on
Closing Date.
(c) The Seller and its Affiliates have made in the Financial
Statements adequate provisions for any Tax due, according
to applicable accounting principles.
(d) The Seller and its Affiliates have not incurred and will
not incur any liability for Tax other than Tax arisen in
the Ordinary Course of Business or as a result of the
transactions contemplated by this Agreement.
(e) Each of the Seller and its Affiliates is resident only in
the jurisdictions in which it is incorporated for Tax
purposes and does not have a permanent establishment or
other taxable presence in any jurisdiction other than the
jurisdictions in which it is resident for Tax purposes.
(f) The Seller and its Affiliates are not, nor have they been,
liable to pay a penalty, surcharge, fine or late payment
interest in connection with Tax in the five years ending
on the Closing Date, and, to Seller's best knowledge,
there exist no facts or circumstances which are likely to
cause the Seller or its Affiliates to incur liability for
any such penalty, surcharge, fine or late payment
interest.
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(g) Neither Seller nor its Affiliates has received any
notification that any of their respective Tax returns have
been selected for audit by any Tax authority and there is
no pending inspection by any Tax authority in relation to
Tax, nor, to Seller's best knowledge, are Tax authorities
intending or in the process of starting an audit or an
inspection in relation to Tax.
(h) Neither Seller nor its Affiliates has received notice of
any Tax deficiency outstanding, proposed or assessed
against or allocable to Seller or to its Affiliates, nor
has Seller or its Affiliates executed any waiver of any
statute of limitations on the assessment or collection of
any Tax or executed or filed with any governmental body
any agreement now in effect extending the period for
assessment or collection of any taxes against Seller or
its Affiliates.
(i) There exists no dispute with the Tax authorities in any
Tax jurisdiction involving the Seller and its Affiliates
nor, to Seller's best knowledge, are Tax authorities in
any Tax jurisdiction intending or in the process of
asserting and/or initiating a claim.
(j) There are no Security Interests on any of the Acquired
Assets that arose in connection with any failure (or
alleged failure) to pay any Tax.
(k) There are no Tax liens upon, pending against or, to the
knowledge of Seller, threatened against any Acquired
Asset.
(l) Consummation of the transactions contemplated hereby will
not result in the imposition or creation of any Tax
obligations on the Acquired Assets, except for Tax
obligations, which remain the liability of Seller.
5.12. INTELLECTUAL PROPERTY
(a) GENERAL. The Seller owns or has the right to use pursuant
to licenses, sublicenses, agreements, or permissions all
Intellectual Property necessary or desirable for the
operation of the Acquired Assets as presently conducted,
free and clear of any and all encumbrances, lien, fees
rights, conditions or restrictions. Except as set forth in
Section 5.12(a) of the Disclosure Schedule, each item of
Intellectual Property owned or used in connection with the
Acquired Assets immediately prior to the Closing hereunder
will be owned or available for use by Buyer on identical
terms and conditions immediately subsequent to the Closing
hereunder. Seller has taken all necessary action to
maintain and protect each item of Intellectual property
that it owns or uses.
(b) NO INFRINGEMENT. Except as set forth in Section 5.12(b) of
the Disclosure Schedule, no claim has been made against
the Seller that the Intellectual Property infringes,
misappropriates, or otherwise comes into conflict with any
Intellectual Property rights of third parties, and none of
the directors and officers of Seller has ever received any
charge, complaint, claim, demand, or notice alleging any
such interference, infringement, misappropriation, or
violation. To the Seller's best knowledge, no third party
has interfered with, infringed upon, misappropriated, or
otherwise come into conflict with any Intellectual
Property rights of the Seller.
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(c) OWNERSHIP OF INTELLECTUAL PROPERTY. All of the
Intellectual Property rights, evidenced by or embodied in:
(i) the Acquired Assets; (ii) any Invention or work
product developed or created by Seller in respect of the
Acquired Assets; (iii) any part of or any derivative work
of any of the foregoing, including their documentation, is
owned or duly licensed by the Seller. Seller has not
transferred, assigned or licensed any of its rights in any
Intellectual Property other than to Buyer pursuant to the
TTA and as set forth in Section 5.12(c) of the Disclosure
Schedule.
(d) OWNERSHIP OF IP RIGHTS: Section 5.12(d) to the Disclosure
Schedule identifies each patent or registration which has
been issued to the Seller with respect to any of its
Intellectual Property, identifies each pending patent
application or application for registration which the
Seller has made with respect to any of its Intellectual
Property, and identifies each license, agreement, or other
permission which the Seller has granted to any third party
with respect to any of its Intellectual Property (together
with any exceptions). Seller has delivered to Buyer,
within the Disclosure Schedule, correct and complete
copies of all such patents, registrations, applications,
licenses, agreements, and permissions (as amended to date)
and has made available to Buyer correct and complete
copies of all other written documentation evidencing
ownership and prosecution (if applicable) of each such
item. Section 5.12(d) to the Disclosure Schedule also
identifies each trade name or unregistered trademark used
in connection with the Acquired Assets. With respect to
each item of Intellectual Property required to be
identified in Section 5.12(d) to the Disclosure Schedule,
the Seller possesses all right, title, and interest in and
to the item, free and clear of any Security Interest.
(e) INTELLECTUAL PROPERTY OWNED BY ANY THIRD PARTY. Section
5.12(e)(i) to the Disclosure Schedule identifies each
item of Intellectual Property that any third party owns
and that the Seller uses, with regard to the Acquired
Assets, pursuant to license, sublicense, agreement, or
permission. Seller has delivered to Buyer, within the
Disclosure Schedule, correct and complete copies of all
such licenses, sublicenses, agreements, and permissions
(as amended to date). With respect to each item of
Intellectual Property required to be identified in Section
5.12(e) of the Disclosure Schedule, the license,
sublicense, agreement, or permission covering the item is
legal, valid, and enforceable and, except as set forth in
Section 5.12(e)(ii) of the Disclosure Schedule, shall stay
such on identical terms following the consummation of the
transactions contemplated hereby.
(f) PROTECTION OF IP RIGHTS AND TRADE SECRETS. The Seller has
taken all reasonable and customary actions to maintain and
protect each item of Intellectual Property that is owned
or used by it. All Confidential Information of the Seller
is being (and has been) continuously maintained in
confidence by taking reasonable precautions to protect and
prevent its disclosure to unauthorized parties.
16
(g) PROPRIETARY INFORMATION AND INVENTIONS AGREEMENTS. Each
Employee, consultant and officer of the Seller has
executed an agreement with the Seller pertaining to
non-competition, confidentiality and assignment of
inventions, or has otherwise sufficiently vested in the
Seller good title to the work product or result of
endeavors of every Employee, officer or contractor, with
respect to the Acquired Assets, free of any retained
rights or royalty or similar obligations. To Seller's
knowledge: (i) none of the said Employees, officers or
consultants is in violation thereof; (ii) no Employee of
the Seller breached any third party contract with respect
to any item of the Intellectual Property; (iii) no
Employee of the Seller or current or former consultant or
independent contractor retained by the Seller has, or has
alleged to have any right, title or interest in the
Intellectual Property.
5.13. TANGIBLE ASSETS. The Seller owns or leases all buildings,
machinery, equipment, and other tangible assets that are
included within the Acquired Assets. Each such tangible
asset is free from material defects (patent and latent), has
been maintained in accordance with industry practice, is in
good operating condition and repair (subject to normal wear
and tear), and is suitable for the purposes for which it
presently is used and presently is proposed to be used. No
such asset is shared by the Seller with any other person.
The tangible assets included in the Acquired Assets shall
constitute all tangible assets as are used in the conduct of
the business of the Seller in the Ordinary Course of
Business on the Closing Date, and, subject to Section 5.13
of the Disclosure Schedule, comprise all the property,
rights and assets necessary for Buyer to carry on Seller's
business in the manner and to the extent which it is
presently conducted.
5.14. INVENTORY. The Inventory consists of items, which are good
and merchantable and fit for the purpose for which they were
procured or manufactured, and none of which is slow-moving,
obsolete, damaged, or defective. The quantity of the
Inventory on the date hereof is, and on the Closing date
will be, consistent with the levels maintained by the Seller
in the Ordinary Course of Business.
5.15. CONTRACTS. Section 5.15 of the Disclosure Schedule lists all
material contracts and other agreements to which the Seller
is a party. Seller has delivered to Buyer, a correct and
complete copy of each written agreement listed in Section
5.15 of the Disclosure Schedule (as amended to date) and a
written summary setting forth the terms and conditions of
each oral agreement referred to in Section 5.15 of the
Disclosure Schedule. With respect to each such agreement,
except as set forth in Section 5.15(b) of the Disclosure
Schedule: (i) the agreement is legal, valid, binding,
enforceable, and in full force and effect; (ii) the
agreement will continue to be legal, valid, binding,
enforceable, and in full force and effect on identical terms
following the consummation of the transactions contemplated
hereby; (iii) neither Seller, nor to the Seller's best
knowledge, any third party is in breach or default, and no
event has occurred which with notice or lapse of time would
constitute a breach or default, or permit termination,
modification, or acceleration, under the agreement; and (iv)
neither Seller, nor to the Seller's best knowledge, no party
has repudiated any provision of the agreement.
17
5.16. NOTES AND ACCOUNTS RECEIVABLE. All accounts, notes and other
receivables of the Seller are reflected properly on the
Financial Statements or in Section 5.16 to the Disclosure
Schedule, are valid receivables subject to no setoffs or
counterclaims, are current and collectible, and will be
collected in accordance with their terms at their recorded
amounts, subject only to the reserve for bad debts in the
Ordinary Course of Business.
5.17. INSURANCE. The Seller is covered by insurance that is in
scope and amount customary and reasonable for the Acquired
Assets. Seller delivered to Buyer, within the Disclosure
Schedule, correct and complete copies of all of the
insurance policies to which the Seller has been a party, a
named insured, or otherwise the beneficiary of coverage at
any time as of July 2000 and with respect to each policy
there are no pending or asserted claims as to which any
insurer has denied liability, and there are no claims under
any such insurance policy that have been disallowed or
improperly filed. Section 5.17 to the Disclosure Schedule
sets forth claims experience of the Seller since July 2000.
With respect to each insurance policy described herein no
party to the policy has repudiated any provision thereof.
Seller has received no notice from any insurance carrier of
the intention of such carriers to discontinue any insurance
coverage afforded to Seller.
5.18. FILINGS. Seller and its Affiliates have timely filed all
required forms, reports and documents with the SEC and any
other competent authority, including tax authorities (the
"TIOGA DOCUMENTS"). As of the time it was filed with the SEC
or any other competent authority, including tax authorities,
none of the Tioga Documents, including any financial
statements or schedules included or incorporated by
reference therein contains any untrue statement of a
material fact or omits to state a material fact required to
be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading.
5.19. LITIGATION. Except as set forth in Section 5.19 to the
Disclosure Schedule, there are no instances in which the
Seller (i) is subject to any outstanding injunction,
judgment, order, decree, ruling, or charge or (ii) is a
party or, to the Seller's best knowledge, is threatened to
be made a party to any action, suit, proceeding, hearing, or
investigation of, in, or before any court or quasi-judicial
or administrative agency of any state, local, or foreign
jurisdiction or before any arbitrator in respect of the
Acquired Assets. None of the actions, suits, proceedings,
hearings, and investigations set forth in Section 5.19 to
the Disclosure Schedule could result in any Material Adverse
Effect.
5.20. CUSTOMERS AND DISTRIBUTION CHANNELS. All sales contracts and
orders with customers and contracts with the distribution
channels of the Seller (including, OEM, VAR and
distributors) were entered into by or on behalf of the
Seller in the Ordinary Course of Business for usual
quantities and at normal prices. During the 24-month period
preceding the date hereof, no material supplier of the
Seller has indicated that it will stop, or decrease the rate
of, supplying materials, products or services to the Seller
and Seller has no reason to believe that any customer or any
OEM, VAR or distributors will cease to do business with
Buyer, after, or as a result of, the consummation of any
transactions contemplated hereby or that any customer or
OEM, VAR or distributors is threatened with bankruptcy or
insolvency. Seller does not know of any fact, condition or
event that would adversely affect its relationship with any
customer or OEM, VAR or distributors.
18
5.21. PRODUCT WARRANTY. Each of the product lines included in the
Acquired Assets that has been manufactured, sold, leased, or
delivered by Seller was manufactured in conformity with all
applicable specifications and contractual commitments and
all express and implied warranties related thereto, and the
Seller does not have any liability (and, to Seller's best
knowledge there is no basis for any present or future
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand against it giving rise to any
liability) for replacement or repair thereof or other
similar damages in connection therewith.
5.22. PRODUCT LIABILITY. The Seller does not have any liability
(and to Seller's best knowledge there is no basis for any
present or future action, suit, proceeding, hearing,
investigation, charge, complaint, claim, or demand against
it giving rise to any liability) arising out of any injury
to individuals or property as a result of the ownership,
possession, or use of any Acquired Assets manufactured,
licensed, sold, leased, or delivered by the Seller.
5.23. EMPLOYEES.
(a) EMPLOYMENT AGREEMENTS. The Disclosure Schedule includes a
list of all written (or summary description of any oral)
promises, agreements, arrangements, understandings or
policies, with officers, directors, Employees (including
part-time, full time and sub-contractor Employees) and
consultants (other than attorneys and accountants) of the
Seller which are presently in effect, and the name, title
or position, terms and conditions of employment, wages and
any other compensation (including bonuses, commissions,
and deferred compensation), the date of the most recent
increase, years of service, pensions (including those
required by all laws), retirement benefits, company cars,
profit sharing, any interests in any incentive
compensation plan and unused accrued vacation with respect
to each such person.
(b) With respect to the Seller: (i) Except as set forth in
Section 5.23(b) of the Disclosure Schedule, the Seller
is not a party to any collective labor agreement or
arrangement or to any labor custom and the Seller does not
have any agreement or arrangement with a trade union or
the Seller's workers committee (Va'ad Ha'Ovdim); (ii) as
of the date hereof, there are no outstanding claims
against the Seller by any person who is now or has been or
claims to have been an officer or Employee of the Seller,
and there have been no disputes between the Seller and any
of its Employees; (iii) the Seller has complied with all
customs, agreements, legislative or other official
provisions relating to the Employees, and their terms of
employment; (iv) any and all amounts due to Employees of
the Seller as of the Closing Date either on account of
wages, annual leave, sick pay, and any other compensation
or reimbursement or payment according to law or contract,
and all amounts required to cover the Seller's liability
with respect to termination of employment as of the
Closing Date, pursuant to any law, custom, agreement or
arrangement were fully paid or fully funded, or provided
and accrued for in the Financial Statements and all such
amounts with respect to the period until the Closing Date
were either fully paid or provided and accrued for in the
Financial Statements or are reflected in Section 5.23(b)
to the Disclosure Schedule. No cause of action exists
giving right to Employees to any claim for compensation or
termination of employment beyond the Employee Related
Liabilities (including the release of funds deposited with
Employees' pension funds, early retirement funds,
education fund (Keren Hishtalmut)), or for payment of any
compensation as a result of the transactions contemplated
hereby.
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(c) LABOR RELATIONS; COMPLIANCE. The Seller has complied with
all laws applicable to its Employees and with all
agreements, arrangements, promises and obligations
relating thereto. There has not been, and to Seller's
knowledge, there has not been threatened, any proceeding
against or affecting the Seller relating to the alleged
violation of any applicable laws or agreements,
undertaking, promises or any other obligation pertaining
to labor relations or employment matters. The Seller is
not liable for the payment of any compensation, damages,
taxes, fines, penalties, or other amounts, however
designated, for failure to comply with any of the
foregoing legal or contractual requirements.
(d) LIST OF EMPLOYEES. Section 5.23(d) of the Disclosure
Schedule lists all Employees as of the Closing Date.
5.24. BENEFIT PLANS. With respect to the Seller: all amounts which
the Seller is required by law, custom or by agreement to
deduct from its Employees' salaries and/or transfer to such
Employees' pension, severance pay, early retirement funds,
life insurance ('Bituach Menahalim'), incapacity insurance,
continuing education fund, bonus or vacation, have been duly
paid into the appropriate fund or funds or provided and
accrued for in the Financial Statements in accordance with
US GAAP, and the Seller does not have any outstanding
obligation to make any such transfer or provision to any
Employee on a consistent basis. Section 5.24(i) of the
Disclosure Schedule, (i) lists retirement, stock option,
stock purchase, incentive, bonus, life, medical, vision,
health, disability or profit sharing plans, and other
Employee compensation or benefit plans, agreements,
policies, contracts, arrangements or commitments, including
without limitation severance agreements, holiday, vacation
or similar matters, relating to officers or Employees of
Seller; and (ii) sets forth Seller's contributions made to
such Plans, all as of December 31, 2002. Seller has
delivered correct and complete copies of all plans,
including amendments thereto.
5.25. [RESERVED].
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5.26. EXPORT CONTROL LAWS. With respect to all Acquired Assets,
Seller has complied with all relevant Export Control Laws
applicable to the products sold by Seller. No obligation of
Seller under any Transferred Contract violates the terms of
any relevant Export Control Law in any relevant
jurisdiction.
5.27. DISCLOSURE. The representations and warranties of Seller in
this Agreement, are each accurate, correct and complete in
all material respects, and do not contain any untrue
statement of a material fact or omit to state a material
fact necessary in order to make the statements and
information contained in this Agreement not misleading.
Buyer has the right to rely fully upon the representations,
warranties, covenants and agreements of Seller contained in
this Agreement or any Exhibit or Schedule hereto or document
executed or delivered in connection with or pursuant to any
of the foregoing.
5.28. SOLVENCY. Seller is not insolvent, nor will Seller be
rendered insolvent by the occurrence of the transactions
contemplated by this Agreement. In addition, immediately
after giving effect to the consummation of the transactions
contemplated by this Agreement, (1) Seller will be able to
pay its debts as they become due, (2) the property of Seller
does not and will not constitute unreasonably small capital,
and Seller will not have unreasonably small capital and will
not have insufficient capital with which to conduct its
present or proposed business, and (3) taking into account
pending and threatened litigation, final judgments against
Seller in actions for money damages are not reasonably
anticipated to be rendered at a time when, or in amounts
such that, Seller will be unable to satisfy any such
judgments promptly in accordance with their terms (taking
into account the maximum probable amount of such judgments
might be rendered). The cash available to Seller, after
taking into account all other anticipated uses of the cash
of Seller, will be sufficient to pay all such judgments
promptly in accordance with their terms.
5.29. CORPORATE NAME. The use of the corporate name of Seller does
not infringe the right of any third party nor is it
confusingly similar with the corporate name of any third
party. After the Closing Date, no person or business entity
other than Buyer will be authorized directly or indirectly
to use the corporate name of Seller or any name deceptively
or confusingly similar thereto.
6. BUYER'S REPRESENTATIONS AND WARRANTIES
Buyer represents and warrants to Seller that the statements contained in this
Section 6 are correct and complete as of the date of this Agreement.
6.1. ORGANIZATION OF BUYER. Each of the Buyer entities is a
corporation duly organized, validly existing, and in good
standing under the laws of its respective jurisdiction.
6.2. AUTHORIZATION OF TRANSACTION. Buyer has full power and
authority (including full corporate power and authority) to
execute and deliver this Agreement and to perform its
obligations hereunder. This Agreement constitutes the valid
and legally binding obligation of Buyer, enforceable in
accordance with its terms and conditions.
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6.3. NO CONTRAVENTION. To Buyer's best knowledge, neither the
execution and the delivery of this Agreement, nor the
consummation of the transactions contemplated hereby, will
(i) violate any constitution, statute, regulation, rule,
injunction, judgment, order, decree, ruling, charge, or
other restriction of any government, governmental agency, or
court to which Buyer is subject or any provision of its
articles of association or (ii) conflict with, result in a
breach of, constitute a default under, result in the
acceleration of, create in any party the right to
accelerate, terminate, modify, or cancel, or require any
notice under any agreement, contract, lease, license,
instrument, or other arrangement to which Buyer is a party
or by which it is bound or to which any of its assets is
subject.
6.4. EXPERIENCE; RECEIPT OF INFORMATION. Buyer represents that it
has such knowledge and experience in business matters so as
to be capable of evaluating the merits and risks relating to
the acquisition of the Acquired Assets, has conducted due
diligence of Seller and the Acquired Assets and assumption
of Assumed Liabilities and has reviewed and inspected all of
the data and information provided to it by the Seller in
connection with this Agreement, the TTA and the Services
Agreement. This representation shall not prejudice Buyer's
reliance on the Seller's representations and warranties set
forth in this Agreement.
7. ADDITIONAL UNDERSTANDINGS.
Because (i) under the Reference Balance Sheet, the Seller has accrued
transaction expenses of approximately US$350,000, that pursuant to this
Agreement are to be borne by the Buyer, and (ii) under same Reference
Balance Sheet, an amount of approximately US$350,000 is to be received from
the OCS and, pursuant to this Agreement, is to be transferred by Seller to
Buyer; the parties agree that, for the sake of procedural simplicity, the
above items will be set off against each other so that the Seller shall
bear and pay such transaction expenses and shall be entitled to such
receivable from the OCS. The parties agree that, other than as set forth in
Sections 5.8(b) and 5.19(e) of the Disclosure Schedule and costs and
expenses of Employees' travel in connection with this Agreement, Seller has
not accrued or incurred any additional transaction expenses that are to be
borne by Buyer and any additional expenses in connection with the
transaction, if any, shall not be assumed by Buyer and shall be deemed an
Excluded Liability.
8. [RESERVED]
9. POST CLOSING COVENANTS
9.1. CONTINUED ASSISTANCE. Following the Closing, at Buyer's
request and without further consideration, Seller shall
execute, acknowledge and deliver such documents, instruments
or assurances and take such other action as Buyer may
reasonably request to more effectively assign, convey and
transfer any of the assets, properties, rights or claims
with regard to the Acquired Assets. Following the Closing,
Seller shall refer to Buyer as promptly as practicable any
telephone calls, letters, orders, notices, requests,
inquiries and other communications relating to the Acquired
Assets. Seller shall cooperate in an orderly transfer of the
Acquired Assets.
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9.2. RECORDS AND DOCUMENTS. For three years following the Closing
Date, Seller shall grant to Buyer and its representatives,
at Buyer's request, access to and the right to make copies
of those records and documents related to the Seller,
possession of which is retained by Seller (if any), as may
be necessary or useful in connection with Buyer's conduct of
the Acquired Assets after the Closing. If during such period
Seller elects to dispose of such records, Seller shall first
give Buyer sixty (60) days' written notice, during which
period Buyer shall have the right to take such records
without further consideration.
9.3. CONFIDENTIALITY. After the Closing Date, except as may be
required for tax purposes or other regulatory purposes,
neither Seller nor any of the respective successors and
assigns of Seller: shall (i) retain any document, databases
or other media embodying any Confidential Information or
proprietary know-how which constitutes a part of the
Acquired Assets or use, publish or disclose to any third
person any such Confidential Information or proprietary
know-how, or (ii) use, publish or disclose any Confidential
Information concerning the Acquired Assets, or Buyer or its
Affiliates.
9.4. COVENANT NOT TO COMPETE.
(a) For a period of three (3) years from and after the
Closing, Seller will not engage in, directly or
indirectly, any business that competes with Seller's
business as conducted prior to Closing, including without
limitation, in the development, making, marketing, or
selling products of xDSL semiconductor business that
compete with the Acquired Assets. Seller acknowledges that
the restrictions contained in this Section 9.4 are fair
and reasonably required to protect the interest of Buyer
under this Agreement. If the final judgment of a court of
competent jurisdiction declares that any term or provision
of this Section 9.4 invalid or unenforceable, the parties
agree that the court making the determination of
invalidity or unenforceability shall have the power to
reduce the scope, duration, or area of the term or
provision, to delete specific words or phrases, or to
replace any invalid or unenforceable term or provision
with a term or provision that is valid and enforceable and
that comes closest to expressing the intention of the
invalid or unenforceable term or provision, and this
Agreement shall be enforceable as so modified after the
expiration of the time within which the judgment may be
appealed.
(b) For a period of two (2) years from the Closing Date,
whether for its own benefit or for the benefit of any
other person, Seller shall not solicit the professional
services of any employee of the Buyer previously employed
by Seller or otherwise interfere with the relationships
between Buyer or any Affiliate and any such person.
9.5. POWER OF ATTORNEY. Seller hereby irrevocably appoints Buyer
as Seller's agent and attorney-in-fact, with full power and
authority in the place of Seller and in the name of Seller
or otherwise, from time to time in Buyer's discretion to
take any action and to execute any instrument which Buyer
may reasonably deem necessary or advisable to fulfill
Seller's obligations, rights or to accomplish the purposes
of this Agreement. Seller hereby ratifies and confirms all
that Buyer may lawfully do by virtue of this Power of
Attorney; provided, however that nothing in this Power of
Attorney shall permit Buyer to take any actions on behalf of
Seller which would prejudice Seller's rights under the
Escrow Agreement.
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9.6. LITIGATION SUPPORT. In the event and for so long as any
party actively is contesting or defending against any
action, suit, proceeding, hearing, investigation, charge,
complaint, claim, or demand in connection with (i) any
transaction contemplated under this Agreement, or (ii) any
fact, situation, circumstance, status, condition, activity,
practice, plan, occurrence, event, incident, action, failure
to act, or transaction on or prior to the Closing Date
involving the Acquired Assets, the other party will
cooperate with it, or its counsel, in the contest or
defense, make available their personnel, and provide such
testimony and access to their books and records as shall be
necessary in connection with the contest or defense, all at
the sole cost and expense of the contesting or defending
party (unless the contesting or defending party is entitled
to indemnification therefor under Section below).
9.7. TRANSITION. Seller will not take any action that is designed
or intended to have the effect of discouraging any lessor,
licensor, customer, distributor, value added reseller,
supplier, from maintaining the same business relationships
with Buyer after the Closing as it maintained with the
Seller prior to the Closing. Seller will refer all customer
inquiries relating to the Acquired Assets to Buyer from and
after the Closing.
9.8. CHANGE OF CORPORATE NAME. As soon as practicable after
Closing, Seller shall execute an amendment to its Articles
of Association, changing its corporate name to a name that
does not include the word "Tioga" or any other name under
which Seller presently conducts business.
9.9. VALUE ADDED TAX. All VAT, including interest and penalties
thereon as determined by the VAT authorities (if any), with
respect to amounts paid or payable under the Services
Agreement, the TTA and this Agreement will be borne by the
Buyer. For such purpose, the parties agree as follows: (a)
Seller shall cooperate with Buyer and its accountants in an
effort to obtain a ruling from the VAT Authorities in Israel
for certain VAT relief with respect to the amounts set forth
above; (b) upon the earlier of (i) two months following the
Closing, and (ii) the VAT authorities' first demand, the
Buyer shall pay to Seller (x) the VAT amounts previously
invoiced by Seller to Buyer under the Services Agreement,
and (y) any additional VAT amounts relating to the Services
Agreement (including interest and penalties thereon, if any)
and required by the VAT Authorities, for which Seller shall
invoice Buyer at such time; (c) upon the VAT authorities'
first demand, the Buyer shall pay to Seller any VAT
(including interest and penalties thereon as determined by
the VAT authorities, if any) due with respect to the
Consideration paid by Buyer to Seller hereunder and shall
remain liable for any such amount throughout the statute of
limitations period; (d) upon the VAT authorities' first
demand, Buyer shall pay to Seller the VAT due with respect
to all amounts paid or payable by Buyer to Seller pursuant
to the TTA. For purposes hereof, the VAT authorities' first
demand shall be in writing unless otherwise made in the
presence of an authorized representative of the Buyer.
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9.10. INSURANCE. Seller shall assist and cooperate with Buyer, at
Buyer's expense, to facilitate the Buyer's receipt of any
amounts recoverable pursuant to insurance policies held by
Seller and covering a Liability assumed by Buyer hereunder;
and any proceeds received by Seller pursuant to such
insurance policies shall be transferred to Buyer to the
extent Buyer has incurred such Liability.
10. INDEMNIFICATION PROVISIONS
10.1. INDEMNIFICATION IN BENEFIT OF BUYER. Subject to Section 10.2
below, during the period ending on the later of (i) thirty
(30) days following the Closing Date, and (ii) twenty days
following receipt by ST NV (at the address set forth below)
of the Closing Financial Statements of Seller (the "ESCROW
PERIOD"), Seller shall defend, indemnify, and hold Buyer and
its employees, directors, officers, shareholders and agents
(the "INDEMNITEES") harmless from and against, and reimburse
them with respect to, any and all liabilities, direct
losses, claims, costs, damages, demands, penalties or other
expenses (including reasonable attorney's fees and other
legal expenses), awards or recoveries, finally assessed by a
court of competent jurisdiction or arbitration tribunal and
actually paid by the Indemnitees (collectively "DAMAGES"),
not exceeding in the aggregate US$1,800,000 (the
"INDEMNIFIABLE AMOUNT") of every nature whatsoever incurred
by the Indemnities by reason of or arising out of or in
connection with:
(a) any misrepresentation or breach of warranty made by Seller
in this Agreement.
(b) any breach by Seller of any covenant, agreement or
undertaking made by it in this Agreement.
10.2. CONDITIONS TO INDEMNIFICATION. Notwithstanding any other
provision in Section 10.1, Buyer shall be entitled to
indemnification only if the aggregate Indemnifiable Amounts
exceed fifty thousand dollars (US$50,000) (the "THRESHOLD
AMOUNT"), provided that at such time as the amount to which
the Buyer is entitled to be indemnified exceeds the
Threshold Amount, the Buyer shall be entitled to be
indemnified up to the full Indemnifiable Amount including
the Threshold Amount. In addition, in the event of a third
party claim, the above indemnification is conditioned upon
the Buyer (i) giving the Seller prompt notice in writing of
such claim, suit, proceeding or threat thereof, (ii)
permitting the Seller sole control, through counsel of its
choice to defend and/or settle such suit and (iii) giving
Seller all the needed information, assistance and authority,
at the Indemnifying party's expense, to enable it to defend
or settle such claim.
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10.3. EXCLUSIVE REMEDY. The Buyer acknowledges and agrees that
except for the remedy of specific performance for
enforcement of this Agreement, the Escrow Amount is the sole
and exclusive remedy (except in the case of fraud in which
case Buyer reserves all rights available to it under the
law) with respect to any and all claims relating to the
subject matter of this Agreement and all ancillary
documents.
11. [RESERVED]
12. MISCELLANEOUS
12.1. SUCCESSION AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties named herein
and their respective successors and permitted assigns.
Subject to Section 2.2 above, each party may assign either
this Agreement or any of its rights, interests, or
obligations hereunder without the prior written approval of
the other party; provided, however that Buyer may (i) assign
any or all of its rights and interests hereunder to one or
more of its Affiliates and (ii) designate one or more of its
Affiliates to perform its obligations hereunder (in any or
all of which cases Buyer nonetheless shall remain
responsible for the performance of all of its obligations
hereunder).
12.2. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State
of New York, without giving effect to its conflict of laws
principles. If a dispute arises out of or related to this
Agreement, the parties agree to submit the dispute to
arbitration. The arbitration proceedings will be conducted
by a single arbitrator selected by the parties or, if the
parties cannot agree on the identity of the arbitrator, by a
panel of three arbitrators, one selected by each of the
parties and the third mutually selected by the other two
arbitrators. The decision of the arbitrators shall be final
and binding upon the parties. The cost of the arbitration,
including the fees and expenses of the arbitrator(s), will
be shared equally by the parties unless the award otherwise
provides. The arbitration shall be conducted in the English
language and all hearings shall be held in New York.
12.3. AMENDMENTS AND WAIVERS. No amendment of any provision of
this Agreement shall be valid unless the same shall be in
writing and signed by Buyer and Seller. No waiver by any
party of any default, misrepresentation, or breach of
warranty or covenant hereunder, whether intentional or not,
shall be deemed to extend to any prior or subsequent
default, misrepresentation, or breach of warranty or
covenant hereunder or affect in any way any rights arising
by virtue of any prior or subsequent such occurrence.
12.4. SEVERABILITY. Any term or provision of this Agreement that
is invalid or unenforceable in any situation in any
jurisdiction shall not affect the validity or enforceability
of the remaining terms and provisions hereof or the validity
or enforceability of the offending term or provision in any
other situation or in any other jurisdiction.
12.5. PARTICIPATION. The parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises,
the this Agreement shall be construed as if drafted jointly
by the parties and no presumption or burden of proof shall
arise favoring or disfavoring any party by virtue of the
authorship of any of the provisions of the this Agreement.
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12.6. STAMP DUTY. Stamp duty payable in respect of this Agreement,
if any, shall be borne by the parties in equal share.
12.7. AGREEMENT. This Agreement sets forth and constitutes the
entire agreement between the parties hereto with respect to
the subject matter hereof, and supersedes any and all prior
agreements, understandings, promises and representations
made by either party to the other, written, electronic, or
oral, concerning the subject matter hereof and the terms
applicable hereto.
12.8. HEADINGS. The Section and other headings contained in this
Agreement are for reference purposes only and shall not
affect in any way the meaning or interpretation of this
Agreement.
12.9. INCORPORATION OF EXHIBITS AND SCHEDULES. Any references to
Sections, Schedules and Exhibits are to Sections of, and
Schedules and Exhibits to, this Agreement unless otherwise
indicated. The Exhibits and Schedules identified in this
Agreement are incorporated herein by reference and made a
part hereof.
12.10. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but
all of which together will constitute one and the same
instrument.
12.11. NOTICES. All notices, requests, demands, claims, and other
communications hereunder will be in writing. Any notice,
request, demand, claim, or other communication hereunder
shall be deemed duly given if (and then two business days
after) it is sent by registered or certified mail, return
receipt requested, postage prepaid, and addressed to the
intended recipient as set forth below or if sent by
facsimile to the number set forth below:
If to Buyer:
General Manager, TPA
STMicroelectronics N.V.
00, Xxxxxx xx Xxxxx xxx Xxxxxx
0000 Xxxxxx
Xxxxxxxxxxx
Fax No: x00 00 000 0000
with a copy to
General Counsel,
STMicroelectronics N.V.
00, Xxxxxx xx Xxxxx xxx Xxxxxx
0000 Xxxxxx
Xxxxxxxxxxx
Fax No.: + 00 00 000 0000
27
and to:
Eitan Xxxxx Xxxxxx Xxxxx-Xxxxx
2 Gav-Yam Center, 7 Xxxxxxx Xx,
Xxxxxxx 00000, Xxxxxx
Fax No.: x000 0 0000000
Attention: Xxxx Xxxxx, Adv.
If to the Seller:
Xx. Xxxxx Xxxxx, Chairman
Tioga Technologies Ltd.
C/O Orckit Communications Ltd.
000 Xxxxx Xxxx Xx.
Xxx Xxxx, Xxxxxx
Fax No.: x000 0 000 0000
with a copy to:
Xxxxxxxx, Xxxxxxx & Xx.
0 Xxxxx Xxxxxx
Xxx-Xxxx, Xxxxxx
Fax: 000 0 000 0000
Attention: Xxxxxx X. Xxxx, Adv.
Any party may send any notice, request, demand, claim, or
other communication hereunder to the intended recipient at
the address set forth above using any other means (including
personal delivery, expedited courier, messenger service,
telecopy, telex, ordinary mail, or electronic mail), but no
such notice, request, demand, claim, or other communication
shall be deemed to have been duly given unless and until it
actually is received by the intended recipient. Any party
may change the address to which notices, requests, demands,
claims, and other communications hereunder are to be
delivered by giving the other party notice in the manner
herein set forth.
12.12. NO THIRD-PARTY BENEFICIARIES. This Agreement shall not
confer any rights or remedies upon any person other than the
parties and their respective successors and permitted
assigns.
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IN WITNESS WHEREOF, the parties hereto have executed this Asset Purchase
Agreement as of the date first above written.
STMICROELECTRONICS N.V.
By: /s/ Xxxx Xxxxxx
Name: Aldo Romana
Title: Corp. V.P.
ST MICROELECTRONICS LTD.
By: /s/ Xxxxxxxx Xxxxxxx
Name: Xxxxxxxx Xxxxxxx
Title: Group V.P.
TIOGA TECHNOLOGIES LTD.
By: /s/ I. Tamir
Name: Xxxxx Xxxxx
Title: Chairman of the Board of Directors
29
