EXHIBIT 10.3
==============================
ASSET PURCHASE AGREEMENT
==============================
B E T W E E N
AMI SEMICONDUCTOR, INC.
AND
NANOAMP SOLUTIONS, INC.
September 8, 2006
-1-
ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made the 8th day of September, 2006, between the following
entities (the "parties"):
AMI SEMICONDUCTOR, INC.,
a corporation existing under the laws of the State of
Delaware, (hereinafter referred to as "AMI Semi" or
"Purchaser"),
- AND -
NANOAMP SOLUTIONS, INC.,
a corporation existing under the laws of the State of
Delaware, (hereinafter referred to as the "NanoAmp"
or "Vendor".
THIS AGREEMENT WITNESSES THAT, in consideration of the respective covenants,
agreements, representations, warranties and indemnities of the parties herein
contained and for other good and valuable consideration (the receipt and
sufficiency of which are acknowledged by each party), the parties agree as
follows:
ARTICLE 1
INTERPRETATION
1.1 DEFINED TERMS
For the purposes of this Agreement, the following terms shall have the
respective meanings set out below and grammatical variations of such terms shall
have corresponding meanings:
"AFFILIATE" means, in relation to any person, any other person that
directly or indirectly controls, that is directly or indirectly controlled
by, or that is under the direct or indirect common control of, such
person; provided, however, that (a) where one person controls another
person, any other person controlled by the first such person shall be
deemed to be an Affiliate of the second such person; and (b) any
corporation in respect of which any person owns beneficially, directly or
indirectly, not less than 50% of such corporation's voting securities,
shall be deemed to be an Affiliate of such person (for purposes hereof,
"control" means, in respect of any person, the power or authority to
direct, or cause the direction of, directly or indirectly, the management,
policies or actions of any other person, whether through the ownership of
equity securities or voting securities or by contract or otherwise);
"ASSIGNED AGREEMENTS" has the meaning set out in Section 5.13;
-2-
"ASSIGNED CONTRACTS" has the meaning set out in Section 2.1(d);
"ASSIGNED THIRD PARTY SOFTWARE LICENSES" has the meaning set out in
Section 2.1(f);
"ASSUMED LIABILITIES" has the meaning set out in Section 4.1;
"BASE INVENTORY" means the Inventory held by the Purchased Business as of
December 31, 2005, as derived from the unaudited financial statements of
the Purchased Business as of December 31, 2005 and determined using GAAP
consistently applied. Any non Medical Related Inventory that Vendor has
that relates to a Product Family that Vendor has not sold in a bona fide
transaction with a customer or used in manufacturing a product sold in a
bona fide transaction with a customer since January 1, 2005 shall be
valued at $0. The Inventory will be analyzed at the Product Family level
and not at the part number level for this purpose. This calculation is set
out in Section 3.5(b);
"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on which
banks are open for ordinary banking business in Pocatello, Idaho;
"CASH ASSETS" means cash, and highly liquid short-term investments with
original maturities of ninety (90) days or less, of the Vendor.
"CLAIM" means any claim, action, demand, lawsuit or legal proceeding;
"CLEANUP" means any investigation, containment, cleanup, removal or other
remediation or corrective action;
"CLOSING DATE" means such date that is no later than the second Business
Day after the satisfaction or waiver of each of the conditions set forth
in Article 10 but no later than September 30, 2006, or such later date as
the parties may mutually agree;
"CONTAMINANT" has the meaning set out in Section 5.10(l);
"CONTRACT" means any agreement, indenture, contract, lease, deed of trust,
license, option, instrument or other commitment, whether written or oral;
"DESIGNATED KEY EMPLOYEES" means the employees of Vendor who are
designated as key employees in Schedule 9.1;
"DISABLING CODE" has the meaning set out in Section 5.10(l);
"EFFECTIVE TIME" means 12:01 a.m. on the Closing Date;
"EFFECTIVE TIME INVENTORY" means the value of the Inventory held by the
Purchased Business at the Effective Time determined using the same
methodology and principles used in determining the Base Inventory. Any Non
Medical Related Inventory that Vendor has that relates to a Product Family
that Vendor has not sold in a bona fide transaction with a customer or
used in manufacturing a product sold in a bona fide transaction with a
customer since January 1, 2005 shall be valued at $0. The Inventory
-3-
will be analyzed at the Product Family level and not at the part number
level for this purpose;
"EMPLOYEE BENEFIT PLANS" means all employee pension benefit plans, as
defined in Section 3(2) of ERISA, employee welfare benefit plans, as
defined in Section (3)(1) of ERISA, and any deferred compensation,
performance, bonus, incentive, vacation pay, holiday pay, severance,
insurance, retirement, excess benefit, fringe benefit or other plan, trust
or arrangement, whether or not covered by ERISA, whether written or oral,
for the benefit of the Employees;
"EMPLOYEES" means the employees of the Purchased Business.
"ENCUMBRANCE" means any encumbrance, lien, charge, hypothecation, pledge,
mortgage, title retention agreement, security interest of any nature,
adverse claim, exception, right of set-off, reservation, easement, right
of occupation, any matter capable of registration against title, option,
right of pre-emption, privilege or any Contract to create any of the
foregoing;
"ENVIRONMENTAL LAWS" means all federal, municipal and local laws,
ordinances, by-laws, codes, statutes, rules and regulations, orders,
directives, decrees or judgments rendered by any Governmental Authority,
relating to (i) the protection of the environment; (ii) pollution; (iii)
the Release, threatened Release, Cleanup or manufacture, processing,
distribution, use, treatment, storage, transport or handling of Hazardous
Substances; or (iv) worker and public health and safety;
"ENVIRONMENTAL PERMITS" means all licenses, permits, approvals, consents,
certificates, registrations or other authorizations required under
Environmental Laws;
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended;
"ESCROW AGENT" means Xxxxx Fargo Bank, N.A.;
"EXCLUDED ASSETS" has the meaning set out in Section 2.2;
"EXCLUDED LIABILITIES" has the meaning set out in Section 4.2;
"FIRST PARTY CLAIM" has the meaning set out in Section 12.3;
"GAAP" means generally accepted accounting principles in the United States
as recommended from time to time by the Financial Accounting Standards
Board or any successor institute.
"GOVERNMENTAL AUTHORITY" means any national, federal, state, county,
municipal, district or local government or government body, or any public
administrative or regulatory agency, political subdivision, commission,
court, board or body, or representative of any of the foregoing, foreign
or domestic, of, or established by any such government or government body
which has authority in respect of a particular matter or
-4-
any quasi-governmental body having the right to exercise any regulatory
authority thereunder;
"HAZARDOUS SUBSTANCES" means any substances, chemicals, materials or
wastes that are toxic or hazardous or any pollutant or contaminant which
is now or hereafter restricted, regulated, prohibited or penalized by any
Environmental Laws; "Hazardous Substances" specifically includes
asbestos-containing materials, radioactive materials and petroleum and its
fractions;
"INCREASED INVENTORY" means any Inventory is which included in the
Inventory Adjustment to be paid by the Purchaser to the Vendor.
"INCREASED NON-MEDICAL INVENTORY" means any Increased Inventory which is
also Non-Medical Related Inventory.
"INDEMNIFIED PARTY" means a person seeking indemnification as set out in
Section 12.3;
"INDEMNIFYING PARTY" means a person providing indemnification as set out
in Section 12.3;
"INDEMNITY ESCROW AGREEMENT" has the meaning set out in Section 3.2;
"INDEMNITY ESCROW AMOUNT" means $1,000,000;
"INDUSTRIAL MARKET" means semiconductors and sensors used in industrial
electronics whose end-market applications include: (1) manufacturing
system applications, including examples such as industrial process and
control systems, fabrication, electronic packaging and assembly equipment;
(2) security and energy management applications, including examples such
as intrusion and fire-detection systems as well as building environmental
controls; (3) test and measurement applications, including examples such
as industrial monitoring and test electronics, analysis and calibration
equipment, and industrial metering and mobile handset metering equipment;
or (4) other industrial electronics applications, including examples
serving the oil, agricultural, retail and construction industries, as well
as electronic vending machines, scientific measuring and drilling
equipment.;
"INTELLECTUAL PROPERTY" means industrial and intellectual property,
including all:
(a) trade secrets, confidential information and confidential
know-how, including all unpatented inventions, customer and
supplier lists, formulae, processes, technology, inventor's
notes, unpublished studies and data, research designs,
research results and notes, prototypes, drawings, design and
construction specifications, production, operating and quality
control manuals, marketing strategies, and current or proposed
business opportunities;
(b) copyrights, including all copyrights in the software;
-5-
(c) industrial designs, design patents and other designs;
(d) integrated circuit topography rights;
(e) patents; and
(f) trade-marks, including both registered and unregistered
trade-marks and service marks, designs, logos, indicia,
distinguishing guises, trade dress, trade names, business
names, internet domain names, any other source or business
identifiers and fictitious characters, and all goodwill
associated with the foregoing,
and all registrations, applications for registration, reissues,
extensions, renewals, divisions, continuations, continuations-in-part,
proprietary information, documentation, licenses, registered user
agreements and other agreements relating to the foregoing;
"INVENTORY" means, as of any date, all products, work in progress, and raw
materials held by the Purchased Business collectively valued at the lower
of cost or market in accordance with GAAP. For clarification purposes,
Inventory will not include wafers in the foundry for which the Vendor has
not been invoiced by its supplier as of the Effective Time;
"INVENTORY ADJUSTMENT" means the difference between the Effective Time
Inventory and the Base Inventory;
"INVENTORY ADJUSTMENT PAYOR" has the meaning set out in Section 3.5(b).
"LOSSES", in respect of any matter, means all Claims, demands,
proceedings, losses, damages, obligations, liabilities, deficiencies,
fines, costs and expenses (including all legal and other professional fees
and disbursements, interest, penalties and amounts paid in settlement)
arising, directly or indirectly, as a result of such matter, provided
however that, notwithstanding anything herein to the contrary, the term
"Losses" shall in no event include amounts recoverable as lost profits or
based on a multiple of earnings, incidental damages, indirect damages,
special damages, punitive damages or consequential damages (except to the
extent that any such amounts or damages are included in any settlement
amount or damages award to be paid by a party to a third party pursuant to
the provisions of Article 12 of this Agreement);
"OFFERED EMPLOYEES" has the meaning set out in Section 9.1;
"MEDICAL MARKET" means semiconductors and sensors used in medical
electronics whose end-market applications include examples such as cardiac
rhythm management (CRM) applications,; continuous glucose monitoring
applications and neurostimulation applications; as well as audiology
applications, electronic surgical support equipment, irradiation
equipment, medical imaging applications and therapeutic and patient
monitoring applications;
-6-
"NON-MEDICAL RELATED INVENTORY" means Inventory intended for use in
products primarily for sale outside of the Medical Market;
"NON ASSIGNED THIRD PARTY SOFTWARE LICENSES" means licenses for any third
party EDA tools, Made 2 Manage and Nehanet;
"NON ASSIGNED SOFTWARE" means Nanofactory;
"PERMITS" has the meaning set out in Section 5.14;
"PERMITTED ENCUMBRANCES" means the Encumbrances described in Schedule 5.6;
"PERSON" means an individual, firm, corporation, limited liability
company, syndicate, partnership, trust, association, joint venture,
unincorporated organization, Governmental Authority or other legal or
business entity;
"PREMISES" has the meaning set out in Section 5.8;
"PRODUCT FAMILY" means a family of non-medical SRAM products with each
family being comprised of SRAMs that have that same number of megabits
(either 1, 2, 4,or 8 megabits) and that were designed and manufactured
with the same base mask sets;
"PURCHASE PRICE" has the meaning set out in Section 3.1;
"PURCHASED ASSETS" has the meaning set out in Section 2.1;
"PURCHASED BUSINESS" means the 6T memory business carried on by the Vendor
prior to the Effective Time utilizing the Purchased Assets, consisting
primarily of the design, development, marketing, manufacture and sale of
five product lines (as defined hereunder) sold primarily (but not limited
to) the Medical Market and the Industrial Market, including single-chip
and multi-chip packaged and bare-die versions of (1) ultra-low power (ULP)
SRAM application specific standard products, (2) customized ULP SRAM ICs,
(3) System-on-Chips (SoCs) that include Vendor's ULP SRAM, (4) Serial RAM
products and (5) embedded ULP SRAM intellectual property, excluding third
party software including EDA tools, cash, and any bank debt or other
financial liabilities;
"RELEASE" means any release, spill, emission, discharge, disposal,
dispersal, leaching or migration into the indoor or outdoor environment;
"RETENTION ESCROW AGREEMENT" has the meaning set out in Section3.3;
"RETENTION ESCROW AMOUNT" means $666,667;
"RIGHTS" has the meaning set out in Section 8.7;
"SYSTEMS" means: (a) all computer systems, hardware, equipment and
peripherals and all computer software and files included in the Purchased
Assets, including the Assigned Third Party Software Licenses; and (b) all
process controls, environmental controls and
-7-
any other support systems included in the Purchased Assets which employs,
stores or processes date/time information in electronic form, which are
used by the Vendor in the operation of the Purchased Business as currently
carried on by the Vendor and that are owned by the Vendor;
"TAX" or "TAXES" means all taxes, charges, fees, levies or other
assessments, including all income, capital, sales, use, transfer, goods
and services, franchise, withholding, social security, payroll, premium,
employment, health, education, excise, business, property or other taxes,
customs duties, surtaxes, fees, assessments, assessments as required
insurance (such as workers' compensation insurance), late filing or
payment penalties, charges or governmental or statutory imposts of any
kind whatsoever imposed by any Governmental Authority or other taxing
authority, together with any interest, penalty, fine or other amount on,
or in lieu of non-collection of, late payment of or otherwise in respect
of, such taxes;
"THIRD PARTY CLAIM" has the meaning set out in Section 12.3;
"TIME OF CLOSING" means 10:00 a.m. (Pacific Standard Time) on the Closing
Date, or such other time on the Closing Date as the parties may mutually
determine;
"TRANSFERRED EMPLOYEES" has the meaning set out in Section 9.3;
"TRANSFERRED INTELLECTUAL PROPERTY" has the meaning set out in Section
5.10(b);
"TRANSFERRED LEASED PROPERTIES" means the leased facilities of the Vendor
that is listed on Schedule 2.1(b) hereto;
"TRANSFERRED PERMITS" has the meaning set out in Section 2.1(l);
"VENDOR EMPLOYEE PLANS" has the meaning set out in Section 9.3(a);
"WARN ACT" has the meaning set out in Section 5.27.
1.2 CURRENCY
Unless otherwise indicated, all dollar amounts referred to in this Agreement are
expressed in United States dollars.
1.3 SECTIONS AND HEADINGS
The division of this Agreement into Articles, Sections and Schedules and the
insertion of headings and an index are for convenience of reference only and
shall not affect the construction or the interpretation of this Agreement.
Unless otherwise specified herein, any reference in this Agreement to an
Article, Section or Schedule refers to the specified Article, Section of or
Schedule to this Agreement. In this Agreement, the terms "this Agreement",
"hereof", "herein", "hereunder" and similar expressions refer to this Agreement
and not to any particular part, Article, Section or other provision hereof.
-8-
1.4 RULES OF CONSTRUCTION
In this Agreement:
(a) words importing the singular number only shall include the plural
and vice versa and words importing the masculine gender shall
include the feminine and neuter genders and vice versa;
(b) the words "include", "includes" and "including" means "include",
"includes" or "including", in each case, "without limitation";
(c) reference to any agreement, indenture or other instrument in writing
means such agreement, indenture or other instrument in writing as
amended, modified, replaced or supplemented from time to time;
(d) reference to any statute shall be deemed to be a reference to such
statute as amended, re-enacted or replaced as of the date of this
Agreement;
(e) if there is any conflict or inconsistency between the provisions
contained in the body of this Agreement and those of any Schedule,
the provisions contained in the body of this Agreement shall
prevail;
(f) time periods within which a payment is to be made or any other
action is to be taken hereunder shall be calculated excluding the
day on which the period commences and including the day on which the
period ends; and
(g) whenever any payment to be made or action to be taken hereunder is
required to be made or taken on a day other than a Business Day,
such payment shall be made or action taken on the next following
Business Day.
1.5 ACCOUNTING PRINCIPLES
In this Agreement, accounting terms that are not defined herein shall be
construed in accordance with GAAP.
1.6 ENTIRE AGREEMENT
This Agreement, together with the attached Schedules and the documents and
instruments specifically contemplated to be entered into or delivered in
connection herewith, constitutes the entire agreement between the parties with
respect to the subject matter hereof and supersedes all prior agreements,
understandings, negotiations and discussions, whether written or oral (including
the nonbinding letter of intent dated April 10, 2006 and the binding letter of
intent dated July 28, 2006, except with respect to the last paragraph of Section
1 of such binding Letter of Intent). There are no other conditions, covenants,
agreements, representations, warranties or other provisions, express or implied,
collateral, statutory or otherwise, relating to the subject matter hereof except
as herein provided or as provided in other documents executed and delivered by
the parties in connection herewith.
-9-
1.7 TIME OF ESSENCE
Time shall be of the essence of this Agreement.
1.8 APPLICABLE LAW
This Agreement shall be construed, interpreted and enforced in accordance with,
and the respective rights and obligations of the parties shall be governed by,
the laws of the State of Delaware without reference to the conflict of laws
principles thereof.
1.9 KNOWLEDGE
Where any matter is stated to be within the Vendor's knowledge in this
Agreement, the Vendor shall be deemed for purposes of this Agreement to have the
knowledge of the relevant facts that those senior managers of the Purchased
Business listed in Schedule 1.9 would reasonably likely to have after reasonable
inquiry. Where any matter is stated to be within Purchaser's knowledge in this
Agreement, the Purchaser shall be deemed for purposes of this Agreement to have
the knowledge of the relevant facts that those senior managers of the Purchaser
listed in Schedule 1.9 would reasonably likely to have after reasonable inquiry.
1.10 AMENDMENT AND WAIVERS
No amendment or waiver of any provision of this Agreement shall be binding on a
party hereto unless consented to in writing by such party. No waiver of any
provision of this Agreement shall constitute a waiver of any other provision,
and no waiver shall constitute a continuing waiver unless otherwise provided.
1.11 SEVERABILITY
If any provision of this Agreement is determined by a court of competent
jurisdiction to be invalid, illegal or unenforceable in any respect, such
determination shall not impair or affect the validity, legality or
enforceability of the remaining provisions hereof, and each provision is hereby
declared to be separate, severable and distinct. To the extent that any such
provision is found to be invalid, illegal or unenforceable, the parties hereto
shall act in good faith to substitute for such provision, to the extent
possible, a new provision with content and purpose as close as possible to the
provision so determined to be invalid, illegal or unenforceable.
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 PURCHASED ASSETS
On the terms and subject to the conditions of this Agreement, the Vendor hereby
agrees to sell, assign and transfer to the Purchaser and the Purchaser hereby
agree to purchase from the Vendor, effective as of the Effective Time, all of
the property and assets owned by the Vendor whether tangible or intangible and
of every kind and description and wheresoever situate that are primarily related
to, or primarily used by the Vendor with respect to, the Purchased Business,
other than the Excluded Assets, including the following (collectively, the
"PURCHASED ASSETS"):
-10-
(a) Machinery and Equipment. The machinery, equipment, hardware,
fixtures, furniture, furnishings, parts, supplies, accessories,
tools and other fixed assets described in Schedule 2.1(a), which,
for clarity, shall include, but not be limited to, all of the
servers located at the Vendor's offices in California as of July 27,
2006;
(b) Leases of Real Properties. All rights under the Transferred Lease
Properties described in Schedule 2.1(b), together with all leasehold
improvements relating thereto;
(c) Inventories. All Inventory, parts, supplies, accessories, work in
progress, and all prototype inventories held by the Purchased
Business and owned by the Vendor as of the Effective Time but not
including any Increased Inventory which is valued at zero ($0);
(d) Agreements. All rights under leases of personal property, orders or
Contracts for the provision of goods or services (whether as buyer
or seller), distribution and agency agreements and other Contracts
not otherwise referred to in this Section 2.1, including the
Contracts described in Schedule 2.1(f) (collectively, the "ASSIGNED
CONTRACTS");
(e) Intellectual Property. All Intellectual Property used in the
Purchased Business, including all trade-marks, (other than the names
"NanoAmp", "NanoAmp Solutions" and "Enable" and any derivatives
thereof and all corporate symbols, logos and domain names associated
therewith), copyrights, patents, industrial designs, licenses and
agreements described in Schedule 2.1(e) provided, that certain
Intellectual Property on Schedule 2.1(e-2) and the Non Assigned
Software shall be licensed to the Purchaser by the Vendor, rather
than purchased by the Purchaser; Effective as of the Effective Time,
the Purchaser hereby grants Vendor a royalty free, transferable,
perpetual, irrevocable, sublicensable, nonexclusive, worldwide,
royalty-free, fully paid up license to Intellectual Property listed
in Schedule 2.1(e-1); Effective as of the Effective Time, the Vendor
hereby grants Purchaser a royalty free, transferable, perpetual,
irrevocable, sublicensable, nonexclusive, worldwide, royalty-free,
fully paid up license to Intellectual Property listed in Schedule
2.1(e-2) and the Non Assigned Software;
(f) Third Party Software Licenses. Those third party software licenses
described in Schedule 2.1(f), and all machine readable media
containing copies of all source code, object code, data files,
records and other information subject to or provided in connection
with such third party software licenses and copies of all
documentation, including documents setting out applicable license
terms, operating procedures and error recovery procedures provided
by third parties or prepared by the Vendor in connection with such
third party software licenses (collectively, the "ASSIGNED THIRD
PARTY SOFTWARE LICENSES"). The Assigned Third Party Software
Licenses shall not include the Non-Assigned Third Party Software
Licenses. Any amounts required to be paid for the transfer of any
-11-
Assigned Third Party Software Licenses will be the responsibility of
the Purchaser;
(g) Computer Hardware and Software. All computer hardware and software,
including all rights under licenses and other agreements or
instruments relating thereto that is in the possession or control of
the Vendor;
(h) Books and Records. All books and records (other than those required
by law to be retained by the Vendor, copies of which will be made
available to the Purchaser), including customer lists, sales
records, working papers and files, engineering notes diagrams and
drawings relating to the Purchased Business, price lists and
catalogues, sales literature, advertising material, data, production
records, employee manuals, personnel records relating to the
Transferred Employees, supply records, inventory records, all data
and electronic data files relating to the Purchased Business used in
connection with the Non Assigned Software, Made to Manage and
Nehenet as well as any other software programs and tools used in the
Purchased Business that is used in normal day-to-day operation of
the Purchased Business, regardless of whether such software programs
and tools are being transferred to the Purchaser under this
Agreement, any historical data relating to the Purchased Business
(which may be provided in hard-copy form and not as part of an
electronic data file), and correspondence files (together with, in
the case of any such information which is stored electronically, the
media on which the same is stored (collectively, the "BOOKS AND
RECORDS");
(i) Warranty Rights. All express or implied warranties, representations
or guarantees made by suppliers furnishing goods (including the
personal property and equipment referred to in Section 2.1(a) or
services, including warranties, representations, guarantees or other
obligations related to product support or maintenance;
(j) Insurance Proceeds. All insurance proceeds received by the Vendor to
the extent related to the Purchased Business or any Purchased Assets
as a result of any damage or claim occurring between the date of
this Agreement and the Closing Date and any rights, claims or causes
of action existing or arising in respect of the Purchased Business
or the Purchased Assets under the Vendor's insurance policies;
(k) Claims. All claims, causes of action, choices in action, rights of
recovery and rights of set-off of any kind, to the extent pertaining
to or arising out of the Purchased Assets or the Assumed
Liabilities; and
(l) Permits. The permits listed on Schedule 2.1(l) (the "TRANSFERRED
PERMITS").
2.2 EXCLUDED ASSETS
The Purchased Assets shall not include any of the following property, assets, or
rights (collectively, the "EXCLUDED ASSETS"):
-12-
(a) Certain Current Assets. All Cash Assets and deferred tax assets of
the Vendor.
(b) Books and Records. All personnel records of the Vendor pertaining to
the Employees who are not Transferred Employees and all other books
and records that do not relate to the Purchased Business;
(c) Corporate Records. All of the Vendor's corporate charters, stock
ledgers, minute and record books;
(d) Employee Plans. All rights in connection with, and all assets of,
the Vendor Employee Plans;
(e) Non-Assigned Contracts. Those Contracts set out in Schedule 2.2(e)
including contracts for Non Assigned Third Party Software Licenses;
(f) Goodwill. Goodwill and other intangibles relating to the Purchased
Business, other than Intellectual Property and any other intangible
rights of the Purchased Business under contract, purchase orders and
the like;
(g) Real Property. Other than the Transferred Leased Properties, all
real property and any interest therein, including any Premises
thereon, and any leasehold or real property license interests other
than the Transferred Lease Properties described in Schedule 2.1(b);
(h) Trademarks. Any rights to the name "NanoAmp", "NanoAmp Solutions"
and "Enable", any derivatives thereof and all corporate symbols,
logos and domain names associated therewith, provided that nothing
herein should be construed as any admission by Purchaser that the
words "NanoAmp" or "Enable" are subject to valid trademarks and,
therefore, not freely useable in the market by Purchaser or others;
(i) Rights under this Agreement. All rights of the Vendor under this
Agreement, and the agreements, instruments and certificates
delivered in connection with this Agreement, and all records
prepared in connection with the transactions contemplated hereby;
(j) Excluded Liabilities. All rights relating to Excluded Liabilities;
(k) Licenses and Permits. All government permits, registrations,
certificates and other authorizations held by or granted to the
Vendor;
(l) Inventory. Any Increased Inventory which is valued at zero under
this Agreement and any Increased Non-Medical Related Inventory which
is resold to the Vendor pursuant to Section 3.5(c) of this
Agreement;
(m) Working Capital. All of Vendor's working capital including but not
limited to accounts receivables, prepaid and other current assets,
accounts payables and accrued liabilities as of the closing will
remain with the Vendor; and
-13-
(n) Other Assets. The Non Assigned Software and assets listed on
Schedule 2.2(n) hereto.
(o) 65 nm Project. The 65 nm SRAM/embedded SRAM project which uses the
65 nm process technology (and no other technology from the Purchased
Business except for the commercial 8 megabits design and database
which will not be used for commercial sale by the Vendor and which,,
for clarity, are part of the Intellectual Property being transferred
to the Purchaser under this Agreement and will be licensed to Vendor
for use solely in the 65 nm Project) including all services
performed.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
The consideration (the "PURCHASE PRICE") payable by the Purchaser to the Vendor
for the Purchased Assets shall be cash in an amount of $21,000,000 in the
aggregate subject to adjustment pursuant to Section 3.5. At the Time of Closing,
Purchaser shall pay to Vendor the Purchase Price, with the following amounts
subtracted:
(a) the Indemnity Escrow Amount, which shall be paid into the escrow
account referenced in Section 3.2;
(b) the Retention Escrow Amount, which shall be paid into the escrow
account referenced in Section 3.3; and
(c) $3,000,000, which was previously paid by the Purchaser as a deposit
towards the Purchase Price.
No less than five Business Days prior to the Closing the Vendor shall provide
the Purchaser the wire transfer instructions for the Vendor's bank account.
Payment shall be made at the Closing by means of wire transfer in immediately
available funds in accordance with such wire transfer instructions.
3.2 INDEMNITY ESCROW
As security for the Vendor's indemnification obligations under this Agreement,
the Purchaser shall withhold from the Purchase Price and pay the Indemnity
Escrow Amount with the Escrow Agent. The Indemnity Escrow Amount shall be held
by the Escrow Agent pursuant to the terms and conditions of the indemnity escrow
agreement in the form attached hereto as Schedule 3.2 (the "INDEMNITY ESCROW
AGREEMENT"), in a separate interest bearing escrow account. On the first
anniversary of the Closing Date, the Escrow Agent shall release to Vendor the
Indemnity Escrow Amount less (i) any amount paid prior to the first anniversary
of the Closing Date by the Escrow Agent with respect to Claims of indemnity
pursuant to Article 12 of this Agreement, and (ii) any amount claimed in any
notice delivered pursuant to Section 12.3 of this Agreement with respect to
Claims of indemnity that have not been resolved or satisfied as of the first
anniversary of the Closing Date (the "UNRESOLVED CLAIMS"). As soon as all
Unresolved Claims, if any, have
-14-
been resolved, the Escrow Agent shall release to the Vendor the remaining
portion of the Indemnity Escrow Amount not required to satisfy such Unresolved
Claims. All interest accrued on the Indemnity Escrow Amount shall be paid to the
Vendor pursuant to the terms of the Indemnity Escrow Agreement.
3.3 RETENTION ESCROW
At the time of closing, Purchaser shall withhold from the Purchase Price and
deposit the Retention Escrow Amount with the Escrow Agent. The Retention Escrow
Amount shall be held by the Escrow Agent in escrow pursuant to a retention
escrow agreement in the form attached hereto as Schedule 3.3 (the "RETENTION
ESCROW AGREEMENT") in a separate interest bearing escrow account. The Retention
Escrow agreement will provide that one-half of the Retention Escrow Amount will
be paid on the first anniversary of the closing to Transferred Employees who
remain in the employ of a Purchaser or an Affiliate of Purchaser on the date
specified in the Retention Escrow agreement for this payment and the other
one-half will be paid on the second anniversary of the closing to those
Transferred Employees who remain in the employ of a Purchaser or an Affiliate of
Purchaser on the date specified in the Retention Escrow agreement for this
payment. A Transferred Employee whose employment is terminated by the Purchaser
or an Affiliate of Purchaser without cause will remain eligible for the
Retention Escrow payments.
3.4 TAXES
(a) The Vendor shall prepare and file, or cause to be prepared and filed
with the appropriate authorities all Tax returns, reports and forms
(collectively, "Tax Returns") and shall pay, or cause to be paid,
when due all Taxes relating to the Purchased Assets attributable to
all times prior to the Effective Time (herein "Pre-Closing Tax
Period"). The Purchaser shall prepare and file, or cause to be
prepared and filed with the appropriate authorities all Tax Returns,
and shall pay, or cause to be paid, when due all Taxes relating to
the Purchased Assets attributable to all times subsequent to the
Effective Time.
(b) The Parties shall cooperate with each other to the extent reasonably
requested and legally permitted in preparing the tax returns
referred to in Section 3.4(a) immediately above for the period
January 1, 2006 to December 31, 2006.
(c) All sales taxes imposed in connection with the sale hereunder of the
Purchased Assets shall be borne by the Purchasers. All transfer,
documentary, use, registration, value-added, stamp duty and any
similar Taxes and related fees (including interest, penalties and
additions to Tax) imposed in connection with this Agreement and the
transactions contemplated hereby shall be borne by the party upon
which such tax or duty is imposed by applicable law. The parties
shall cooperate with each other to the extent reasonably requested
and legally permitted to minimize any such Taxes and related fees.
3.5 INVENTORY ADJUSTMENT
(a) Within 30 days after the Closing Date, the Vendor will provide the
Purchaser with a calculation of the Effective Time Inventory and
Base Inventory. The
-15-
calculation of the Effective Time Inventory shall be prepared on the
same basis and consistent with the same accounting standards,
methods and policies used in compiling the Base Inventory. The
Purchaser, acting reasonably, shall have 30 days to review and
approve the calculation of the Effective Time Inventory and Base
Inventory or to provide written notice to the Vendor of any
objections of the Purchaser to the calculation of the Effective Time
Inventory and Base Inventory. If, at the end of the 45 day period
following the Vendor's delivery to the Purchaser of such
calculations, the parties have not agreed on such calculations, then
the calculation of the Effective Time Inventory shall be determined
in writing (which determination shall be final, binding and not
subject to appeal) by an independent nationally-recognized
accounting firm selected by agreement between the parties within 5
days following the expiration of such 45 day period. Such accounting
firm shall make such determination within 30 days of the engagement
of such accounting firm by the parties. The costs and expenses of
such accounting firm shall be borne by the party whose position with
respect to the calculation of the Inventory Adjustment is furthest
from such accounting firm's determination of the Inventory
Adjustment.
(b) If the Effective Time Inventory is more than the Base Inventory, the
Purchaser shall pay the Vendor the Inventory Adjustment. If the
Effective Time Inventory is less than the Base Inventory, the Vendor
shall pay the Purchaser the Inventory Adjustment. The party
obligated to pay the Inventory Adjustment hereunder ("the "INVENTORY
ADJUSTMENT PAYOR") shall pay the Inventory Adjustment within 60 days
of the Closing Date by wire transfer in immediately available funds
in accordance with instructions to be provided by the party to be
paid. In the event of a dispute between the parties as to the
Inventory Adjustment calculation, the Inventory Adjustment Payor
shall pay the undisputed amount within 60 days of the Closing Date
and shall pay any remaining amount within fifteen (10) days of the
determination by the accounting firm referenced in Section 3.5(a).
The Inventory Adjustment Payor unconditionally and irrevocably
guarantees in favour of the party to be paid the due and punctual
payment of any amounts due and owing under this Section 3.5. This
shall be a continuing, absolute and unconditional guarantee and
shall not be subject to any set-off, counterclaim, violation or
other diminution or any other provision of this Agreement.
(c) The parties agree that if, the Purchaser has not been able to sell
all of the Increased Non-Medical Inventory within the four-month
period following the Closing Date, the Purchaser shall so notify the
Vendor and the Vendor shall purchase any unsold portion of the
Increased Non-Medical Inventory from the Purchaser for the same
amount that the Purchaser paid to the Vendor for said unsold portion
of the Increased Non-Medical Inventory. In such case, the Purchaser
shall, at its expense, return the unsold portion of the Increased
Non-Medical Inventory to the Vendor and the Vendor shall remit
payment to the Purchaser within thirty days after said return.
Purchaser agrees that to the extent that any orders it fills during
the four month period specified above can reasonably be filled from
Non-Medical Related Inventory, such sales will be
-16-
considered sales of Increased Non-Medical Inventory for purposes of
this Section 3.5(c).
ARTICLE 4
LIABILITIES
4.1 ASSUMPTION OF CERTAIN LIABILITIES BY THE PURCHASER
On the terms and subject to the conditions of this Agreement, the Purchaser
agrees to assume the obligations and liabilities of the Vendor (collectively,
the "ASSUMED LIABILITIES") in connection with the Purchased Assets which accrue
after the Effective Time under or in respect of: (a) the Assigned Contracts; (b)
the Assigned Third Party Software Licenses; (c) the Lease Assignment and
Assumption Agreement, and (d) those engineering production and inventory
purchase commitments of Vendor set forth on Schedule 4.1 for which the services
or products have not been received prior the Effective Time, (e) liability for
analyzing RMA's received from customers and replacing products exhibiting
manufacturing defects (but not including any liability for redesigning products
to fix design errors) after the Effective Time even if the products in question
were shipped by the Vendor prior to the Effective Time, (f) all obligations and
liabilities arising on or after the Closing under or in respect of the Assigned
Agreements, and (g) all obligations and liabilities relating to the Transferred
Employees arising out of the Purchaser's employment of such Transferred
Employees from and following the Closing.
4.2 EXCLUDED LIABILITIES
Notwithstanding anything to the contrary in this Agreement, the Purchaser shall
not assume, and the Vendor shall be solely responsible for, any liabilities of
the Vendor other than the Assumed Liabilities and specifically the liabilities
set out in Schedule 4.2 (collectively the "EXCLUDED LIABILITIES") including any
engineering production and inventory purchase commitments of Vendor for which
the services or products have been received prior the Effective Time.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE VENDOR
Subject to the disclosures set forth in the disclosure statement attached
hereto (the "DISCLOSURE STATEMENT"), The Vendor represents and warrants to the
Purchaser as follows and acknowledges that the Purchaser is relying on such
representations and warranties in connection with the transaction described in
this Agreement:
5.1 ORGANIZATION
The Vendor is a corporation duly incorporated and organized and validly existing
under the laws of Delaware and has the corporate power to own or lease its
property, to carry on the Purchased Business as now being conducted by it, to
enter into this Agreement and to perform its obligations hereunder. The Vendor
is duly qualified as a corporation to do business in all jurisdictions in which
the Purchased Business is conducted.
-17-
5.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered and is a legal,
valid and binding obligation of the Vendor, enforceable against it by the
Purchaser in accordance with its terms, except (a) as enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium and other laws affecting
the rights and remedies of creditors generally, and (b) as the remedy of
specific performance and injunctive and other forms of equitable relief may be
subject to equitable defenses and to the discretion of a court of competent
jurisdiction before which any proceeding may be brought.
5.3 NO OTHER AGREEMENTS TO PURCHASE
No person other than the Purchaser has any written or oral agreement or option
or any right or privilege (whether by law, pre-emptive or contractual) capable
of becoming an agreement or option for the purchase or acquisition from the
Vendor of any of the Purchased Assets, other than pursuant to purchase orders
accepted by the Vendor in the ordinary course of the Purchased Business.
5.4 NO VIOLATION
The execution and delivery of this Agreement by the Vendor and the consummation
of the transactions herein provided for do not and will not result in: (a) the
breach or violation of any of the provisions of, or constitute a default under,
or conflict with or cause the acceleration of any obligation of the Vendor or an
Affiliate of the Vendor under: (i) any Assigned Contract or Assigned Third Party
Software License with respect to the Purchased Assets to which the Vendor or an
Affiliate of the Vendor is a party; (ii) any provision of its certificate of
incorporation or by-laws or resolutions of the board of directors (or any
committee thereof) or shareholders of the Vendor; (iii) any agreements entered
into by the shareholders of the Vendor; (iv) any judgment, decree, order or
award of any court, Governmental Authority or arbitrator having jurisdiction
over the Vendor and that relates to the Purchased Assets; or (iv) any applicable
law, statute, ordinance, by-laws, regulation or rule applicable to the Purchased
Assets; or (b) the creation or imposition of any Encumbrance on any of the
Purchased Assets.
5.5 SUFFICIENCY OF PURCHASED ASSETS
The Purchased Assets are sufficient to carry on the Purchased Business in
substantially the same manner as the Purchased Business is carried on by the
Vendor prior to the date hereof (with the exception of the Excluded Assets). All
tangible Purchased Assets are in good operating condition and are in a state of
good repair and maintenance, reasonable wear and tear excepted. During the two
years preceding the date of this Agreement, there has not been any significant
interruption of operations (being an interruption of more than one day) of the
Purchased Business due to inadequate maintenance of any of the Purchased Assets.
5.6 TITLE TO PERSONAL PROPERTY
The Purchased Assets are owned beneficially by the Vendor with a good and
marketable title thereto, free and clear of all Encumbrances other than those
described in Schedule 5.6 (the "PERMITTED ENCUMBRANCES").
-18-
5.7 REAL PROPERTY LEASES
Except for the leases (the "LEASES") described in Schedule 5.7 relating to the
real property that is used in the Purchased Business and leased by the Vendor
(the "LEASED PROPERTY"), the Vendor is not a party to any other lease or
agreement to lease in respect of any real property which is used in the
Purchased Business, whether as lessor or lessee. Schedule 5.7 sets out the
parties to the Leases, the dates of execution and expiry dates, any options to
renew, any options to purchase, the locations of the leased lands and Premises
and the rent and other charges payable thereunder. Except as described in
Schedule 5.7, the Vendor occupies the Leased Property and has the exclusive
right to occupy and use the Leased Property. The Leases are in good standing and
in full force and effect, and neither the Vendor nor any other party thereto is
in breach of any covenants, conditions or obligations contained therein. The
Vendor has provided to the Purchaser a true and complete copy of the Lease and
all amendments thereto.
5.8 LEASED PROPERTY
To the knowledge of the Vendor, all buildings, structures, improvements and
appurtenances situated on the Leased Property (collectively, the "PREMISES") are
in good operating condition and in a state of reasonably good maintenance and
repair, are adequate and suitable for the purposes for which they are currently
being used and the Vendor has adequate rights of ingress and egress for the
operation of the Purchased Business in the ordinary course. To the knowledge of
the Vendor, none of such buildings, structures, improvements or appurtenances
(or any equipment therein), nor the operation or maintenance thereof, violates
any material restrictive covenant or any provision of any federal, provincial or
municipal law, ordinance, rule or regulation, or encroaches on any property
owned by others. Without limiting the generality of the foregoing to the
knowledge of the Vendor:
(a) the Leased Property and the Premises, the current uses thereof and
the conduct of the Purchased Business comply with all regulations,
statutes, enactments, laws and by-laws, including those dealing with
zoning, parking, access, loading facilities, landscaped areas,
building construction, fire and public health and safety and
Environmental Laws;
(b) no alteration, repair, improvement or other work has been ordered,
directed or requested in writing to be done or performed to or in
respect of the Leased Property and the Premises or to any of the
plumbing, heating, elevating, water, drainage or electrical systems,
fixtures or works by any municipal, provincial or other competent
authority, which alteration, repair, improvement or other work has
not been completed, and the Vendor knows of no written notification
having been given to them or to the Purchased Business of any such
outstanding work being ordered, directed or requested, other than
those which have been complied with;
(c) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Leased Property and the Premises
at the request of the Vendor have been fully paid and satisfied and
no person is entitled to claim a lien against the Leased Property or
the Premises or any part thereof, other than current accounts in
respect of which the payment due date has not yet passed;
-19-
(d) there is nothing owing in respect of the Leased Property and the
Premises by the Vendor or any Affiliate of the Vendor to any
municipal corporation or to any other corporation or commission
owning or operating a public utility for water, gas, electrical
power or energy, steam or hot water, or for the use thereof, other
than current accounts in respect of which the payment due date has
not yet passed;
(e) no part of the Leased Property or the Premises has been taken or
expropriated by any federal, provincial, municipal or other
competent authority nor has any notice or proceeding in respect
thereof been given or commenced;
(f) there are no Encumbrances which affect the Leased Property or the
Premises;
(g) the Leased Property and the Premises are fit for their present use,
and there are no material or structural repairs or replacements
which are necessary or advisable and, without limiting the
generality of the foregoing, there are no repairs to, or
replacements of, the roof or the mechanical, electrical, heating,
ventilating, air-conditioning, plumbing or drainage equipment or
systems which are necessary or advisable to permit the continued
operation of the Purchased Business, and none of the Leased Property
or the Premises is currently undergoing any alteration or renovation
nor is any such alteration or renovation contemplated; and
(h) there are no outstanding levies, charges or fees assessed against
the Leased Property or the Premises by any public authority
(including development or improvement levies, charges or fees).
5.9 INVENTORY
The Inventory relating to the Purchased Business do not include any items which
are below standard quality or of a quality or quantity not useable or saleable
in the normal course of business, the value of which has not been written down
on its books of account to net realizable market value. The Inventory levels of
the Purchased Business have been maintained at such amounts as are required for
the operation of the Purchased Business as previously conducted and as proposed
to be conducted, and such Inventory levels are adequate therefor.
5.10 INTELLECTUAL PROPERTY
(a) Schedule 2.1(f) lists all Contracts and amendments thereto which set
forth the terms of the Assigned Third Party Software Licenses. The
Assigned Third Party Software Licenses govern the Vendor's rights to
assign the Assigned Third Party Software Licenses to the Purchaser.
(b) The Intellectual Property described in Schedule 2.1(e) and 2.1(e-2)
and the Assigned Third Party Software Licenses (collectively the
"TRANSFERRED INTELLECTUAL PROPERTY") comprise all Intellectual
Property required in order for the Purchaser to conduct the
Purchased Business as currently conducted (with the exception of the
Excluded Assets identified on Schedule 2.2(e)).
-20-
(c) The Vendor is the beneficial owner of the rights which are to be
conferred by the assignment of the Transferred Intellectual
Property, free and clear of all Encumbrances and is not a party to
or bound by any Contract or any other obligation whatsoever that
limits or impairs its ability to sell, transfer, assign or convey
the Transferred Intellectual Property to the Purchaser.
(d) All of the Transferred Intellectual Property is in full force and
effect and has not been used or enforced or failed to be used or
enforced in a manner that would result in the abandonment,
cancellation or unenforceability of any of the Transferred
Intellectual Property. The Vendor has maintained or caused to be
maintained the rights to Transferred Intellectual Property in full
force and effect and, without limiting the generality of the
foregoing, has registered or applied to register the Transferred
Intellectual Property in certain jurisdictions, has paid all
applicable fees under all Contracts, including the Assigned Third
Party Software Licenses, for the Transferred Intellectual Property
and for all the registrations and applications for registrations,
and has renewed or made applications for renewal within the
applicable renewal periods for all Contracts, including the Assigned
Third Party Software Licenses, for the Transferred Intellectual
Property.
(e) Except as set forth in Schedule 5.10(e), the Vendor has not received
any notice of any adverse claim or litigation and is not party to
any litigation challenging the validity, ownership or enforceability
of any of the Transferred Intellectual Property, or of the Vendor's
right to use or assign the Transferred Intellectual Property to the
Purchaser. The Vendor has no knowledge of any state of facts which
casts doubt on the validity or enforceability of any of the
Transferred Intellectual Property. Purchaser acknowledges that
Vendor in making this representation has not conducted a patent
search.
(f) To the Vendor's knowledge, the Transferred Intellectual Property
operates substantially in accordance with its specifications and
documentation.
(g) The conduct of the Purchased Business, as currently carried on by
the Vendor, including the use of the Transferred Intellectual
Property, to the Vendor's knowledge, does not infringe upon or
breach the Intellectual Property, domestic or foreign, of any other
person. The Vendor has not received any notice of any adverse claim
or litigation that has not been withdrawn and is not party to any
litigation alleging that the conduct of the Purchased Business, as
currently carried on by the Vendor, infringes upon or breaches any
Intellectual Property of any other person. The Vendor has no
knowledge of any state of facts or event which would provide any
other person with a reasonable basis for claiming that the conduct
of the Purchased Business, as currently carried on by the Vendor,
including the use of the Transferred Intellectual Property,
infringes upon or breaches the Intellectual Property of that other
person.
(h) To the knowledge of the Vendor, there is no basis for any claim that
the Vendor's Intellectual Property rights in the Transferred
Intellectual Property are being or have been infringed or breached
by any other person.
-21-
(i) The Vendor has provided the Purchaser with true and complete copies
of all Contracts, software, media and documentation comprising the
Transferred Intellectual Property which is to be provided pursuant
to the Assigned Third Party Software Licenses or this Agreement.
(j) The assignment by the Vendor to the Purchaser of the Transferred
Intellectual Property does not and will not violate any Contracts or
invalidate any such Intellectual Property.
(k) All the source code for the Assigned Third Party Software Licenses
or the software included in the other Transferred Intellectual
Property (other than mass-produced commercially available software)
is subject to escrow arrangements that will permit the Purchaser to
access such source code in the event of the applicable licensor's
insolvency or failure or refusal to maintain or provide support for
such software. Current copies of all source code, to the extent
applicable, for the Transferred Intellectual Property have been
appropriately recorded on machine readable media, clearly identified
and are stored in a secure location subject to escrow arrangements
in favor of the Purchaser. An accurate and current list identifying
the location of all copies of source code, to the extent applicable,
for the Transferred Intellectual Property and the terms of the
escrow arrangements has been prepared and provided to the Purchaser.
(l) The Systems owned by the Vendor and, to the Vendor's knowledge, the
Systems licensed to the Vendor, including the Assigned Third Party
Software Licenses, are free of any disabling codes or instructions
(each, a "DISABLING CODE"), and any virus or other contaminant
(each, a "Contaminant"), that may, or may be used to, access,
modify, delete, damage or disable the Systems or that may result in
damage thereto. The Vendor has taken reasonable steps and
implemented all reasonable procedures to ensure that the Systems are
free from Disabling Codes and Contaminants. The Vendor has in place
appropriate disaster recovery plans, procedures and facilities and
has taken all steps and implemented all procedures to safeguard the
Systems and restrict unauthorized access thereto.
5.11 INSURANCE
The Vendor has maintained general liability and other insurance and such
insurance coverage will be continued in full force and effect until and
including the Effective Time. The Vendor is not in default with respect to any
of the provisions contained in any such insurance policy. Schedule 5.11 lists
all past or current insurance policies of the Vendor pursuant to which the
Vendor continues to have any rights or ability to make claims.
5.12 NO EXPROPRIATION
No notice or proceeding in respect of an action by a Governmental Authority to
expropriate any of the Purchased Assets has been given or commenced, and the
Vendor is not aware of any intent or proposal to give any such notice or
commence any such proceedings.
-22-
5.13 AGREEMENTS AND COMMITMENTS
The Assigned Contracts, Assigned Third Party Software Licenses, and Leases set
forth on Schedules 2.1(d), 2.1(f) and 5.7 respectively (collectively, the
"ASSIGNED AGREEMENTS") constitute all Contracts to which Vendor is a party with
respect to the Purchased Business and all Contracts which are required for the
operation of the Purchased Business in substantially the same manner as the
Vendor currently conducts the Purchased Business (with the exception of the
Excluded Assets). The Vendor has performed in all respects all of the
obligations required to be performed by it and is entitled to all benefits
under, and is not in default or alleged to be in default in respect of any of
the Assigned Agreements. All of the Assigned Agreements are in good standing and
in full force and effect, and no event, condition or occurrence exists which,
after notice or lapse of time or both, would constitute a material default under
any of the Assigned Agreements. The Vendor has provided to the Purchaser a copy
of each Assigned Agreement.
5.14 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
The Vendor has complied in all material respects with all laws, statutes,
ordinances, regulations, rules, judgments, decrees, franchises or other
governmental authorizations, guidelines, policies or orders applicable to the
Purchased Business and/or to the Purchased Assets. The Transferred Permits and
the Non-Transferred Permits (collectively, the "PERMITS"), as set out in
Schedule 2.1(l) and Schedule 5.14, respectively, are all the (a) government
permits; and (b) other approvals, consents, certificates, registrations and
authorizations (whether governmental, regulatory or otherwise) held by or
granted to the Vendor which are applicable to the Purchased Business, the Leased
Property, the Premises and/or the Purchased Assets, and there are no other
material (i) government permits (including Environmental Permits), and (ii)
other licenses, approvals, consents, registrations, certificates or
authorizations (including Environmental Permits) necessary for the Purchaser to
conduct the Purchased Business in substantially the same manner as the Vendor
currently conducts the Purchased Business or to own or lease any of the
Purchased Assets. Each Permit is valid, binding and in full force and effect,
the Vendor is not in violation, default or breach of any Permit, and no
proceeding is pending or, to the knowledge of the Vendor, threatened for
violation of or to revoke or limit any Permit.
5.15 CONSENTS AND APPROVALS
There is no requirement to make any filing with, give any notice to or to obtain
any license, permit, certificate, registration, authorization, consent or
approval of, any Governmental Authority or any other person as a condition to
the lawful consummation of the transactions contemplated by this Agreement,
except for the filings, notifications, licenses, permits, certificates,
registrations, authorizations, consents and approvals described in Schedule
5.15. Other than as set forth in Schedule 5.15, under any Contract to which the
Vendor is a party or by which it or the Purchased Business is bound or the
Purchased Assets are subject, there is no requirement to give notice to, or to
obtain the consent or approval of, any party to such agreement, instrument or
commitment relating to the consummation of the transactions contemplated by this
Agreement.
-23-
5.16 BOOKS AND RECORDS
The books and records to be delivered by the Vendor to the Purchaser pursuant to
Section 2.1(h) fairly and correctly set out and disclose in all material
respects all of the information contained therein.
5.17 LITIGATION
There are no actions, suits or proceedings pending or affecting or, to the
knowledge of the Vendor, threatened against the Vendor in respect of or
affecting the Purchased Business, the Leased Property, the Premises or any of
the Purchased Assets or any part thereof, at law or in equity or before or by
any court, Governmental Authority, domestic or foreign, or before or by an
arbitrator or arbitration board. The Vendor has no knowledge of any ground on
which any such action, suit or proceeding might be commenced with any reasonable
likelihood of success.
5.18 NO LIABILITIES
There are no liabilities or commitments of the Vendor or its Affiliates, whether
or not accrued and whether or not determined or determinable, in respect of
which the Purchaser may become liable on or after the consummation of the
transaction herein provided for, other than the Assumed Liabilities.
5.19 ABSENCE OF CHANGES
Since December 31, 2005 the Purchased Business has been carried on only in the
ordinary and normal course consistent with past practice and there has not been:
(a) any material adverse change in the condition (financial or otherwise),
assets, liabilities, operations, earnings, business or prospects of the
Purchased Business; (b) any damage, destruction or loss (whether or not covered
by insurance) affecting the Purchased Assets; (c) any obligation or liability
(whether absolute, accrued, contingent or otherwise, and whether due or to
become due) incurred by the Vendor in connection with the Purchased Business,
other than those incurred in the ordinary and normal course of the Purchased
Business and consistent with past practice; (d) any payment, discharge or
satisfaction of any Encumbrance, liability or obligation of the Vendor in
relation to the Purchased Business or the Purchased Assets (whether absolute,
accrued, contingent or otherwise, and whether due or to become due) other than
payment of accounts payable and tax liabilities incurred in the ordinary and
normal course of business consistent with past practice; (e) any labor trouble
adversely affecting the Purchased Business or the Purchased Assets; (f) any
license, sale, assignment, transfer, disposition, pledge, mortgage or granting
of a security interest or other Encumbrance on or over any Purchased Assets; (g)
any write-down of the value of any inventory or any write-off as uncollectible
of any accounts or notes receivable or any portion thereof relating to the
Purchased Business in amounts exceeding $100,000 in each instance or $250,000 in
the aggregate; (h) any cancellation of any debts or claims or any amendment,
termination or waiver of any rights of value to the Purchased Business in
amounts exceeding $100,000 in each instance or $250,000 in the aggregate; (i)
any general increase in the compensation of any Employee (including any increase
pursuant to any Vendor Employee Plan or commitment), or any increase in any such
compensation or bonus payable to any Employee, consultant or agent of the
Purchased Business) or the execution of any Contract of employment
-24-
with any Employee, or the making of any loan to, or engagement in any
transaction with, any Employee in relation to the Purchased Business; (j) any
capital expenditures or commitments relating to the Purchased Business or
Purchased Assets in excess of $100,000 in the aggregate; (k) any forward
purchase commitments in excess of the requirements of the Purchased Business for
normal operating inventories or at prices higher than the current market prices;
(l) any forward sales commitments other than in the ordinary and normal course
of the Purchased Business or any failure to satisfy any accepted order for goods
or services; (m) any change in the accounting or tax practices followed by the
Vendor; (n) any change adopted by the Vendor in its depreciation or amortization
policies or rates; or (o) any change in the credit terms offered to customers
of, or by suppliers to, the Purchased Business. The Vendor will notify the
Purchaser of any planned acquisitions or dispositions of assets belonging to or
used by the Purchased Businesses that are greater than $100,000.
5.20 NON-ARM'S LENGTH TRANSACTIONS
With respect to the Purchased Business: (a) the Vendor has not since December
31, 2005, made any payment or loan to, or borrowed any moneys from or is
otherwise indebted to, any officer, director, employee, shareholder or any other
person not dealing at arm's length with the Vendor or any Affiliate of any of
the foregoing, except for usual employee reimbursements and compensation paid in
the ordinary course of the Purchased Business; and (b) except for Contracts of
employment, the Vendor is not a party to any Contract with any officer,
director, employee, shareholder or any other person not dealing at arm's length
with the Vendor or any Affiliate of any of the foregoing. To the knowledge of
the Vendor, no officer of the Vendor and no entity which is an Affiliate of one
or more of such individuals owns, directly or indirectly, any interest in
(except for shares representing less than one per cent of the outstanding shares
of any class or series of any company), or is an officer, or employee of, any
person which is, or is engaged in business as, a competitor of the Purchased
Business or a lessor, lessee, supplier, distributor, sales agent or customer of
the Purchased Business; To the knowledge of the Vendor, no officer, director or
shareholder of the Vendor and no entity which is an Affiliate of one or more of
such individuals: (i) owns, directly or indirectly, in whole or in part, any
property that the Vendor uses in the operation of the Purchased Business; or
(ii) has any cause of action or other claim whatsoever against, or owes any
amount to, the Vendor in connection with the Purchased Business, except for any
liabilities reflected in the Financial Statements and claims in the ordinary
course of business such as for accrued vacation pay and accrued benefits under
any Vendor Employee Plans.
5.21 TAX MATTERS
There are no actions, suits, proceedings, investigations or claims pending or to
the knowledge of the Vendor, threatened against the Vendor in respect of Taxes,
government charges or assessments, whether paid or unpaid, nor are any material
matters under discussion with any Governmental Authority relating to Taxes,
governmental charges or assessments, whether paid or unpaid, asserted by any
such authority which could result in a claim against or Encumbrance on any of
the Purchased Assets or the Purchased Business. The Vendor has paid or caused to
be paid all sales and use taxes incurred in connection with the Purchased
Business. The Vendor has withheld from each payment made to any of its past or
present employees, officers or directors of the Purchased Business, the amount
of all taxes and other deductions required to be withheld
-25-
therefrom, and has paid the same to the proper tax or other receiving officers
within the time required under any applicable legislation. There are no liens
for Taxes on the Purchased Assets. None of the Purchased Assets is subject to
any joint venture, partnership or other agreement or arrangement that is treated
as a partnership for federal income tax purposes.
5.22 NO COLLECTIVE BARGAINING CONTRACTS, ETC.
(a) The Vendor has not (i) entered into any Contract with any labor
union or employee association in respect of any of the employees
employed by the Vendor in connection with the Purchased Business; or
(ii) made any commitments to or conducted negotiations with any
labor union or employee association with respect to any future
agreements in respect of any of the employees employed by the Vendor
in connection with the Purchased Business.
(b) To the Vendor's knowledge, there are no current attempts to organize
or to establish any labor union or employee association in respect
of any of the employees employed by the Vendor in connection with
the Purchased Business and there is no certification of any such
union with regard to a bargaining unit.
5.23 CUSTOMERS AND SUPPLIERS
Schedule 5.23 sets out the major customers of the Purchased Business (being
those customers of the Purchased Business which in the aggregate account for
more than 75% of sales for the period July 1, 2005 to June 30, 2006) and there
has been no termination or cancellation of, and no modification or change in,
the Vendor's business relationship with any major customer or group of major
customers. The Vendor has no reason to believe that the benefits of any
relationship with any of the major customers or suppliers of the Purchased
Business will not continue after the Closing Date in substantially the same
manner as prior to the date of this Agreement.
Schedule 5.23 also sets out the contracts under which the Vendor has sold
products of the Purchased Business to customers during the last three (3) years.
Copies of such contracts have been delivered to Purchaser.
5.24 PRODUCT WARRANTIES
Schedule 5.24 is a complete list of all express, written warranties given to
purchasers of products or software supplied by the Vendor in connection with the
Purchased Business.
5.25 ENVIRONMENTAL
(a) The Purchased Business, and to the knowledge of the Vendor, the
Leased Property and the Premises have been and are in compliance
with all Environmental Laws.
(b) The Vendor has not used or permitted to be used, except in
compliance with all Environmental Laws, the Leased Property or the
Premises to generate, manufacture, process, distribute, use, treat,
store, dispose of, transport or handle any Hazardous Substance.
-26-
(c) To the knowledge of the Vendor, there are no underground storage
tanks, ozone-depleting substances or polychlorinated biphenyls in or
on the Leased Property or the Premises and the Premises have not
been and are not insulated with urea formaldehyde insulation or
asbestos-containing material.
(d) The Vendor is not responsible for any Cleanup or any other remedy or
liability under any Environmental Laws in connection with the Leased
Property, the Premises, the Purchased Assets or the Purchased
Business. The Vendor has never received any formal or informal
notice of, or been prosecuted for, non-compliance with any
Environmental Laws, nor has the Vendor settled any allegations of
any such non-compliance prior to prosecution. There are no written
notices, orders or directions relating to environmental matters or
other matters governed by Environmental Laws requiring, or notifying
the Vendor that it is or may be responsible for, any work, repairs,
construction or material capital expenditures to be made under
Environmental Laws with respect to the Purchased Business, the
Leased Property, the Premises or the Purchased Assets. The Vendor
has never received a written claim or notice and otherwise has no
knowledge of potential liability or actual liability, relating to
any Cleanup at any off-site location arising out of the Vendor's or
any other person's activities or operations at the Leased Property
or the Premises.
(e) The Vendor has not caused or permitted, nor, to the knowledge of the
Vendor, has there been any Release of any Hazardous Substance on,
in, around, from or in connection with the Leased Property or the
Premises or the Purchased Business or any such Release on or from a
facility which was previously owned or leased, or any such Release,
to the Vendor's knowledge, on or from a facility owned or operated
by any third party but with respect to which the Vendor in
connection with the Purchased Business is or may reasonably be
alleged to have liability.
(f) All Hazardous Substances and all other wastes and other materials
and substances used in whole or in part by the Vendor in connection
with the Purchased Business or resulting from the operation of the
Purchased Business have been disposed of, treated and stored by the
Vendor in compliance with all Environmental Laws.
(g) The Vendor has shown or provided to the Purchaser all documents in
the Vendor's possession or under its control relating to compliance
by the Vendor with or claims against the Vendor under Environmental
Laws or to any other environmental or occupational health and safety
matter in connection with the Leased Property, the Premises or the
Purchased Business.
5.26 BROKERAGE
The Vendor has not retained any broker or finder in connection with the
transactions contemplated by this Agreement. Any brokerage or finder's fee due
to any broker or finder in violation of the foregoing representation shall be
paid by the Vendor.
-27-
5.27 WARN ACT
The Vendor either (i) is not and has not been an "employer" or has not engaged
in any "plant closing" or "mass layoff" as such terms are defined in the Worker
Adjustment Retraining and Notification Act of 1988, as amended (the "WARN ACT"),
each within the 90 days prior to and including the Closing Date or (ii) has
provided any notification required by the WARN Act or satisfied any severance
liabilities, payroll sums and benefit amounts owed due to failure to provide
such notice. Schedule 5.27 lists all employees that have suffered an "employment
loss" as defined under the WARN Act in the 90 days prior to the Closing.
5.28 SOLVENCY
The Vendor is not now insolvent and will not be rendered insolvent by any of the
transactions contemplated by this Agreement. As used in this section,
"insolvent" means that the sum of the debts and other probable liabilities of
the Vendor exceeds the present fair saleable value of the Vendor's assets.
5.29 EMPLOYEE PLANS
The Vendor maintains for the benefit of current or former employees of the
Purchased Business only those Employee Benefit Plans listed on Schedule 5.29.
The Vendor is not now a contributing employer to any "multi-employer plan" as
described in Section 4001(a)(3) of ERISA with respect to any employees of the
Purchased Business. The Vendor has not been a contributing employer to any
"multi-employer" plan with respect to employees of the Business in the past five
years. Each and every pension plan (as defined in Section 3(1) of ERISA)
maintained by the Vendor for the benefit of the employees of the Purchased
Business has been issued a favorable determination letter with respect to its
qualified status under Section 401(a) of the Code by the U.S. Internal Revenue
Service, or an application for such a determination letter has been filed with
the U.S. Internal Revenue Service within the requisite time period to allow the
Vendor to make remedial amendments for such qualification purposes. With respect
to employees of the Purchased Business resident in the United States, the Vendor
is in compliance with the healthcare continuation coverage requirements of the
Consolidated Omnibus Budget Reconciliation Act of 1985, Section 4980B of the
Code, and proposed regulations issued by the U.S. Internal Revenue Service.
5.30 FULL DISCLOSURE
None of the representations and warranties of the Vendor contained herein and
none of the information contained in the Schedules to this Agreement contains or
will contain any untrue statement of a material fact or omits or will omit to
state a material fact necessary to make the statements contained herein or
therein not misleading. There has been no event, transaction or information
which has come to the attention of Vendor that has not been disclosed to the
Purchaser in writing which could reasonably be expected to have a material
adverse effect on the assets, business, earnings, prospects, properties or
condition (financial or otherwise) of the Purchased Business or the prospects of
the Purchased Business.
-28-
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Vendor as follows and
acknowledges that the Vendor is relying on such representations and warranties
in connection with the sale of the Purchased Assets:
6.1 ORGANIZATION
The Purchaser is a corporation validly existing under the laws of the
State of Delaware, has the corporate power to enter into this Agreement and to
perform its obligations hereunder.
6.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered by and is
a legal, valid and binding obligation of the Purchaser, enforceable against the
Purchaser by the Vendor in accordance with its terms, except (a) as enforcement
may be limited by bankruptcy, insolvency, reorganization, moratorium and other
laws affecting the rights and remedies of creditors generally, and (b) as the
remedy of specific performance and injunctive and other forms of equitable
relief may be subject to equitable defenses and to the discretion of a court of
competent jurisdiction before which any proceedings may be brought.
6.3 NO VIOLATION
The execution and delivery of this Agreement by the Purchaser and the
consummation of the transactions herein provided for will not result in the
violation of, or constitute a default under, or conflict with or cause the
acceleration of any obligation of the Purchaser under: (a) any provision of the
certificate of incorporation or by-laws or resolutions of the board of directors
(or any committee thereof) or shareholders of the Purchaser; (b) any judgment,
decree, order or award of any court, Governmental Authority or arbitrator having
jurisdiction over the Purchaser; or (c) any applicable law, statute, ordinance,
regulation or rule.
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 SURVIVAL OF REPRESENTATIONS AND WARRANTIES
The representations and warranties contained in this Agreement and in all
certificates delivered pursuant to or contemplated by this Agreement shall
survive the closing of the transactions contemplated hereby and, notwithstanding
such closing or any investigation made by or on behalf of the party entitled to
the benefit thereof, shall continue in full force and effect for the benefit of
the party entitled to the benefit thereof for a period of one year from the
Closing Date. The covenants contained in this Agreement shall survive in
accordance with their terms.
-29-
ARTICLE 8
COVENANTS
8.1 ACCESS TO THE PURCHASED BUSINESS AND PURCHASED ASSETS
Until the earlier of the termination of this Agreement and the Closing, the
Vendor shall make available to the Purchaser and its authorized representatives
and, if requested by the Purchaser, shall provide the Purchaser with copies of
all title documents, Assigned Agreements, financial information, policies,
plans, reports, orders, Permits, books of account, accounting records and all
other documents, information and data in the possession of the Vendor reasonably
relating to the Purchased Business (provided that neither Vendor nor its
representatives shall be required to disclose any attorney-client privileged
information to the Purchaser). The Vendor shall provide the Purchaser and its
authorized representatives reasonable access during normal business hours to the
Purchased Assets, the Leased Property and the Premises. At the reasonable
request of the Purchaser, the Vendor shall execute such consents, authorizations
and directions as may be reasonably necessary to permit any inspection of the
Purchased Assets or to enable the Purchaser or their authorized representatives
to obtain reasonable access to all files and records relating to any of the
Purchased Assets maintained by a Governmental Authority or other public
authority. At the Purchaser's request, the Vendor shall cooperate with the
Purchaser in arranging any such meetings as the Purchaser should reasonably
request with:
(a) Employees of the Purchased Business;
(b) customers, suppliers, distributors or others who have or have had a
business relationship with the Vendor in respect of the Purchased
Business; and
(c) the auditors, lawyers or any other persons engaged or previously
engaged to provide services to the Vendor who have knowledge of
matters relating to the Purchased Business or Purchased Assets
(provided that neither Vendor nor its representatives shall be
required to disclose any attorney-client privileged information to
the Purchaser).
In particular, without limitation, to the extent permissible under the terms of
the applicable Lease, the Vendor shall permit the Purchaser's representatives or
consultants to conduct all such interviews, testing, inspections, audits and
assessments in respect of environmental and occupational health and safety
matters with respect to the Leased Property as may be reasonably required to
satisfy the Purchaser in respect of such matters, and the Vendor shall
reasonably cooperate in all respects therewith, including using commercially
reasonable efforts to obtain any required or desirable consent or approval of
the lessors of the Leased Property. The Vendor shall reasonably conduct, in
cooperation with the representatives or consultants of the Purchaser, such
physical review of the Purchased Assets as is necessary to confirm the values
presented on the Financial Statements, to the reasonable satisfaction of the
Purchaser. The exercise of any rights of inspection by or on behalf of the
Purchaser under this Section 8.1 shall not mitigate or otherwise affect any of
the representations and warranties of the Vendor hereunder which shall continue
in full force and effect as provided in Section 7.1 or in such other agreements,
as the case may be.
-30-
8.2 DELIVERY OF BOOKS AND RECORDS
At the Time of Closing, the Vendor shall deliver to the Purchaser all the books
and records described in Section 2.1(h) provided, however, that the Vendor shall
be permitted to make, maintain and use a copy of such books and records solely
for financial and tax reporting purposes and for the purpose of defending any
claims made against the Vendor under this Agreement or in connection with the
transactions contemplated hereby. Vendor shall treat said Book and Records as
the Confidential Information of the Purchaser pursuant to the Confidential
Disclosure Agreement by and between Purchaser and Vendor having an effective
date of November 29, 2005. The Purchaser agrees to preserve the books and
records so delivered for such period as is required by any applicable law, and
will permit the Vendor or its authorized representatives reasonable access
thereto in connection with the tax or other legitimate affairs of the Vendor,
but the Purchaser shall not be responsible or liable to the Vendor for or as a
result of any accidental loss or destruction of or damage to any such books or
records.
8.3 USE OF NAMES
As of the Closing Date, Vendor shall cease use of any trademarks, tradenames and
product names associated with the Purchased Business or any similar trademarks,
tradenames and products names (except for the names "NanoAmp", "NanoAmp
Solutions" and "Enable" and their derivatives) and agrees that the Purchaser may
use such trademarks, tradenames and product names or any variations thereof from
and after the Effective Time. Nothing herein should be construed as any
admission by Purchaser that the words "NanoAmp" or "Enable" are subject to valid
trademarks and, therefore, not freely useable in the market by Purchaser or
others. Further, the Purchaser, itself or through its Affiliates and
distributors, shall be permitted to sell the Inventory as such Inventory is
marked as of the Effective Time, even if such marking includes the names or
trademarks referenced above.
8.4 CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING
Without in any way limiting any other obligations of the Vendor hereunder,
during the period from the date hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course. The Vendor shall conduct
the Purchased Business only in the ordinary and normal course
consistent with past practice and the Vendor shall not, without the
prior written consent of the Purchaser, enter into any transaction
or refrain from doing any action which, if effected before the date
of this Agreement, would constitute a breach of any representation,
warranty, covenant or other obligation of the Vendor contained
herein, and the Vendor shall not enter into any material Contracts
with respect to the Purchased Business without the consent of the
Purchaser, which consent shall not be unreasonably withheld or
delayed. Vendor shall obtain the consent of the Purchaser prior to
placing any purchase order that is more than $150,000 and prior to
placing purchase orders that are more than $500,000 in the aggregate
in any calendar month;
(b) Continue Insurance. The Vendor shall continue to maintain in full
force and effect all policies of insurance or renewals thereof now
in effect, shall take out, at the
-31-
expense of the Purchaser, such additional insurance as may be
reasonably requested by the Purchaser and shall give all notices and
present all claims under all policies of insurance in a due and
timely fashion;
(c) Regulatory Consents. The Vendor shall use its commercially
reasonable efforts to effect the assignment of the Transferred
Permits described in Schedule 2.1(l) and to obtain, at or prior to
the Time of Closing, any necessary consents or approvals from all
appropriate federal, provincial, municipal or other governmental or
regulatory bodies necessary to effect the transaction contemplated
hereby;
(d) Contractual Consents. The Vendor shall use its commercially
reasonable efforts to give or obtain, at or prior to the Time of
Closing, the notices, consents and approvals described in Schedule
5.15;
(e) Preserve Goodwill. The Vendor shall use its commercially reasonable
efforts to preserve intact the Purchased Business and Purchased
Assets and to carry on the Purchased Business as currently
conducted, and the Vendor shall use its commercially reasonable
efforts to promote and preserve for the Purchaser the goodwill of
suppliers, customers and others having business relations with the
Vendor;
(f) Discharge Liabilities. The Vendor shall pay and discharge the
liabilities of the Vendor relating to the Purchased Business in the
ordinary course in accordance and consistent with the previous
practice of the Vendor, except those contested in good faith by the
Vendor;
(g) Corporate Action. The Vendor shall use its commercially reasonable
efforts to take or cause to be taken all necessary corporate action,
steps and proceedings to approve or authorize validly and
effectively the transfer of the Purchased Assets to the Purchaser
and the execution and delivery of this Agreement and the other
agreements and documents contemplated hereby and to cause all
necessary meetings of directors and shareholders of the Vendor to be
held for such purpose; and
(h) Commercially Reasonable Efforts. The Vendor shall use its
commercially reasonable efforts to satisfy the conditions contained
in Section 10.2;
8.5 DELIVERY OF CONVEYANCING DOCUMENTS
The Vendor shall deliver to the Purchaser all necessary deeds, conveyances,
bills of sale, assurances, transfers, assignments and any other documentation
necessary or reasonably required to transfer the Purchased Assets to the
Purchaser with a good and marketable title, free and clear of all Encumbrances
whatsoever except for Permitted Encumbrances.
8.6 DELIVERY OF CLOSING DOCUMENTATION
(a) The Vendor shall deliver to the Purchaser a certificate of status
and two copies, certified by a senior officer of the Vendor as of
the Closing Date, of its articles of incorporation and by-laws and
of the resolution authorizing the execution, delivery
-32-
and performance by the Vendor of this Agreement and any documents to
be provided by it pursuant to the provisions hereof. The Vendor
shall also execute and deliver or cause to be executed and delivered
to the Purchaser two copies of such other documents relevant to the
closing of the transactions contemplated hereby as the Purchaser,
acting reasonably, may request.
(b) The Purchaser shall execute and deliver or cause to be executed and
delivered two copies of such documents relevant to the closing of
the transactions contemplated hereby as the Vendor, acting
reasonably, may request.
8.7 CONSENTS TO ASSIGNMENT
If any of the Purchased Assets or any claim, right or benefit thereunder
(collectively, the "RIGHTS") is not by its terms assignable or transferable or
is not assignable or transferable without the consent, approval or waiver of any
person who is not a party hereto and such consent, approval or waiver has not
been obtained at or prior to the Time of Closing, or the assignment or transfer
thereof to the Purchaser would constitute a breach of any Contract, law,
statute, ordinance, regulation, rule, judgment, decree or order, then the Vendor
shall hold such Purchased Assets or Rights, as the case may be, and all benefits
derived thereunder and therefrom in trust for the Purchaser subject to the
performance by the Purchasers of all obligations related to such Purchased
Assets. For a period of 1 year following the Closing, the Vendor shall continue
to use its commercially reasonable efforts to obtain, where possible, as the
Purchaser may direct, acting reasonably, any necessary consents, approvals or
waivers to the assignment or transfer of the Purchased Assets or Rights, as the
case may be, to the Purchaser following the Time of Closing. Until such consent,
approval or waiver has been obtained or if it cannot be obtained, the Vendor
shall continue to maintain the existence of the Purchased Assets or Rights, as
the case may be, subject in each case to the Purchaser's performance of any
obligations necessary to maintain such Rights, comply with the terms and
provisions of the Rights, as agent for the Purchaser at the Purchaser's expense
and for the benefit of the Purchaser, take all such actions and do or cause to
be done all such things as the Purchaser may reasonably direct, at the
Purchasers' expense, in order to preserve such Purchased Assets or Rights, as
the case may be, and provide the benefits thereof to the Purchaser, including
collecting and paying promptly to the Purchaser all monies payable under or in
respect of such Purchased Assets or Rights, as the case my be, and enforcing at
the request and expense of the Purchaser, or terminating at the direction of the
Purchaser, any such Rights.
8.8 ACTION BY THE PURCHASER AND THE VENDOR
The Purchaser and the Vendor shall use its commercially reasonable efforts to
take or cause to be taken all necessary corporate action, steps and proceedings
to approve or authorize validly and effectively the transfer of the Purchased
Assets from the Vendor to the Purchaser, the execution and delivery of this
Agreement and the other agreements and documents contemplated hereby and the
performance of each party's respective obligations hereunder and thereunder, and
each party shall cause all necessary meetings of its board of directors (or any
committee thereof) to be held for such purpose. Purchaser shall use its
commercially reasonable efforts to satisfy the conditions contained in Section
10.3.
-33-
ARTICLE 9
EMPLOYEE MATTERS
9.1 Offers of Employment
The Purchaser will offer regular full time employment to those Employees
who are listed on Schedule 9.1 (the "Offered Employees") and who are
employees of the Purchased Business on the Closing Date in accordance with
the terms and conditions of this Article 9 consistent with its
then-existing employment practices. The employment offers for each Offered
Employee will offer a base salary that is no less than salary of such
Offered Employee as was represented to the Purchaser by the Vendor in
April 2006. Purchaser agrees that the employment offers for those Offered
Employees employed by the Vendor at the Leased Property will be for jobs
located within 20 miles of the Leased Property where they presently work.
9.2 OFFERED EMPLOYEES
(a) The Vendor acknowledges and confirms that Schedule 9.1 contains a
complete and accurate list of the names of the Offered Employees,
including the Designated Key Employees, as of the date hereof,
together with the length of hire, title or classification of each
such person, the rate of salary or hourly pay at the Vendor, any
commission or bonus entitlements and any other remuneration payable
by the Vendor to each such person as of such date and any Vendor
planned wage increases up to and including the Closing Date.
(b) The Vendor covenants and agrees to work with and provide all
commercially reasonable assistance to the Purchaser in procuring the
employment by the Purchaser of the Offered Employees.
(c) The Vendor shall continue to employ each of the Offered Employees
until the Closing Date except for any such employee who, at any time
prior to the Closing Date is terminated for cause, voluntarily
resigns, retires, or dies. The Vendor will not make any material
changes in employment positions, levels or terms, including but not
limited to compensation, benefits, bonus programs, or severance
plans for any Employee without the Purchaser's written consent,
which consent shall not be unreasonably withheld or delayed.
9.3 TRANSFERRED EMPLOYEES
(a) Those Offered Employees who accept Purchaser's employment offers and
are hired by the Purchaser or an Affiliate of the Purchaser on the
Closing Date (the "TRANSFERRED EMPLOYEES") shall cease to accrue
benefits under the Vendor's retirement, pension, vacation, bonus,
incentive and all other Employee Benefit Plans (the "VENDOR EMPLOYEE
PLANS") as of the Closing Date. The Transferred Employees shall
participate in the retirement, pension, vacation, bonus, incentive
and all other employee benefit plans of the Purchaser or the hiring
Affiliate as of the Closing Date, to the extent that such plans
exist in the country of employment, upon the same terms and
conditions (including plan eligibility requirements) as current
-34-
employees of the Purchaser or the hiring Affiliate participating in
such plans. The effective date for such participation shall be the
Closing Date, unless it is impractical, or not permitted under the
applicable plan, for such participation to begin on that date, in
which case such participation shall begin as soon after the Closing
Date as is practicable or permitted. The Purchaser shall provide the
Transferred Employees and their eligible dependents credit against
any service and waiting period requirements under any of the
Purchaser's employee benefit plans and the Purchaser shall ensure
that such employee benefit plans shall not provide any pre-existing
condition exclusions. The Vendor represents and warrants that
Schedule 9.3(a) identifies the Vendor Employee Plans in which any of
the Employees are entitled to participate.
(b) Vendor represents and warrants that:
(i) Schedule 9.3(b) lists all Transferred Employees who have been
absent continually from work for a period in excess of one
month, as well as the reason for their absence;
(ii) There are no complaints, claims or charges outstanding, or to
the knowledge of the Vendor, threatened, nor are there any
orders, decisions, currently registered or outstanding by any
tribunal or agency against or in respect of the Vendor under
or in respect of any employment litigation; and
(iii) The Vendor is in material compliance with any applicable
employment laws with respect to the Offered Employees.
9.4 EMPLOYEE ACCRUALS
The Vendor will pay all accruals for unpaid vacation pay, premiums for
unemployment insurance, health premiums, pension plan premiums, accrued wages,
salaries and commissions and employee benefit plan payments arising with respect
to the employment by the Vendor of any Employees through the Closing Date.
9.5 EMPLOYEE INFORMATION
The Purchaser shall report all wages paid and taxes withheld by the Purchaser
from and after the Closing, and the Vendor shall report all wages paid and taxes
withheld by the Vendor for the period ending with the Closing Date for the
calendar year in which the Closing Date occurs.
9.6 TERMINATION OF EMPLOYEES.
The Vendor shall cause all Transferred Employees to be terminated immediately
prior to the Closing. The Vendor shall have sole responsibility for compliance
with the requirements of the WARN Act, as amended, and any other state, federal
or local requirements with respect to any termination of employment of Employees
in connection with the transactions contemplated by this Agreement.
-35-
9.7 NO HIRE; NO COMPETE.
Vendor agrees that neither it nor any subsidiary of the Vendor shall do anything
to entice the Offered Employees to decline Purchaser's offer or to leave the
employ of Purchaser or an Affiliate of Purchaser or offer to hire or employ or
actually hire or employ any such Offered Employees for a period of three (3)
years after the Date of the Closing unless the Offered Employees are terminated
by the Purchaser or an Affiliate of the Purchaser. The Vendor agrees on behalf
of itself and its Affiliates that, for a period of two years after the Date of
Closing, neither it nor any of its Affiliates will, directly or indirectly,
license or sell to any third party any products, services or intellectual
property that compete with the products, services or intellectual property
currently offered by the Purchased Business. The obligations of Vendor under
this section shall apply without limitation in the Medical Market and, in the
Industrial Market, shall be limited to the 6T memory business for process
technology greater than 90nm. Notwithstanding the provisions of this section,
Vendor may sell any Inventory which is returned to Vendor by Purchaser pursuant
to Section 3.5 of this Agreement.
ARTICLE 10
CONDITIONS OF CLOSING
10.1 MUTUAL CONDITIONS PRECEDENT
The sale and purchase of the Purchased Assets is subject to the following terms
and conditions for the benefit of the parties (provided that no party may rely
on the non-satisfaction or non-fulfilment of any such term or condition to the
extent that such non-satisfaction or non-fulfilment resulted from any material
misrepresentation or material breach of warranty or covenant hereunder by such
party), to be performed or fulfilled at or prior to the Time of Closing (which
conditions may be waived, in whole or in part, in writing by the parties):
(a) No Action or Proceeding Regarding Completion of Transaction. No
legal or regulatory action or proceeding shall be pending by any
person to enjoin, restrict or prohibit the consummation of the
transactions contemplated hereby;
(b) No Action or Proceeding Regarding Carrying-on of the Purchased
Business. No legal or regulatory action or proceeding shall be
pending by any person which would enjoin, restrict, prohibit or
adversely affect the Purchaser from carrying on the Purchased
Business on or after the Closing Date in materially the same manner
as the Vendor carried on the Purchased Business up to the Closing
Date;
(c) Regulatory Consents. There shall have been obtained from all
appropriate Governmental Authorities such licenses, permits,
consents, approvals, certificates, registrations and authorizations
as are required to be obtained by the parties to permit the
consummation of the transactions contemplated hereby and to permit
the Purchaser to conduct the Purchased Business after the Effective
Time, including for clarity the expiration or termination of any
requisite waiting period (and any extension thereof) applicable to
the consummation of the transaction under the Xxxx-Xxxxx-Xxxxxx
Antitrust Improvements Act of 1976, as amended and any other
applicable competition, merger, control, antitrust or similar law.
-36-
10.2 CONDITIONS OF CLOSING IN FAVOR OF THE PURCHASER
The sale and purchase of the Purchased Assets is subject to the following
conditions for the exclusive benefit of the Purchaser to be performed or
fulfilled at or prior to the Time of Closing (which conditions may be waived, in
whole or in part, by the written consent of the Purchaser):
(a) Representations and Warranties. The representations and warranties
of the Vendor contained in this Agreement shall be true and correct
at the Time of Closing with the same force and effect as if such
representations and warranties had been made at and as of such time
(except for representations and warranties which address matters
only as to a specified date, which representations and warranties
shall be true and correct with respect to such specified date),
except for changes therein specifically permitted by this Agreement
or resulting from any transaction expressly consented to in writing
by a Purchaser, and a certificate of a duly authorized officer of
each of the Vendor, dated the Closing Date, to that effect shall
have been delivered to the Purchaser, such certificate to be in the
form reasonably agreed to by the counsel for the Vendor and the
counsel for the Purchaser;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Vendor at or
before the Time of Closing shall have been complied with or
performed in all material respects, and a certificate of a duly
authorized officer of the Vendor, dated the Closing Date, to that
effect shall have been delivered to the Purchaser, such certificate
to be in the form reasonably agreed to by the counsel for the Vendor
and the counsel for the Purchaser;
(c) Consents. The Vendor shall have given or obtained the notices,
consents and approvals described in Schedule 10.2(c), in each case
in form and substance reasonably satisfactory to the Purchaser, with
respect to all material agreements and shall have made commercially
reasonable efforts to obtain assignments of the standalone
indemnification letters listed on Schedule 10.2(c), provided that
failure to obtain such assignments shall not constitute a failure of
this condition;
(d) No Damage. No material damage by fire or other hazard to Purchased
Assets shall have occurred prior to the Time of Closing;
(e) Legal Matters. All instruments and documents required to implement
this Agreement, or instrumental thereto shall have been approved as
to form and legality by the Purchaser's counsel, which approval
shall not be unreasonably withheld or delayed;
(f) Financial Statements. The Vendor shall have delivered to the
Purchaser the unaudited financial statements for the Purchased
Business for the period from January 1, 2006 through the nearest
fiscal quarter completed prior to the Closing, such unaudited
financial statements having been prepared in accordance with GAAP
(except that such unaudited financial statements will not contain
footnotes); and
-37-
(g) Designated Key Employees. All of the Designated Key Employees and
seventy-percent (70%) of the Offered Employees shall have accepted
the Purchaser's offer of employment pursuant to Section 9.1 of this
Agreement.
If any of the conditions contained in this Section 10.2, shall not be performed
or fulfilled at or prior to September 30, 2006 to the satisfaction of the
Purchaser, the Purchaser, by notice to the Vendor may terminate this Agreement
and the obligations of the parties under this Agreement shall be terminated. In
addition, the Purchaser may also bring an action pursuant to Article 12 against
the Vendor for damages (other than consequential damages) suffered by the
Purchaser if Vendor has either wilfully or negligently not performed or failed
to fulfill prior to September 30, 2006 any of the following conditions: Section
10.2(a), 10.2(b), 10.2(e), and 10.2(f) suffered by the Purchaser.
10.3 CONDITIONS OF CLOSING IN FAVOR OF THE VENDOR
The sale and purchase of the Purchased Assets is subject to the following
conditions for the exclusive benefit of the Vendor to be performed or fulfilled
at or prior to the Time of Closing (which conditions may be waived, in whole or
in part, by the written consent of the Vendor):
(a) Representations and Warranties. The representations and warranties
of the Purchaser contained in this Agreement shall be true and
correct at the Time of Closing with the same force and effect as if
such representations and warranties were made at and as of such
time, (except for representations and warranties which address
matters only as to a specified date, which representations and
warranties shall be true and correct with respect to such specified
date) and except for changes therein specifically permitted by this
Agreement or resulting from any transaction expressly consented to
in writing by the Vendor, and a certificate of a duly authorized
representative of the Purchaser, dated the Closing Date, to that
effect shall have been delivered to the Vendor, such certificate to
be in the form agreed to by the counsel for the Vendor and the
counsel for the Purchaser;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchaser at or
before the Time of Closing shall have been complied with or
performed in all material respects, and a certificate of a duly
authorized representative of the Purchaser, dated the Closing Date,
to that effect shall have been delivered to the Vendor, such
certificate to be in the form reasonably agreed to by the counsel
for the Vendor and the counsel for the Purchaser; and
(c) Legal Matters. All instruments and documents required to implement
this Agreement, or instrumental thereto, shall have been approved as
to form and legality by the counsel for the Vendor, which approval
shall not be unreasonably withheld or delayed.
If any of the conditions contained in this Section 10.3 shall not be performed
or fulfilled on or prior to September 30, 2006 to the satisfaction of the Vendor
and the Vendor may, by notice to the Purchaser terminate this Agreement and the
obligations of the Vendor and the Purchaser
-38-
under this Agreement, provided that the Vendor may also bring an action pursuant
to Article 12 against the Purchaser or for damages (other than consequential
damages) suffered by the Vendor.
ARTICLE 11
CLOSING DATE AND TRANSFER OF POSSESSION
11.1 PLACE OF CLOSING
The closing shall take effect at the Time of Closing via conference call, or at
such other place or time as the parties may agree upon in writing.
11.2 TRANSFER
Subject to compliance with the terms and conditions hereof, the transfer of
possession of the Purchased Assets shall be deemed to take effect as at the
Effective Time.
11.3 FURTHER ASSURANCES
From time to time subsequent to the Closing Date, each party covenants and
agrees that at all times after the Closing Date, at the expense of the
requesting party, it will promptly execute and deliver all such documents,
including all such additional conveyances, transfers, consents and other
assurances and do all such other acts and things as the other party, acting
reasonably, from time to time may request be executed or done in order to
evidence better or perfect or effectuate any provision of this Agreement or of
any agreement or other document executed pursuant to this Agreement or any of
the respective obligations intended to be created hereby.
11.4 RISK OF LOSS
From the date hereof up to the Time of Closing, the Purchased Assets shall be
and remain at the risk of the Vendor. If, prior to the Time of Closing, all or
any part of the Purchased Assets which are necessary to carry on the Purchased
Business as currently conducted are destroyed or damaged by fire or any other
casualty or shall be appropriated, expropriated or seized by Governmental
Authority or other lawful authority, unless the Purchaser terminates its
obligations under this Agreement as contemplated by Section 10.2, the Purchaser
shall complete the purchase without reduction of the Purchase Price, in which
event all proceeds of insurance or compensation for expropriation or seizure
shall be paid to the Purchaser at the Time of Closing and all right and claim of
the Vendor to any such amounts not paid by the Closing Date shall be assigned at
the Time of Closing to the Purchaser.
ARTICLE 12
INDEMNIFICATION
12.1 INDEMNIFICATION BY THE VENDOR
The Vendor shall indemnify and save harmless the Purchaser, its successors and
its or their directors, officers, shareholders, Affiliates, employees, and
agents from and against any and all Losses suffered or incurred by such party as
a result of or arising directly or indirectly out of or in connection with:
-39-
(a) any breach by the Vendor or any inaccuracy of any representation or
warranty of the Vendor contained in this Agreement or in any
agreement, instrument or certificate delivered pursuant hereto
(provided that the Vendor shall not be required to indemnify or save
harmless the Purchaser in respect of any such breach or inaccuracy
of any representation or warranty unless the Purchaser shall have
provided notice to the Vendor in accordance with Section 12.3 on or
prior to the expiration of the survival period for such
representation and warranty set out in Section 7.1);
(b) any breach or non-performance by the Vendor any covenant to be
performed by it which is contained in this Agreement or in any
agreement, instrument or certificate delivered pursuant hereto;
(c) any liabilities, obligations or commitments of the Vendor (whether
accrued, contingent or otherwise and whether or not determined or
determinable) related to the Purchased Business, the Transferred
Leased Properties, the Premises or the Purchased Assets, other than
the Assumed Liabilities, existing at or prior to the Effective Time
(including any liability or obligation of the Vendor that becomes a
liability of the Purchaser under any common law doctrine of de facto
merger or of successor liability);
(d) any product liability claims, warranty claims or other claims with
respect to the compliance with specifications or orders of any
Vendor products sold by the Purchased Business or any services
offered by the Purchased Business prior to the Effective Time,
provided that the Purchaser agrees that, notwithstanding the
foregoing, the Purchaser shall accept liability solely for analyzing
RMA's received by customers and replacing products exhibiting
manufacturing defects (but not including any liability for
redesigning products to fix design errors) after the effective Time
even if the products in question were shipped by the Vendor prior to
the Effective Time;
(e) any claims by any employees of the Purchased Business arising out of
such employees' employment with the Vendor, including claims with
respect to the Vendor Employee Plans;
(f) any event occurring or any condition existing at or prior to the
Effective Time relating to the Purchased Business, the Transferred
Leased Properties, the Premises or the Purchased Assets which now or
hereafter constitutes a violation of, or gives rise to any liability
under, any Environmental Laws;
(g) any Release of any Hazardous Substances in, on, under or from the
Leased Property, the Premises or the Purchased Assets and whether by
the Vendor or any other person prior to the Effective Time and for
greater certainty, whether or not known at the Closing Date;
(h) any commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who purports to
act or have acted for or on
-40-
behalf of the Vendor with respect to the transactions contemplated
by this Agreement; and
(i) any claim by a third party alleging that the Transferred
Intellectual Property infringes an Intellectual Property right of
such third party to the extent that the claim arises from activities
occurring prior to the Time of Closing.
12.2 INDEMNIFICATION BY THE PURCHASER
The Purchaser shall indemnify and save harmless the Vendor and its
successors and its or their directors, officers, shareholders, Affiliates,
employees and agents from and against any and all Losses suffered or incurred by
such party as a result of or arising directly or indirectly out of or in
connection with:
(a) any breach by Purchaser of or any inaccuracy of any representation
or warranty of Purchaser contained in this Agreement or in any
agreement, instrument or certificate delivered pursuant hereto
(provided that the Purchaser shall not be required to indemnify or
save harmless the Vendor in respect of any breach or inaccuracy of
any representation or warranty unless the Vendor shall have provided
notice to a Purchaser in accordance with Section 12.3 on or prior to
the expiration of the survival period for such representation and
warranty set out in Section 7.1);
(b) any breach or non-performance by Purchaser of any covenant to be
performed by it which is contained in this Agreement or in any
agreement, instrument or certificate delivered pursuant hereto;
(c) any failure by Purchaser to pay, satisfy, discharge, perform or
fulfil any of the Assumed Liabilities in a timely manner;
(d) any claims by Transferred Employees employed by Purchaser or an
Affiliate of Purchaser after the Effective Time relating to their
employment with Purchaser or an Affiliate of Purchaser after the
Effective Time, including claims with respect to any employee
benefit plan of the Purchaser or and Affiliate of the Purchaser; and
(e) any commission or other remuneration payable or alleged to be
payable to any broker, agent or other intermediary who purports to
act or have acted for or on behalf of a Purchaser.
12.3 NOTICE OF CLAIM
In the event that any party (the "INDEMNIFIED PARTY") shall assert a First Party
Claim or become aware of any Third Party Claim in respect of which another party
(the "INDEMNIFYING PARTY") agreed to indemnify the Indemnified Party pursuant to
this Agreement, the Indemnified Party shall promptly give notice thereof to the
Indemnifying Party. Such notice shall specify whether the Claim arises as a
result of a Claim asserted by a third person against the Indemnified Party (a
"THIRD PARTY CLAIM") or whether the Claim is asserted by the other party (a
"FIRST PARTY
-41-
CLAIM"), and shall also specify with reasonable particularity (to the extent
that the information is available):
(a) the factual basis for the Claim; and
(b) the amount of the Claim, if known.
If, through the fault of the Indemnified Party, the Indemnifying Party does not
receive notice of any Claim in time to contest effectively the determination of
any liability susceptible of being contested, the Indemnifying Party shall be
entitled to set off against the amount claimed by the Indemnified Party the
amount of any Losses incurred by the Indemnifying Party resulting from the
Indemnified Party's failure to give such notice on a timely basis.
12.4 FIRST PARTY CLAIMS
With respect to any First Party Claim, following receipt of notice from the
Indemnified Party of the Claim, the Indemnifying Party shall have 60 days to
make such investigation of the Claim as is considered necessary or desirable.
For the purpose of such investigation, the Indemnified Party shall make
available to the Indemnifying Party the information relied upon by the
Indemnified Party to substantiate the Claim, together with all such other
information and access to personnel as the Indemnifying Party may reasonably
request. If both parties agree at or prior to the expiration of such 60-day
period (or any mutually agreed upon extension thereof) to the validity and
amount of such Claim, the Indemnifying Party shall immediately pay to the
Indemnified Party the full agreed upon amount of the Claim, failing which the
matter shall be referred to dispute resolution pursuant to the provisions of
Section 13.1.
12.5 THIRD PARTY CLAIMS
With respect to any Third Party Claim, the Indemnifying Party shall have the
right, at its expense, to participate in or assume control of the negotiation,
settlement or defense of the Claim. If the Indemnifying Party elects to assume
such control, the Indemnified Party shall have the right to participate in, but
not control, the negotiation, settlement or defense of such Third Party Claim
and to retain counsel to act on its behalf at its sole cost and expense,
provided, that if the same counsel cannot represent both the Indemnifying Party
and the Indemnified Party due to actual or potential conflict of interest that
cannot reasonably be waived, then the Indemnifying Party shall be responsible
for paying the reasonable expense of separate counsel to represent the
Indemnified Party. The Indemnified Party shall not settle a claim or demand for
which it seeks or may seek to be indemnified by any Indemnifying Party without
the prior written consent of the Indemnifying Party, which consent will not be
unreasonably withheld or delayed. If the Indemnifying Party, having elected to
assume control of such defense, thereafter fails to defend the Third Party Claim
within a reasonable time, the Indemnified Party shall be entitled to assume
control of such defense, subject to the right of the Indemnifying Party at any
time to re-assume control of the defense, and the amount of any such Third Party
Claim (so long as it is a claim or demand in respect of which indemnification is
available hereunder) or, if the same be contested by the Indemnified Party, then
that portion thereof as to which such defense is unsuccessful (and the
reasonable costs and expenses pertaining to such defense) shall be the liability
of the Indemnifying Party hereunder. The Indemnifying Party shall not settle any
Third Party Claim
-42-
without the prior written consent of the Indemnified Party (which consent shall
not be unreasonably withheld or delayed), unless such settlement includes an
unconditional release of the Indemnified Party.
12.6 COOPERATION
The Indemnified Party and the Indemnifying Party shall cooperate fully with each
other with respect to Third Party Claims and shall keep each other fully advised
with respect thereto (including supplying copies of all relevant documentation
promptly as it becomes available). The Indemnified Party will give the
Indemnifying Party and its counsel prompt and reasonable access to the
Indemnified Party's premises and relevant business records and other documents
and all employees, counsel, accountants and other agents and representatives of
the Indemnified Party necessary for the defense of the Third Party Claim. The
Indemnified Party shall use its reasonable best efforts in the defense of all
such claims.
12.7 INDEMNIFICATION THRESHOLD
No Claim shall be made pursuant to Sections 12.1 or 12.2 until the aggregate
Losses suffered or incurred by the Indemnified Party in respect of all matters
which could be the subject of such a Claim exceed $20,000, at which time the
Indemnified Party may make Claims in respect of all Losses, including for
greater certainty, the first $20,000 thereof.
12.8 COMPUTATION OF LOSSES
Any amount payable pursuant to this Article 12 shall be decreased to the extent
(i) the Indemnified Party recognizes a Tax Benefit as a result of a Loss (the
Indemnified Party shall be deemed to recognize a tax benefit ("Tax Benefit")
with respect to a taxable year if, and to the extent that, the Indemnified
Party's cumulative liability for Taxes through the end of such taxable year,
calculated by excluding any Tax items attributable to the Losses from all
taxable years, exceeds the Indemnified Party's actual cumulative liability for
Taxes through the end of such taxable year, calculated by taking into account
any Tax items attributable to the Losses for all taxable years (to the extend
permitted by the relevant tax law and treating such Tax items as the last items
claimed for any taxable year), (ii) of any insurance proceeds or contribution
payments or other similar source of compensation received by the Indemnified
Party or its Affiliates in respect of any Losses, (iii) of any indemnification
proceeds received by the Indemnified Party or its Affiliates from an unrelated
party in respect of any Losses. If any Indemnified Party is entitled to receive
or receives any of the benefits specified in the prior sentence after an
indemnification payment of the Indemnifiable Damages is made, the Indemnified
Party shall notify the Indemnifying Party of such fact and promptly repay to the
Indemnifying Party such amount of the indemnification payment as would not have
been paid had such benefit reduced the original indemnification payment.
12.9 EXCLUSIVITY AND LIMITATIONS ON LIABILITY
The provisions of this Article 12 shall apply to any Claim for breach of any
covenant, representation, warranty or other provision of this Agreement (other
than a claim for specific performance or injunctive relief) and/or for any of
the other indemnifiable matters set forth in Sections 12.1 and 12.2, with the
intent that all such Claims shall be subject to the limitations and
-43-
other provisions contained in this Article 12. Absent fraud or wilful
misconduct, the aggregate liability of Vendor under this Agreement will be
limited to 1 year from Closing and shall not exceed $4,000,000 and the Indemnity
Escrow. Absent fraud or wilful misconduct, the aggregate liability of the
Purchaser under this Agreement delivered pursuant hereto shall not exceed
$5,000,000.
ARTICLE 13
MISCELLANEOUS
13.1 DISPUTE RESOLUTION
In the event of any dispute relating to this Agreement, the parties shall first
attempt in good faith to resolve any and all controversies or claims relating to
such disputes promptly by negotiation commencing within ten (10) calendar days
of the written notice of such disputes by either party. The representatives of
the parties shall meet at a mutually acceptable time and place but within thirty
(30) calendar days of the written notice and thereafter as often as they
reasonably deem necessary to exchange relevant information and to attempt to
resolve the dispute.
13.2 ARBITRATION; WAIVER OF JURY TRIAL
(a) Except as otherwise provided in this Agreement, the following
binding dispute resolution procedures shall be the exclusive means
used by the parties to resolve all disputes, differences,
controversies and claims arising out of or relating to this
Agreement (collectively "DISPUTES"). Any party may, by written
notice to the other party, refer any Disputes for resolution in the
manner set forth below in this Section 13.2.
(b) Any Disputes shall be referred to arbitration under the
Comprehensive Arbitration Rules & Procedures of JAMS (the
"ARBITRATION ADMINISTRATOR"), as such rules shall be in effect on
the Closing Date, except to the extent that such rules are
inconsistent with this Section 13.2, in which case this Section
shall govern.
(c) The parties to a Dispute shall agree on a single arbitrator (the
"ARBITRATOR"). The Arbitrator shall be selected by the parties from
a roster of arbitrators provided by the Arbitration Administrator.
If the parties cannot agree on an Arbitrator within seven (7) days
of delivery of the demand for arbitration ("DEMAND") (or such other
time period as the parties may agree), the Arbitration Administrator
shall deliver a roster of ten names to the parties. Within seven (7)
calendar days of service upon the parties of the list of names, each
party may strike three (3) names and shall rank the remaining seven
(7) arbitrator candidates in order of preference, from least to most
preferred. The Arbitration Administrator will then appoint the
remaining candidate with the highest composite ranking as the
Arbitrator, or, in the event of a tie, the Arbitration Administrator
will select an Arbitrator from among the tied candidates.
(d) Unless otherwise mutually agreed to by the parties to a Dispute, the
place of arbitration shall be Chicago, Illinois.
-44-
(e) The Federal Arbitration Act shall govern the arbitrability of all
Disputes, and the Rules of the Arbitration Administrator shall, to
the extent not inconsistent with this Agreement, govern the conduct
of the arbitration. To the extent that the Federal Arbitration Act
and Rules do not provide an applicable procedure, California law
shall govern the procedures for arbitration and enforcement of an
award, and then only to the extent not inconsistent with the terms
of this Section 13.2. Disputes between the parties shall be subject
to arbitration notwithstanding that a party to this Agreement is
also a party to a pending court action or special proceeding with a
third party, arising out of the same transaction or series of
related transactions and there is a possibility of conflicting
rulings on a common issue of law or fact.
(f) Unless otherwise mutually agreed to by the parties to a Dispute,
each party shall allow and participate in discovery as follows:
(i) Expert Disclosure. If scientific, technical, or other
specialized knowledge will assist the arbitrator, each party
may select a single witness who is retained or specially
employed to provide such expert testimony. In addition, each
party may select an additional retained or specially employed
expert witness to testify with respect to damages issues, if
any. Expert discovery shall consist of the following: (1) the
parties shall exchange complete reports on all information to
be provided by the expert(s) at the hearing no later than
thirty (30) days before the first day of the hearing; (2) the
parties shall depose the other party's experts, (3) the
parties shall produce complete rebuttal reports, if any, no
later than ten (10) days before the first day of the hearing;
and (4) the parties shall be required to produce any and all
documents reviewed by their expert(s) in performing work
relating to the arbitration.
(ii) Additional Discovery. The Arbitrator may, on application by
either party, authorize additional discovery. In the event
that remote witnesses might otherwise be unable to attend the
arbitration, arrangements shall be made to allow their live
testimony by video conference during the arbitration hearing.
(g) The Arbitrator shall render an award within six (6) months after the
date of appointment, and a condition of the arbitrator's appointment
shall be commitment to comply with this six (6) month period. This
period may be extended by mutual agreement of the parties. The award
shall be accompanied by a written opinion setting forth the findings
of fact, conclusions of law and reasoning relied upon by the
arbitrator in reaching his or her decision. The arbitrator shall be
bound by the provisions of this Agreement with respect to the type
of Losses that are recoverable hereunder. The award (subject to
clarification or correction by the arbitrator as allowed by statute
and/or the applicable Rules of the Arbitration Administrator) shall
be final and binding upon the parties, subject solely to the review
procedures provided in this Section 13.2.
-45-
(h) Either party to a Dispute may seek review of the award pursuant to
the following procedure. Either party may seek arbitral review of
the award pursuant to the JAMS Optional Arbitration Appeal Procedure
then in force. Arbitral review may be had as to any element of the
award as allowed by such Procedures.
(i) The arbitration provisions of this Agreement are to be performed in
Chicago, Illinois . Any judicial proceeding arising out of or
relating to this Agreement or the relationship of the parties,
including without limitation any proceeding to enforce this Section
13.2, to review or confirm the award in arbitration shall be brought
exclusively in a court of competent jurisdiction in Chicago,
Illinois (the "ENFORCING COURT"). Any judgment of the Enforcing
Court may be enforced by any sister court of competent jurisdiction.
By execution and delivery of this Agreement, each party (i) accepts,
generally and unconditionally, the exclusive jurisdiction of the
Enforcing Court and any related appellate court, and irrevocably
agrees to be bound by any judgment rendered thereby in connection
with this Agreement, their relationship, or any arbitration relating
thereto, (ii) irrevocably waives any objection it may now or
hereafter have as to the venue of any such suit, action or
proceeding brought in such a court or that such court is an
inconvenient forum, and (iii) waives personal service of process and
consents to service of process upon it by certified or registered
mail, return receipt requested, at its address specified or
determined in accordance with Section 13.3 hereof, and service so
made shall be deemed completed on the third business day after such
service is deposited in the mail. Subject to Article 12, the fees
and expenses of the Arbitrator and Arbitration Administrator shall
be borne equally by the parties if and to the extent that the
arbitration panel determines that such result would be fair and
equitable under the circumstances.
(j) The parties agree that conduct and detailed content of any
arbitration pursuant to this Section 13.2 shall be kept confidential
and no party shall disclose to any person such information, except
(i) to the extent that the party has a good faith commercial reason
for disclosing such information to a third party who has agreed to
keep such information confidential, and (ii) as may be required by
law or by any governmental authority or for financial reporting
purposes in each party's financial statements. Nothing in this
subsection shall prevent a party from disclosing the existence and
high level nature of the dispute and the fact that it is being
arbitrated.
(k) IN THE EVENT OF ANY DISPUTE BETWEEN THE PARTIES, WHETHER IT RESULTS
IN PROCEEDINGS IN ANY COURT IN ANY JURISDICTION OR IN ARBITRATION,
THE PARTIES HEREBY KNOWINGLY AND VOLUNTARILY, AND HAVING HAD AN
OPPORTUNITY TO CONSULT WITH COUNSEL, WAIVE ALL RIGHTS TO TRIAL BY
JURY, AND AGREE THAT ANY AND ALL MATTERS SHALL BE DECIDED BY A JUDGE
OR ARBITRATOR WITHOUT A JURY TO THE FULLEST EXTENT PERMISSIBLE UNDER
APPLICABLE LAW.
-46-
13.3 NOTICES
(a) Any notice or other communication required or permitted to be given
hereunder shall be in writing and shall be delivered in person,
transmitted by facsimile or similar means of recorded electronic
communication or sent by registered mail, charges prepaid, addressed
as follows:
(i) if to Purchaser:
AMI Semiconductor, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx
X.X.X. 00000
Attention: Xxxxxxx Xxxxx, Senior Vice President and General
Counsel
Facsimile No.: (000) 000-0000
With a copy to:
AMI Semiconductor, Inc.
0000 Xxxxxxxx Xxxx
Xxxxxxxxx, Xxxxx
X.X.X. 00000
Attention: Xxxxx Xxxxx, Senior Vice President and CFO
Facsimile No.: (000) 000-0000
(ii) if to Vendor:
NanoAmp Solutions, Inc.
0000 XxXxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxx, CEO
Tel: (000) 000-0000
Fax: (000) 000-0000
(b) Any such notice or other communication shall be deemed to have been
given and received on the day on which it was personally delivered
or transmitted by telecopier, receipt confirmed (or, if such day is
not a Business Day, on the next following Business Day) or, if
mailed, on the third Business Day following the date of mailing or,
if couriered overnight, on the next following Business Day;
provided, however, that, if at the time of mailing or within three
Business Days thereafter there is or occurs a labor dispute or other
event which might reasonably be expected to disrupt the delivery of
documents by mail, any notice or other
-47-
communication hereunder shall be delivered or transmitted by means
of telecopier as aforesaid.
(c) Either party may change its address for service at any time by
giving notice to the other party in accordance with this Section
13.3.
13.4 CONSTRUCTION
The parties hereto acknowledge that their respective legal counsel have reviewed
and participated in settling the terms of this Agreement and that any rule of
construction to the effect that any ambiguity is to be resolved against the
drafting party, including the rule or doctrine of contra proferentum, shall not
be applicable in the interpretation of this Agreement.
13.5 PUBLIC ANNOUNCEMENT
The parties shall consult with each other before issuing any press release or
making any other public announcement with respect to this Agreement or the
transactions contemplated hereby and, except as required by any applicable law
or regulatory requirement, neither of them shall issue any such press release or
make any such public announcement without the prior written consent of the
other, which consent shall not be unreasonably withheld or delayed.
13.6 EXPENSES
Except as otherwise provided herein, each party shall be responsible for the
expenses (including fees and expenses of legal advisors, accountants and other
professional advisors) incurred by it and its Affiliates, respectively, in
connection with the negotiation and settlement of this Agreement, the completion
of the transactions contemplated hereby, and the post-Closing transition of the
Purchased Business and the Transferred Employees to the Purchaser. The Vendor
will reasonably cooperate with the Purchaser with respect to the transition of
the Purchased Business to the Purchaser.
13.7 SUCCESSORS AND ASSIGNS
This Agreement shall enure to the benefit of and shall be binding on and
enforceable by the parties and their respective successors and permitted
assigns. No party may assign any of its rights or obligations hereunder without
the prior written consent of the other parties, which consent shall not be
unreasonably withheld or delayed.
13.8 COUNTERPARTS
This Agreement may be executed and delivered (including by facsimile or e-mail
transmission) in counterparts, each of which shall constitute an original and
all of which taken together shall constitute one and the same instrument.
-48-
IN WITNESS WHEREOF this Agreement has been executed by the parties.
AMI SEMICONDUCTOR, INC.
by /s/ Xxxxx X. Xxxxx
------------------------------------
Name: Xxxxx X. Xxxxx
Title: Senior Vice President & CFO
NANOAMP SOLUTIONS, INC.
by /s/ Xxxxxx Xxxx
-----------------------------------
Name: Xxxxxx Xxxx
Title: CEO
