EXHIBIT 10.1
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ASSET PURCHASE AGREEMENT
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BETWEEN
AMI SEMICONDUCTOR, INC.
EMMA MIXED SIGNAL C.V.
AMI SEMICONDUCTOR ISRAEL, LTD.
AMIS HOLDINGS, INC.
AND
FLEXTRONICS SEMICONDUCTOR, INC.
FLEXTRONICS INTERNATIONAL USA, INC.
FLEXTRONICS SEMICONDUCTOR LTD. (UK),
FLEXTRONICS SEMICONDUCTOR LTD.,
PERIPHERAL IMAGING CORPORATION,
KMOS SEMICONDUCTOR, INC.,
FLEXTRONICS SEMICONDUCTOR DESIGN, INC.
September 9, 2005
TABLE OF CONTENTS
ARTICLE 1
INTERPRETATION
1.1 Defined Terms....................................................... 3
1.2 Currency............................................................ 10
1.3 Sections and Headings............................................... 10
1.4 Rules of Construction............................................... 11
1.5 Accounting Principles............................................... 11
1.6 Entire Agreement.................................................... 11
1.7 Time of Essence..................................................... 12
1.8 Applicable Law...................................................... 12
1.9 Knowledge........................................................... 12
1.10 Amendment and Waivers............................................... 12
1.11 Severability........................................................ 12
ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 Purchased Assets.................................................... 13
2.2 Excluded Assets..................................................... 15
ARTICLE 3
PURCHASE PRICE
3.1 Purchase Price...................................................... 16
3.2 Closing Date Payment................................................ 16
3.3 Escrow.............................................................. 17
3.4 Allocation of Purchase Price; Transfer Taxes........................ 17
3.5 Working Capital Adjustment.......................................... 18
ARTICLE 4
LIABILITIES
4.1 Assumption of Certain Liabilities by the Purchasers................. 19
4.2 Excluded Liabilities................................................ 20
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND FLEX USA
5.1 Organization........................................................ 20
5.2 Authorization....................................................... 21
5.3 No Other Agreements to Purchase..................................... 21
5.4 No Violation........................................................ 21
5.5 Sufficiency of Purchased Assets..................................... 21
5.6 Title to Personal Property.......................................... 22
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5.7 Real Property Leases................................................ 22
5.8 Leased Property..................................................... 22
5.9 Inventories......................................................... 23
5.10 Accounts Receivable................................................. 24
5.11 Intellectual Property............................................... 24
5.12 Insurance........................................................... 26
5.13 No Expropriation.................................................... 26
5.14 Agreements and Commitments.......................................... 26
5.15 Compliance with Laws; Governmental Authorizations................... 27
5.16 Consents and Approvals.............................................. 27
5.17 Books and Records................................................... 27
5.18 Litigation.......................................................... 27
5.19 No Liabilities...................................................... 28
5.20 Absence of Changes.................................................. 28
5.21 Non-Arm's Length Transactions....................................... 29
5.22 Tax Matters......................................................... 29
5.23 No Collective Bargaining Contracts, etc............................. 30
5.24 Customers and Suppliers............................................. 30
5.25 Product Warranties.................................................. 30
5.26 Environmental....................................................... 31
5.27 Brokerage........................................................... 31
5.28 WARN Act............................................................ 32
5.29 Solvency............................................................ 32
5.30 Employee Plans...................................................... 32
5.31 Full Disclosure..................................................... 32
5.32 Accuracy of Certain Data With Respect to the System-on-a-Chip
Portion of the Purchased Business................................... 33
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS AND AMIS PARENTCO
6.1 Organization........................................................ 33
6.2 Authorization....................................................... 33
6.3 No Violation........................................................ 33
6.4 Consents and Approvals.............................................. 34
6.5 Injunctions, Orders................................................. 34
6.6 Financing........................................................... 34
ARTICLE 7
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
7.1 Survival of Representations and Warranties.......................... 34
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ARTICLE 8
COVENANTS
8.1 Access to the Purchased Business and Purchased Assets............... 34
8.2 Delivery of Books and Records....................................... 35
8.3 Use of Names........................................................ 36
8.4 Conduct of Purchased Business Prior to Closing...................... 36
8.5 Delivery of Conveyancing Documents.................................. 38
8.6 Delivery of Closing Documentation................................... 38
8.7 Consents to Assignment.............................................. 39
8.8 Regulatory Approvals................................................ 40
8.9 Actions by the Purchasers........................................... 40
8.10 Agreement Regarding Certain Royalties............................... 41
ARTICLE 9
EMPLOYEE MATTERS
9.1 Offers of Employment................................................ 41
9.2 Offered Employees................................................... 42
9.3 Transferred Employees............................................... 44
9.4 Employee Accruals................................................... 45
9.5 Employee Information................................................ 45
9.6 Severed Non-Offered Employee Severance Costs........................ 45
9.7 Termination of Employees............................................ 46
9.8 No Hire; No Compete................................................. 46
ARTICLE 10
CONDITIONS OF CLOSING
10.1 Mutual Conditions Precedent......................................... 47
10.2 Conditions of Closing in Favor of the Purchasers and AMIS
Parentco............................................................ 48
10.3 Conditions of Closing in Favor of the Vendors and Flex USA.......... 49
ARTICLE 11
CLOSING DATE AND TRANSFER OF POSSESSION
11.1 Place of Closing.................................................... 50
11.2 Transfer............................................................ 50
11.3 Further Assurances.................................................. 51
11.4 Risk of Loss........................................................ 51
ARTICLE 12
INDEMNIFICATION
12.1 Indemnification by the Vendors and Flex USA......................... 51
12.2 Indemnification by the Purchasers and AMIS Parentco................. 53
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12.3 Notice of Claim..................................................... 53
12.4 First Party Claims.................................................. 54
12.5 Third Party Claims.................................................. 54
12.6 Cooperation......................................................... 55
12.7 Indemnification Threshold........................................... 55
12.8 Computation of Losses............................................... 55
12.9 Exclusivity and Limitations on Liability............................ 56
ARTICLE 13
MISCELLANEOUS
13.1 Dispute Resolution; Waiver of Jury Trial............................ 56
13.2 Notices............................................................. 59
13.3 Construction........................................................ 61
13.4 Public Announcement................................................. 61
13.5 Expenses............................................................ 61
13.6 Successors and Assigns.............................................. 61
13.7 Intellectual Property License....................................... 62
13.8 Counterparts........................................................ 62
SCHEDULES
Schedule 1.9 - Senior Managers
Schedule 2.1(a) - Machinery and Equipment
Schedule 2.1(b) - Transferred Leases
Schedule 2.1(c) - Vehicles
Schedule 2.1(d) - Vehicle Leases
Schedule 2.1(h) - Assigned Contracts
Schedule 2.1(i) - Intellectual Property
Schedule 2.1(j) - Assigned Third Party Software Licenses
Schedule 2.2(e) - Non-Assigned Contracts
Schedule 2.2(p) - Other Assets
Schedule 3.3 - Form of Escrow Agreement
Schedule 3.4 - Allocation of Purchase Price
Schedule 3.5(a) - Working Capital Calculation
Schedule 6.4 - Required Consents of the Purchasers and AMIS Parentco
Schedule 9.1(a) - Employees
Schedule 9.1(b) - Offered Employees
Schedule 9.1(c) - Non-Offered Employees and Lesser Offered Employees
Schedule 9.3(a) - Vendor Employee Plans
Schedule 9.3(c) - Absent Transferred Employees
Schedule 9.8 - Certain Affiliates
Schedule 10.2(c) - Required Consents
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT is made the 9th day of September, 2005, 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 a "Purchaser" and
collectively with AMI Semiconductor Israel Ltd. and Emma Mixed
Signal C.V. referred to as the "Purchasers"),
-and-
AMI SEMICONDUCTOR ISRAEL LTD.,
a corporation existing under the laws of Israel, (hereinafter
referred to as "AMI Israel" or a "Purchaser" and collectively
with AMI Semi and Emma Mixed Signal C.V. referred to as the
"Purchasers"),
-and-
EMMA MIXED SIGNAL C.V.
a limited partnership organized under the laws of the
Netherlands, (hereinafter referred to as "Emma" or a "Purchaser"
and collectively with AMI Semi and AMI Israel, referred to as the
"Purchasers"),
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AMIS HOLDINGS, INC.,
a corporation existing under the laws of the State of Delaware,
(hereinafter referred to as "AMIS Parentco"),
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FLEXTRONICS SEMICONDUCTOR, INC.,
a corporation existing under the laws of the State of Delaware,
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(hereinafter referred to as the "FlexSemi" and together with
KMOS, PIC, FlexSemi UK, FlexSemi Israel and Flex Semi Design, the
"Vendors" and each a "Vendor"),
-and-
FLEXTRONICS SEMICONDUCTOR LTD. (UK) , a corporation existing
under the laws of the United Kingdom (hereinafter referred to as
"FlexSemi UK" and together with KMOS, PIC, FlexSemi, FlexSemi
Israel and Flex Semi Design, the "Vendors" and each a "Vendor"),
-and-
FLEXTRONICS SEMICONDUCTOR LTD.,
a corporation existing under the laws of the Israel (hereinafter
referred to as "FlexSemi Israel" and together with KMOS, PIC,
FlexSemi UK, FlexSemi and Flex Semi Design, the "Vendors" and
each a "Vendor"),
-and-
PERIPHERAL IMAGING CORPORATION,
a corporation existing under the laws of State of California
(hereinafter referred to as "PIC" and together with KMOS,
FlexSemi, FlexSemi UK, FlexSemi Israel and Flex Semi Design, the
"Vendors" and each a "Vendor"),
-and-
KMOS SEMICONDUCTOR, INC.,
a corporation existing under the laws of Delaware (hereinafter
referred to as "KMOS" and together with FlexSemi, PIC, FlexSemi
UK, FlexSemi Israel and Flex Semi Design, the "Vendors" and each
a "Vendor"),
-and-
FLEXTRONICS SEMICONDUCTOR DESIGN, INC.,
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a corporation existing under the laws of Tennessee (hereinafter
referred to as "Flex Semi Design" and together with KMOS, PIC,
FlexSemi UK, FlexSemi Israel and FlexSemi, the "Vendors" and each
a "Vendor"),
-and-
FLEXTRONICS INTERNATIONAL USA, INC.
a corporation existing under the laws of the State of Delaware
(hereinafter referred to as "Flex USA").
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);
"AGGREGATE OPTION HOLDBACK AMOUNT" has the meaning set out in Section
9.2(c);
"ANCILLARY AGREEMENTS" means the Escrow Agreement dated September 9, 2005
between FlexSemi and AMI Semi and the Transition Services Agreement dated
September 9, 2005 between Flex USA and AMI Semi.
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"ASSIGNED AGREEMENTS" has the meaning set out in Section 5.14;
"ASSIGNED CONTRACTS" has the meaning set out in Section 2.1(h);
"ASSIGNED THIRD PARTY SOFTWARE LICENSES" has the meaning set out in Section
2.1(j);
"ASSUMED LIABILITIES" has the meaning set out in Section 4.1;
"BOOKS AND RECORDS" has the meaning set out in Section 2.1(l);
"BUSINESS DAY" means a day, other than a Saturday or a Sunday, on which
banks are open for ordinary banking business in San Jose, California;
"CASH ASSETS" means cash, and highly liquid short-term investments with
original maturities of ninety (90) days or less, of the Vendors.
"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 the second Business Day after the
satisfaction or waiver of each of the conditions set forth in Article 10,
or such other date as the parties may mutually agree;
"CLOSING FINANCIAL STATEMENTS" has the meaning set out in Section 3.5(a);
"CONTAMINANT" has the meaning set out in Section 5.11(k);
"CONTRACT" means any agreement, indenture, contract, lease, deed of trust,
license, option, instrument or other commitment, whether written or oral;
"DISCLOSURE LETTER" has the meaning set out in the introductory paragraph
to Article 5;
"DISABLING CODE" has the meaning set out in Section 5.11(k);
"EFFECTIVE TIME" means 11:59 p.m. on the Closing Date;
"EFFECTIVE TIME WORKING CAPITAL" has the meaning set out in Section 3.5(a);
"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;
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"EMPLOYEES" has the meaning set out in Section 9.1(a).
"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,
other than Permitted Encumbrances;
"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 Wells Fargo Bank, N.A.;
"ESCROW AGREEMENT" has the meaning set out in Section 3.3;
"ESCROW AMOUNT" has the meaning set out in Section 3.2(a);
"EXCLUDED ASSETS" has the meaning set out in Section 2.2;
"EXCLUDED LIABILITIES" has the meaning set out in Section 4.2;
"FINANCIAL STATEMENTS" means for Flex Semi the audited consolidated
statement of net assets acquired, statement of revenues and direct and
allocated expense, including footnotes, for fiscal year ended March 31,
2005;
"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
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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;
"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;
"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;
(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;
"ISRAELI TRANSFERRED EMPLOYEE ACCRUALS" has the meaning set out in Section
2.1(n);
"LEASES" has the meaning set out in Section 5.7;
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"LEASED PROPERTY" has the meaning set out in Section 5.7;
"LESSER OFFERED EMPLOYEE" has the meaning set out in Section 9.1(c);
"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;
"MATERIAL ADVERSE EFFECT" with respect to the Purchased Business means any
change, event, violation, inaccuracy, circumstance or effect (each, an
"Effect") that, individually or taken together with all other Effects, is,
or is reasonably likely to be, materially adverse in relation to the
condition (financial or otherwise), properties, assets, liabilities,
operations, or results of operations of the Purchased Business except to
the extent that such Effect results from (i) changes in general economic
conditions, (ii) changes affecting the industry in which the Purchased
Business is operated (provided that such changes do not affect the
Purchased Business in a substantially disproportionate manner), (iii)
actions not taken by any Vendor pursuant to Section 8.4 due to AMI Semi
unreasonably withholding its consent following a request from such Vendor
to AMI Semi to undertake such actions, or (iv) the public announcement or
pendency of the transactions contemplated hereby;
"NON-OFFERED EMPLOYEE" has the meaning set out in Section 9.1(c);
"OFFERED EMPLOYEES" has the meaning set out in Section 9.1(b);
"OPTION HOLDBACK AMOUNT" has the meaning set out in Section 9.2(c);
"PERMITS" has the meaning set out in Section 5.15;
"PERMITTED ENCUMBRANCES" means: (A) statutory liens for taxes that are not
yet due and payable or liens for taxes being contested in good faith by any
appropriate proceedings for which adequate reserves have been established;
(B) statutory liens to secure obligations to landlords, lessors or renters
under leases or rental agreements; (C) deposits or pledges made in
connection with, or to secure payment of, workers' compensation,
unemployment insurance or similar programs mandated by applicable law; (D)
statutory liens in favor of carriers, warehousemen, mechanics and
materialmen, to secure claims for labor, materials or supplies and other
like liens; (E) liens in favor of customs and revenue authorities arising
as a matter of law to secure payments of customs duties in connection with
the importation of goods; and (F) non-exclusive object code licenses of
software by any Vendor in the ordinary course of its business;
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"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;
"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 business carried on by any Vendor prior to
the Effective Time utilizing the Purchased Assets, consisting primarily of
the design and sale of mixed signal application specific integrated
circuits ("ASICs"), the design of CMOS-based contact image sensor chips and
modules using active-pixel array technology, and digital ASICs and field
programmable gate arrays to ASIC conversion services but excluding the
business of designing, developing and marketing Bluetooth(R) solutions
focused on wireless and mobile printing including the IntelliBLUE(TM)
BIC2102 Application Processor, and Class 1 and Class 2 modules for
Bluetooth(R) applications.
"REGISTERED INTELLECTUAL PROPERTY" means all United States and foreign: (i)
patents and patent applications (including provisional applications), (ii)
registered trademarks, applications to register trademarks, intent-to-use
applications, or other registrations or applications related to trademarks,
(iii) registered copyrights and applications for copyright registration,
and (iv) any other Intellectual Property that is the subject of an
application, certificate, filing, registration or other document issued,
filed with, or recorded by any governmental authority owned by, or
registered or filed in the name of, any Vendor.
"REIMBURSABLE SEVERANCE COSTS" means for each Severed Non-Offered Employee,
the corresponding amount set forth in Schedule 9.1(c), but only to the
extent that such amount is actually paid by a Vendor or Flex USA or an
Affiliate of a Vendor of Flex USA to such Severed Non-Offered Employee as
described in Section 9.6 of this Agreement;
"REIMBURSABLE SEVERANCE COST ACCOUNTING" has the meaning set out in Section
9.6;
"RELEASE" means any release, spill, emission, discharge, disposal,
dispersal, leaching or migration into the indoor or outdoor environment;
"RIGHTS" has the meaning set out in Section 8.7;
"SEVERED NON-OFFERED EMPLOYEE" means an Employee (a) who is listed in
Schedule 9.1(c) and who does not become a Transferred Employee at the
Closing, (b) whose employment with a Vendor or any Affiliate of such Vendor
or Flex USA is terminated for reasons other than cause by such Vendor, such
Affiliate or Flex USA after June 13,
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2005 and within 45 days following the Closing Date (or with respect to an
Employee who is referenced in the Transition Services Agreement, the date
such Employee's transition service period ends as set forth in the
Transition Services Agreement), (c) whose termination was not as a result
of the employee's voluntary resignation, retirement, death, disability, and
(d) no less than 90% of whose employment responsibilities for the period
from May 11, 2005 through the date of termination consisted of performing
duties for the Purchased Business.
"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 any other support systems
included in the Purchased Assets which employs, stores or processes
date/time information in electronic form, which are used by any Vendor in
the operation of the Purchased Business as currently carried on by such
Vendor and that are owned or controlled by such 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 ASSETS" means any assets included within the Purchased Assets
that are not owned by the Vendors as of the Effective Time, including
without limitation all third party Intellectual Property, real property, or
other assets licensed to the Vendors pursuant to the Assigned Agreements;
"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 Flex USA and the Purchasers
may mutually determine;
"TRANSFERRED EMPLOYEES" has the meaning set out in Section 9.3(a);
"TRANSFERRED INTELLECTUAL PROPERTY" has the meaning set out in Section
5.11(b);
"TRANSFERRED LEASED PROPERTY" means each of the leased facilities of the
Vendors that are listed on Schedule 2.1(b) hereto;
"TRANSFERRED LEASES" has the meaning set out in Section 2.1(b);
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"TRANSITION SERVICES AGREEMENT" means that Transition Services Agreement
executed by and between Flex USA and AMI Semi on or about the date of this
Agreement;
"UNRESOLVED CLAIMS" has the meaning set out in Section 3.3;
"VENDOR EMPLOYEE PLANS" has the meaning set out in Section 9.3(a);
"VENDOR LESSEE" has the meaning set out in Section 5.8;
"VENDOR PRODUCTS" means all products of the Purchased Business sold by the
Purchased Business or its distributors or agents prior to the Time of
Closing but excluding any products relating to or arising out of the
Product Development and License Agreement between FlexSemi and eASIC
Corporation and any other products the design, sale or manufacture of which
are dependent upon rights arising from the Contracts set out in Schedule
2.2(e);
"WARN ACT" has the meaning set out in Section 5.28.
"WARRANTY RESERVE LIMITATION" has the meaning set out in Section 4.1(d).
"WORKING CAPITAL" means, as of any date, all current assets except Cash
Assets and deferred taxes, less all assumed liabilities hereunder, as
recorded on the balance sheet, in each case as determined in accordance
with GAAP consistently applied, excluding both Excluded Assets and Excluded
Liabilities. Using this methodology, the Working Capital of the Purchased
Business as of March 31, 2005 was $14,825,000. This calculation is further
set out in Schedule 3.5. Notwithstanding the foregoing, if the Financial
Statements reflect any change in the basis of accounting for any item from
that reflected in Schedule 3.5 that would affect the calculation of Working
Capital, then the Working Capital amount set forth above and in Section
3.5(b) shall be correspondingly adjusted.
"WORKING CAPITAL ADJUSTMENT" has the meaning set out in Section 3.5(b); and
"WORKING CAPITAL PAYOR" has the meaning set out in Section 3.5(b).
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,
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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.
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
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oral (including the letter of intent dated June 13, 2005). There are no
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.
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 California without reference to the
conflict of laws principles thereof.
1.9 KNOWLEDGE
Where any matter is stated to be within the Vendors' or any Vendor's
knowledge in this Agreement, such 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 be expected to
have after reasonable inquiry. Where any matter is stated to be within a
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
be expected 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.
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ARTICLE 2
PURCHASE AND SALE OF PURCHASED ASSETS
2.1 PURCHASED ASSETS
On the terms and subject to the conditions of this Agreement and
subject to any restrictions on assignment or transfer as are set forth in
Schedule 5.16 to the Disclosure Letter, each Vendor hereby agrees to sell,
assign and transfer to the Purchasers and the Purchasers hereby agree to
purchase from each Vendor, effective as of the Effective Time, all of the
property and assets owned, and other rights held, by such Vendor whether
tangible or intangible and of every kind and description and wheresoever situate
that is primarily related to, or used by such Vendor primarily with respect to,
the Purchased Business, other than the Excluded Assets, including the following
(collectively, the "PURCHASED ASSETS"):
(a) Machinery and Equipment. The machinery, equipment, hardware, fixtures,
furniture, furnishings, parts, supplies, accessories, tools and other
fixed assets owned by the Vendors, including those described in
Schedule 2.1(a);
(b) Leases of Real Property. All rights under the leases described in
Schedule 2.1(b) (the "TRANSFERRED LEASES"), together with all
leasehold improvements relating thereto;
(c) Vehicles. The trucks, cars and other vehicles described in Schedule
2.1(c);
(d) Vehicle Leases. All rights under the leasing arrangements for vehicles
described in Schedule 2.1(d);
(e) Inventories. All inventories, including raw materials, parts,
accessories and all prototype inventories, that are owned by the
Vendor as of the Effective Time;
(f) Accounts Receivable. All accounts receivable, trade accounts, notes
receivable, book debts and other debts due or accruing due to any
Vendor with respect to the Purchased Business, including all
intercompany accounts receivable with respect to product sales between
the Vendors and other business units within the Flextronics group, and
the benefit of all security for such accounts, notes and debts;
(g) Prepaid Expenses. All prepaid expenses (subject to Section 2.2(m));
(h) 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(h) (collectively, the "ASSIGNED CONTRACTS"),
excluding the Non-Assigned Contracts;
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(i) Vendor Intellectual Property. All Intellectual Property owned by any
Vendor as of the Effective Time, including all Registered Intellectual
Property described in Schedule 2.1(i) but excluding any trademarks,
tradenames or domain names containing the name "Flextronics" or
"Flex";
(j) Third Party Software Licenses. All third party software licenses,
including the third party software licenses described in Schedule
2.1(j), 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 any Vendor in
connection with such third party software licenses, in each case that
is in the possession or control of the Vendor as of the Effective Time
(collectively, the "ASSIGNED THIRD PARTY SOFTWARE LICENSES");
(k) Computer Hardware and Software. All computer hardware and software,
including all rights under licenses and other agreements or
instruments relating thereto, in each case that is in the possession
or control of the Vendor as of the Effective Time;
(l) Books and Records. All books and records (other than those required by
law to be retained by any Vendor, copies of which will be made
available to the Purchasers), 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 (to
the extent permissible under applicable laws), supply records,
inventory records 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")
provided that the Vendors shall have joint use with the Purchasers,
and shall retain copies, of all Books and Records that relate to both
the Purchased Business and other businesses of the Vendors;
(m) 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;
(n) Accumulated Amounts For Israeli Transferred Employees. Any amounts
accumulated in the Manager Insurance Program of FlexSemi Israel for
severance payments, pension contributions, disability insurance, and
the vocational study
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allowances for those Transferred Employees that are employed by
FlexSemi Israel (the "ISRAELI TRANSFERRED EMPLOYEE ACCRUALS"); and
(o) 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.
2.2 EXCLUDED ASSETS
The Purchased Assets shall not include any of the following property,
assets or rights (collectively, the "EXCLUDED ASSETS"):
(a) Certain Current Assets. All Cash Assets and deferred tax assets of any
Vendor.
(b) Books and Records. All personnel records of any Vendor pertaining to
the Employees who are not Transferred Employees or all other books and
records that do not relate to the Purchased Business;
(c) Corporate Records. All of any Vendor's corporate charters, stock
ledgers, minute and record books;
(d) Employee Plans. All rights in connection with, and all assets of, any
Vendor Employee Plans;
(e) Non-Assigned Contracts. Those Contracts set out in Schedule 2.2(e);
(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 Leases described in Schedule 2.1(b);
(h) Trademarks. All rights to the name "Flextronics", any derivatives
thereof and all corporate symbols, logos and domain names associated
therewith;
(i) Licenses and Permits. All government permit, and other approvals,
consents, registrations, certificates and other authorizations held by
or granted to any Vendor;
(j) Insurance Contracts. All insurance Contracts in effect as of the date
of this Agreement and as of the Closing Date;
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(k) Rights under this Agreement. All rights of the Vendors 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;
(l) Wireless Business. All of the properties, assets and rights relating
solely to the Wireless Business, including any Intellectual Property,
technology, Contracts, inventory, software, hardware, accounts
receivable, prepaid expenses and any and all other rights relating
thereto;
(m) Certain Prepaid Assets. All VAT, income tax and other tax receivables
and all building or other security deposits, except for those building
or other security deposits made in connection with the Transferred
Leases;
(n) Inter-company Accounts. All Flextronics group inter-company accounts
other than those expressly referred to in Section 2.1(f) above;
(o) Excluded Liabilities. All rights relating to Excluded Liabilities; and
(p) Other Assets. The assets listed on Schedule 2.2(p) hereto.
ARTICLE 3
PURCHASE PRICE
3.1 PURCHASE PRICE
The consideration (the "PURCHASE PRICE") payable by the Purchasers to
the Vendors for the Purchased Assets shall be equal to $131,550,000 in the
aggregate.
3.2 CLOSING DATE PAYMENT
At the Time of Closing, the Purchasers shall pay to FlexSemi the
Purchase Price for the account of all of the Vendors, with the following
adjustments:
(a) The following amounts shall be subtracted:
(i) $4,725,000 (the "ESCROW AMOUNT"), which Purchasers shall pay into
the escrow account referenced in Section 3.3;
(ii) $5,000,000, which was previously paid as a deposit towards the
Purchase Price;
(iii) $923,397 (representing $1,000,000 minus the Aggregate Option
Holdback Incentive Amount calculated as of the close of the
market on 9/8/05).
(b) The following amounts shall be added:
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(i) $393,892.25 representing the amount of state sales taxes and VAT
which the Vendors are required to collect from the Purchasers and
will remit to the appropriate taxing authorities.
(ii) $5,400,000 in connection with the non-assignment of the Software
License Agreement between Flextronics Semiconductor, Inc. and
Magma Design Automation, Inc. dated 9/28/2001, as amended through
3/31/2005.
Prior to the Closing, FlexSemi shall provide wire transfer instructions to the
Purchasers. Payment shall be made to FlexSemi by means of wire transfer in
immediately available funds in accordance with such wire transfer instructions.
The Purchase Price shall be allocated amongst the Vendors in accordance with
Schedule 3.4 and FlexSemi shall pay a portion of the Purchase Price to each
other Vendor consistent with such allocation.
3.3 ESCROW
As security for the Vendors' and Flex USA's indemnification
obligations under this Agreement, the Purchasers shall withhold and pay the
Escrow Amount to the Escrow Agent. The 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 3.3 (the "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 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 been resolved, the
Escrow Agent shall release to any Vendor the remaining portion of the Escrow
Amount not required to satisfy such Unresolved Claims. The Escrow Amount held by
the Escrow Agent pursuant to this Section 3.3 shall not limit the
indemnification obligations of the Vendors and Flex USA under this Agreement.
3.4 ALLOCATION OF PURCHASE PRICE; TRANSFER TAXES
(a) The Purchase Price shall be allocated among the Purchased Assets and
the Vendors in accordance with Schedule 3.4.
(b) The Vendors and the Purchasers each:
(i) will complete and file all returns required by applicable
federal, state, provincial, municipal and local laws, statutes,
regulations and ordinances relating to Taxes in a manner
consistent in all material respects with Schedule 3.4; and
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(ii) will not take a position on any such return that is inconsistent
in any material respect with the allocation provided for in
Schedule 3.4 without the consent of the other party.
(c) The Vendors 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 solely relating to the Purchased Assets attributable to
the period prior to the Effective Time (herein "Pre-Closing Tax
Period"). The Purchasers 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 solely relating
to the Purchased Assets attributable to periods after the Effective
Time.
(d) All sales taxes imposed in connection with the sale hereunder of the
Purchased Assets shall be borne by the Purchasers, as provided for in
Section 3.2. Any other taxes or duties imposed as a result of 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.
3.5 WORKING CAPITAL ADJUSTMENT
(a) Within 30 days after the Closing Date, FlexSemi will provide the
Purchasers with unaudited consolidated financial statements of the
Purchased Business as of the Closing Date (the "CLOSING FINANCIAL
STATEMENTS"), which Closing Financial Statements shall be prepared on
the same basis and consistent with the same accounting standards,
methods and policies used in compiling the Financial Statements, and a
calculation of Working Capital as of the Effective Time (the
"EFFECTIVE TIME WORKING CAPITAL"), which amount shall be calculated
consistent with the method used to calculate Working Capital as of
March 31, 2005 as set out in Schedule 3.5(a). The Purchasers, acting
reasonably, shall have 30 days to review and approve the Closing
Financial Statements and calculation of the Effective Time Working
Capital or to provide written notice to FlexSemi of any objections of
the Purchasers to the Closing Financial Statements and such
calculation of the Effective Time Working Capital. If, at the end of a
45 day period following Flex Semi's delivery to the Purchasers of the
Closing Financial Statements and the calculation of the Effective Time
Working Capital, FlexSemi and the Purchasers have not agreed on the
Closing Financial Statements and the calculation of the Effective Time
Working Capital, then the Closing Financial Statements and the
calculation of the Effective Time Working Capital 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 FlexSemi and the Purchasers within
5 days following the expiration of such 45 day period. Such accounting
firm shall make such
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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 Effective Time Working Capital is furthest from such accounting
firm's determination of the Effective Time Working Capital.
(b) The difference between the Effective Time Working Capital and
$14,825,000 shall be referred to herein as the "WORKING CAPITAL
ADJUSTMENT". If the Effective Time Working Capital is more than
$14,825,000, the Purchasers shall pay FlexSemi the Working Capital
Adjustment. If the Effective Time Working Capital is less than
$14,825,000, FlexSemi shall pay the Purchasers the Working Capital
Adjustment. The party obligated to pay the Working Capital Adjustment
hereunder ("the "WORKING CAPITAL PAYOR") shall pay the Working Capital
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 Working Capital calculation, the Working Capital
Payor shall pay the undisputed amount within 60 days of the Closing
Date and shall pay any remaining amount within fifteen (15) days of
the determination by the accounting firm referenced in Section 3.5(a).
The Working Capital 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.
ARTICLE 4
LIABILITIES
4.1 ASSUMPTION OF CERTAIN LIABILITIES BY THE PURCHASERS
On the terms and subject to the conditions of this Agreement, the
Purchasers agree to assume, perform and discharge, effective as of the Closing,
the following obligations and liabilities (whether accrued or fixed, absolute or
contingent, matured or unmatured, determined or determinable, and whether
pecuniary or not) (the "ASSUMED LIABILITIES"):
(a) intentionally left blank;
(b) all accounts payable, accrued liabilities and deferred revenue
obligations of the Vendors incurred and accrued by any Vendor in the
ordinary course of the Purchased Business prior to the Closing Date,
but specifically not including any accrued liabilities with respect to
employees or taxes;
(c) all obligations and liabilities arising on or after the Closing under
or in respect of the Assigned Agreements;
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(d) the obligations and liabilities of any Vendor with respect to customer
warranty claims relating directly to the Vendor Products provided that
the aggregate liability discharged by the Purchasers hereunder shall
not exceed the amount of the warranty reserve reflected in the Closing
Financial Statements (the "WARRANTY RESERVE LIMITATION") and provided
further that, notwithstanding the Warranty Reserve Limitation, the
Purchasers agree that to the extent that such defective Vendor
Products can be replaced from inventory that has been transferred to
the Purchasers hereunder but which has been written down to zero value
for accounting purposes in the books and records of the Vendors as of
the Closing, the Purchasers will do so and said replacements shall not
be taken into account for the purpose of determining whether the
Warranty Reserve Limitation has been reached with respect to the
Purchasers' aggregate liability under this Section 4.1(d), provided
that the Purchasers shall not be obligated to use such inventory only
for such use and may use it for other purposes;
(e) all obligations and liabilities relating to the Transferred Employees
arising out of the Purchasers' employment of such Transferred
Employees from and following the Closing; and
(f) all obligations and liabilities arising on or after the Closing with
respect to the conduct of the Purchased Business by the Purchasers
post-Closing and the use or ownership of the Purchased Assets by the
Purchasers post-Closing.
4.2 EXCLUDED LIABILITIES
Notwithstanding anything to the contrary in this Agreement, the
Purchasers shall not assume, and the Vendors shall be solely responsible for,
any liabilities of the Vendors other than the Assumed Liabilities ( the
"EXCLUDED LIABILITIES").
ARTICLE 5
REPRESENTATIONS AND WARRANTIES OF THE VENDORS AND FLEX USA
Subject to the disclosures set forth in the disclosure letter
delivered to the Purchasers and AMIS Parentco concurrently with the parties'
execution of this Agreement (the "DISCLOSURE LETTER"), each of the Vendors and
Flex USA, jointly and severally, represents and warrants to the Purchasers and
AMIS Parentco as follows and acknowledges that the Purchasers and AMIS Parentco
are relying on such representations and warranties in connection with the
transaction described in this Agreement:
5.1 ORGANIZATION
Each of the Vendors and Flex USA is a corporation duly incorporated
and organized and validly existing under the laws of the jurisdiction of its
incorporation 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. Each
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Vendor is duly qualified as a corporation to do business in each jurisdiction in
which the failure to be so qualified would have a Material Adverse Effect on the
Purchased Business.
5.2 AUTHORIZATION
This Agreement has been duly authorized, executed and delivered and is
a legal, valid and binding obligation of each of the Vendors and Flex USA,
enforceable against each 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 Purchasers and AMIS Parentco 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 any Vendor or Flex USA of any of the Purchased
Assets, other than pursuant to purchase orders accepted by a Vendor in the
ordinary course of the Purchased Business.
5.4 NO VIOLATION
The execution and delivery of this Agreement by each of the Vendors
and Flex USA and the consummation by each of the Vendors and Flex USA 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 any such Vendor or
Flex USA under: (i) any Assigned Contract or Assigned Third Party Software
License to which any Vendor is a party; (ii) any provision of its certificate of
incorporation or by-laws, or equivalent organizational documents, or resolutions
of its board of directors (or any committee thereof) or shareholders; (iii) any
judgment, decree, order or award of any court, Governmental Authority or
arbitrator having jurisdiction over any such Vendor or Flex USA and that relates
to the Purchased Assets; or (iv) any law, statute, ordinance, 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
Other than the Excluded Assets, the Purchased Assets constitute all
material assets that are used by the Vendors in, and are sufficient for the
conduct of, the Purchased Business as it is currently being carried on. All
material 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
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Purchased Business due to inadequate maintenance of any of the Purchased Assets.
All the tangible Purchased Assets are situated at the Leased Properties.
5.6 TITLE TO PERSONAL PROPERTY
Other than the Third Party Assets, the Vendors have good and valid
title to, or, in the case of leased assets, valid leasehold interests in, all of
the Purchased Assets free and clear of all Encumbrances. To the Vendor's
knowledge, there are no Encumbrances on any of the Third Party Assets that
impair the right of the Vendors to operate the Purchased Business as being
carried on as of the Closing Date.
5.7 REAL PROPERTY LEASES
No Vendor owns any real property. Except for the leases or licenses
(the "LEASES") set forth in Schedule 5.7 to the Disclosure Letter relating to
the real property that is primarily used in the Purchased Business and leased or
licensed 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. With respect to the
Transferred Leases, Schedule 2.1(b) 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 payable
thereunder as of the date hereof. The Transferred Leases are in full force and
effect, and neither any Vendor nor, to the knowledge of the Vendors, any other
party thereto is in material breach of any covenants, conditions or obligations
contained therein. The Vendor has provided to the Purchasers a true and complete
copy of the Transferred Leases and all amendments thereto.
5.8 LEASED PROPERTY
To the knowledge of the Vendors, all buildings, structures,
improvements and appurtenances situated on the Transferred Leased Properties
(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 leasing such
Premises (the "VENDOR LESSEE") has adequate rights of ingress and egress for the
operation of the Purchased Business in the ordinary course consistent with past
practice. Neither the operation of the Purchased Business by the Vendor Lessee
on such Premises nor the maintenance thereof violates any material restrictive
covenant of such Vendor Lessee or any provision of any federal, provincial or
municipal law, ordinance, rule or regulation. Without limiting the generality of
the foregoing:
(a) the conduct by the relevant Vendor Lessee of the Purchased Business on
the Premises complies in all material respects with all regulations,
statutes, enactments, laws and by-laws applicable to the Vendor
Lessee, including those dealing with zoning, parking, access, loading
facilities, landscaped areas, building construction, fire and public
health and safety and Environmental Laws;
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(b) all accounts for work and services performed and materials placed or
furnished upon or in respect of the Transferred Leased Properties and
the Premises at the request of any Vendor have been fully paid and
satisfied when due 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 or accounts which are in dispute;
(c) there is nothing material owing in respect of the Transferred Leased
Properties and the Premises by any Vendor or Flex USA or any Affiliate
of any Vendor or Flex USA 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 or accounts which are in dispute;
(d) to the knowledge of the Vendors, no part of the Transferred Leased
Properties 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 as
of the date hereof;
(e) there are no Encumbrances of any Vendor which affect the Transferred
Leased Properties or the Premises;
(f) the Transferred Leased Properties 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 material 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 in the manner conducted as of the
date hereof, and none of the Transferred Leased Properties or the
Premises is currently undergoing any material alteration or renovation
nor is any such alteration or renovation contemplated; and
(g) there are no outstanding levies, charges or fees assessed against any
Vendor with respect to any Transferred Leased Properties or the
Premises by any public authority (including development or improvement
levies, charges or fees).
5.9 INVENTORIES
The inventories relating to the Purchased Business do not include any
material items which are slow moving, below standard quality or of a quality or
quantity not useable or saleable in the normal course of business, except for
items which have been written off, or for which adequate reserves have been
established on the books of the Vendors in accordance with generally accepted
accounting principles. The inventory levels of the Purchased Business have
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been maintained at such amounts as are required for the operation of the
Purchased Business as currently conducted, and such inventory levels are
adequate therefor.
5.10 ACCOUNTS RECEIVABLE
All accounts receivable, book debts and other debts due or accruing to
each Vendor in connection with the Purchased Business are bona fide and, subject
to an allowance for doubtful accounts which have been reflected on the books of
such Vendor in accordance with generally accepted accounting principles, to the
knowledge of the Vendors, are collectible without material set-off or
counterclaim.
5.11 INTELLECTUAL PROPERTY
(a) Schedule 2.1(j) lists all Contracts and amendments thereto which set
forth the terms of the Assigned Third Party Software Licenses. The
Assigned Third Party Software Licenses and legal principals of general
applicability govern the Vendors' rights to assign the Assigned Third
Party Software Licenses to the Purchasers.
(b) Except for Intellectual Property included in the Excluded Assets, the
Intellectual Property included within the Purchased Assets pursuant to
Section 2.1(i) of this Agreement and the Intellectual Property
included within the Third Party Assets (collectively the "TRANSFERRED
INTELLECTUAL PROPERTY") comprise all Intellectual Property (other than
third party patent rights of which Vendors are not aware) that is used
by the Vendors in and material to the conduct of the Purchased
Business as being carried on as of the Closing Date.
(c) Except for the Third Party Assets, the Vendors are the beneficial
owners of the rights which are to be conferred by the assignment of
the Transferred Intellectual Property, free and clear of all
Encumbrances and except for Contracts related to the Third Party
Assets, none of the Vendors is 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 Purchasers.
(d) Except for the Third Party Assets all of the Registered Intellectual
Property, and to Vendors' knowledge all of the unregistered
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 such Transferred Intellectual Property. Each Vendor has
maintained or caused to be maintained the rights to Registered
Intellectual Property owned by such Vendor in full force and effect
and, without limiting the generality of the foregoing, has paid all
applicable fees under all Contracts, including the Assigned Third
Party Software Licenses, for the Transferred Intellectual Property and
for all registrations and applications for registrations of
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the Registered Intellectual Property owned by the Vendors, 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 the Disclosure Letter, no Vendor has 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 any such Vendor's
right to use or assign the Transferred Intellectual Property to the
Purchaser. No Vendor has knowledge of any state of facts which casts
doubt on the validity or enforceability of any of the Transferred
Intellectual Property.
(f) To each 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
Vendors, including the use of the Transferred Intellectual Property
owned by the Vendors, does not infringe upon or breach the
Intellectual Property, domestic or foreign, of any other person,
provided that this representation will apply to patent infringement
only to the extent that any such infringement arises from conduct of
the Vendors prior to the Closing Date, and will not apply to any
patent infringement arising solely from conduct of Purchaser after the
Closing Date. Except as set forth in the Disclosure Letter, no Vendor
has received any notice of any adverse claim or litigation and is not
party to any litigation alleging that the conduct of the Purchased
Business, as currently carried on by such Vendor, infringes upon or
breaches any Intellectual Property of any other person. No Vendor has
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 such 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 Vendors, there is no basis for any claim that
any Vendor's Intellectual Property rights in the Transferred
Intellectual Property are being or have been infringed or breached by
any other person.
(i) The Vendor has provided the Purchasers with true and complete copies
of all Contracts comprising the Transferred Intellectual Property
which is to be provided pursuant to this Agreement.
(j) Except for any consents or approvals described in Schedule 5.16 to the
Disclosure Letter, the assignment by the Vendors to the Purchasers of
the Transferred
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Intellectual Property does not and will not violate any Contracts or
invalidate any such Intellectual Property.
(k) The Vendors have implemented all reasonable procedures to ensure that
the Systems, including the Assigned Third Party Software Licenses
utilized in the Systems, 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, and to the knowledge of the Vendors, such
Systems are free of any Disabling Code or Contaminants. Each 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.
5.12 INSURANCE
The Vendors have maintained general liability and other insurance on
terms that are customary in the industry, and such insurance coverage will be
continued in full force and effect until and including the Effective Time. No
Vendor is in material default with respect to any of the provisions contained in
any such insurance policy.
5.13 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 any Vendor is not aware of any intent or proposal to give any
such notice or commence any such proceedings.
5.14 AGREEMENTS AND COMMITMENTS
Other than agreements related to or that constitute Excluded Assets,
the Assigned Contracts, Assigned Third Party Software Licenses, and Transferred
Leases set forth on Schedules 2.1(b), 2.1(d), 2.1(h) and 2.1(j) respectively
(collectively, the "ASSIGNED AGREEMENTS") constitute all material Contracts to
which a Vendor is a party, that are material to the conduct of the Purchased
Business as currently being carried out, other than purchase orders entered into
by any Vendor in the ordinary course of Purchased Business. Each Vendor has
performed in all material respects all of the obligations required to be
performed by it under the Assigned Agreements to which it is a party and is
entitled to all material benefits under, and is not in material default or, to
the knowledge of such Vendor, alleged to be in material default in respect of
any of the Assigned Agreements. All of the Assigned Agreements are in full force
and effect, and, to the knowledge of the Vendors as of the date hereof, no
event, condition or occurrence exists which, after notice or lapse of time or
both, would constitute a material default by any Vendor under any of the
Assigned Agreements.
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5.15 COMPLIANCE WITH LAWS; GOVERNMENTAL AUTHORIZATIONS
Each 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. Set out in Schedule 5.15
to the Disclosure Letter 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 any Vendor which
are applicable to the Purchased Business and/or the Purchased Assets (the
"PERMITS"), 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)
required to be held by any Vendor to conduct the Purchased Business as currently
conducted or to own or lease any of the Purchased Assets. Each Permit is valid,
binding and in full force and effect, no Vendor is in violation, default or
breach in any material respect of any Permit, and no proceeding is pending or,
to the knowledge of the Vendors, threatened for violation of or to revoke or
limit any Permit.
5.16 CONSENTS AND APPROVALS
There is no requirement for any Vendor 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 5.16 to the Disclosure Letter and except for such filings
as may be required under the Hart-Scott-Rodino Act Antitrust Improvements Act of
1976, as amended ("HSR").
5.17 BOOKS AND RECORDS
(a) The books and records to be delivered by any Vendor to the Purchasers
pursuant to Section 2.1(l) fairly and correctly set out and disclose
in all material respects all of the information contained therein.
(b) The Financial Statements have been prepared in accordance with GAAP,
and present fairly the net assets acquired, the revenues and the
direct and allocated expenses of FlexSemi as at the date of and for
the period covered by the Financial Statements..
5.18 LITIGATION
There are no actions, suits or proceedings pending or affecting or, to
the knowledge of the Vendors, threatened against any Vendor in respect of or
affecting the Purchased Business 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 basis on which any such
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action, suit or proceeding would be reasonably expected to be commenced with any
reasonable likelihood of success.
5.19 NO LIABILITIES
To the knowledge of the Vendors, there are no liabilities or
commitments of any Vendor or its Affiliates, whether or not accrued and whether
or not determined or determinable, in respect of which the Purchasers may become
liable on or after the consummation of the transaction herein provided for,
other than the Assumed Liabilities.
5.20 ABSENCE OF CHANGES
Since June 13, 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 Effect with respect to the Purchased Business
through the date of this Agreement; (b) any material damage, destruction or loss
(whether or not covered by insurance) affecting the Purchased Assets; (c) any
material obligation or liability (whether absolute, accrued, contingent or
otherwise, and whether due or to become due) incurred by any 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 any 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, tax
liabilities and other liabilities incurred in the ordinary and normal course of
business consistent with past practice; (e) any labor disputes 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 (other than the
sale or nonexclusive license of the Purchased Assets to customers in the
ordinary and normal course of business consistent with past practice); (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 with any
Employee, or the making of any loan (other than routine expense advances to
employees consistent with past practice) 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 materially 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 ship goods or
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services in satisfaction of any accepted order for such goods or services; (m)
any change in the accounting or tax practices followed by FlexSemi; (n) any
material change adopted by FlexSemi in its depreciation or amortization policies
or rates; or (q) any material change in the credit terms offered to customers
of, or by suppliers to, the Purchased Business.
5.21 NON-ARM'S LENGTH TRANSACTIONS
With respect to the Purchased Business: (a) no Vendor has since June
13, 2005, made any payment or loan to, or borrowed any moneys from or is
otherwise indebted to, any officer, director, or employee or any other person
(except Affiliates of any Vendor) not dealing at arm's length with such 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, no Vendor is a party to
any Contract with any officer, director or employee or any other person (other
than Affiliates of any Vendor) not dealing at arm's length with any Vendor or
any Affiliate of any of the foregoing. To the knowledge of the Vendors, no
officer or director of any Vendor and no entity which is an Affiliate of one or
more of such individuals (other than Affiliates of any Vendor): (i) 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
publicly traded company), or is an officer, director, employee or consultant 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; (ii) owns, directly or indirectly, in whole or in part,
any property that any Vendor uses in the operation of the Purchased Business; or
(iii) has any cause of action or other claim whatsoever against, or owes any
amount to, any 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 compensation and accrued benefits under
any employment agreements or Vendor Employee Plans.
5.22 TAX MATTERS
There are no actions, suits, proceedings, investigations or claims
pending or to the knowledge of the Vendors, threatened against any 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. Each
Vendor has paid or caused to be paid all Taxes incurred in connection with the
Purchased Assets or the Purchased Business required to be paid by such Vendor
for which payment was due, except those Taxes being contested in good faith by
such Vendor. Each 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 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
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is subject to any joint venture, partnership or other agreement or arrangement
that is treated as a partnership for federal income tax purposes.
5.23 NO COLLECTIVE BARGAINING CONTRACTS, ETC.
(a) No Vendor has (i) entered into any Contract with any labor union or
employee association in respect of any of the Employees employed by
such 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 such Vendor in connection with the
Purchased Business.
(b) To Vendors' knowledge, there are no current attempts by Employees to
organize or to establish any labor union or employee association in
respect of any of the Employees employed by any Vendor in connection
with the Purchased Business and there is no certification of any such
union with regard to a bargaining unit.
5.24 CUSTOMERS AND SUPPLIERS
Schedule 5.24 to the Disclosure Letter sets out the customers of each
of the three major divisions of the Purchased Business (being (a) mixed signal
ASICs, (b) the design and sale of CMOS-based contact image sensor chips and
modules using active-pixel array technology, and (c) digital ASICs and field
programmable gate arrays to ASIC conversion services) which in the aggregate
account for more than 75% of sales for the period April 1, 2004 to March 31,
2005 of each such division and there has been no termination or cancellation of
any Vendor's business relationship with any of the customers listed in Schedule
5.24 to the Disclosure Letter. No Vendor has any reason to believe that the
listed customers or suppliers of the Purchased Business will not continue their
relationship with the Purchased Business after the Closing Date in substantially
the same manner as prior to the date of this Agreement.
5.25 PRODUCT WARRANTIES
Schedule 5.25 to the Disclosure Letter is a complete list of all
express, written warranties given to purchasers of products or software supplied
by any Vendor in connection with the Purchased Business that are currently in
effect, other than the warranties provided by such Vendor under its standard
terms and conditions of sale which have been made available to the Purchasers.
5.26 ENVIRONMENTAL
(a) Each Vendor has conducted the Purchased Business in material
compliance with all Environmental Laws.
(b) No Vendor has used or permitted to be used, except in material
compliance with all Environmental Laws, the Transferred Leased
Properties or the Premises to
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generate, manufacture, process, distribute, use, treat, store, dispose
of, transport or handle any Hazardous Substance.
(c) To the knowledge of the Vendors, there are no underground storage
tanks, ozone-depleting substances or polychlorinated biphenyls in or
on the Transferred Leased Properties or the Premises and, to the
knowledge of the Vendors, the Premises have not been and are not
insulated with urea formaldehyde insulation or asbestos-containing
material.
(d) No Vendor has any current liability to effect any Cleanup or discharge
any other realized liability under any Environmental Laws in
connection with the Transferred Leased Properties, the Premises, the
Purchased Assets or the Purchased Business. No Vendor has received any
formal or informal written notice of, or been prosecuted for,
non-compliance with any Environmental Laws, nor has any 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 any 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
Transferred Leased Properties, the Premises or the Purchased Assets.
No Vendor has received a written claim or written notice and otherwise
no Vendor has any knowledge of any potential liability or actual
liability of such Vendor, relating to any Cleanup at any off-site
location arising out of such Vendor's or any other person's activities
or operations at the Transferred Leased Properties or the Premises.
(e) No Vendor has caused or permitted, nor has there been to the knowledge
of any Vendor, any Release of any Hazardous Substance on, in, around,
from or in connection with the Transferred Leased Properties or the
Premises or the Purchased Business.
(f) All Hazardous Substances and all other wastes and other materials and
substances used in whole or in part by any Vendor in connection with
the Purchased Business or resulting from the operation of the
Purchased Business have been disposed of, treated and stored by such
Vendor in material compliance with all Environmental Laws.
5.27 BROKERAGE
Neither any Vendor nor Flex USA has 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 such Vendor or Flex USA.
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5.28 WARN ACT
Each 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 5.28 to the Disclosure Letter lists all employees
of any Vendor that have suffered an "employment loss" as defined under the WARN
Act in the 90 days prior to the date of this Agreement.
5.29 SOLVENCY
No Vendor is 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
such Vendor exceeds the book value of such Vendor's assets.
5.30 EMPLOYEE PLANS
Each Vendor maintains for the benefit of current or former employees
of the Purchased Business only those Employee Benefit Plans listed on Schedule
5.30 to the Disclosure Letter. No Vendor is now a contributing employer to any
"multi-employer plan" as described in Section 4001(a)(3) of ERISA with respect
to any Employees. No Vendor has been a contributing employer to any
"multi-employer" plan with respect to Employees in the past five years. No
Vendor maintains any pension plan (as defined in Section 3(1) of ERISA) With
respect to employees of the Purchased Business, each 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.
5.31 FULL DISCLOSURE
None of the representations and warranties of any Vendor or Flex USA
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 or Flex USA as of the
date of this Agreement that has not been disclosed to the Purchasers in writing
which could reasonably be expected to have a Material Adverse Effect on the
Purchased Business.
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5.32 ACCURACY OF CERTAIN DATA WITH RESPECT TO THE SYSTEM-ON-A-CHIP PORTION
OF THE PURCHASED BUSINESS
The Vendors and Flex USA represent that the information in Schedule
5.32 of the Disclosure Letter is accurate and complete.
ARTICLE 6
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS AND AMIS PARENTCO
Each of the Purchasers and AMIS Parentco, jointly and severally,
represents and warrants to any Vendor and Flex USA as follows and acknowledges
that any Vendor and Flex USA are relying on such representations and warranties
in connection with the sale of the Purchased Assets:
6.1 ORGANIZATION
Each of AMI Semi and AMIS Parentco is a corporation validly existing
under the laws of the State of Delaware, has the requisite corporate power and
authority to enter into this Agreement and to perform its obligations hereunder.
Emma is a limited partnership organized under the laws of the Netherlands and
has the requisite corporate power and authority 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 each of the Purchasers and AMIS
Parentco, enforceable against each of the Purchasers and AMIS Parentco 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 each of the Purchasers
and AMIS Parentco 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 any of the Purchasers or
AMIS Parentco 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 any of the Purchasers or AMIS Parentco; (b) any judgment,
decree, order or award of any court, Governmental Authority or arbitrator having
jurisdiction over the Purchasers or AMIS Parentco; (c) any applicable law,
statute, ordinance, regulation or rule; or (d) any material Contract to which
the Purchasers or AMIS Parentco is a party.
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6.4 CONSENTS AND APPROVALS
There is no requirement that any Purchaser or AMIS Parentco 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 6.4 and except for such filings as
may be required under HSR.
6.5 INJUNCTIONS, ORDERS
There is no injunction, order or decree of any Governmental Authority,
and no action, suit or proceeding pending or, to the knowledge of the Purchasers
and AMIS Parentco, threatened against any Purchaser and/or AMIS Parentco, which
would prohibit or materially delay the consummation of the transactions
contemplated by this Agreement.
6.6 FINANCING
The Purchasers will have available to them upon the Closing,
sufficient funds to consummate the transactions contemplated by this Agreement.
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.
ARTICLE 8
COVENANTS
8.1 ACCESS TO THE PURCHASED BUSINESS AND PURCHASED ASSETS
During the period commencing on the date hereof and continuing until
the earlier of the termination of this Agreement and the Closing, each Vendor
shall, upon the reasonable request of the Purchasers, make available to the
Purchasers and their authorized representatives and, if requested by the
Purchasers, shall provide the Purchasers 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
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possession of such Vendor reasonably relating to the Purchased Business
(provided that neither any Vendor nor its representatives shall be required to
disclose any attorney-client privileged information to the Purchasers). Each
Vendor shall provide the Purchasers and their authorized representatives
reasonable access during normal business hours to the Purchased Assets. At the
reasonable request of the Purchasers, each 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 Purchasers 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 Purchasers' request, any Vendor shall
cooperate with the Purchasers in arranging any such meetings as the Purchasers
should reasonably request with:
(a) Employees;
(b) customers, suppliers, distributors or others who have, or have had in
the last 12 months, a business relationship with any Vendor in respect
of the Purchased Business; and
(c) the auditors, lawyers or any other persons engaged or previously
engaged to provide services to any Vendor who have knowledge of
matters relating to the Purchased Business or Purchased Assets
(provided that neither any Vendor nor its representatives shall be
required to disclose any attorney-client privileged information to the
Purchasers).
In particular, without limitation, to the extent permissible under the
terms of the applicable Lease, each 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 Transferred Leased Properties as
may be reasonably required to satisfy the Purchasers in respect of such matters,
and each Vendor shall reasonably cooperate in all respects therewith, including
using commercially reasonable efforts to obtain any required or desirable
consent or approval of the lessor. The exercise of any rights of inspection by
or on behalf of the Purchasers under this Section 8.1 shall not mitigate or
otherwise affect any of the representations and warranties of FlexSemi and Flex
USA hereunder which shall continue in full force and effect as provided in
Section 7.1, as the case may be. The information or knowledge obtained by the
Purchasers hereunder shall be governed by the provisions of the letter agreement
entered into between AMIS Parentco and Flex USA dated April 11, 2005.
8.2 DELIVERY OF BOOKS AND RECORDS
At the Time of Closing, each Vendor shall deliver to the Purchasers
all the Books and Records, provided, however, that any 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 any Vendor or Flex USA under this Agreement or in connection with the
transactions contemplated hereby or for any other commercially
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reasonable purpose. The Purchasers agree that they will preserve the Books and
Records so delivered for such period as is required by any applicable law, and
will permit any Vendor, Flex USA or any of their authorized representatives
reasonable access thereto in connection with the tax or other legitimate affairs
of any such Vendor or Flex USA, but the Purchasers shall not be responsible or
liable to any Vendor or Flex USA for or as a result of any accidental loss or
destruction of or damage to any such Books and Records.
8.3 USE OF NAMES
(a) Each Vendor and Flex USA agree that as of the Closing Date, they 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 name "Flextronics" and that the
Purchasers may use such trademarks, tradenames and product names or
any variations thereof (except for the name "Flextronics" and any
derivatives thereof) from and after the Effective Time.
(b) Each Vendor and Flex USA agree that, as of the Closing Date, the
Purchasers may continue to sell any existing or substantially
completed inventories of the products of the Purchased Business even
though such products may bear the Flextronics name, logo or trademark
until such inventories are depleted, provided that the Purchasers
shall take all actions reasonably necessary to ensure that any
customer that purchases such products understands that the Purchasers
are the successors to the Purchased Business and that no Flextronics
entity has any obligation or liability to such customer for such
product sales.
8.4 CONDUCT OF PURCHASED BUSINESS PRIOR TO CLOSING
Without in any way limiting any other obligations of any Vendor
hereunder, during the period from the date hereof to the Time of Closing:
(a) Conduct Business in the Ordinary Course. Each Vendor shall conduct the
Purchased Business only in the ordinary and normal course consistent
with past practice and shall
(i) not enter into any material Contracts with respect to the
Purchased Business outside the ordinary and normal course of
business without the consent of AMI Semi, which consent shall not
be unreasonably withheld or delayed;
(ii) use its commercially reasonable efforts to maintain the Purchased
Business intact, to market, promote, sell and distribute the
products and services of the Purchased Business consistently with
its past practices, and to preserve the present relationships
with the customers and suppliers of the Purchased Business and
others with whom the Purchased Business has business relations;
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(iii) maintain the Premises, plants, buildings, structures and other
improvements and machinery and equipment constituting any of the
Purchased Assets in good operating condition and repair, except
for wear and tear in the ordinary course of business;
(iv) meet the contractual obligations of the Purchased Business and
perform and pay its obligations as they mature in the ordinary
course of business except as otherwise consented to by AMI Semi,
such consent not to be unreasonably withheld or delayed;
(v) make payments and filings required to continue the Registered
Intellectual Property and continue to prosecute and maintain all
pending applications therefor in all jurisdictions in which such
applications are pending; comply in all material respects with
all judgments, all laws, statutes, rules, ordinances and
regulations promulgated by any Governmental Authority and all
Permits applicable to the conduct of the Purchased Business or
the ownership or operation of the Purchased Assets or the
Premises, and maintain, and prosecute applications for, such
Permits and pay all Taxes, assessments and other charges
applicable thereto when due, except for any Taxes that are being
contested in good faith by such Vendor;
(vi) promptly advise the Purchasers in writing of any Material Adverse
Effect with respect to the Purchased Business;
(vii) except as permitted under this Section 8.4, not take any action,
or omit to take any action, that would result in any of Vendors'
or Flex USA's representations and warranties made herein being
inaccurate in any material respect at the time of such action or
omission as if made at and as of such time; and
(viii) give notice to the Purchasers promptly upon becoming aware of
any inaccuracy of any of Vendors' or Flex USA's representations
or warranties made herein or in the Disclosure Letter (any such
notice to describe such inaccuracy in reasonable detail).
(b) Continue Insurance. Each 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 expense of the Purchasers, such
additional insurance as may be reasonably requested by the Purchasers
and shall give all notices and present all claims under all policies
of insurance in a due and timely fashion;
(c) Regulatory Consents. Each Vendor shall use its commercially reasonable
efforts to obtain any necessary consents or approvals from all
appropriate federal,
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provincial, municipal or other governmental or regulatory bodies
necessary to effect the transaction contemplated hereby;
(d) Contractual Consents. Each 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
5.16 to the Disclosure Letter;
(e) Preserve Goodwill. Each 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
each Vendor shall use its commercially reasonable efforts to promote
and preserve for the Purchasers the goodwill of suppliers, customers
and others having business relations with such Vendor;
(f) Discharge Liabilities. Each Vendor shall pay and discharge the
liabilities of such Vendor relating to the Purchased Business when due
in the ordinary and normal course of business in accordance and
consistent with the previous practice of such Vendor, except those
being contested in good faith by such Vendor;
(g) Corporate Action. Each 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 approvals of
the Board of Directors and shareholders of such Vendor to be obtained
with respect thereto; and
(h) Commercially Reasonable Efforts. Each Vendor shall use its
commercially reasonable efforts to satisfy the conditions contained in
Section 10.2.
8.5 DELIVERY OF CONVEYANCING DOCUMENTS
Each Vendor shall deliver to the Purchasers 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 Purchasers with a good and marketable title, free and clear of all
Encumbrances whatsoever except for Permitted Encumbrances.
8.6 DELIVERY OF CLOSING DOCUMENTATION
Each of FlexSemi and Flex USA shall deliver to the Purchasers a
certificate of status and two copies, certified by a senior officer of Flex Semi
or Flex USA, as the case may be, as of the Closing Date, of its certificate of
incorporation, and by-laws and of the resolutions of the Board of Directors and
shareholders of such entities authorizing the execution, delivery and
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performance by FlexSemi or Flex USA, as the case may be, of this Agreement and
any agreements to be entered into by any of them as expressly contemplated by
this Agreement.
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 Purchasers would constitute a breach of
any Contract, law, statute, ordinance, regulation, rule, judgment, decree or
order, then such Purchased Assets shall not be assigned to the Purchasers until,
if applicable, any such consent, approval or waiver of such third party has been
obtained and pending receipt thereof, the relevant Vendor shall hold such
Purchased Assets or Rights, as the case may be, and all benefits derived
thereunder and therefrom in trust for the Purchasers subject to the performance
by the Purchasers of all obligations related to such Purchased Assets. Until
such consent is obtained, or if an attempted assignment thereof would be
ineffective or would adversely affect the rights of the Vendors or the
Purchasers thereunder so that the Purchasers would not in fact receive all such
Rights, the Purchasers and the Vendors will cooperate with each other in any
arrangement designed to provide for the Purchasers the benefits of any such
Contract or Right. For a period of three months following the Time of Closing,
each Vendor shall continue to use its commercially reasonable efforts to obtain,
where possible, as the Purchasers 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 Purchasers following the Time of
Closing provided that in the event that any payment or other consideration must
be paid to any third party in order to obtain any such consent, approval or
waiver, AMI Semi and FlexUSA shall discuss such payment or other consideration
and, if both parties agree that such payment or other consideration is
reasonable and appropriate, the parties shall share the cost thereof equally.
Until such consent, approval or waiver has been obtained or if it cannot be
obtained, in each case to the extent permissible under the applicable Contract,
law, statute, ordinance, regulation, rule, judgment, decree or order, each
Vendor shall continue to comply with the terms and provisions of the Rights and
to maintain the existence of the Purchased Assets or Rights, as the case may be,
to maintain the existence of such Rights subject in each case to the Purchasers'
performance of any obligations of such Vendor necessary to maintain such Rights,
and shall take all such actions and do or cause to be done all such things as
the Purchasers 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 Purchasers, including collecting and paying promptly to
the Purchasers all monies payable under or in respect of such Purchased Assets
or Rights, as the case may be, and enforcing at the request and expense of the
Purchasers, or terminating at the direction of the Purchasers, any such Rights.
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8.8 REGULATORY APPROVALS.
(a) Each of the Vendors and Flex USA shall promptly execute and file,
or join in the execution and filing of, any application, notification (including
any notification or provision of information, if any, that may be required under
HSR or applicable foreign antitrust laws) or other document that may be
necessary in order to obtain the authorization, approval or consent of any
Governmental Authority which may be reasonably required, or which the Purchasers
may reasonably request, in connection with the consummation of the transactions
contemplated by this Agreement. Each Vendor and Flex USA shall use commercially
reasonable efforts to obtain, and to cooperate with the Purchasers to promptly
obtain, all such authorizations, approvals and consents and shall share equally
with the Purchasers any associated filing fees with respect to such
authorizations, approvals and consents. If a Vendor, Flex USA or any affiliate
of a Vendor receives any formal or informal request for supplemental information
or documentary material from any Governmental Authority with respect to the
transactions contemplated hereby, then the Vendor shall make, or cause to be
made, as soon as reasonably practicable, a response in compliance with such
request. The Vendor shall direct, in its sole discretion, the making of such
response, but shall consider in good faith the views of the Purchasers.
(b) The Purchasers and AMIS Parentco shall promptly execute and file,
or join in the execution and filing of, any application, notification (including
any notification or provision of information, if any, that may be required under
the HSR Act or applicable foreign antitrust laws) or other document that may be
necessary in order to obtain the authorization, approval or consent of any
Governmental Authority which may be reasonably required in connection with the
consummation of the transactions contemplated by this Agreement. The Purchasers
and AMIS Parentco shall use commercially reasonable efforts to obtain all such
authorizations, approvals and consents and shall share equally with the Vendors
any associated filing fees with respect to such authorizations, approvals and
consents. The Purchasers shall promptly inform the Vendors of any material
communication between the Purchasers, AMIS Parentco and any Governmental
Authority regarding any of the transactions contemplated hereby. If the
Purchasers, AMIS Parentco or any affiliate of such entities receives any formal
or informal request for supplemental information or documentary material from
any Governmental Authority with respect to the transactions contemplated hereby,
then the Purchasers and/or AMIS Parentco shall make, or cause to be made, as
soon as reasonably practicable, a response in compliance with such request. The
Purchasers shall direct, in their sole discretion, the making of such response,
but shall consider in good faith the views of the Vendors and Flex USA.
8.9 ACTIONS BY THE PURCHASERS
Each of the Purchasers and AMIS Parentco 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 consummate
and make effective transactions contemplated hereby and the execution and
delivery of this Agreement and the other agreements and documents contemplated
hereby and to cause all necessary approvals of
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the Board of Directors of such Purchaser or Parentco to be obtained with respect
thereto. Each Purchaser shall use its commercially reasonable efforts to satisfy
the conditions contained in Section 10.3.
8.10 AGREEMENT REGARDING CERTAIN ROYALTIES
Flex USA agrees that it will reimburse AMI Semi for one-half of the
royalties paid by AMI Semi or an Affiliate of AMI Semi pursuant to the
provisions of the Asset Purchase and Royalty Agreement (the "APRA") dated May 6,
2003 between Simix B.V. and Flex Semi (which is being assumed by the Purchasers
pursuant this Agreement). AMI Semi shall bill Flex USA no more frequently than
once each calendar quarter for one-half of the royalties actually paid by AMI
Semi or an Affiliate of AMI to Simix B.V. under the APRA and Flex USA shall pay
such amount within thirty days of its receipt of AMI Semi's bill, provided that
in no event shall Flex USA be obligated to pay AMI Semi or its Affiliates more
than $100,000 under this Section 8.10.
ARTICLE 9
EMPLOYEE MATTERS
9.1 OFFERS OF EMPLOYMENT
(a) Schedule 9.1(a) sets forth the employees of the Purchased Business as
of June 13, 2005 (the "EMPLOYEES").
(b) A Purchaser or an Affiliate of a Purchaser has offered regular
full-time employment (contingent upon the closing of this transaction)
to those Employees who are listed on Schedule 9.1(b) (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 such Purchaser's or Affiliate's, as the case
may be, then-existing employment practices. Schedule 9.1(b) contains a
list of the names of the Offered Employees as of the date of this
Agreement, together with the date of hire, title or classification of
each such person, the rate of salary or hourly pay at Flex USA, or a
Vendor, as the case may be, any commission or bonus entitlements and
any other cash remuneration payable by Flex USA or a Vendor, as the
case may be, to each such person as of such date, and any planned wage
increases for any Offered Employee up to and including October 31,
2005. Within one week following the Closing, Flex USA shall deliver to
AMIS a schedule setting forth the amount of any social security taxes
withheld from each Transferred Employee (as defined in Section 9.3
below) during the calendar year up to and including the Closing Date
and the amount of any contributions made by such Transferred Employee
to any Flex USA 401k plan during the calendar year up to and including
the Closing Date.
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(c) Schedule 9.1(c) contains the name of and the corresponding severance
costs for (i) each Employee to whom a Purchaser or an Affiliate of a
Purchaser did not make an offer of employment (each a "NON-OFFERED
EMPLOYEE"), and (ii) each Offered Employee who is not a Transferred
Employee and with respect to whom both AMI Semi and Flex USA agree
that the employment offer made by a Purchaser or an Affiliate of a
Purchaser is not on terms substantially similar to (or better than)
the terms that such Offered Employee enjoys pursuant to his or her
current employment with a Vendor or an Affiliate of a Vendor with
respect to core job responsibilities, location and aggregate cash
compensation (which includes rate of salary or hourly pay and any
commission or bonus opportunity) (each a "LESSER OFFERED EMPLOYEE").
In the event that the terms of the employment offer to any Non-Offered
Employee or any Lesser Offered Employee changes after the date of this
Agreement but prior to the Closing Date, AMI Semi shall notify Flex
USA in writing of the change, specifying the details of the change.
Flex USA and AMI Semi shall discuss such changes within two Business
Days of AMI Semi's notice and will agree upon whether the new offer is
substantially similar to (or better than) the terms that such Offered
Employee enjoys pursuant to his or her current employment with a
Vendor or an Affiliate of a Vendor with respect to core job
responsibilities, location and aggregate cash compensation, and will
amend Schedule 9.1(c) accordingly.
9.2 OFFERED EMPLOYEES
(a) Flex Semi and each Vendor covenants and agrees to work with and
provide all commercially reasonable assistance to the Purchasers in
procuring the employment by the Purchasers of the Offered Employees.
(b) Each 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. Neither any Vendor nor Flex USA will make
any material changes in employment positions, levels or terms,
including but not limited to compensation, benefits, bonus programs,
or severance plans for any Offered Employee without the Purchasers'
written consent, which consent shall not be unreasonably withheld or
delayed.
(c) At the Closing, for each Transferred Employee and for each Employee
providing services on a transition basis following the Closing under
the terms of the Transition Services Agreement (a "TRANSITION
EMPLOYEE"), Flex USA shall set aside an amount equal to the value of
the unvested, unexercised, in-the-money employee stock options granted
to such Transferred Employee or Transition Employee on or prior to
December 31, 2004 pursuant to any of the Flextronics International
Ltd. equity incentive plans (other than outstanding options under the
SEMI, DII Group or Orbit equity incentive plans that were assumed by
Flextronics International in connection with corporate merger and
acquisition
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transactions) and held by such Transferred Employee or Transition
Employee as of the Closing Date. For each Transferred Employee and
Transition Employee, such amount is referred to as the "OPTION
HOLDBACK AMOUNT." The total Option Holdback Amount for all of the
Transferred Employees and Transition Employees combined is referred to
as the "AGGREGATE OPTION HOLDBACK AMOUNT." In the event that, prior to
the first anniversary of the Closing Date, any Transferred Employee's
employment with a Purchaser or an Affiliate of a Purchaser terminates
for any reason, the Purchaser or Affiliate shall promptly notify Flex
USA in writing. Such notice shall specify for each such Transferred
Employee whether the termination was by the Transferred Employee or by
the Purchaser or Affiliate and, if it was by the Purchaser of
Affiliate, whether such termination was with or without cause. If the
notice indicates that the termination was by (i) the Transferred
Employee, or (ii) the Purchaser or Affiliate with cause, the Option
Holdback Amount being held by Flex USA with respect to such
Transferred Employee shall forfeited to and retained by Flex USA. If
the notice indicates that the termination was by the Purchaser or
Affiliate without cause, Flex USA shall promptly pay the Option
Holdback Amount to the Transferred Employee. Upon the request of Flex
USA, AMI Semi shall provide appropriately detailed documentation or
other evidence substantiating the basis upon which the employment of
the relevant Transferred Employee was terminated. Promptly following
the first anniversary of the Closing, Flex USA shall pay the
applicable Option Holdback Amount to each Transferred Employee for
whom Flex USA has not received a notification of termination from any
Purchaser or its Affiliate by the first anniversary of the Closing
Date. In the event that, prior to the date of termination of the
services to be provided by a Transition Employee under the terms of
the Transition Services Agreement (the "Service Termination Date"),
such Transition Employee's employment with Flex USA or any of its
Affiliates is terminated (i) by such Transition Employee, or (ii) by
Flex USA or such Affiliate, as applicable, with cause, the Option
Holdback Amount being held by Flex USA with respect to such Transition
Employee shall forfeited to and retained by Flex USA. If a Transition
Employee's employment with Flex USA or any of its Affiliates is
terminated by Flex USA or such Affiliate without cause prior to the
Service Termination Date, Flex USA shall promptly pay the Option
Holdback Amount to the Transition Employee. Promptly following the
Service Termination Date, Flex USA shall pay the applicable Option
Holdback Amount to each Transition Employee who has remained employed
by Flex USA or its Affiliate through the Service Termination Date.
(d) On or prior to the Closing, Purchasers have offered to Offered
Employees and Transition Employees cash retention bonuses designed to
provide the Transferred Employees and Transition Employees with
aggregate retention bonuses of up to $1,000,000 minus the Aggregate
Option Holdback Amount if they remain in the long-term or short-term
employment, as applicable, of a Purchaser or an Affiliate of a
Purchaser.
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9.3 TRANSFERRED EMPLOYEES
(a) Those Offered Employees who accept a Purchaser's employment offers and
are hired by a Purchaser on the Closing Date (the "TRANSFERRED
EMPLOYEES") shall cease to accrue benefits under any 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 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 hiring
Purchaser shall provide each Transferred Employee and his or her
eligible dependents such credit as the Vendor or Flex USA, as the case
may be, who employed such Transferred Employee during the period from
June 13, 2005 until the Closing Date recognized as such Transferred
Employee's length of service against any service and waiting period
requirements under any of such Purchaser's employee benefit plans and
such Purchaser shall use reasonable commercial efforts to cause the
insurers of its applicable employee benefit plans to waive any
limitations on benefits relating to any pre-existing condition
exclusions. Flex USA represents and warrants that Schedule 9.3(a)
identifies each Vendor Employee Plan in which any of the Employees are
entitled to participate.
(b) Intentionally left blank.
(c) The Vendors represent and warrant that:
(i) Schedule 9.3(c) lists all Transferred Employees who have been
absent continually from work for a period in excess of one month
as of the date of this Agreement, as well as the reason for their
absence;
(ii) Except as set forth in Schedule 5.18 to the Disclosure Letter,
there are no complaints, claims or charges by any Offered
Employee outstanding, or to the knowledge of any Vendor,
threatened, nor are there any orders, decisions, currently
registered or outstanding by any tribunal or agency against or in
respect of any Vendor under or in respect of any employment laws
with respect to any Offered Employee.
(iii) Each Vendor is in material compliance with any applicable
employment laws with respect to the Offered Employees.
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9.4 EMPLOYEE ACCRUALS
Each Vendor will pay when due 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 such Vendor of any Employees through
the Closing Date.
9.5 EMPLOYEE INFORMATION
For the calendar year in which the Closing occurs, any Purchaser or
Affiliate of a Purchaser who employed a Transferred Employee during said year
shall report all wages paid and taxes withheld by such Purchaser or Affiliate,
and any Vendor or Flex USA or Affiliate of a Vendor for Flex USA who employed
any Transferred Employees during said year shall report all wages paid and taxes
withheld by such Vendor, Flex USA or Affiliate.
9.6 SEVERED NON-OFFERED EMPLOYEE SEVERANCE COSTS
In the event that any Vendor or Flex USA incurs Reimbursable Severance
Costs (i) between June 13, 2005 and the expiration of 45 days following the
Closing Date with respect to Severed Non-Offered Employees who are not providing
services to the Purchasers under the Transition Services Agreement, or (ii) on
the date of termination of the transition service period or within 30 days
thereafter with respect to a Severed Non-Offered Employee who is providing
services to the Purchasers under the Transition Services Agreement, Flex USA
shall provide an accounting to AMI Semi identifying each Severed Non-Offered
Employee for which Reimbursable Severance Costs are being sought and for each
such Severed Non-Offered Employee the date of termination and the amount of
Reimbursable Severance Costs paid (which shall not be more than the applicable
amount set forth in Schedule 9.1(c)) (the "REIMBURSABLE SEVERANCE COST
ACCOUNTING"). FlexSemi shall provide a Reimbursable Severance Cost Accounting to
AMI Semi on a monthly basis commencing on the Closing Date. Each such
Reimbursable Severance Cost Accounting shall include the required data for all
Severed Non-Offered Employees terminated by any Vendor or Flex USA prior to the
date of the Reimbursable Severance Cost Accounting and since the date of the
previous Reimbursable Severance Cost Accounting, if any. If AMI Semi agrees with
the Reimbursable Severance Costs as set forth in a Reimbursable Severance Cost
Accounting, AMI Semi shall pay the amount of the Reimbursable Severance Costs
stated therein to Flex USA within thirty days after AMI Semi's receipt of the
Reimbursable Severance Costs Accounting. If AMI Semi disputes the Reimbursable
Severance Costs as set forth in a Reimbursable Severance Cost Accounting, AMI
Semi shall, within twenty (20) days after receipt of the Reimbursable Severance
Cost Accounting from Flex USA provide Flex USA with a written statement setting
out in reasonable detail all of its proposed adjustments to the Reimbursable
Severance Cost Accounting and their proposed adjustments to the Reimbursable
Severance Costs. If Flex USA agrees with the proposed adjustments, Flex USA
shall so notify Ami Semi in writing and AMI Semi shall pay the amount of the
adjusted Reimbursable Severance Costs as agreed with Flex USA within thirty days
after AMI Semi's receipt of the Reimbursable Severance Cost Accounting. If Flex
USA disputes the proposed
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adjustments, Flex USA shall have twenty (20) days after delivery of the written
statement of adjustments from AMI Semi to object in writing thereto, setting out
in detail Flex USA's objections to such proposed adjustments and the alternative
adjustments, if any, proposed by Flex USA. AMI Semi and Flex USA shall use
commercially reasonable efforts to resolve the dispute and if they come to an
agreement, the agreed upon Reimbursable Severance Costs shall be deemed to be
final. If a final resolution is not agreed upon within ten (10) days after Flex
USA delivers its written objections to AMI Semi, AMI Semi and Flex USA shall
promptly engage an independent employee compensation consultant to resolve the
dispute. In making its determination, the consultant shall consider only the
items or amounts in dispute (and, to the extent required, any other items or
amounts necessary to derive the disputed items or amounts). The costs and
expenses of the consultant shall be borne by the party whose initial position
with respect to the calculation of Reimbursable Severance Costs is furthest from
the consultant's determination of such amount. The consultant shall make a
determination of the Reimbursable Severance Costs and shall deliver such
determination to the parties no later than thirty (30) days following
appointment. The consultant's decision shall be final and binding upon the
parties. AMI Semi shall pay Flex USA the amount of the Reimbursable Severance
Costs as determined by the consultant no later than ten (10) days after their
receipt of the consultant's determination.
9.7 TERMINATION OF EMPLOYEES
Flex USA and the Vendors 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
("TERMINATION STATUTES") in connection with the transactions contemplated by
this Agreement provided that, to the extent that the termination of employment
by Seller of any Severed Non-Offered Employee upon or following the termination
by the Purchaser of the services being performed by such Severed Non-Offered
Employee under the Transition Services Agreement (without consideration of the
effect of any terminations of employment of any person other than the Severed
Non-Offered Employee or the Employees by the Vendors or Flex USA or any
Affiliate of a Vendor or Flex USA) would cause a Termination Statute to apply,
the Purchasers on behalf of themselves and their Affiliates agree to allow any
notice period imposed by such Termination Statute to be worked by the affected
Severed Non-Offered Employees, or paid for by the Purchasers, prior to the
termination of the transition services of such employees under the Transition
Services Agreement.
9.8 NO HIRE; NO COMPETE
Each Vendor and Flex USA agrees on behalf of itself and its Affiliates
that neither it nor any of its Affiliates shall offer to hire or employ or
actually hire or employ any Offered Employee for a period of three years after
the Closing Date, unless prior written consent is given by the Senior Vice
President of Human Resources of AMI Semi. Each of the Vendors and Flex USA
agrees on behalf of itself and its Affiliates that, for a period of two years
after the Closing Date, neither it nor any of its Affiliates will, directly or
indirectly, solicit or attempt to solicit the trade of any individual or entity
which, as of the date of this Agreement, is known to
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such Vendor, Flex USA or such Affiliate to be a customer of a Purchaser or an
Affiliate of a Purchaser, provided, however, that (i) this limitation shall only
apply with respect to the sale to such customer of any product or service which
is in direct competition with a product or service developed, offered or sold by
the Purchased Business as of the Closing Date; (ii) in no event shall this
limitation preclude any Vendor, Flex USA or any Affiliate of either from
developing FPGA and ASIC devices for internal use within the Flextronics group
of companies and for incorporation of such devices into other products, and sale
of such products to, any customer or other party (regardless of whether such
customer or other party is a customer of a Purchaser or an Affiliate of a
Purchaser) that are not directly competitive with the products sold by the
Purchased Business as of the Closing Date, (iii) in no event shall this
limitation be applicable to (A) any of the entities listed in Schedule 9.8
hereto to the extent that any such entity is considered an Affiliate of any
Vendor or Flex USA, (B) any entity in which any Vendor, Flex USA or any of their
respective Affiliates collectively hold fifty percent or less of the voting
securities of such entity or (C) any entity, or the business operations of any
entity, acquired by any Vendor, Flex USA or any of their respective Affiliates,
in each case, whose primary business does not involve the sale of products or
services which are directly competitive with any product or service developed,
offered or sold by the Purchased Business as of the Closing Date.
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 any Vendor, Flex USA, the
Purchasers and AMIS Parentco (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 materially
adversely affect the Purchasers from carrying on the Purchased
Business on or after the Closing Date in materially the same manner as
the Vendors or Flex USA 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,
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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 Purchasers 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
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended and
any other applicable competition, merger, control, antitrust or
similar law.
10.2 CONDITIONS OF CLOSING IN FAVOR OF THE PURCHASERS AND AMIS PARENTCO
The sale and purchase of the Purchased Assets is subject to the
following conditions for the exclusive benefit of the Purchasers and AMIS
Parentco, 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 AMIS
Parentco):
(a) Representations and Warranties. The representations and warranties of
the Vendors and Flex USA contained in this Agreement shall be true and
correct in all material respects (except for such representations and
warranties that are qualified by their terms by a reference to
materiality or Material Adverse Effect, which representations and
warranties as so qualified shall be true and correct in all respects)
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) and a
certificate of a duly authorized officer of each Vendor and Flex USA,
dated the Closing Date, to that effect shall have been delivered to
the Purchasers, such certificate to be in the form reasonably agreed
to by the counsel for Flex USA and the counsel for AMIS Parentco;
(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by any Vendor or Flex USA
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 each Vendor and Flex USA, dated the Closing
Date, to that effect shall have been delivered to the Purchasers, such
certificate to be in the form reasonably agreed to by the counsel for
Flex USA and the counsel for AMIS Parentco;
(c) Consents. The Vendors or Flex USA 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 Purchasers;
(d) Financial Statements. FlexSemi or Flex USA shall have delivered to the
Purchasers the Financial Statements as well as unaudited financial
statements for the Purchased Business for the period from April 1,
2005 through the nearest
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fiscal quarter completed prior to the Closing, such unaudited
financial statements having been prepared in accordance with GAAP and
on the same basis as the Financial Statements (except that such
unaudited financial statements will not contain footnotes).
If any of the conditions contained in this Section 10.2, shall not be performed
or fulfilled at or prior to October 31, 2005 to the satisfaction of the
Purchasers and AMIS Parentco, the Purchasers and AMIS Parentco, by notice to
FlexSemi and Flex USA, may terminate this Agreement and the obligations of each
Vendor, Flex USA and the Purchasers and AMIS Parentco under this Agreement shall
be terminated and the Purchasers and/or AMIS Parentco may also bring an action
pursuant to Article 12 against any Vendor and/or Flex USA for (a) all Losses
suffered by the Purchasers and/or AMIS Parentco where the non-performance or
non-fulfilment of the relevant condition is as a result of a wilful breach of
covenant, representation or warranty by any Vendor or Flex USA, or (b) any
reasonable legal expenses incurred by the Purchasers and/or AMIS in connection
with the negotiation of this Agreement and the transactions contemplated by this
Agreement (but excluding any expenses incurred with obtaining financing for the
purpose of completing the transactions contemplated by this Agreement) where the
non-performance or non-fulfilment of the relevant condition is as a result of a
negligent breach of covenant, representation or warranty by any Vendor or Flex
USA. Any such condition which is waived in whole or in part by the Purchasers or
AMIS Parentco shall be with prejudice to any claims it may have for breach of
covenant, representation or warranty.
10.3 CONDITIONS OF CLOSING IN FAVOR OF THE VENDORS AND FLEX USA
The sale and purchase of the Purchased Assets is subject to the
following conditions for the exclusive benefit of the Vendors and Flex USA, 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 FlexSemi or Flex
USA):
(a) Representations and Warranties. The representations and warranties of
the Purchasers and AMIS Parentco contained in this Agreement shall be
true and correct in all material respects (except for such
representations and warranties that are qualified by their terms by a
reference to materiality or Material Adverse Effect, which
representations and warranties as so qualified shall be true and
correct in all respects) 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 a certificate of a duly authorized representative of each of
the Purchasers and AMIS Parentco, dated the Closing Date, to that
effect shall have been delivered to any Vendor, such certificate to be
in the form agreed to by the counsel for Flex USA and the counsel for
AMIS Parentco;
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(b) Covenants. All of the terms, covenants and conditions of this
Agreement to be complied with or performed by the Purchasers or AMIS
Parentco 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 Purchasers or AMIS Parentco,
dated the Closing Date, to that effect shall have been delivered to
Flex Semi and Flex USA, such certificate to be in the form reasonably
agreed to by the counsel for Flex USA and the counsel for AMIS
Parentco;
(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 any Vendor and Flex USA, which
approval shall not be unreasonably withheld or delayed; and
(d) Payments. The Purchasers shall have made the payment referred to in
Section 3.2.
If any of the conditions contained in this Section 10.3 shall not be performed
or fulfilled on or prior to October 31, 2005 to the satisfaction of FlexSemi and
Flex USA, FlexSemi and Flex USA, by notice to the Purchasers and AMIS Parentco,
may terminate this Agreement and the obligations of each Vendor, Flex USA and
the Purchasers and AMIS Parentco under this Agreement shall be terminated and
any Vendor and/or Flex USA may also bring an action pursuant to Article 12
against the any Purchaser or AMIS Parentco for (a) all Losses suffered by such
Vendor and/or Flex USA where the non-performance or non-fulfilment of the
relevant condition is as a result of a wilful breach of covenant, representation
or warranty by any Purchaser or AMIS Parentco, or (b) any reasonable legal
expenses incurred by any Vendor and/or Flex USA in connection with the
negotiation of this Agreement and the transactions contemplated by this
Agreement where the non-performance or non-fulfilment of the relevant condition
is as a result of a negligent breach of covenant, representation or warranty by
any Purchaser or AMIS Parentco. Any such condition which is waived in whole or
in part by a Vendor or Flex USA shall be with prejudice to any claims it may
have for breach of covenant, representation or warranty.
ARTICLE 11
CLOSING DATE AND TRANSFER OF POSSESSION
11.1 PLACE OF CLOSING
The closing shall take effect at the Time of Closing at the offices of
Fenwick and West, Mountain View, California, or at such other place or time as
the Purchasers and Flex USA 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.
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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 Vendors. If, prior to the Time of
Closing, all or any part of the Purchased Assets 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 Purchasers
terminate their obligations under this Agreement as contemplated by Section
10.2, the Purchasers 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 Purchasers at the Time of Closing
and all right and claim of the Vendors to any such amounts not paid by the
Closing Date shall be assigned at the Time of Closing to the Purchasers.
ARTICLE 12
INDEMNIFICATION
12.1 INDEMNIFICATION BY THE VENDORS AND FLEX USA
Each of the Vendors and Flex USA shall, jointly and severally,
indemnify and save harmless each Purchaser, AMIS Parentco, their 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 any Vendor or Flex USA or any inaccuracy of any
representation or warranty of any Vendor or Flex USA contained in this
Agreement or in any agreement, instrument or certificate delivered
pursuant hereto (provided that any Vendor and Flex USA shall not be
required to indemnify or save harmless the Purchasers or AMIS Parentco
in respect of any such breach or inaccuracy of any representation or
warranty unless a Purchaser or AMIS Parentco shall have provided
notice to any Vendor or Flex USA 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);
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(b) any breach or non-performance by any Vendor or Flex USA 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 liabilities, obligations or commitments of any Vendor or Flex USA
(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 any Vendor
that becomes a liability of a 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 or any services offered by the Purchased Business prior to
the Effective Time, except to the extent assumed by the Purchasers
under Section 4.1(d);
(e) any claims by any employees of the Purchased Business arising out of
such employees' employment with any Vendor or Flex USA, including
claims with respect to any 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
any Vendor, Flex USA 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 behalf of any Vendor and Flex USA with respect to the
transactions contemplated by this Agreement;
(i) any claim by a third party alleging that the Transferred Intellectual
Property owned by the Vendors immediately prior to Closing infringes
an Intellectual Property right of such third party to the extent that
the claim arises from actions of the Vendors occurring prior to the
Time of Closing; and
(j) any other claim by any third party relating to the Purchased Business
that is based on actions of the Vendors occurring prior to the
Closing.
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12.2 INDEMNIFICATION BY THE PURCHASERS AND AMIS PARENTCO
The Purchasers and AMIS Parentco shall, jointly and severally,
indemnify and save harmless each of any Vendor, Flex USA, their 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 a Purchaser or AMIS Parentco of or any inaccuracy of any
representation or warranty of a Purchaser or AMIS Parentco contained
in this Agreement or in any agreement, instrument or certificate
delivered pursuant hereto (provided that the Purchasers and AMIS
Parentco shall not be required to indemnify or save harmless any
Vendor and Flex USA in respect of any breach or inaccuracy of any
representation or warranty unless such Vendor or Flex USA shall have
provided notice to a Purchaser or AMIS Parentco 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 a Purchaser or AMIS Parentco 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 a Purchaser to pay, satisfy, discharge, perform or
fulfil any of the Assumed Liabilities in a timely manner;
(d) any claims by any Transferred Employee of the Purchased Business
arising out of such employees' employment with any Purchaser or AMIS
Parentco, including claims with respect to any employee benefit plan
of a Purchaser or AMIS Parentco and any claims by any Israeli
Transferred Employee with respect to the any portion of the Israeli
Transferred Employee Accrual that is transferred by FlexSemi Israel to
the Purchasers hereunder (but not including any claim with respect to
fact of or the amounts of any accrual occurring or owing prior to the
Closing Date); 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 or AMIS Parentco; and
(f) any claim by any third party relating to the Purchased Business that
is based on actions of the Purchasers occurring after the Closing.
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
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"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 Indemnified Party
(a "FIRST PARTY CLAIM"), and shall also specify with reasonable particularity
(to the extent that the information is available):
(a) which Indemnified Party has incurred or paid, or reasonably
anticipates that it may incur or pay, Losses;
(b) the amount of such Indemnifiable Damages (which, in the case of
Indemnifiable Damages not yet incurred or paid may be the maximum
amount reasonably anticipated by the Indemnified Party to be incurred
or paid); and
(c) the individual items of such Indemnifiable Damages included in the
amount so stated, the nature of the claim to which such Indemnifiable
Damages are related and the basis for the Claim against the
Indemnifying Party hereunder with respect thereto.
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
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Third Party Claim and to retain counsel to act on its behalf at its sole cost
and expense. 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 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(a) or 12.2(a) 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 $50,000, at which
time the Indemnified Party may make Claims in respect of all Losses, including
for greater certainty, the first $50,000 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
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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, or (iv) that such Losses have
been addressed in the Working Capital Adjustment (it being understood that the
party receiving the Working Capital Adjustment shall be deemed fully compensated
for any Losses which are reflected in the Working Capital Adjustment whether
resulting in a reduction in the Purchase Price or not). 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
or any Ancillary Agreement or certificate delivered pursuant hereto (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 other provisions
contained in this Article 12. Absent fraud or wilful misconduct, the aggregate
liability of any Vendor and Flex USA under this Agreement or any Ancillary
Agreement or certificate delivered pursuant hereto shall not exceed $9,450,000.
Absent fraud or wilful misconduct, the aggregate liability of the Purchasers and
AMIS Parentco under this Agreement or any Ancillary Agreement, certificate or
other document delivered pursuant hereto shall not exceed $9,450,000.
ARTICLE 13
MISCELLANEOUS
13.1 DISPUTE RESOLUTION; 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 the Ancillary Agreements
to be executed in connection with this Agreement or the transactions
contemplated by this Agreement and such Ancillary Agreements
(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 13.1. Affiliates of each of the parties are also
intended beneficiaries of and may enforce this dispute resolution
procedure.
(b) Any Disputes shall be referred to arbitration under the Comprehensive
Arbitration Rules & Procedures of JAMS (the "ARBITRATION
ADMINISTRATOR"), as such rules
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shall be in effect on the Closing Date, except to the extent that such
rules are inconsistent with this Section 13.1, 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.
(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
13.1. 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
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(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 13.1.
(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 13.1, 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 13.2 hereof, and service so made
shall be deemed completed on the third business day after such
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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 13.1 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) Notwithstanding anything contained in this Section 13.1 to the
contrary, in the event of any Dispute, prior to referring such Dispute
to arbitration pursuant to Section 13.1(b) hereof, the parties to a
Dispute shall 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 and
thereafter as often as they reasonably deem necessary to exchange
relevant information and to attempt to resolve the Dispute for a
period of four (4) weeks. In the event that the parties are unable to
resolve such Dispute pursuant to this Section 13.1(k), the provisions
of Section 13.1(a) through (j) hereof, inclusive, as well as Section
13.1(l) shall apply.
(l) 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.
13.2 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:
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(i) if to a Purchaser or AMIS Parentco:
AMIS Holdings Inc.
2300 Buckskin Road
Pocatello, Idaho
U.S.A. 83201
Attention: Darlene Gerry, Senior Vice President and
General Counsel
Facsimile No.: (208) 234-6035
With a copy to:
AMIS Holdings Inc.
2300 Buckskin Road
Pocatello, Idaho
U.S.A. 83201
Attention: David Henry, Senior Vice President and CFO
Facsimile No.: (208) 234-6841
(ii) if to any Vendor or Flex USA:
Flextronics International USA Inc.
2090 Fortune Drive
San Jose, CA 95131
Attention: Chief Financial Officer
Facsimile No.: (408) 428-0859
With a copy to:
Flextronics International Ltd.
2090 Fortune Drive
San Jose, CA 95131
Attention: General Counsel
Facsimile No.: (408) 428-0859
(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
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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 13.2.
13.3 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.
13.4 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.
13.5 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 Purchasers. Each Vendor
and Flex USA will reasonably cooperate with the Purchasers with respect to the
transition of the Purchased Business to the Purchasers.
13.6 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.
13.7 INTELLECTUAL PROPERTY LICENSE
(A) Each of the Vendors and Flex USA on behalf itself and its Affiliates
(each a "Grantor"), hereby grants to each Purchaser and AMIS Parentco
and each of its and their Affiliates a nonexclusive worldwide,
royalty-free, irrevocable license under any patents of the Grantor,
including any registrations, applications for registration,
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reissues, extensions, renewals, divisions, continuations,
continuations-in-part relating thereto to make (including the right to
use any apparatus and practice any method in making), use, import,
offer for sale, lease, license, sell and/or otherwise transfer Vendor
Products and any derivatives or follow-ons thereto and to have Vendor
Products and any derivatives or follow-ons thereto made by another
manufacturer for the use, importation, offer for sale, lease, sale
and/or other transfer.
(B) Each "Grantor" hereby grants to each Purchaser and AMIS Parentco and
each of its and their Affiliates a nonexclusive worldwide,
royalty-free, irrevocable license under any other Intellectual
Property (excluding Intellectual Property used solely in any Excluded
Assets, third party Intellectual Property that Vendors and Flex USA
have no right to sublicense, trade-marks, 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) of the Grantor that was used in
the Purchased Business prior to the Closing Date to use, perform,
execute, copy, make derivative works of such Intellectual Property,
solely for internal use purposes.
(C) The license rights granted in this Section 13.7 will be transferable
by Purchaser to an acquirer of any part of the Purchased Business
and/or the Purchased Assets, provided that (i) Purchaser may transfer
rights only with respect to that Intellectual Property that is used in
or associated with the part of the Purchased Business or Purchased
Assets so transferred and (ii) Purchaser may retain all or any part of
the license rights after such transfer.
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.
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IN WITNESS WHEREOF this Agreement has been executed by the parties.
AMI SEMICONDUCTOR, INC.
by /s/ David A. Henry
-------------------------------------
Name: David A. Henry
Title: Senior VP & CFO
AMI SEMICONDUCTOR ISRAEL LTD.
by /s/ David A. Henry
-------------------------------------
Name: David A. Henry
Title: Director
EMMA MIXED SIGNAL C.V.
by /s/ David A. Henry
-------------------------------------
Name: David A. Henry
Title: Senior VP & CFO, AMI
Semiconductor, Inc.
AMIS HOLDINGS, INC.
by /s/ David A. Henry
-------------------------------------
Name: David A. Henry
Title: Senior VP & CFO
FLEXTRONICS SEMICONDUCTOR, INC.
by /s/ Duncan Robertson
-------------------------------------
Name: Duncan Robertson
Title: VP Finance
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FLEXTRONICS INTERNATIONAL USA, INC.
by /s/ Thomas J. Smach
-------------------------------------
Name: Thomas J. Smach
Title: CFO
FLEXTRONICS SEMICONDUCTOR LTD.
by /s/ Elli Yaniv
-------------------------------------
Name: Elli Yaniv
Title:
------------------------------
FLEXTRONICS SEMICONDUCTOR LTD. (UK)
by /s/ Elli Yaniv
-------------------------------------
Name: Elli Yaniv
Title:
------------------------------
KMOS SEMICONDUCTOR, INC.
by /s/ Thomas J. Smach
-------------------------------------
Name: Thomas J. Smach
Title: CFO
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PERIPHERAL IMAGING CORPORATION
by /s/ Thomas J. Smach
-------------------------------------
Name: Thomas J. Smach
Title: CFO
FLEXTRONICS SEMICONDUCTOR DESIGN, INC.
by /s/ Thomas J. Smach
-------------------------------------
Name: Thomas J. Smach
Title: CFO