Exhibit 10.1
SETTLEMENT AGREEMENT AND MUTUAL RELEASE
This Settlement Agreement and Mutual Release (the "Agreement") is made and
entered into as of the 29th day of March, 2006 ("the Effective Date") by and
between SCHNEIDER ELECTRIC SA, ("Schneider Electric"), a French corporation, and
SQUARE D COMPANY ("Square D"), a Delaware corporation, for themselves and their
divisions, subsidiaries, operating companies and affiliates (hereinafter
collectively referred to as "Schneider") on the one hand, and AMI Semiconductor,
Inc., a Delaware corporation, and AMI Semiconductor Belgium BVBA, a Belgian
corporation, for themselves and their divisions, subsidiaries, operating
companies and affiliates (hereinafter collectively referred to as "AMI") on the
other hand. Schneider and AMI are collectively referred to as the "Parties."
RECITALS
WHEREAS, AMI is the manufacturer and sole supplier of a certain custom
computer chip known as the application specific integrated circuit, which is
incorporated into a certain Square D circuit breaker known as the arc fault
circuit interrupter ("AFCI").
WHEREAS, Square D's AFCIs are designed, in part, to detect electrical arcs
from broken or damaged electrical wires or insulation, and to shut off power to
the circuit before the arcing leads to overheating or a fire.
WHEREAS, Schneider has asserted certain claims against AMI related to AMI's
manufacture and sale of certain application specific integrated circuits
manufactured in Pocatello, Idaho between approximately March 2004 through
September 2004 that were incorporated as a component in certain AFCIs
(hereinafter, "the ASICs"). Schneider has claimed that the ASICs were not in
conformity with Square D's requirements and specifications and
contained a condition that results in the delamination of the ASICs when the
AFCIs are installed in the field. As a result of this alleged nonconformity,
Schneider initiated a recall of the AFCIs containing the ASICs in cooperation
with the U.S. Consumer Product Safety Commission. Schneider's claims in
connection with the ASICs are referred to hereinafter as the "Dispute".
WHEREAS AMI DENIES SCHNEIDER'S CLAIMS RELATED TO the ASICS AND THE DISPUTE.
WHEREAS, the Parties have entered into an Agreement in Principle dated
March 1, 2006 ("the Agreement in Principle") in order to settle the Dispute,
which is attached hereto as Exhibit A and incorporated by reference herein.
WHEREAS, the Parties have entered into this Agreement to complete the
documentation of the settlement reached pursuant to the Agreement in Principle.
NOW THEREFORE, in consideration of the promises and mutual covenants
contained herein, it is agreed by each of the Parties as follows:
AGREEMENT
1. INCORPORATION OF RECITALS. The foregoing Recitals to this Agreement
are incorporated by reference as if fully set forth here as Section 1 of this
Agreement, with the same force and effect as if recited here at length.
2. PAYMENT BY AMI. AMI shall pay a total of Five Million U.S. Dollars (US
$5,000,000.00) to Schneider. As of the time of this Agreement, AMI has paid
Schneider the sum of One Million, Three Hundred Thousand U.S. Dollars (US
$1,300,000.00). The remainder shall be paid within five business days after the
execution of the Agreement, representing the full and final amount to be paid to
settle the Dispute. The payments shall be made via wire transfer per wire
instructions provided to AMI by Schneider or by immediately collectible funds
such as certified check payable to the order of Schneider.
2
3. ATTORNEYS' FEES AND COSTS. Schneider and AMI shall be liable for and
shall pay their own attorneys' fees and costs relating to or arising out of this
Agreement and the Dispute.
4.
(a) RELEASE BY SQUARE D AND SCHNEIDER ELECTRIC, SA OF AMI
SEMICONDUCTORL INC. AND AMI SEMICONDUCTOR BELGIUM BVBA. Except as set forth
in Section 4(c) of this Agreement, Schneider Electric, SA and Square D for
themselves and on behalf of their parents, divisions, operating companies,
affiliates, employees, representatives, shareholders, directors,
successors, and assigns, individually and collectively, hereby release and
forever discharge AMI Semiconductor, Inc. and AMI Semiconductor Belgium
BVBA, and each of their officers, directors, employees, affiliates,
subsidiaries, shareholders, representatives, successors, assignees,
accountants, and attorneys from any and all known judgments, damages,
liens, liabilities, demands, lawsuits, arbitrations, fees, losses, and
fixed or contingent expenses, of any kind which Schneider Electric, SA and
Square D, their parents, divisions, operating companies, affiliates,
employees, representatives, shareholders, directors, successors, and
assigns, individually and collectively have had, now have, or may in the
future have, hold, or claim, against AMI Semiconductor, Inc. and AMI
Semiconductor Belgium BVBA and each of their officers, directors,
employees, affiliates, subsidiaries, shareholders, representatives,
successors, and assignees, either individually or collectively, either
directly or indirectly, arising out of or relating to any event, act, or
omission that took place, including any claims that have been, or could
have been brought prior to, on or after the Effective Date by Schneider
Electric
3
SA and Square D, their parents, divisions, operating companies, affiliates,
employees, representatives, shareholders, directors, successors, and
assigns, individually and collectively against AMI Semiconductor, Inc. or
AMI Semiconductor Belgium BVBA or their respective subsidiaries, officers,
directors, employees, affiliates, subsidiaries, shareholders,
representatives, successors, or assigns arising out of or relating to the
Dispute.
(b) RELEASE BY AMI SEMICONDUCTOR, INC. AND AMI SEMICONDUCTOR
BELGIUM BVBA OF SQUARE D AND SCHNEIDER ELECTRIC, SA. Except as set forth in
Section 4(c) of this Agreement, AMI Semiconductor, Inc. and AMI
Semiconductor Belgium BVBA, for themselves and on behalf of their parents,
divisions, operating companies, affiliates, employees, representatives,
shareholders, directors, successors, and assigns, individually and
collectively, hereby release and forever discharge Schneider Electric, SA
and Square D and each of their officers, directors, employees, affiliates,
subsidiaries, shareholders, representatives, successors, assignees,
accountants, and attorneys from any and all known or unknown judgments,
damages, liens, liabilities, demands, lawsuits, arbitrations, fees, losses,
and fixed or contingent expenses, of any kind, which AMI Semiconductor,
Inc. and AMI Semiconductor Belgium BVBA, their parents, divisions,
operating companies, affiliates, employees, representatives, shareholders,
directors, successors, and assigns, individually and collectively have had,
now have, or may in the future have, hold, or claim against Schneider
Electric, SA and Square D and each of their officers, directors, employees,
affiliates, subsidiaries, shareholders, representatives, successors, and
assignees,
4
either individually or collectively, either directly or indirectly, arising
out of or relating to any event, act, or omission that took place,
including any claims that have been, or could have been brought prior to
on, or after the Effective Date by AMI Semiconductor, Inc. and AMI
Semiconductor Belgium BVBA, their parents, divisions, operating companies,
affiliates, employees, representatives, shareholders, directors,
successors, and assigns, individually and collectively, against Schneider
Electric SA and Square D or their respective subsidiaries, officers,
directors, employees, affiliates, subsidiaries, shareholders,
representatives, successors, or assigns arising out of or relating to the
Dispute.
(c) EXCEPTED CLAIMS AND MATTERS. This Agreement and the foregoing
releases apply exclusively to the ASICs giving rise to the Dispute and do
not affect the already dealt with in (i) below Parties' other ongoing
contracts or obligations. It is further agreed that this Agreement and the
releases do not apply to (I) a breach of this Agreement or the Agreement in
Principle, (ii) tangible property damage, personal injury or death caused
to a third party by an ASIC, and (iii) any contracts, agreements, claims or
obligations between the Parties (including, without limitation, for sourced
products) unrelated to the Dispute or the ASICs that gave rise to the
Dispute.
5. REPRESENTATION AND WARRANTY: Each of the Parties represents and
warrants that it is a bona fide corporation currently in good standing under the
laws of its state or country of incorporation and it has the power and authority
to enter into this Agreement.
5
6. BINDING EFFECT. This Agreement, and all benefits, obligations and
burdens of this Agreement, shall be binding upon, and shall inure to the benefit
of each of the Parties and their respective affiliates, successors, assigns and
purchasers.
7. VOLUNTARY EXECUTION OF AGREEMENT. This Agreement is executed
voluntarily and without any duress or undue influence on the part or on behalf
of each of the Parties hereto. Each of the Parties acknowledge that: (a) they
have read this Agreement; (b) they have been represented in the preparation,
negotiation, and execution of this Agreement by legal counsel of their own
choice; (c) they understand the terms and consequences of this Agreement and of
the release it contained herein; and (d) they are fully aware of the legal and
binding effect of this Agreement.
8. COUNTERPARTS. This Agreement may be executed in counterparts, and each
counterpart shall have the same force and effect as an original and shall
constitute an effective, binding agreement on the part of each of the
undersigned. Delivery by facsimile of a signed execution page shall be
acceptable as proof of execution, as long as the original signature page is
tendered to the other Parties within five days thereafter.
9. NO ORAL MODIFICATION. This Agreement and the Agreement in Principle
may only be amended in a writing signed by each of the Parties.
10. ENTIRE AGREEMENT. This Agreement and the Agreement in Principle
represent the entire agreement and understanding between the Parties concerning
the Parties' settlement and the Dispute, and supersede and replace any and all
prior agreements and understandings concerning the Dispute.
6
11. CONTROLLING LAW. The Agreement and all claims and disputes between the
parties relating to it shall be governed by the substantive laws of the State of
Delaware (exclusive of its conflicts of law provisions).
12. NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed to have been duly given if personally delivered with
proof of delivery thereof, or sent by registered or certified mail, postage
prepaid, addressed to the respective Parties as follows:
Notices to Schneider:
Stephen A. Litchfield
Schneider Electric-North American Operating Division
1415 South Roselle Road
Palatine, IL 60067
Notices to AMI:
General Counsel
AMI Semiconductor, Inc.
2300 Buckskin Road
Pocatello, ID, 83202
7
IN WITNESS WHEREOF, the Parties have executed this Settlement Agreement as
of the Effective Date.
AMI SEMICONDUCTOR, INC. SQUARE D COMPANY
By: /s/Christine King By: /s/Howard E. Japlon
----------------- -------------------
Christine King Howard E. Japlon
Its: President & CEO Its: Senior Vice President,
--------------- ----------------------
General Counsel and Secretary
-----------------------------
AMI SEMICONDUCTOR BELGIUM BVBA SCHNEIDER ELECTRIC S.A.
By: /s/Walter Mattheus By: /s/Pedro Salazar
------------------ ----------------
Walter Mattheus Pedro Salazar
Its: Managing Director Its: /s/Senior Vice President,
----------------- ---------------------
General Counsel