AGREEMENT FOR PURCHASE AND SALE OF ASSETS, dated
as of February 6, 1996, is made among STANDARD MICROSYSTEMS
CORPORATION, a Delaware corporation ("Buyer"), EFAR
MICROSYSTEMS, INC., a California corporation, Peter C.R. Ju
("Ju"), Ying Feng Chang ("Chang") and Chin Hwaun Wu ("Wu"
and together with Ju and Chang, the "Key Officers").
WHEREAS, Buyer, Company (as hereinafter defined),
and the Key Officers hereby agree as follows:
WHEREAS, the parties have had discussions
regarding the development, manufacturing, and marketing of
Core Logic Products (as hereinafter defined), prefatory to
the agreements hereinafter set forth; and
WHEREAS, Buyer wishes to buy from the Company, and
the Company wishes to sell to Buyer, the Assets (as
hereinafter defined), on the terms and conditions
hereinafter set forth;
NOW THEREFORE, the parties set forth their
agreement as follows:
ARTICLE I
DEFINITIONS
When used in this Agreement, the following terms
shall have the respective meanings set forth below:
"Accounts Receivable" shall mean all of the
Company's accounts, notes, accounts receivable, contract
rights, drafts, and other instruments, receivables and
rights to the payment of money or other forms of considera-
tion, for goods sold or leased or services performed.
"Adjustment Amount" is defined in Section 2.10.3.
"Affiliate" shall mean with respect to any Person
(i) a Person directly or indirectly controlling, controlled
by or under common control with, such Person; (ii) a Person
owning or controlling 10% or more of the outstanding voting
securities of such Person; or (iii) an officer, director or
partner of such Person. When the Affiliate is an officer,
director or partner of such Person, any other Person for
which the Affiliate acts in that capacity shall also be
considered an Affiliate. For these purposes, control means
the possession, direct or indirect, of the power to direct
or cause the direction of the management and policies of a
Person, whether through the ownership of voting securities,
by contract or otherwise.
"Agreement" shall mean this Agreement for Purchase
and Sale of Assets, including all exhibits and schedules
hereto, as the same may hereafter be amended, modified or
supplemented from time to time.
"Assets" shall mean all of the Business, goodwill,
assets, properties and rights of every nature, kind and
description, whether tangible or intangible, real, personal
or mixed, wherever located and whether or not carried or
reflected on the books and records of the Company, which are
owned by the Company or in which the Company has any
interest (including the right to use). The Assets shall
include, but not be limited to, the following:
(a) the Real Property;
(b) the Inventories;
(c) the Tangible Personal Property;
(d) the Intangible Personal Property;
(e) the Licenses or Permits;
(f) the Contracts or Other Agreements;
(g) the Accounts Receivable;
(h) the Books and Records;
(i) all rights of the Company under express
or implied warranties from suppliers or contractors with
respect to the Assets;
(j) all of the Company's claims, causes of
action, choses in action, rights of recovery and rights of
set-off of any kind;
(k) all goodwill of the Business as a going
concern;
(l) all of the Company's cash on hand or on
deposit; and
(m) all other properties, tangible and
intangible, not otherwise referred to above which are owned
by the Company or in which it has any interest, including
the right to use (to the extent of such interest or right).
"Assumed Obligation Schedule" is defined in
Section 2.3(a).
"Authority" shall mean any governmental,
regulatory or administrative body, agency or authority, any
court or judicial authority, any arbitrator, or any public,
private or industry regulatory authority, whether
international, national, Federal, state, or local.
"Average Market Price/Contingent Payment" shall
mean the arithmetic mean of the closing prices for the Buyer
Common on each of the trading days within the fiscal quarter
ending on the applicable Contingent Payment Measurement
Date, as reported in The Wall Street Journal.
"Average Market Price/Initial Payment" shall mean
the arithmetic mean of the closing prices for the Buyer
Common on each of the 10 trading days immediately preceding
and each of the 10 trading days immediately following the
execution and delivery of this Agreement, as reported in The
Wall Street Journal.
"Balance Sheet" shall mean the balance sheet con-
tained in the Financial Statements.
"Balance Sheet Date" shall mean September 30,
1995.
"Bill of Sale" is defined in Section 2.8(b).
"Books and Records" shall mean all books and
records, ledgers, employee records, customer lists, files,
correspondence, and other written records of every kind
owned by the Company or in which the Company has any inter-
est, but excluding the Company's minute books and stock
ledgers.
"Business" shall mean the business of the Company
as conducted now by the Company anywhere in the world and as
would now be proposed to be conducted, but for the execution
of this Agreement.
"Buyer Common" shall mean the Common Stock, $.10
par value per share, of Buyer.
"Buyer Disclosure Schedule" shall mean the
Schedule delivered by Buyer to the Company herewith. The
Buyer Disclosure Schedule shall be a part of this Agreement.
"CA-GCL" shall mean the California General
Corporation Law.
"CERCLA" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, 42 U.S.C. Section 9601, et. seq., as the same may be
amended from time to time.
"Closing" is defined in Section 2.6.
"Closing Date" shall mean the date upon which the
Closing occurs.
"Code" shall mean the Internal Revenue Code of
1986, as the same may hereafter be amended from time to
time. Any reference to a specific section of the Code shall
refer to the cited provision as the same may be subsequently
amended from time to time, as well as to any successor
provision(s).
"Company" shall mean EFAR Microsystems, Inc., a
California corporation, including the EFAR Microsystems,
Inc. Taiwan branch.
"Company Capital Stock" shall mean the Company
Common and the Company Preferred.
"Company Common" shall mean the Common Stock,
without par value, of the Company.
"Company Disclosure Schedule" shall mean the
schedule delivered by Company to Buyer herewith. The
Company Disclosure Schedule shall be a part of this
Agreement.
"Company Documents" shall mean this Agreement and
all other agreements, instruments and certificates to be
executed by the Company in connection with this Agreement.
"Company Preferred" shall mean the Series A
Preferred Stock and the Series B Preferred Stock.
"Consent Solicitation" is defined in Section
3.1.4.
"Contingent Payment" is defined in Section 2.10.1.
"Contingent Payment Date" shall mean the date that
is 30 days following the relevant Contingent Payment
Measurement Date.
"Contingent Payment Dollar Value" shall mean one-
third of the Gross Profit derived from sales of Core Logic
Products during the six month period ending on the
applicable Contingent Payment Measurement Date.
"Contingent Payment Measurement Date" shall mean
the last day of each of February and August commencing
August 31, 1996 and ending on February 28, 1999.
"Continuing Warranties" is defined in Section
2.3(b).
"Continuing Warranties Obligations" is defined in
Section 2.3(b).
"Contract Accruals" is defined in Section 2.3(a).
"Contracts or Other Agreements" shall mean all
contracts, agreements, warranties, guaranties, indentures,
bonds, options, leases, subleases, easements, mortgages,
plans, collective bargaining agreements, licenses, purchase
orders, sales orders, commitments or other binding
arrangements of any nature whatsoever, express or implied,
written or unwritten, and all amendments thereto, entered
into by or binding upon the Company or to which any of the
Assets may be subject.
"Core Logic Business Unit" is defined in Section
5.18.
"Core Logic Products" shall mean any semiconductor
device (or set of semiconductor devices), along with any
supporting software, firmware, microcode, and documentation,
released for production by the Core Logic Business Unit.
"Core Logic Technology Package" is defined in
Section 5.15.
"Employment Agreements" are defined in Section
6.7.
"Employee Records" shall mean all of the Company's
Books and Records relating to employees who shall become
employees of Buyer or SMC Asia, as of the Closing.
"Environmental Law or Orders" shall mean
collectively, all Laws and Orders relating to industrial
hygiene, occupational safety conditions or environmental
conditions on, under or about property, including, without
limitation, RCRA, CERCLA and all other Laws and Orders
relating to emissions, discharges, releases or threatened
releases of pollutants, contaminants, chemicals or
industrial, hazardous or toxic materials or wastes into the
environment (including ambient air, surface water, ground
water, land surface or sub-surface strata) or otherwise
relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of
pollutants, contaminants, chemicals or industrial hazardous
or toxic materials or wastes.
"ERISA" shall mean the Employee Retirement Income
Security Act of 1974, as the same may hereafter be amended
from time to time. Any reference to a specific section of
ERISA shall refer to the cited provision as the same may be
subsequently amended from time to time, as well as to any
successor provision(s).
"ERISA Affiliate" shall mean all trades and
businesses (whether or not incorporated) which, together
with the Company, are either members of a controlled group
of corporations, within the meaning of Section 414(b) of the
Code, or are under common control, within the meaning of
Section 414(c) of the Code.
"ERISA Plans" shall mean, collectively, all
Pension Plans and all Welfare Plans required to be disclosed
in Section 3.13 of the Company Disclosure Schedule.
"Escrow Agreement" shall mean the Documentation
and Deposit Agreement dated September 13, 1995 between the
Company, Buyer and Brambles NSD, Inc. attached hereto as
Exhibit 1.
"Exchange Act" is defined in Section 5.11.4.
"Excluded Liabilities" is defined in Section 2.4.
"Financial Statements" shall mean the unaudited
balance sheet and statements of income of the Company as of
and for the nine-month period ended September 30, 1995,
including all notes thereto.
"GAAP" shall mean generally accepted accounting
principles.
"Gross Profit" shall mean the difference between
revenues and cost of goods sold, as determined in accordance
with GAAP, applied consistently with Buyer's then-current
practices.
"Initial Payment" is defined in 2.5(a).
"Intangible Personal Property" shall mean all
intangible properties owned by the Company or in which the
Company has any interest (including the right to use),
including, without limitation, (i) the Company's name and
all Marks; (ii) all statutory, common law and registered
copyrights and mask work rights, and all applications for
the registration thereof; (iii) all Patents; (iv) all
Software; (v) all other inventions, discoveries,
improvements, processes, formulas (secret or otherwise),
algorithms, Trade Secrets, information, know-how and ideas
(including those in the possession of third parties, but
that are the property of the Company); and (vi) all
Technical Documentation.
"Inventories" shall mean all inventories,
including, without limitation, inventories of raw materials,
work in progress, storehouse stocks, materials, supplies,
finished goods and consigned goods, owned by the Company or
in which the Company has any interest (including the right
to use), whether located on the premises of the Business, in
transit to or from such premises, in storage facilities or
otherwise.
"IRS" shall mean the United States Internal
Revenue Service.
"Key Employees" shall mean the employees listed in
Section 6.7 of the Company Disclosure Schedule.
"Labor Agreements" shall mean, collectively,
(i) all employment agreements, collective bargaining
agreements or other labor agreements to which the Company is
a party or by which it or any of its properties is bound;
(ii) all pension, profit sharing, deferred compensation,
bonus, stock option, stock purchase, savings, retainer,
consulting, retirement, welfare or incentive plans,
agreements, or arrangements (including ERISA Plans) to which
the Company is a party or by which it or any of its
properties is bound; and (iii) all plans, agreements, or
arrangements under which "fringe benefits" (including, but
not limited to, hospitalization plans or programs, medical
insurance, vacation plans or programs, sick plans or pro-
grams and related benefits) are afforded to any employees of
the Company.
"Law" shall mean any law, statute, regulation,
rule, ordinance, or other binding action or pronouncement of
an Authority.
"Licenses or Permits" shall mean all licenses and
permits issued to the Company or in which the Company has
any interest (including the right to use).
"Lien or Other Encumbrance" shall mean any lien,
pledge, mortgage, security interest, charge, conditional
sales contract, option, restriction on transfer, use, power
to exercise rights or to grant rights to others, or other
restriction, reversionary interest, right of first refusal,
voting trust arrangement, preemptive right, claim under
bailment or storage contract, easement or any other adverse
claim or right whatsoever, now existing or that hereafter
may come into existence upon the passage of time or the
occurrence of any transaction contemplated hereby.
"Losses" shall mean all damages, awards,
judgments, payments, diminutions in value and other losses,
however suffered or characterized, all interest thereon, all
costs and expenses of investigating any claim, lawsuit or
arbitration and any appeal therefrom, all actual attorneys'
fees incurred in connection therewith, whether or not such
claim, lawsuit or arbitration is ultimately defeated and all
amounts paid incident to any compromise or settlement of any
such claim, lawsuit or arbitration.
"Marks" shall mean all registered and unregistered
trademarks, service marks, trade names, and slogans, all
applications therefor, and all associated goodwill.
"Material Contracts" shall mean, collectively, the
Contracts or Other Agreements that are, or are required to
be, identified anywhere in the Company Disclosure Schedule
by the terms and provisions of this Agreement.
"MoSys" is defined in Section 5.10.
"MoSys Agreement" is defined in Section 5.10.
"Option Holder" is defined in Section 3.2.1.
"Order" shall mean any decree, order, judgment,
writ, award, injunction, rule or consent of or by an
Authority.
"Patents" shall mean all registered patents,
including, without limitation, all reissues, divisions,
continuations, continuations in part, utility models and
design patents, all patent applications, and all associated
inventions, industrial models, processes, designs, technical
information, shop rights, know-how, Trade Secrets,
processes, operating, maintenance and other manuals,
drawings and specifications, process flow diagrams and
related data.
"Pension Plan" shall mean any employee pension
benefit plan within the meaning of Section 3(2) of ERISA.
"Person" shall mean any entity, corporation, com-
pany, association, joint venture, joint stock company,
partnership, trust, organization, individual (including
personal representatives, executors and heirs of a deceased
individual), nation, state, government (including agencies,
departments, bureaus, boards, divisions and instrumen-
talities thereof), trustee, receiver or liquidator and all
subsidiaries thereof.
"Prospectus" is defined in Section 5.12.1(b).
"RCRA" shall mean the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901, et. seq. as
the same may be amended from time to time.
"Real Property" shall mean, collectively, all real
properties in which the Company has any interest or estate
(including the right to use), together with all buildings,
fixtures, trade fixtures, plant and other improvements
located thereon or attached thereto; all of the Company's
rights arising out of use thereof (including air, water, oil
and mineral rights); and all subleases, franchises,
licenses, permits, easements and rights-of-way which are
appurtenant thereto.
"Registration" is defined in Section 5.11.1.
"Registration Statement" is defined in Section
5.11.1(a).
"SEC" is defined in Section 5.11.1(a).
"Securities Act" is defined in Section 5.11.1(a).
"Series A Preferred Stock" shall mean the 7%
cumulative convertible Preferred A Stock, without par value,
of the Company.
"Series B Preferred Stock" shall mean the
convertible Preferred B Stock, without par value, of the
Company.
"Shareholder Approval" is defined in Section
3.1.3.
"Shareholders" shall mean the Persons identified
in Section 3.2 of the Company Disclosure Schedule as an
owner of Company Capital Stock as of the date hereof or any
Option Holder who, on or after the date hereof and prior to
the Closing, shall exercise his, her or its option.
"SMC Asia" shall mean Standard Microsystems
Corporation (Asia), a Delaware corporation.
"Software" shall mean all partial or whole
"software" and "firmware" and documentation thereof
(including, without limitation, all electronic data
processing systems and program specifications, source codes,
object codes, routines, microcodes, input data and report
layouts and formats, record file layouts, outlines,
documentation, diagrams, specifications and narrative
descriptions and flow charts).
"Tangible Personal Property" shall mean all
machinery, equipment, trucks, automobiles, furniture,
supplies, spare parts, computers, hardware, tools, stores
and other tangible personal property owned by the Company or
in which the Company has any interest (including the right
to use), other than the Inventories and the Books and
Records.
"Tax Returns" shall mean, collectively all
Federal, state, foreign, and local tax reports, returns,
information returns and other related documents required by
any relevant taxing Authority to be filed with such
Authority.
"Taxes" shall mean, collectively all taxes,
including without limitation, income, gross receipts, net
proceeds, alternative, add-on, minimum, ad valorem, value
added, turnover, sales, use, property, personal property
(tangible and intangible), stamp, leasing, excise, duty,
franchise, transfer, license, withholding, payroll, employ-
ment, fuel, excess profits, environmental, occupational,
interest equalization, windfall profits and severance taxes,
and all other like governmental charges.
"Technical Documentation" shall mean all technical
information and documentation, including, without
limitation, all partial or whole designs, drawings,
schematics, board layouts, bills of material, chip tooling,
pattern generation tapes, test tapes, logic diagrams,
circuit diagrams, partial or whole mask, board, chip or cell
designs, outlines, or other specifications, descriptions
used in the Business, or documentation, writings, drawings,
papers, records, books, tapes, disks, or other tangible
media embodying any of the Intangible Personal Property.
"Territory" is defined in Section 5.14.1.
"Trade Secrets" shall have its customary meaning
and includes without limitation any information, including a
formula, pattern, compilation, program, device, method,
technique, or process, that: derives independent economic
value, actual or potential, from not being generally known
to the public or to other persons who can obtain economic
value from its disclosure or use; and is the subject of
efforts that are reasonable under the circumstances to
maintain its secrecy. Without limiting the foregoing
definition in any way, Trade Secrets include inventions,
technical and business information, such as information set
out in or relating to computer programs, engineering or
technical data, drawings, designs, manufacturing techniques,
research and development plans and practices, cost data,
pricing practices and policies, marketing practices and
policies, licensing practices and policies, and the identity
and location of past, present, or prospective suppliers,
licensors, licensees, or customers.
"Transfer Agent" shall mean the Transfer Agent for
the Buyer Common.
"Welfare Plan" shall mean any employee welfare
benefit plan within the meaning of Section 3(1) of ERISA.
ARTICLE II
PURCHASE AND SALE OF ASSETS; THE CLOSING
2.1 Assets to be Transferred. Upon the terms and
subject to the conditions of this Agreement, at the Closing,
the Company shall sell and deliver to the Buyer, and the
Buyer shall purchase and accept from the Company, all of the
Assets with (i) such changes thereto not constituting a
material adverse change thereto (individually or in
aggregate) as may occur in the ordinary course of business
and (ii) such deletions or additions thereto that may occur
with the written consent of the Buyer, in each case in (i)
or (ii) above, consistent with the terms and conditions of
this Agreement, from the date hereof to the Closing.
2.2 Instruments of Sale. The sale and delivery
of the Assets to the Buyer, as herein provided, shall be
effected by bills of sale, endorsements, assignments,
licenses, drafts, checks and other instruments of transfer
and conveyance, agreements and documents in the form
specified herein or reasonably acceptable to the Buyer.
2.3 Assumed Liabilities and Obligations. At the
Closing, the Buyer shall assume and shall thereafter pay,
discharge and perform in the ordinary course each of the
following (the "Assumed Obligations"):
(a) only: (i) the obligations of the Company
arising and accruing with respect to performance to be
rendered after the Closing Date under the express terms of
the leases, contracts, customer obligations and other
obligations listed in Exhibit 2.3(a) hereto (the "Assumed
Obligations Schedule"), except those contracts listed
thereon, the assignment of which requires the consent of a
Person that has not been obtained as of the Closing;
provided, however, that except as set forth in Section
2.3(b), the Buyer shall not assume or be obligated to pay,
discharge or perform any obligation relating to products
sold by the Company; (ii) the obligations of the Company to
sell and deliver products under order backlog and associated
costs of selling, manufacturing and delivering same, but
only to the extent of products that are finished and
packaged on the Closing Date; and (iii) the payment
obligations under the express terms of any contract, lease,
customer obligation, or other obligation listed in Exhibit
2.3(a) due after the Closing Date and arising and accruing
with respect to performance rendered to or for the Company
prior to the Closing Date (the "Contract Accruals"); and
(b) all express replace or repair
obligations of the Company arising directly out of the
express terms of the express warranties specifically
disclosed in Section 2.3(b) of the Company Disclosure
Schedule (the "Warranties"), which arise on or after the
Closing Date with respect to sales or shipments of products
before the Closing Date (the "Continuing Warranties", and
together with all costs and expenses incurred in connection
with such Continuing Warranties, the "Continuing Warranties
Obligations").
2.4 No Other Liabilities or Obligations Assumed.
Except as expressly set forth herein, the Buyer shall not
assume, and shall not be liable for any liabilities or
obligations of the Business, the Company, any of the
Company's Affiliates, or any other Person, whether the same
are direct or indirect, fixed, contingent or otherwise,
known or unknown, whether arising under a Contract or Other
Agreement or otherwise, other than the Assumed Obligations
specifically listed on the Assumed Obligations Schedule or
the Continuing Warranties Obligations listed on Section
2.3(b) of the Company Disclosure Schedule (the liabilities
and obligations not assumed by the Buyer pursuant to this
Agreement, the "Excluded Liabilities"). Without limitation
of the foregoing, the Excluded Liabilities shall include,
and the Buyer shall not assume or be liable for any of the
Company's, the Company's Affiliates', or the Business's
liabilities or obligations which relate to any (a) Labor
Agreement; (b) claim, suit, action or proceeding alleging
that any product was defective, improperly designed or
manufactured, or that the sale thereof breached any implied
warranty, except this clause (b) shall not impair Buyer's
obligation to assume pursuant to Section 2.3(b) the express
replace or repair obligations of Company under the express
terms of any of the Continuing Warranties; (c) any liability
of the Company with respect to "dissenting shares," as meant
by Section 1300 of the CA-GCL; (d) any liability for any
dividend on Company Capital Stock, except as set forth on
Exhibit 2.3(a); or (e) Taxes, except as provided in Section
2.7.1. The Company shall promptly pay, discharge and
perform in the ordinary course all Excluded Liabilities.
NYB Initial Payment.
(a) In consideration for the sale and
delivery of the Assets, and subject to the terms and
conditions of this Agreement, at the Closing, the Buyer
shall pay to the Company that number of shares of Buyer
Common calculated in the manner set forth in Section 2.5(b)
(the "Initial Payment").
(b) The total number of shares of Buyer
Common to be issued to the Company at the Closing shall
equal: (i) the quotient obtained by dividing $4,000,000 by
the Average Market Price/Initial Payment, minus (ii) the
shares that are to be subtracted as a result of the
operation of Section 2.11.1.
(c) In addition, at the Closing, Buyer shall
pay the Company, by bank check or wire transfer in
immediately available funds $341,600.
2.6 Closing. The closing (the "Closing") shall
occur on the latest of (i) second business day after
Shareholder Approval shall have been obtained by written
consent of all Shareholders, (ii) the 10th business day
following the day on which the right of dissenting
shareholders to make demand for payment of their shares
shall have expired, or (iii) the second business day after
Buyer's Board of Directors shall have approved the
Agreement, as contemplated in Section 6.10, provided that
Buyer, in its sole discretion, may accelerate the Closing
Date to any day not sooner than the second business day
after the date on which Shareholder Approval shall have been
obtained. The Closing shall occur at the offices of Loeb &
Loeb LLP, 345 Park Avenue, New York, New York 10154, except
as otherwise agreed by Buyer and the Company. At the
Closing, Buyer shall deliver to the Company a certificate
registered in the name of the Company for the total number
of shares of Buyer Common required by Section 2.5(b),
accompanied by a cashier's check payable to the Company for
the total amount of cash required under Section 2.11.1 (or a
wire transfer thereof), representing the Initial Payment.
The certificate shall bear such legends, and Buyer may give
the Transfer Agent such instructions, as shall be reasonably
appropriate to enforce Company's obligations under Section
5.11.2(b).
2.7 Taxes and Other Matters.
2.7.1 Payment of Taxes. The Buyer
agrees to pay and hold the Company harmless from all
transfer taxes, sales taxes and other similar taxes or
charges imposed by any governmental entity in connection
with the transfer of the Assets. Each of the Buyer and the
Company shall prepare and file, and shall fully cooperate
with the other party with respect to such preparation and
filing of, any returns and other filings relating to any
such taxes, fees, charges, or transfers, as may be required.
2.7.2 Allocation of Purchase Price. The
parties agree that the purchase price of the Assets is to be
allocated among the Assets as set forth on Exhibit 2.7.2.
The parties agree to be bound for all purposes by such
allocation and to execute and file IRS Forms 8594 consistent
therewith.
2.8 Company's Deliveries at Closing.
2.8.1 Deliveries to Buyer. At the
Closing, the Company will deliver, or cause to be delivered,
to the Buyer or SMC-Asia the following:
(a) duly executed assignments of the
Contracts or Other Agreements and all consents to such
assignments obtained prior to the Closing Date in form and
substance satisfactory to the Buyer and its counsel;
(b) duly executed bills of sale with respect
to the Assets substantially in the form of Exhibit 2.8(b)
(the "Bill of Sale");
(c) the certificates or certified copies of
documents contemplated by Sections 6.1 and 6.6 hereof;
(d) certificates of incumbency for the
officers of the Company executing this Agreement and the
other Company Documents or making certifications at the time
of the Closing, dated as of the Closing in form and
substance reasonably satisfactory to the Buyer and its
counsel;
(e) the opinion of Skjerven, Morrill,
MacPherson, Franklin & Friel, the Company's counsel, as
provided for in Section 6.4 hereof;
(f) the Employee Records;
(g) the Core Logic Technology Package;
(h) copies of resolutions duly adopted by
the Company's Board of Directors described in Section 3.1.4,
certified as complete, accurate and authentic copies and
being in full force and effect as of the Closing by an
appropriate officer of the Company in form and substance
reasonably satisfactory to the Buyer and its counsel;
(i) copies of resolutions duly adopted by
the Shareholders constituting Shareholder Approval,
certified by an appropriate officer of the Company as
complete, accurate and authentic copies and being in full
force and effect as of the Closing in form and substance
reasonably satisfactory to the Buyer and its counsel;
ID3 certified copies of banking resolutions
on banks' printed forms designating only those persons whom
Buyer shall have specified as authorized to write checks on
or make withdrawals from the Company's bank accounts;
(k) duly executed assignments of the
Company's right, title and interest in and to the Marks,
Patents and other Intangible Personal Property in form and
substance reasonably satisfactory to the Buyer and its
counsel;
(l) a true, complete and accurate list
setting forth the Company's order backlog (as of the Closing
Date);
(m) insurance certificates naming the Buyer
as an additional insured with respect to the Company's
Business product liability coverage for claims arising from
products sold prior to the Closing;
(n) the Employment Agreements, duly executed
by the respective Key Employees;
(o) the MoSys Agreement, duly executed by
the Company and MoSys; and
(p) all other properties, documents,
instruments, writings and certificates reasonably requested
by the Buyer to be delivered by the Company at the Closing,
to the extent not theretofore delivered.
2.8.2 Location for delivery. Except as
otherwise provided in Section 2.8.1, the Assets shall be
delivered to Buyer or SMC Asia, as the case may be, in
place, where currently located.
2.9 Buyer Deliveries at Closing. At the Closing,
the Buyer will deliver, or cause to be delivered, to the
Company the following:
(a) the Initial Payment;
(b) an assumption agreement in connection
with all of the Assumed Obligations to be assumed by the
Buyer pursuant to Section 2.3 hereof, in form and substance
reasonably satisfactory to the Company and its counsel;
(c) the certificates or certified copies of
documents contemplated by Sections 7.1 and 7.5;
(d) certificates of incumbency for the
officers of the Buyer executing this Agreement and the other
Company Documents or making certifications at the time of
the Closing, dated as of the Closing, in form and substance
reasonably satisfactory to the Company and its counsel;
(e) the opinion of Loeb & Loeb LLP, the
Buyer's counsel, as described in and provided by Section 7.3
hereof;
(f) copies of resolutions duly adopted by
the Board of Directors of the Buyer, authorizing and
approving the transactions contemplated hereby and the
execution and delivery of this Agreement and the other
documents to be executed by Buyer pursuant hereto, certified
as complete, accurate and authentic copies and as being in
full force and effect as of the Closing by an appropriate
officer of the Buyer, in form and substance reasonably
satisfactory to the Company and its counsel; and
(g) all other documents, instruments and
writings reasonably requested by the Company to be delivered
by the Buyer at the Closing.
2.10 Contingent Payment.
2.10.1 Contingent Payment Obligation. In
further consideration for the sale and delivery of the
Assets, and subject to the terms and conditions of this
Agreement, at each Contingent Payment Date, the Buyer shall
pay to the Company that number of shares of Buyer Common
calculated in the manner set forth in Section 2.10.2 (each a
"Contingent Payment"); provided, however, that Buyer's
obligation to make Contingent Payments shall be fully
satisfied, and Buyer shall have no further obligation to
make Contingent Payments, after Contingent Payments shall
have been made in respect of total Contingent Payment Dollar
Value equal to the difference between $22,000,000 and the
Adjustment Amount; and provided further that the Buyer may,
at its option, make any Contingent Payment in cash.
2.10.2 Calculation of Contingent Payment.
The total number of shares of Buyer Common to be issued to
the Company on each Contingent Payment Date shall equal:
(i) the quotient obtained by dividing (x) the Contingent
Payment Dollar Value by (y) the Average Market
Price/Contingent Payment minus (ii) the shares that are to
be subtracted as a result of the operation of Section
2.11.1.
2.10.3 Adjustment Amount. Within 60 days
after the Closing Date, Buyer shall deliver to the Company a
statement setting forth the Adjustment Amount as determined
in accordance herewith. The Adjustment Amount shall be the
amount by which the Assumed Obligations exceeds the amount
of Company cash included in the Assets.
2.11 No Fractional Shares; Adjustments.
2.11.1 No Fractional Shares. No
certificates or scrip representing fractional shares of
Buyer Common shall be issued, and such fractional share
interests will not entitle the owner thereof to vote or to
any other rights of a stockholder of Buyer. In lieu of any
fractional share to which the Company would otherwise have
been entitled, the Company shall receive an amount in cash
equal to the product of such fraction and the Average Market
Price/Initial Payment or Average Market Price/Contingent
Payment, as the case may be.
2.11.2 Adjustments. All amounts referred
to in Sections 2.5(b) or 2.10.2 shall be adjusted
appropriately for any stock split, stock dividend, reverse
stock split or like changes in the outstanding Buyer Common
prior to the Closing Date or the applicable Contingent
Payment Date, as the case may be.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
OF THE COMPANY
The Company and the Key Officers, jointly and
severally, hereby represent and warrant to Buyer that:
3.1 Organization; Authority; Due Authorization;
Vote Required.
3.1.1 Organization and Good Standing.
The Company is a corporation duly organized, validly
existing and in good standing under the Laws of California;
has all requisite corporate power to own, lease, and operate
the Assets and to carry on the Business; and is duly
qualified or licensed to do business as a foreign
corporation and is in good standing in Taiwan, which is the
only jurisdiction in which the nature of the Company's
Business or the location of its Assets requires such
qualification or licensing.
3.1.2 Authority to Execute and Perform
Agreements. The Company has all requisite corporate power,
authority and approvals required to enter into, execute and
deliver this Agreement and all of the other Company
Documents and to perform fully the Company's obligations
hereunder and thereunder.
3.1.3 Due Authorization; Enforceability.
Subject only to obtaining shareholder approval of this
Agreement and the principal terms of the transactions
contemplated hereby as required by the CA-GCL and the
Company's Articles of Incorporation ("Shareholder
Approval"), the Company has taken all actions necessary to
authorize it to enter into and perform fully its obligations
under this Agreement and all of the other Company Documents
and to consummate the transactions contemplated herein and
therein. This Agreement and the other Company Documents to
which the Company, any Key Officer, or any Key Employee is a
party are, and, as of the Closing Date, together with any
other Company Document or agreement to which any such Person
will be a party, will be, the legal, valid, and binding
agreement of each such Person, enforceable in accordance
with their respective terms, except as such may be subject
to the effect of bankruptcy, insolvency, reorganization,
moratorium or similar laws or equitable principles relating
to or limiting creditors' rights generally (including,
without limitation, laws pertaining to preferential and
fraudulent transfers), and that equitable remedies are
subject to the discretion of the court.
3.1.4 Specific Board Action. Without
limiting any other representation or warranty hereunder, the
Board of Directors of the Company has unanimously adopted
resolutions (a) approving and authorizing the execution and
delivery of this Agreement and the other Company Documents
and the performance by the Company of all its obligations
hereunder and under the other Company Documents; (b)
authorizing and directing the solicitation of written
consents of the Shareholders to obtain Shareholder Approval
("Consent Solicitation"); (c) stating its determination that
this Agreement is in the best interests of the Shareholders,
recommending that the Shareholders vote their Company
Capital Stock in favor of Shareholder Approval, and
directing the inclusion of such determination and
recommendation in the Consent Solicitation; and (d)
terminating options outstanding under the Company's 1992
Stock Option Plan in accordance with Paragraph 9b thereof.
The Board of Directors has not adopted any plan to dissolve
the Company or distribute shares of Buyer Common to the
Shareholders.
3.1.5 Vote Required. The affirmative
vote of a majority of the votes that holders of the Company
Common and Series B Preferred Stock are entitled to cast are
the only votes necessary to constitute Shareholder Approval,
and no other action by the Board of Directors of the Company
or the Shareholders is or will be required in connection
therewith.
3.2 Capitalization and Ownership of Company
Capital Stock. The authorized capital stock of the
Company, constituting the Company Capital Stock, consists of
20,000,000 shares of Company Common, without par value, of
which [889,212] are issued and outstanding as of the date
hereof, 5,000,000 shares of Preferred Stock, without par
value, of which 1,220,000 are designated Series A Preferred
Stock, all of which shares issued and outstanding as of the
date hereof, and 1,280,000 of which are designated Series B
Preferred Stock and 1,238,506 of which are issued and
outstanding as of the date hereof. No other shares of
capital stock of the Company are and authorized or
outstanding. Section 3.2 of the Company Disclosure Schedule
identifies each owner of Company Capital Stock and
accurately sets forth (i) each class of Company Capital
Stock and number of shares of such class held by such
Shareholder, (ii) the nationality and residence address of
such Shareholder, and (iii) all relationships between such
Shareholder and the Company, any officer or employee of the
Company, or any Option Holder or other Shareholder. Section
3.2 of the Company Disclosure Schedule identifies each owner
of any option to purchase shares of Company Capital Stock
("Option Holder"), accurately identifying the stock option
plan pursuant to which each option was granted to such
Option Holder, the date of grant and vested status of such
option, and the class of Company Capital Stock and number of
shares of such class issuable pursuant to such option.
Except as disclosed on Section 3.2 of the Company Disclosure
Schedule, there are no Contracts or Other Agreements or
other rights to subscribe for any Company Capital Stock, or
Contracts or Other Agreements or other obligations requiring
the Company to issue, or grant any rights to acquire, or
securities or instruments exercisable or exchangeable for or
convertible into, any Company Capital Stock or Contracts or
Other Agreements or other obligations requiring the Company
to merge, consolidate, dissolve, liquidate, restructure or
recapitalize the Company. All outstanding Company Capital
Stock is duly authorized, validly issued, fully paid, and
nonassessable.
3.3 Subsidiaries. The Company does not own,
directly or indirectly, any interest or investment (whether
equity or debt) in any subsidiary.
3.4 No Violation. Except as disclosed in Section
3.4 of the Company Disclosure Schedule, and subject to
obtaining Shareholder Approval, neither the execution or
delivery by the Company of this Agreement or any of the
Company Documents nor the consummation of the transactions
contemplated herein or therein will: (a) violate any
provision of the Articles of Incorporation, bylaws or other
charter document of the Company; (b) violate, conflict with,
or constitute a default under, permit the termination or
acceleration of, or cause the loss of any material right or
option under, any Material Contract; (c) require any
authorization, consent or approval of, exemption or other
action by, or notice to, any party to any Material Contract;
(d) result in the creation or imposition of any Lien or
Other Encumbrance upon any of the Assets; or (e) violate or
require any consent or notice under any Law or Order to
which the Company or any of its Assets is subject.
3.5 Regulatory Approvals and Other Consents.
Section 3.5 of the Company Disclosure Schedule sets forth a
complete and accurate description of each consent, approval,
authorization, notice, filing, exemption or other require-
ment, whether prescribed by the Articles of Incorporation,
by-laws, other charter document of the Company, Law or Order
or required pursuant to the terms of any Material Contract,
that must be obtained from any Person or that must otherwise
be satisfied by the Company in order that (i) the execution
or delivery by the Company of this Agreement or any of the
Company Documents and (ii) the consummation of the
transactions contemplated herein or therein will not cause
any breach of the representations and warranties contained
in Section 3.4.
3.6 Financial Condition.
3.6.1 Financial Statements. Section
3.6.1 of the Company Disclosure Schedule sets forth (i) the
balance sheets of the Company as of December 31, 1992, 1993
and 1994, the related statements of income, stockholders'
equity, and cash flows for the year then ended, reviewed by
Michael C. Jagchid, the Company's independent certified
public accountant, whose reports thereon are included
therewith, and (ii) the unaudited balance sheet at
September 30, 1995 and the related statements of income for
the nine months ended September 30, 1995 and 1994. Said
financial statements (a) were prepared from and in
accordance with the Books and Records of the Company; (b)
were prepared in accordance with GAAP; (c) fairly present
the Company's financial condition and the results of its
operations as of the relevant dates thereof and for the
periods covered thereby; (d) contain and reflect all
necessary adjustments and accruals for a fair presentation
of the Company's financial condition and the results of its
operations for the periods covered by said financial
statements; and (e) contain and reflect adequate provisions
for all reasonably anticipated liabilities for all Taxes
with respect to the periods covered and all prior periods.
3.6.2 No Undisclosed Liabilities. Except
for (i) those liabilities specifically reflected or reserved
against on the Balance Sheet, (ii) those current liabilities
for trade or business obligations incurred since the Balance
Sheet Date in connection with the purchase of goods or
services in the ordinary course of the Business and consis-
tent with past practices, (none of which liabilities is,
individually or in the aggregate, material and none of which
is for breach of contract, breach of warranty, tort
(including product liability) or infringement), (iii) those
liabilities arising under any Material Contract (none of
which liabilities is for breach of contract, breach of
warranty, tort (including product liability) or
infringement) or (iv) those liabilities otherwise
specifically disclosed in Section 3.6.2 of the Company
Disclosure Schedule (none of which liabilities is for breach
of contract, breach of warranty, tort (including product
liability) or infringement), the Company has, as of the date
hereof, no direct or indirect indebtedness, liabilities,
claims, losses, damages, deficiencies, obligations or
responsibilities, known or unknown, liquidated or
unliquidated, accrued, absolute, contingent or otherwise,
and whether or not of a kind required by GAAP to be set
forth on a financial statement, which individually is or in
the aggregate are material to the condition (financial or
otherwise), Assets, liabilities, Business, operations or
prospects (before or after the Closing Date) of the Company
or the Core Logic Business Unit.
3.6.3 Inventories. Section 3.6.3 of the
Company Disclosure Schedule accurately lists the Company's
Inventories as of its date. Buyer acknowledges that it will
write down to zero all Inventories not related to order
backlog as of the Closing, and the Company and the Key
Officers shall have no liability respecting such writedown.
Except as set forth in Section 3.6.3 of the Company
Disclosure Schedule, all such Inventories were, and are,
owned by the Company free and clear of any Liens or Other
Encumbrances, and no items included in such Inventories
were, or are, held by the Company on consignment from
others.
3.6.4 Accounts Receivable. All Accounts
Receivable, whether reflected on the Balance Sheet or
otherwise, represent bona fide sales of inventory or
services of the Company in the ordinary course of the
Business and are fully collectible, net of any reserves
shown on the Balance Sheet or identified in Section 3.6.4 of
the Company Disclosure Schedule, which reserves are adequate
and were calculated consistent with past practices.
3.6.5 Absence of Certain Changes. Except
as indicated in Section 3.6.5 of the Company Disclosure
Schedule, since the Balance Sheet Date, the Company has
conducted the Business only in the ordinary course
consistent with its past practices and has not:
(a) suffered any change, event or
condition which, in any case or in the aggregate, has had or
could reasonably be expected to have a material adverse
effect upon the Company's condition (financial or
otherwise), Assets, liabilities, Business, operations or
prospects (before or after the Closing Date) of the Company
or the Core Logic Business Unit, or the Company's ability to
consummate the transactions contemplated herein;
(b) suffered any destruction, damage to
or loss of any Asset (whether or not covered by insurance)
which could reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise),
Assets, liabilities, Business, operations, or prospects
(before or after the Closing Date) of the Company or the
Core Logic Business Unit, the value or utility of the Assets
or the Company's ability to consummate the transactions
contemplated herein;
(c) incurred any obligation or liabil-
ity or taken property subject to any liability, whether
absolute, accrued, contingent or otherwise and whether due
or to become due, except current liabilities for trade or
business obligations incurred since the Balance Sheet Date
in connection with the purchase of goods or services in the
ordinary course of the Business and consistent with prior
practices, none of which liabilities, in any event, involved
in excess of $5,000, individually, or $25,000, in the
aggregate;
(d) mortgaged, pledged, or subjected
any of the Assets to any Lien or Other Encumbrance;
(e) sold, transferred, leased to others
or otherwise disposed of any of the Assets, except for
Inventory sold in the ordinary course of the Business
consistent with past practices;
(f) amended or terminated any Material
Contract or any License or Permit or received any notice of
termination of any of the same;
(g) declared or made any payment of
dividends or other distribution to any Shareholder or upon
or in respect of any Company Capital Stock, or purchased,
retired or redeemed, or obligated itself to purchase, retire
or redeem, any Company Capital Stock;
(h) encountered any labor union organ-
izing activity, suffered any actual or threatened employee
strike, work stoppage, slow-down or lock-out, or any
material change in its relations with its employees, agents,
customers or suppliers, or suffered any actual or threatened
claim of wrongful discharge, or other unlawful labor
practice or proceeding;
(i) made any change in the rate of
compensation, commission, bonus or other direct or indirect
remuneration payable, or agreed or orally promised to pay,
conditionally or otherwise, any bonus, extra compensation,
pension or severance or vacation pay, to any Shareholder,
director, officer, employee, salesperson, distributor or
agent of the Company;
(j) changed its accounting methods or
practices (including, without limitation, any change in
depreciation or amortization policies or rates) or revalued
any of its Assets;
(k) entered into any transaction,
contract or commitment other than in the ordinary course of
the Business and consistent with its prior practices; or
(l) entered into any agreement or made
any commitment to take any of the types of action described
in subparagraphs (a) through (k) above.
3.7 Tax Matters. Except as indicated in Section
3.7 of the Company Disclosure Schedule:
(a) within the times and in the manner pre-
scribed by Law, the Company has filed all Tax Returns that
the Company is required to file, has paid or provided for
all Taxes shown thereon to be due and owing by it and has
paid or provided for all deficiencies or other assessments
of Taxes, interest or penalties owed by it; no taxing
Authority has asserted any claim for the assessment of any
additional Taxes of any nature with respect to any periods
covered by any such Tax Returns; all Taxes required to be
withheld or collected by the Company have been duly withheld
or collected and, to the extent required, have been paid to
the proper taxing Authority or properly segregated or
deposited as required by Law;
(b) each Tax Return filed by the Company
fully and accurately reflects its liability for Taxes for
such year or period and accurately sets forth all items (to
the extent required to be included or reflected in such
returns) relevant to its future liabilities for Taxes,
including the tax basis of its properties and assets. The
provisions for Taxes payable reflected in the Financial
Statements are fully adequate;
(c) no audit of any Tax Return of the
Company is in progress or, to the knowledge of the Company
or any Key Officer, threatened;
(d) no extensions of time with respect to
any date on which any Tax Return was or is to be filed by
the Company is in force;
(e) the Company has not waived or extended
any applicable statute of limitations relating to the
assessment of any Taxes;
(f) no issue has been raised with the Com-
pany by any taxing Authority that is currently pending in
connection with any Tax Returns. No material issue has been
raised in any examination by any taxing Authority with
respect to the Company which, by application of similar
principles, reasonably could be expected to result in a
proposed deficiency for any other period not so examined.
There are no unresolved issues or unpaid deficiencies relat-
ing to any such examination; and
(g) the Company has delivered to Buyer true
and correct copies of all Federal and state income Tax
Returns of the Company for the last four complete fiscal
years.
3.8 Compliance with Laws; Governmental Matters.
3.8.1 General. The Company has in all
material respects complied with, and is now in all material
respects in compliance with, all Laws and Orders applicable
to the Business, and no material capital expenditures will
be required in order to insure continued compliance
therewith. Section 3.8.1 of the Company Disclosure Schedule
sets forth each License or Permit material to the conduct of
the Business, together with its date of expiration and a
brief description of its material terms. Except for the
Licenses or Permits already held by the Company as disclosed
in Section 3.8.1 of the Company Disclosure Schedule, no
other franchise, license, permit, order or approval of any
Authority is material to or necessary for the conduct of the
Business. Each License or Permit listed in Section 3.8.1 of
the Company Disclosure Schedule is in full force and effect;
the Company is now and has at all times in the past been in
all material respects in full compliance with each thereof;
no material violations are or have in the last five years
been recorded by any Authority in respect of any thereof,
and no proceeding is pending or, to the knowledge of the
Company or any Key Officer, threatened to revoke, amend or
limit any thereof. Except as disclosed in Section 3.8.1 of
the Company Disclosure Schedule, there are no pending or, to
the knowledge of the Company or any Key Officer, threatened
proceedings by or before any Authority which involve new
special assessments, assessment districts, bonds, Taxes,
condemnation actions, Laws or Orders or similar matters
which, if instituted, could reasonably be expected to have a
material adverse effect upon the condition (financial or
otherwise), Assets, liabilities, or prospects (before or
after the Closing Date) of the Company or the Core Logic
Business Unit.
3.8.2 Environmental and Industrial
Hygiene Compliance. Except as disclosed in Section 3.8.2 of
the Company Disclosure Schedule, (i) neither the Company
nor, to the best of its knowledge, any of the Assets has
ever been or is now in any material respect in violation of
any applicable Environmental Law or Order; (ii) neither the
Company nor, to the best of its knowledge, any third party
has prior to the date hereof ever used, generated,
manufactured, stored or disposed of, on, under, or about the
Assets or transported to or from the Assets any flammable
explosives, radioactive materials, hazardous wastes or toxic
substances, except in compliance with Law; (iii) the Company
has obtained and now holds all material permits, licenses
and other authorizations that are required to be held by it
under all applicable Environmental Laws or Orders; (iv) the
Company is in compliance in all material respects with all
terms and conditions of any and all required permits,
licenses and authorizations and all other limitations,
restrictions, conditions, standards, prohibitions,
requirements, obligations, schedules and timetables
contained in all applicable Environmental Laws or Orders,
and any notice or demand letter issued, entered, promulgated
or approved thereunder; (v) to the Company's best knowledge,
no facts, past or present events, or conditions interfere
with or prevent continued compliance in all material
respects by the Company with, or give rise to any material
present or potential legal, common law, or statutory
liability of the Company under, any applicable Environmental
Law or Order; (vi) there is no pending civil or criminal
litigation, written notice of violation or administrative
proceeding involving the Company and relating in any way to
any Environmental Law or Order (including any notice, demand
letter or written claim under RCRA, CERCLA and similar state
or local laws), other than rulemaking proceedings, if any;
and (vii) to the Company's best knowledge, there has been no
disposal by the Company, directly or indirectly, of any
hazardous materials or wastes to, on, or in any site
currently listed or formally proposed to be listed on the
National Priorities List under CERCLA or any site listed or
formally proposed to be listed as a major or priority
cleanup site under any comparable state law. For the
purpose of this Section 3.8.2, hazardous materials shall
include but not be limited to (i) substances now defined as
"hazardous substances," "hazardous materials," or "toxic
substances" in CERCLA, the Hazardous Materials
Transportation Act, 49 U.S.C. Section 1801, et seq. or RCRA,
as the same may be amended from time to time, or in the
regulations adopted and publications promulgated pursuant to
said Laws from time to time and (ii) those substances now or
at any time hereafter defined as "hazardous wastes" in
Section 25117 of the California Health and Safety Code or as
"hazardous substances" in Section 25316 of the California
Health and Safety Code, as the same may be amended from time
to time, or in the regulations adopted and publications
promulgated pursuant to said laws from time to time.
3.9 Litigation. Section 3.9 of the Company
Disclosure Schedule sets forth an accurate and complete
description of every pending or, to the knowledge of the
Company or any Key Officer, threatened adverse claim,
dispute, governmental investigation, suit, action
(including, without limitation, nonjudicial real or personal
property foreclosure action), arbitration, legal,
administrative or other proceeding of any nature, domestic
or foreign, criminal or civil, at law or in equity, by or
against or otherwise affecting the Company, the Business,
the Assets, or any Key Employee. Section 3.9 of the Company
Disclosure Schedule includes a true and complete copy, as
currently in effect, of the settlement agreement between the
Company and Toshiba Electronics Taiwan Corporation referred
to in the 25 August 1995 letter of Dennis McAteer to Michael
E. Hingle. The Company has fully discharged its obligations
thereunder. The Company has delivered to Buyer copies of all
relevant court papers and other documents relating to the
matters referred to in Section 3.9 of the Company Disclosure
Schedule. Except as disclosed in Section 3.9 of the Company
Disclosure Schedule:
(a) the Company is not in default with
respect to any Order by which it is bound or to which any of
the Assets is subject, and there exists no Order enjoining
or requiring the Company to take any action of any kind with
respect to the Business or the Assets;
(b) neither the Company nor, to the
knowledge of the Company or any Key Officer, any officer,
director, or employee of the Company has been permanently or
temporarily enjoined by any Order from engaging in or
continuing any conduct or practice in connection with the
Business or the Assets.
3.10 Property of the Company.
3.10.1 Real Property.
(a) The Company owns no Real Property.
The Company has delivered to Buyer true, correct, and
complete copies of each lease for Real Property to which
Company is a party, and all amendments thereto. Each such
lease, together with all amendments, is listed in
Section 3.10.1 of the Company Disclosure Schedule and, to
the knowledge of the Company and the Key Officers, is valid,
and enforceable by the Company, with respect to the other
party thereto, except as such may be subject to the effect
of bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting
creditors' rights generally (including, without limitation,
laws pertaining to preferential and fraudulent transfers),
and that equitable remedies are subject to the discretion of
the court. Neither the Company nor any other party to any
such lease is in breach of any provision thereof.
(b) All of the buildings, fixtures and
other improvements constituting a part of the Real Property
are in good operating condition and repair, and the Business
is not, to the knowledge of the Company or any Key Officer,
in any material respect in violation of any applicable
building code, zoning ordinance or other Law, or without
limitation, applicable environmental protection and
occupational health and safety laws.
(c) The Company has not experienced any
material interruption in the delivery of adequate quantities
of any utilities (including, without limitation,
electricity, natural gas, potable water, water for cooling
or similar purposes and fuel oil) or other public services
(including, without limitation, sanitary and industrial
sewer service) required by the Company in the operation of
the Business.
(d) All of the Real Property has
unqualified access to public roads and to all utilities,
including electricity, sanitary and storm sewer, potable
water, oil, natural gas and other utilities used in the
operation of the Business.
3.10.2 Tangible Personal Property.
Section 3.10.2 of the Company Disclosure Schedule sets
forth, as of the date hereof, a description of each item of
Tangible Personal Property owned by the Company having
either a depreciated book value or estimated fair market
value (whichever is lower) per unit in excess of $1,000 or
not owned by the Company but in the possession of the
Company or used by the Company in the Business and having
rental payments therefor in excess of $2,000 per year,
together with a description of the owner of, and any
Contract or Other Agreement relating to the possession or
use of, each such item of Tangible Personal Property.
Except as disclosed in Section 3.10.2 of the Company
Disclosure Schedule, as of the date hereof:
(a) the Company has good and marketable
title to each item of the Tangible Personal Property owned
by the Company, free and clear of all Liens or Other
Encumbrances, except for liens, if any, for personal
property taxes not due and liens of repairpersons or bailees
or other similar liens incurred in the ordinary course of
the Business in respect of obligations that are not overdue;
and
(b) each item of the Tangible Personal
Property is in good operating condition and repair, usable
in the ordinary course of the Business, and the operation
thereof as conducted prior to the date hereof, as presently
conducted and as proposed to be conducted, is not in any
material respect in violation of any applicable building
code, zoning ordinance, or other Law, including without
limitation, with respect to environmental protection.
3.10.3 Intangible Personal Property.
Section 3.10.3 of the Company Disclosure Schedule sets
forth, as of the date hereof, (i) a true and complete
schedule of each Mark, Patent, item of Software, or Trade
Secret constituting a part of the Intangible Personal
Property; (ii) a true and complete schedule of each
statutory, common law, registered copyright, or mask work
right, and each registration and application therefor con-
stituting a part of the Intangible Personal Property;
(iii) a true and complete schedule identifying all Technical
Documentation and the specific location of each item
thereof; and (iv) a true and complete schedule of each
Contract or Other Agreement to which the Company is a party
relating to any item of Intangible Personal Property.
Section 3.10.3 of the Company Disclosure Schedule specifies
which of such Contracts or Other Agreements requires the
Company to pay or entitles it to receive any royalty,
license fee, or other compensation and the amount thereof or
the basis for computing same. Section 3.10.3 of the Company
Disclosure Schedule also identifies each item of Intangible
Personal Property development of which was funded by a third
Person (including any officer, director, employee, or
Shareholder) or was conducted by or as a joint venture, in
partnership, or otherwise in collaboration, with any other
Person (except an employee solely in his or her capacity as
such) and any Contract or Other Agreement pursuant to which
same occurred. The effectuation of the transactions
contemplated hereby will not adversely affect in any manner
such Contract or Other Agreement or any item or part of the
Intangible Personal Property or the nature or usefulness
thereof in the hands of the Buyer. Except as indicated in
3.10.3 of the Company Disclosure Schedule, as of the date
hereof:
(a) the Company is the owner of all
right, title and interest in and to each item of the Intan-
gible Personal Property, free and clear of all Liens or
Other Encumbrances;
(b) all Trademarks, Patents,
copyrights, mask work rights and all other Intangible
Personal Property and all state, Federal, and foreign
registrations listed in Section 3.10.3 of the Company
Disclosure Schedule are valid and in full force and effect,
and all applications therefor listed in Section 3.10.3 of
the Company Disclosure Schedule have been properly filed and
are in proper form, and none of the foregoing are subject to
any Taxes, maintenance fees or actions falling due within
120 days after the date hereof;
(c) there are no existing Orders and no
pending claims, actions, judicial or other adversary
proceedings, disputes or disagreements involving the Company
concerning any item of the Intangible Personal Property or
part thereof, and, to the knowledge of the Company and each
Key Officer, no such action, proceeding, dispute or
disagreement is threatened;
(d) the Company has, and upon
consummation of the transactions contemplated hereby, Buyer
will have, the full, exclusive, and irrevocable right and
authority in perpetuity to use each item of the Intangible
Personal Property as it has been used previously in the
Business; to the knowledge of the Company and each Key
Officer, such use did not ever, does not, and will not
conflict with, infringe upon, or violate any Patent,
copyright, Mark, Trade Secret or other proprietary right of
any other Person; the Company has not infringed and is not
now infringing any proprietary right belonging to any other
Person; no Person has made any assertion contrary to or
inconsistent with the foregoing; and, to the knowledge of
the Company and each Key Officer, no Person has infringed
upon or violated any Intangible Personal Property of the
Company or threatened to do so;
(e) all Trade Secrets of the Company
are presently protectible, and are not part of the public
knowledge or literature, nor to the knowledge of the Company
or any Key Employee have any been used, divulged or
appropriated for the benefit of any Person other than the
Company or to the detriment of the Company; the Company has
taken reasonable security measures to protect the secrecy,
confidentiality, and value of its Trade Secrets; and the
Technical Documentation related to each Trade Secret is
current, accurate, and sufficient in detail and content to
identify and explain it, and to allow its full and proper
use without reliance on the special knowledge or memory of
others; and
(f) upon commencement of employment
with the Company, and prior to disclosure to any Company
employee of any Trade Secret or other Company confidential
information, each employee of the Company (whether now or at
any time previously employed) executed an agreement with
Company in the form set forth in Section 3.10.3(f) of the
Company Disclosure Schedule; each such agreement has vested
fully, exclusively, and irrevocably in the Company all
Intangible Personal Property developed, in whole or in part,
or alone or together with others, by each Company employee
during the term of his or her employment with the Company
and is otherwise enforceable by the Company in accordance
with its terms; and to the knowledge of the Company or any
Key Officer, no employee has breached or threatened to
breach any term thereof.
3.10.4 Use Restrictions. Except as
disclosed in Section 3.5, 3.10.2 or 3.10.3 of the Company
Disclosure Schedule, none of the Tangible Personal Property
or Intangible Personal Property owned or used by the Company
is subject to (a) any material contractual restriction on
the manner in, purpose for, or location at, which same may
be used, or (b) other restriction on any use of same that
would result from the consummation of the transactions
contemplated hereby.
3.10.5 Necessary Properties. Except as
set forth in Section 3.10.5 of the Company Disclosure
Schedule, as of the date hereof, the Assets include all of
the assets, real properties, tangible personal properties
and intangible properties necessary for the conduct of the
Business as conducted to the date hereof, as presently
conducted and as proposed to be conducted.
3.11 Agreements.
(a) Section 3.11(a) of the Company Dis-
closure Schedule sets forth a true and complete list of each
Contract or Other Agreement now in effect, except (i) any
Contract or Other Agreement specifically identified in Sec-
tions 3.10.1, 3.10.2, 3.10.3, 3.12.1, or 3.14 of the Company
Disclosure Schedule or that would be required to be dis-
closed therein but for specific exclusions contained in any
of such Sections; (ii) purchase or sales orders made in the
ordinary course of the Business not involving payments,
costs, or potential liabilities in excess of $2,500; and
(iii) any other Contract or Other Agreement made in the
ordinary course of the Business not involving aggregate
payments, costs, or potential liabilities in excess of
$2,500. Notwithstanding clause (iii) of the previous
sentence, each Contract or Other Agreement to which any
officer, director, employee or Shareholder is a party, or
arising from a relationship described in Section 3.18, or
pursuant to which any Company Trade Secret was at any time
disclosed to a third Person, that otherwise would not be
required to be disclosed pursuant to any other provision of
this Agreement, is disclosed in Section 3.11(a) of the
Company Disclosure Schedule.
(b) Except as disclosed in Section 3.11(b)
of the Company Disclosure Schedule:
(i) each Material Contract is the
valid, legal and binding obligation of the Company and, to
the Company's knowledge, of the other contracting party,
enforceable in all material respects in accordance with its
terms against the other contracting party and is in full
force and effect, except as such may be subject to the
effect of bankruptcy, insolvency, reorganization, moratorium
or similar laws or equitable principles relating to or
limiting creditors' rights generally (including, without
limitation, laws pertaining to preferential and fraudulent
transfers), and that equitable remedies are subject to the
discretion of the court; and all rights of the Company
thereunder are owned free and clear of any Lien or Other
Encumbrance;
(ii) no other contracting party to any
Material Contract is now in material breach thereof or has
breached the same in any material respect prior to the date
hereof; neither the Company nor any Key Officer has any
knowledge of any anticipated material breach thereof by any
such party; and there is not now, nor has there been prior
to the date hereof, any disagreement or dispute arising
under any Material Contract that has not been resolved;
(iii) the Company has fulfilled all
material obligations required pursuant to each Material
Contract to have been performed by it prior to the date
hereof, and neither the Company nor any Key Officer has any
reason to believe that the Company or the Core Logic
Business Unit will not be able to fulfill, when due, all of
its obligations under each Material Contract remaining to be
performed after the date hereof;
(iv) the Company is not under any
material liability or obligation with respect to the return
of Inventory or products sold by the Company that are in the
possession of distributors, wholesalers, retailers, or
customers;
(v) the Company is not a party to, nor
bound by, any Contract or Other Agreement or any provision
of its Articles of Incorporation or by-laws that
(x) restricts the conduct of the Business anywhere in the
world or (y) contains any unusual or burdensome provisions
that could reasonably be expected to have a material adverse
effect upon the condition (financial or otherwise), Assets,
liabilities, Business, operations or prospects (before or
after the Closing Date) of the Company or the Core Logic
Business Unit; and
(vi) the Material Contracts include all
of the contracts and agreements necessary for the conduct of
the Business as conducted prior to the date hereof, as
presently conducted by the Company, and as proposed to be
conducted.
(c) Section 3.11(c) of the Company
Disclosure Schedule sets forth a true and correct list of
each proposed agreement, commitment, arrangement, or other
understanding under current discussion between Company and
any third party that would, or reasonably could be expected
to, be required to be disclosed pursuant to any provision of
this Agreement, if same had been executed as of the date
hereof. A copy of the most recent draft of such agreement
and all other documents evidencing the current state of such
discussion is set forth in Section 3.11(c) of the Company
Disclosure Schedule.
3.12 Labor and Employment Matters.
3.12.1 Labor Agreements. Section 3.12.1
of the Company Disclosure Schedule sets forth a true and
current list of all of the Labor Agreements now in effect.
The Company has previously delivered to Buyer true and
correct information concerning the Company's employees,
including with respect to the (i) name, residence address,
and social security number; (ii) position; (iii)
compensation; (iv) vacation and other fringe benefits; (v)
claims under any Welfare Plan; (vi) location of employment;
(vii) citizenship; and (viii) resident alien status (if
applicable). Except as disclosed in Section 3.12.1 of the
Company Disclosure Schedule, as of the date hereof:
(a) all employees of the Company are
employees at will, and the employment of each employee of
the Company may be terminated immediately by the Company;
(b) to the knowledge of the Company, no
employee of the Company has any plan to terminate his or her
employment at or prior to the Closing, whether or not as a
result of the transactions contemplated herein;
(c) to the knowledge of the Company and each
Key Officer, no employee of the Company, in the ordinary
course of his or her duties, has breached or will breach any
obligation to a former employer in respect of any
proprietary right of such former employer; and
(d) the Company has no material labor
relations problems.
3.12.2 Compliance With Labor Laws and
Agreements. Except as disclosed in Section 3.12.2 of the
Company Disclosure Schedule, the Company has complied in all
material respects with all Labor Agreements and all
applicable Laws and Orders relating to employment or labor.
To the Company's knowledge, no such Law or Order of
California requires Buyer to give any notice, make any
filing, receive any approval, or take any other action to,
with, or from or with respect to any Authority in connection
with the transactions contemplated hereby. Except as
disclosed in Section 3.12.2 of the Company Disclosure
Schedule, there is no legal prohibition with respect to the
permanent residence of any Company employee in the United
States or his or her permanent employment by the Company or
the Buyer. No present or former employee, officer or
director of the Company has, or will have at the Closing
Date, any claim against the Company for any matter
including, without limitation, for wages, salary, vacation
or sick pay, or under any Welfare Plan. Except as disclosed
in Section 3.12.2 of the Company Disclosure Schedule, there
is no:
(a) unfair labor practice complaint
against the Company pending before the National Labor Rela-
tions Board or any state or local agency;
(b) pending labor strike or other
material labor trouble affecting the Company;
(c) material labor grievance pending
against the Company;
(d) pending representation question
respecting the employees of the Company; or
(e) pending arbitration proceeding
arising out of or under any collective bargaining agreement
to which the Company is a party.
In addition, to the knowledge of the Company and
each Key Officer in the ordinary course of business (and
without any special investigation): (i) none of the matters
specified in clauses (a) through (e) above is threatened
against the Company; (ii) no union organizing activities
have taken place with respect to the Company; (iii) no basis
exists for which a claim may be made under any collective
bargaining agreement to which the Company is a party; and
(iv) all employees referred to in Section 6.7 are in good
health. There has been no mass layoff or plant closing as
defined in the Worker Adjustment and Retraining Notification
Act or any similar state or local "plant closing" law with
respect to the employees of the Company.
3.13 Pension and Benefit Plans. All accrued
obligations of the Company applicable to its employees,
whether arising by operation of Law, by contract, by past
custom or otherwise, for payments by the Company to trusts
or other funds or to any governmental agency, with respect
to unemployment compensation benefits, social security
benefits or any other benefits for its employees with
respect to the employment of said employees through the date
hereof have been paid or adequate accruals therefor have
been made on the Books and Records. All reasonably
anticipated obligations of the Company with respect to such
employees, whether arising by operation of Law, by contract,
by past custom, or otherwise, for salaries, vacation and
holiday pay, sick pay, bonuses and other forms of
compensation payable to such employees in respect of the
services rendered by any of them prior to the date hereof
have been or will be paid by the Company prior to the
Closing Date. The Company does not currently maintain,
contribute to or participate in any Pension Plan (whether
single employer, multi-employer or otherwise), has not
maintained, contributed to or participated in any Pension
Plan and has no commitment to adopt a Pension Plan. The
Company does not have, and has never had, any ERISA
Affiliate. The Company has no liability, and to its best
knowledge, is not aware of any potential liability,
including, but not limited to, joint and several liability
for Pension Plans of current or former ERISA Affiliates,
with respect to any Pension Plan. Except as disclosed in
Section 3.13 of the Company Disclosure Schedule, as of the
date hereof:
(a) the Company does not maintain or
participate in, and have any obligation to contribute to,
have in effect, and has not committed to adopt, any Welfare
Plan (or improvement thereto);
(b) each ERISA Plan conforms in form and
operation, in all material respects to all applicable Laws
and Orders, including ERISA and the applicable provisions of
the Code. All notices, reports, returns, applications and
disclosures have been timely made which are required to be
made to the Internal Revenue Service, the U.S. Department of
Labor, the Pension Benefit Guaranty Corporation, any
participants in the ERISA Plans, any trustee, or any insurer
with respect to the ERISA Plans;
(c) the Company has made or provided for
(with fully-funded reserves) all contributions heretofore
required to have been made under all of the ERISA Plans, and
will, by the Closing Date, have made or provided for (with
fully-funded reserves) all contributions required to be made
on or before the Closing Date under all such plans;
(d) no ERISA Plan nor any trust created
thereunder, nor any trustee or administrator thereof has
engaged in a transaction which may subject any of such ERISA
Plans, any such trust, or any party dealing with such ERISA
Plans or any such trust (including the Company), to the Tax
or penalty on prohibited transactions imposed by Section
4975 of the Code or to a civil penalty imposed by Section
502 of ERISA;
(e) there are no material actions, claims or
lawsuits which have been asserted or instituted against any
of the ERISA Plans or the trusts thereunder, and to the
knowledge of the Company or any Key Officer, no basis for
such action, claim or lawsuit exists, and no such action,
claim or lawsuit has been threatened;
(f) the Company has not agreed to indemnify
any other party for any liabilities or expenses which have
been or may in the future be incurred by or asserted against
such other party in respect of any ERISA Plan;
(g) the Company has no unpaid liability in
respect of any employee for any contribution and/or premium
due under any Welfare Plan constituting one of the ERISA
Plans and has no liability as to any benefits to which any
employee may be entitled under any Welfare Plan constituting
one of the ERISA Plans, whether for benefits due or claims
filed which is not fully and accurately reflected on its
Financial Statements;
(h) the Company does not maintain or
participate in any Welfare Plan which provides for
continuing benefits or coverage for any participant or any
spouse, dependent or beneficiary under such plan after
termination of employment, except as may be required by the
Consolidated Omnibus Budget Reconciliation Act of 1985, as
amended ("COBRA") and the regulations thereunder and at the
expense of the participant or the beneficiary of the
participant. The Company is in compliance with the COBRA
notice and continuation coverage requirements with respect
to all plans which it maintains or in which it participates;
and
(i) except as disclosed in Section 3.13 of
the Company Disclosure Schedule, the transaction
contemplated by this Agreement will not (under a Labor
Agreement, an ERISA Plan or otherwise) result in any
increase in benefit payable or acceleration of benefit
vesting or liability for severance or termination pay or any
similar payment to any current or former employee of the
Company.
3.14 Insurance. Section 3.14 of the Company Dis-
closure Schedule sets forth a true and complete list of all
policies or binders of fire, liability, workers' compensa-
tion, vehicular or other insurance held by or on behalf of
the Company specifying the type of policy, the insurer, the
policy number or covering note number with respect to
binders and describing each pending claim thereunder. Such
policies and binders are in full force and effect and are in
all material respects in accordance with the customary
insurance requirements for the industry of the Company and
in compliance with all applicable Laws and Orders. The
Company is not, and has not been, in any material respect in
default, with respect to any provision contained in any such
policy or binder or failed to give any notice or present any
claim under any such policy or binder in due and timely
fashion. There are no outstanding unpaid claims under any
such policy or binder. The Company has not received a
notice of cancellation or non-renewal of any such policy or
binder. The Company has no knowledge of any inaccuracy in
any application for such policies or binders, any failure to
pay premiums when due, or any similar state of facts which
may form the basis for termination of any such insurance.
The Company has never been refused any insurance with
respect to its properties or operations, nor has its insur-
ance coverage ever been limited. No such policy is ter-
minable or cancelable by the insurer by virtue of the
consummation of the transactions contemplated herein.
3.15 Suppliers and Customers.
(a) Section 3.15(a) of the Company
Disclosure Schedule is a true, complete and current list of
the Company's customers (including distributors). All
information previously delivered by the Company to Buyer
relating to its customers and sales of its product is true,
complete and correct in all material respects. Except as
disclosed in Section 3.15(a) of the Company Disclosure
Schedule, no single supplier or customer of the Company is
of material importance to the Company. Except as set forth
in Section 3.15(a) of the Company Disclosure Schedule, the
relationships of the Company with its suppliers, customers,
and sales representatives are good commercial working
relationships, and no Person who was a supplier, customer,
or sales representative of the Company at any time during
the Company's previous fiscal year or the current fiscal
year has canceled or otherwise terminated, or threatened to
cancel or otherwise terminate, its relationship with the
Company or decreased or limited materially, or threatened to
decrease or limit materially, its services, supplies, or
materials to the Company or its purchases of the services or
products of the Company. Except as set forth in Section
3.15(a) of the Company Disclosure Schedule, the Company has
no knowledge that any such supplier, customer, or sales
representative intends to cancel or otherwise modify its
relationship with the Company or to decrease materially or
limit its services or products to the Company or its
purchases of the services or products of the Company.
Except as set forth in Section 3.15(a) of the Company
Disclosure Schedule, the execution, delivery, or performance
of this Agreement, or the consummation of the transactions
contemplated hereby will not, to the knowledge of the
Company or any Key Officer, adversely affect the
relationship of the Business with any such supplier,
customer or sales representative.
(b) Each written commitment or Contract or
Other Agreement to which an Authority is a party or
obligating Company, for the benefit of any Authority, to
maintain a supply of any Company product, and any
commitment, sales order, or Contract or Other Agreement
requiring the Company to deliver or sell any Company product
at a date later than six months after the date hereof, is
described in Section 3.15(b) of the Company Disclosure
Schedule or identified in Section 3.11(a) of the Company
Disclosure Schedule.
(c) Section 3.15(c) of the Company
Disclosure Schedule sets forth (i) a true, complete, and
accurate list, since January 1, 1995, of all sales
representatives of the Company and (ii) a true, complete,
and accurate list of each Person who has or to the Company's
knowledge, claims any right to sell Company products in any
geographic area or to any particular customer, and a
reasonably detailed description of such right or claim.
3.16 Warranties and Merchandising.
(a) Section 3.16(a) of the Company
Disclosure Schedule sets forth (i) true, complete and
accurate copies or descriptions of all of the Company's
forms of warranty now in effect with respect to any Company
product; (ii) a true, complete and accurate list of all
warranty claims made with respect to any Company product
during the last fiscal year or the current fiscal year,
identifying the product, customer, nature of the claim and
date made, remedial action taken, and dollar amount
involved; (iii) a true, complete, and accurate description
of all of the Company's stock rotation or co-op advertising
obligations; and (iv) a true, complete and accurate list of
all Contracts or Other Agreements and other documents of the
Company, other than Labor Agreements, providing for or
describing or otherwise obligating the Company with respect
to incentives for sales of Company products or to make
payments to or for a customer, or make any other
accommodation for a customer, or take back any Company
product from a customer (or in absence of such Contract or
Other Agreement or document, Section 3.16(a) of the Company
Disclosure Schedule accurately and completely describes each
such obligation and the customers to whom such obligation is
owed).
(b) As of December 31, 1995, the aggregate
of all unfilled accepted orders for the sale of Company
products is approximately $289,000. A true, complete, and
accurate list of all of such orders, specifying amount,
customer date accepted, and date due is contained in
Section 3.16(b) of the Company Disclosure Schedule.
3.17 Product Quality.
3.17.1 Claims and Occurrences. Except as
disclosed in Section 3.17.1 of the Company Disclosure
Schedule, there is no claim now pending or, to the knowledge
of the Company or any Key Officer in the ordinary course of
business and without special investigation, threatened by or
before any Authority alleging any defect in any product
manufactured, shipped, sold or delivered by the Company or
alleging, with respect thereto, any failure of the Company
to warn or any breach by the Company of any implied warranty
or representation, as a result of which personal injury or
property damage is alleged to have occurred, nor to the
knowledge of the Company or any Key Officer is there any
valid basis for any such claim.
3.17.2 Compliance With Standards. All
products, manufacturing standards applied, and testing
procedures used comply in all material respects with all
applicable specifications and the product literature in
which they are described and all applicable Laws
promulgated, administered or enforced by the Federal
Communications Commission and with all applicable standards
established by Underwriters Laboratory, or equivalent U.S.
laboratory, CISPR, or CSA.
3.18 Potential Conflicts of Interest. Except as
disclosed in Section 3.18 of the Company Disclosure Sched-
ule, none of the Key Employees, and no Affiliate of any of
them, (i) holds a beneficial interest in any Contract or
Other Agreement of the Company (other than contracts,
commitments, or agreements between the Company and such
persons in their capacities as employees, officers, or
directors of the Company) or (ii) owns, directly or
indirectly, in whole or in part, any tangible or intangible
property (including, without limitation any Patent, Mark,
franchise, invention, permit, license, Trade Secret, or
confidential information) that the Company uses or the use
of which is necessary for the Company's conduct of the
Business.
3.19 Certain Transactions. Except as disclosed in
Section 3.19 of the Company Disclosure Schedule, all
purchases and sales or other transactions, if any, between
the Company, on the one hand, and any Key Officer, officer,
director, Shareholder, Key Employee or Affiliate thereof, on
the other hand, have been made on the basis of prevailing
market rates and terms, such that all such transactions have
been on terms no less favorable to the Company than those
that would have been available from unrelated third parties.
3.20 Powers of Attorney and Suretyships. Except
as disclosed in Section 3.20 of the Company Disclosure
Schedule, the Company has no general or special powers of
attorney outstanding (whether as grantor or grantee thereof)
or any obligation or liability (whether actual, accrued,
accruing, contingent, or otherwise) as guarantor, surety,
co-signer, endorser, co-maker, indemnitor or otherwise in
respect of the obligation of any Person.
3.21 Banking Facilities. Section 3.21 of the Com-
pany Disclosure Schedule contains a true and complete list
of:
(a) each bank, savings and loan, or other
financial institution with which the Company has an account
or safety deposit box and the numbers of the accounts or
safety deposit boxes maintained by the Company thereat; and
(b) the names of all persons authorized to
draw on each such account or to have access to any such
safety deposit box facility, together with a description of
the authority (and conditions thereof, if any) of each such
person with respect thereto.
3.22 Absence of Adverse Changes. Neither the
Company nor any Key Officer knows or has reason to know of
any material fact or contingency that could reasonably be
expected to have a material adverse effect upon the
condition (financial or otherwise), Assets, liabilities,
Business, operations or prospects (before or after the
Closing Date) of the Company or the Core Logic Business
Unit, the value or utility of the Assets, or the ability of
the Company to consummate the transactions contemplated
herein or in the other Company Documents.
3.23 Full Disclosure. The Company has heretofore
made all of the Books and Records available to Buyer for its
inspection and has heretofore delivered to Buyer copies of
all Material Contracts and other documents referred to in
the Company Disclosure Schedule. All Material Contracts,
documents, and other papers or copies thereof delivered to
Buyer by or on behalf of the Company in connection with this
Agreement or the other Company Documents and the
transactions contemplated herein or therein are accurate,
complete, and authentic. Furthermore, the information
furnished to Buyer by or on behalf of the Company in
connection with this Agreement or the other Company
Documents and the transactions contemplated herein or
therein does not contain any untrue statement of a material
fact and does not omit to state any material fact necessary
to make the statements made, in the context in which they
are made, true or not misleading. Except for matters of
general application relating to companies similarly situated
to the Company, there is no fact that the Company has not
disclosed to Buyer in writing that could reasonably be
expected to have a material adverse effect upon the
condition (financial or otherwise), Assets, liabilities,
Business, operations, properties or prospects (before or
after the Closing Date), of the Company or the Core Logic
Business Unit, the value or utility of the Assets, or the
ability of the Company to consummate the transactions
contemplated herein or in the other Company Documents.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to the Company as
follows:
4.1 Due Incorporation. The Buyer is a
corporation duly organized, validly existing and in good
standing under the Laws of the State of Delaware and has all
requisite power and authority to own, lease, and operate its
assets, properties and business and to carry on its business
as now conducted.
4.2 Authority to Execute and Perform Agreements.
Subject to the further approval of the Board of Directors of
the Buyer referred to in Section 6.10, the Buyer has all
requisite corporate power, authority, and approval required
to enter into, execute, and deliver this Agreement and the
other agreements to be executed by it hereunder and to
perform fully its obligations hereunder and thereunder.
4.3 Due Authorization. Subject to the further
approval of the Board of Directors of the Buyer referred to
in Section 6.10, the Buyer has taken all action necessary to
authorize it to enter into and perform its obligations under
this Agreement and all other agreements to be executed by it
hereunder and to consummate the transactions contemplated
herein and therein. Subject to such further approval, this
Agreement and such other agreements will be, as of the Clos-
ing Date, the legal, valid, and binding obligations of the
Buyer, enforceable in accordance with their respective
terms, except as such may be subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or
similar laws or equitable principles relating to or limiting
creditors' rights generally (including, without limitation,
laws pertaining to preferential and fraudulent transfers),
and that equitable remedies are subject to the discretion of
the court. Upon issuance pursuant to this Agreement, the
Buyer Common will be legally and validly issued, fully paid,
and nonassessable.
4.4 No Violation. Subject to Section 4.5,
neither the execution and delivery of this Agreement and all
other agreements to be executed by Buyer hereunder nor the
consummation of the transactions contemplated herein and
therein will (a) violate any provision of the Certificate of
Incorporation or bylaws of Buyer; (b) violate, conflict
with, or constitute a default under any agreement to which
Buyer is a party or by which it or its property is bound;
(c) require the consent of any party to any Material
Contract or Other Agreement to which Buyer is a party or by
which it or its property is bound; or (d) violate any Laws
or Orders to which Buyer or its property is subject.
4.5 Required Consents. Each consent, approval,
authorization, waiver, and other requirement prescribed by
any Law or Order or material contract or other material
agreement that must be obtained or satisfied by Buyer and
that is necessary for the execution and delivery by Buyer of
this Agreement and all other agreements to be executed by it
hereunder and the consummation of the transactions
contemplated herein or therein are listed on Section 4.5 of
the Buyer Disclosure Schedule.
ARTICLE V
CERTAIN COVENANTS
The parties hereto covenant and agree as follows:
5.1 Business Examinations and Physical
Investigations of Assets. Prior to the Closing Date, the
Buyer shall be entitled, through its employees and
representatives, including, without limitation, Loeb & Loeb
LLP and Arthur Andersen LLP, to make such investigations and
examinations of the Company, its Books and Records, the
Business, and the Assets as Buyer may reasonably request.
In order that Buyer may have the full opportunity to do so,
the Company shall furnish Buyer and its representatives
during such period with all information concerning the
Business and the Assets as Buyer or such representatives may
reasonably request and cause the Company's officers,
employees, consultants, agents, accountants, and attorneys
to cooperate fully with Buyer and such representatives and
to make full disclosure of all information and documents
requested by Buyer and/or such representatives. Any such
investigations and examinations shall be conducted at
reasonable times and under reasonable circumstances. No
investigation by Buyer shall, however, diminish or obviate
in any way, the effectiveness of any of the representations,
warranties, covenants, or agreements of the Company or any
of the Key Officers contained in this Agreement. All
information shall be kept confidential pursuant to Section
11.2.
5.2 Conduct of Business.
(a) From the date hereof through the Closing
Date, the Company shall conduct the Business in such a
manner that the representations and warranties contained in
Article III shall continue to be true and correct in all
material respects as of the Closing Date as if made at and
as of the Closing Date.
(b) From the date hereof through the Closing
Date, the Company shall conduct the Business only in the
ordinary course and consistent with its prior practices,
shall not make or institute any unusual or novel methods of
manufacture, purchase, sale, lease, management, accounting
or operation or that vary materially from those in use as of
the date hereof and shall maintain, keep and preserve the
Assets in good condition and repair. In addition, the
Company shall use its best efforts (i) to preserve the
Business and organization of the Company intact, (ii) to
keep available to Buyer the services of the Company's
present officers, employees, agents and independent
contractors, (iii) to preserve for the benefit of Buyer the
goodwill of the Company's suppliers, customers, landlords
and others having business relations with it, and (iv) to
cooperate with Buyer and use reasonable efforts to assist
Buyer in obtaining the consent of any landlord, licensor, or
other party to any lease or Contract or Other Agreement with
the Company where the consent of such landlord or other
party may be required by reason of the transactions
contemplated herein. Without limiting the generality of the
foregoing, prior to the Closing, the Company shall not with-
out Buyer's prior written approval:
(x) enter into any Contract or Other
Agreement, commitment or other understanding
or arrangement,
(y) perform, take any action or incur or
permit to exist any of the acts,
transactions, events or occurrences of the
type (1) described in Section 3.6.5 which
would have been inconsistent with the
representations and warranties set forth
therein had the same occurred after the
Balance Sheet Date and prior to the date
hereof or (2) described in Section 3.19 that
would be required to be set forth on Section
3.19 of the Company Disclosure Schedule if it
had previously taken place, or
(z) amend or propose to amend its
Articles of Incorporation or by-laws.
5.3 Changes in Business. From the date hereof
through the Closing Date, the Company shall consult with,
and in good faith consider implementing the instructions of,
Buyer with respect to (i) the cancellation of Contracts or
Other Agreements, commitments or other understandings or
arrangements to which the Company is a party, including,
without limitation, purchase orders for any item of
Inventory and commitments for capital expenditures or
improvements; (ii) entering into any Contract or Other
Agreement of a kind referred to in Section 3.11(c);
(iii) the commencement in one or more of the Company's loca-
tions of the orderly and gradual discontinuance of par-
ticular items or operations; (iv) the purchasing, pricing or
selling policies (including, without limitation, selling at
discounts merchandise of the Business); and (v) the
settlement or disposition of any litigation or claim.
5.4 Insurance. From the date hereof through the
Closing Date, the Company shall maintain in force (including
necessary renewals thereof) the insurance policies listed in
Section 3.14 of the Company Disclosure Schedule, except to
the extent that they may be replaced with equivalent
policies appropriate to insure the Assets and the Business,
to the same extent as currently insured at the same rates or
at different rates approved by Buyer.
5.5 No Defaults. From the date hereof through
the Closing Date, the Company shall not commit a material
default under any term or provision of, or suffer or permit
to exist any condition or event which, with notice or lapse
of time or both, would constitute a material default by the
Company under, any Material Contract or any License or
Permit.
5.6 Reporting and Compliance With Law. From the
date hereof through the Closing Date, the Company shall duly
and timely file all Tax Returns required to be filed with
Authorities and duly observe and conform, in all material
respects, to all applicable Laws and Orders.
5.7 Litigation. From the date hereof through the
Closing Date, the Company shall promptly notify Buyer of any
lawsuit, claim, proceeding, or investigation that after the
date hereof is threatened or commenced against the Company,
or to the Company's knowledge, any officer, director,
employee, consultant, agent or Shareholder, in his, her or
its capacity as such, which, if decided adversely, could
reasonably be expected to have a material adverse effect
upon the condition (financial or otherwise), Assets,
liabilities, Business, operations or prospects (before or
after the Closing Date) of the Company or the Core Logic
Business Unit, the value or utility of the Assets or the
ability of the Company to consummate the transactions
contemplated herein or the other Company Documents.
5.8 Arrangements with Employees. From the date
hereof until the Closing Date, the Company, after prior
reasonable notice from Buyer, shall permit Buyer to approach
and negotiate with any or all employees of the Company,
including, but not limited to, managerial staff, in an
effort to persuade them to continue in the employ of the
Company pending the Closing and thereafter to become
employees of the Buyer. The Company shall cooperate with
Buyer in such negotiations.
5.9 No Solicitation or Negotiation. Unless and
until this Agreement shall be terminated, the Company shall
not, nor shall it cause, suffer or permit its directors,
officers, employees, representatives, agents, accountants or
attorneys to, initiate or solicit, directly or indirectly,
any inquiries or the making of any proposal, or engage in
negotiations or discussions with any Person, or provide any
confidential information or data to any Person, with respect
to any acquisition, business combination or purchase of all
or substantially all of the Assets or any significant Asset
(other than Inventory in the ordinary course) of the
Company, or any direct or indirect equity interest in the
Company or otherwise facilitate any effort or attempt to
seek any of the foregoing. Furthermore, the Company shall
immediately terminate any existing activities, discussions
or negotiations with any Person with respect to any of the
foregoing.
5.10 Agreement with Monolithic Systems Technology.
The parties will use best efforts to cause to be executed
and delivered an agreement between Monolithic Systems
Technology, Inc., a California corporation ("MoSys"), Buyer,
and the Company (the "MoSys Agreement") satisfactory to
Buyer, granting to Buyer substantially the same rights as
are granted to Company pursuant to an Agreement dated
October 12, 1994 between MoSys and Company.
5.11 Registration of Buyer Common.
5.11.1 Registration Procedures. Buyer
hereby agrees to use best efforts to cause to be registered
under and in accordance with the Securities Act (a
"Registration") the Buyer Common constituting the Initial
Payment. In addition, Buyer hereby agrees to use best
efforts to cause a Registration, on one occasion in each 12
month period in which a Contingent Payment is made, of the
Buyer Common so issued to the Company during such 12 month
period In Connection with such Registrations, Buyer will,
as expeditiously as practicable, after the Closing in the
case of the Initial Payment, and after the second, fourth
and sixth Contingent Payments are made in the case of the
Contingent Payments:
(a) prepare and file with the Securities and
Exchange Commission (the "SEC") a registration statement
under the Securities Act covering the applicable Buyer
Common issued to the Company hereunder (a "Registration
Statement") and use its best efforts to cause such
Registration Statement to become and remain effective as
provided herein and shall use its best efforts to comply
with the Securities Act of 1933, as amended (the "Securities
Act") and the rules and regulations of the SEC in preparing
and filing such Registration Statement;
(b) prepare and file with the SEC such
amendments and post-effective amendments to the Registration
Statement as may be necessary to keep the Registration
Statement effective for a period of not less than two years
from the date of issuance of the Buyer Common covered by
such Registration Statement; cause the prospectus which is
part of the Registration Statement ("Prospectus") to be
supplemented by any required Prospectus supplement, and as
so supplemented to be filed pursuant to Rule 424 under the
Securities Act; and comply with the provisions of the
Securities Act applicable to it with respect to the
disposition of all securities covered by such Registration
Statement during such two-year period;
(c) make every reasonable effort to obtain
the withdrawal of any order suspending the effectiveness of
the Registration Statement at the earliest practicable time;
and
(d) on or prior to the date on which the
Registration Statement is declared effective, use its best
efforts to register or qualify the Buyer Common covered by
such Registration Statement under the securities laws of the
States of California and New York.
5.11.2 Obligations of the Company.
(a) The Company will furnish to Buyer in
writing such information and affidavits as Buyer may
reasonably request or as may be required in connection with
any registration, qualification or compliance with respect
to the Buyer Common. The Company shall give prompt notice
to Buyer of each sale by the Company of Buyer Common
registered pursuant hereto.
(b) The Company will not sell any Buyer
Common issued to the Company hereunder until a Registration
Statement covering same shall become effective and same
shall have been qualified for sale under applicable state
securities laws, except pursuant to applicable exemptions.
Immediately on notice from Buyer, the Company will cease
sales of the Buyer Common, for so long as Buyer shall advise
Company such cessation is required under applicable Federal
or state securities laws. The Company shall not adopt any
plan to dissolve the Company or distribute Buyer Common to
Shareholders until after two years from the Closing Date.
(c) At the end of any period during which
Buyer keeps any Registration Statement current and effective
as provided by Section 5.11.1(b) hereof, the Company shall
discontinue sales of Buyer Common pursuant to such
Registration Statement and the Company shall notify Buyer of
the number of shares of Buyer Common registered which remain
unsold at the end of such period.
5.11.3 Registration Expenses. All of the
costs and expenses of each registration hereunder will be
borne by the Buyer, including all registration and filing
fees, the fees and expenses of Buyer's counsel and
accountants and all other costs and expenses incident to
Buyer's performance of or compliance with this Agreement,
including without limitation the preparation, printing (or
otherwise duplicating) and filing under the Securities Act
of the Registration Statement (and all amendments and
supplements thereto) and furnishing copies thereof and of
the Prospectus included therein, and the costs and expenses
incurred in connection with the qualification of the Buyer
Common issued to the Company hereunder under the securities
laws of the States of California and New York; provided,
that Buyer shall not bear costs and expenses of the Company
comprising brokerage fees, transfer taxes, the fees and
expenses of any counsel, accountants or other
representatives retained by the Company, or any fees, costs
or expenses required to be borne by the Company under state
securities laws.
5.11.4 Indemnification.
(a) The Buyer agrees to indemnify and hold
harmless the Company and its officers and directors and each
Person who controls the Company (within the meaning of the
Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act")), against any losses, claims,
damages, liabilities (joint or several) and expenses
(including attorneys' fees) caused by any untrue or alleged
untrue statement of a material fact contained in any
Registration Statement, Prospectus, or preliminary
Prospectus or any amendment or supplement to any of the
foregoing or any omission or alleged omission to state
therein a material fact necessary to make the statements
therein (in the case of the Prospectus or any preliminary
Prospectus, in light of the circumstances under which they
were made) not misleading, except insofar as the same are
caused by (i) or contained in any written information
furnished to Buyer in connection with the preparation of
such Prospectus by the Company, (ii) violation by the
Company of Section 5.11.2, or (iii) the failure of the
Company to deliver a copy of the Registration Statement or
Prospectus or any amendment or supplement thereto after
Buyer has furnished the Company with a copy thereof.
(b) The Company and the Key Officers,
jointly and severally, agree to indemnify, to the full
extent permitted by Law, Buyer, its directors and officers
and each Person who controls Buyer (within the meaning of
the Securities Act and the Exchange Act) against any losses,
claims, damages, liabilities and expenses (including
attorneys' fees) resulting from (i) any untrue or alleged
untrue statement of a material fact or any omission or
alleged omission to state a material fact necessary to make
the statements in the Registration Statement or Prospectus
or preliminary Prospectus (in the case of the Prospectus or
any preliminary Prospectus, in light of the circumstances
under which they were made) not misleading to the extent,
that such untrue statement or omission was made in reliance
upon written information furnished by the Company in
connection with the preparation of such Prospectus or (ii)
the breach of any covenant in Section 5.11.2.
(c) Any Person entitled to indemnification
hereunder will (i) give prompt written notice to the
indemnifying party of any claim with respect to which it
seeks indemnification, and (ii) unless in such indemnified
party's reasonable judgement a conflict of interest may
exist between such indemnified and indemnifying parties with
respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. Whether or not such
defense is assumed by the indemnifying party, the
indemnifying party will not be subject to any liability for
any settlement made without its consent (but such consent
will not be unreasonably withheld). The failure of an
indemnified party to give notice pursuant to clause (i)
above shall not relieve any indemnifying party of its
obligations hereunder except to the extent such indemnifying
party is prejudiced by such failure. No indemnifying party
will consent to entry of any judgment or enter into any
settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect
of such claim or litigation. An indemnifying party who is
not entitled to, or elects not to, assume the defense of a
claim will not be obligated to pay the fees and expenses of
more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless, in
the reasonable judgment of any indemnified party, a conflict
of interest may exist between such indemnified party and any
other of such indemnified parties with respect to such
claim, in which event the indemnifying party shall be
obligated to pay the fees and expenses of such additional
counsel of counsels.
(d) If for any reason the indemnification
provided for in the preceding clauses (a) and (b) is
unavailable to an indemnified party as contemplated by the
preceding clauses (a) and (b), then the indemnifying party
shall as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations.
5.12 Shareholder Matters.
5.12.1 Notices to Shareholders.
Immediately following execution hereof, Company shall (a)
notify each Option Holder, in accordance with paragraph 9b
of the Company's 1992 Stock Option Plan, that the Company
has declared the options outstanding thereunder terminated
in accordance therewith and (b) transmit to each Shareholder
the Consent Solicitation.
5.12.2 CA-GCL Section 1301. The Company
shall comply with CA-GCL Section 1301 after Shareholder
Approval shall have been obtained.
5.12.3 Review by Buyer. Company shall
afford Buyer reasonable opportunity to review and comment
upon all notices, Consent Solicitations, and other documents
and instruments to be distributed by Company pursuant to
this Section 5.12, prior to distribution of same.
5.13 Records. Following the Closing, upon the
request of Buyer, on the one hand, or the Company on the
other, the other party shall make available to the
requesting party such records and information relating to
the Company in its possession that the other party may
reasonably require in connection with income, franchise or
other tax matters or for any other proper purpose under
circumstances where such information cannot be readily
obtained from other sources.
5.14 Covenants Not to Compete.
5.14.1 Covenant. The Company covenants
and agrees that for a period of ten years from the date
hereof, it shall not, directly or indirectly, as principal,
partner, agent, servant, employee, consultant, stockholder,
or otherwise, anywhere in the world (the "Territory"),
engage or attempt to engage in any business activity
competitive with the Business.
5.14.2 Reasonableness of Restrictions.
Buyer and Company acknowledge and agree that it is not
possible to limit the geographic scope of the covenants not
to compete contained in this Agreement to particular cities,
counties or other geographic subdivisions of any
jurisdiction. For purposes of Section 16601 of the
California Business and Professions Code, the parties agree
that the names of each and every city and county of
California, which are listed on Exhibit 5.14.2, and every
other jurisdiction covered hereby, are incorporated by
reference herein. The Company recognizes that the foregoing
territorial and time limitations are reasonable and properly
required for the adequate protection of the business of
Buyer and the Affiliates of Buyer and that in the event that
any such territorial or time limitation is deemed to be
unreasonable in arbitration or otherwise, the Company agrees
to request, and to submit to, the reduction of said
territorial and/or time limitation to such an area or period
as shall be deemed reasonable by the Arbitrator, as herein-
after defined, or other tribunal.
5.14.3 Separate Covenants. Buyer and the
Company intend for the covenants not to compete contained in
this Agreement to comply with the provisions of California
Business and Professions Code Section 16601, and to be
construed as a series of separate covenants, one for each
county, state, market area or business area, and for each
year. Except for geographic coverage, each such covenant
shall be deemed identical in terms to the covenants in
Section 5.14.1 of this Agreement.
5.14.4 Increased Time Limitations. In the
event that the Company shall be in violation of the
aforementioned restrictive covenants, then the time
limitation thereof shall be extended for a period of time
during which such breach or breaches shall occur.
5.14.5 Severability of Claims. The
existence of any claim or cause of action by the Company
against Buyer or any Affiliate of Buyer, if any, whether
predicated upon this Agreement or otherwise, shall not
constitute a defense to the enforcement by Buyer or any
Affiliate of Buyer of the foregoing restrictive covenants
but shall be resolved by separate proceeding.
5.14.6 Injunctive Relief. The Company
agrees that a remedy at law for any breach of the foregoing
shall be inadequate and that Buyer or any Affiliate of Buyer
shall be entitled to injunctive relief, in addition to any
other remedy it might have.
5.15 Core Logic Technology Package. The parties
shall, on the day before the Closing Date, prepare a
technology package (the "Core Logic Technology Package"),
the partial contents of which are defined and documented in
the Escrow Agreement. The Core Logic Technology Package
shall contain the source database materials for two
revisions of the following Company devices:
EC924
EC932
EC926
The first database shall reflect the last revisions of each
design database which was used to produce working
semiconductor devices for each part number. A copy of each
device, labeled according to the appropriate revision, shall
be included in the Core Logic Technology Package. The
second database shall reflect the latest revision of the
designs of each referenced Company device, effective
48 hours prior to the Closing. The Company covenants that
the Core Logic Technology Package, when utilized with
appropriate Assets, and without undue additional engineering
or other planning, will enable a person ordinarily skilled
in the art to design, develop, make, use, sell, support,
service, and maintain the Core Logic Products.
5.16 Remittance of Payments. The Company shall
promptly remit and pay over in kind to the Buyer any and all
payments received by it from customers or vendors of the
Company in respect of products or services provided by the
Company prior to the Closing Date, including any payments
made in respect of the Accounts Receivable. Any payment
made in the form of a check or other negotiable instrument
shall be endorsed and made payable by the Company to the
Buyer. The Company will cooperate with the Buyer,
immediately after the Closing, in notifying all Persons
owing any obligation to the Company, thereafter to remit or
pay same to the Buyer.
5.17 Company Debts. The Company shall promptly
pay or satisfy any and all of its debts or obligations not
assumed by the Buyer pursuant to this Agreement as the same
shall become due and payable.
5.18 Core Logic Business Unit. The Buyer intends
to operate the Assets as a business unit to be named the
"Core Logic Business Unit" on a basis substantially the same
as the other business units of the Buyer are operated.
Buyer agrees that it will not take any action or execute any
transaction (other than to enforce this Agreement), with a
principal intention of avoiding or eliminating any
Contingent Payment.
ARTICLE VI
CONDITIONS PRECEDENT TO THE OBLIGATION
OF BUYER TO CLOSE
The obligation of Buyer to consummate the trans-
actions contemplated herein shall be subject to the
fulfillment, at or before the Closing Date, of all of the
conditions set forth below in this Article VI. Buyer may
waive any or all of such conditions in whole or in part
without prior notice; provided, however, that no such waiver
shall constitute a waiver by Buyer of any right or remedy
otherwise available to it if the Company or any Key Officer
shall be in default of any of its, his or her
representations, warranties or covenants contained in this
Agreement, or any Shareholder shall be in default of any of
his, her, or its representations, warranties, or covenants
contained in the Solicitation Documents.
6.1 Representations and Warranties; Performance
of Covenants. The representations and warranties of the
Company and the Key Officers contained in this Agreement and
in any other Company Document shall be true in all material
respects on and as of the Closing Date with the same force
and effect as though made on and as of the Closing Date, and
each obligation of the Company or any of the Key Officers to
be performed by him, her, or it on or before the Closing
Date pursuant to the terms of this Agreement shall have been
duly performed in all material respects on or before the
Closing Date; there shall not have occurred between the date
hereof and the Closing Date any material adverse change in
the condition (financial or otherwise), Assets, liabilities
(whether absolute, accrued, contingent or otherwise),
Business, operations, or prospects of the Company, or in the
value or utility of the Assets, or in the ability of the
Company to consummate the transactions contemplated herein
or the other Company Documents; no action, suit or
proceeding shall have been instituted before any court or
governmental body or instituted or threatened by any
governmental agency or body which has or may have, in the
opinion of Buyer, a material adverse effect on the condition
(financial or otherwise), Assets, properties, Business or
prospects of the Company or the Core Logic Business Unit;
and the Company shall have delivered to Buyer a certificate
to such effect dated the Closing Date signed by the
President and Chief Financial Officer of the Company.
6.2 Shareholder Action. Shareholder Approval
shall have been obtained by unanimous vote or written
consent of the Shareholders.
6.3 Third Party Consents. All consents, Licenses
and Permits, or approvals from Authorities parties to any
Material Contract which may be required or be desirable in
connection with (a) the consummation of the transactions
contemplated hereby and (b) the Buyer's ownership of the
Assets and operation of the Business, shall have been
obtained upon terms and conditions satisfactory to Buyer.
Consent of the lenders to Buyer which may be required or be
desirable in connection with the consummation of the
transactions contemplated hereby shall have been obtained
upon terms and conditions satisfactory to Buyer.
6.4 Opinion of Counsel to the Company. Buyer
shall have received the favorable opinion of Skjerven,
Morrill, MacPherson, Franklin & Friel, counsel to the
Company in the form of Exhibit 6.4. Such opinion shall also
cover such other matters incident to the transactions
contemplated by this Agreement as Buyer may reasonably
request.
6.5 Approval of Counsel to Buyer. All actions
and proceedings hereunder and all documents and other papers
required to be delivered by the Company hereunder or in
connection with the consummation of the transactions
contemplated herein, and all other related matters shall
have been approved in its reasonable discretion by Loeb &
Loeb LLP, counsel to Buyer, as to their form and substance.
6.6 No Amendments to Resolutions; Corporate
Status. The resolutions of the Company's Board of Directors
referred to in Section 3.1.4 and of the Shareholders
constituting Shareholder Approval shall not have been
modified or rescinded. The Company shall be in good
standing under the laws of California and each jurisdiction
in which it shall have qualified to do business and shall
have delivered to Buyer (a) a certified copy of its Articles
of Incorporation, (b) a true and correct copy of its bylaws
certified by the Company's Secretary, (c) good standing
certificates from the Secretary of State of each
jurisdiction in which the Company is qualified to do
business, and (d) a long form good standing certificate from
the California State Secretary as of a date which is not
more than seven days prior to the Closing Date.
6.7 Employment Agreements. Each of the employees
listed in Section 6.7 of the Company Disclosure Schedule
shall have entered into employment agreements with Buyer in
the form of Exhibit 6.7 (the "Employment Agreements").
6.8 MoSys Agreement. The MoSys Agreement shall
have been executed and delivered by the parties thereto and
be in full force and effect.
6.9 No Action or Proceeding. No action, suit or
proceeding shall have been instituted or threatened before
any Authority seeking to challenge or restrain the
transactions contemplated herein that presents a substantial
risk that such transactions will be restrained or that
either party hereto may suffer material damages or other
relief as a result of consummating such transactions.
6.10 Approval of Board of Directors. The
execution, delivery and performance of this Agreement and
all of the other Company Documents to which the Buyer is a
party shall have been approved by the Board of Directors of
the Buyer at the meeting of the Board of Directors of the
Buyer scheduled to be held on February 19, 1996.
ARTICLE VII
CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE COMPANY TO CLOSE
The obligation of the Company to consummate the
transactions contemplated herein shall be subject to the
fulfillment, at or before the Closing Date, of all the
conditions set forth below in this Article VII. The Company
may waive any or all of such conditions in whole or in part
without prior notice; provided, however, that no such waiver
shall constitute a waiver by the Company of any right or
remedy otherwise available to it if Buyer shall be in
default of any of its representations, warranties or cove-
nants contained in this Agreement.
7.1 Representations and Warranties. The
representations and warranties of Buyer contained in this
Agreement shall be true in all material respects on and as
of the Closing Date with the same force and effect as though
made on and as of the Closing Date; each of the obligations
of Buyer to be performed by it on or before the Closing Date
pursuant to the terms of this Agreement shall have been duly
performed in all material respects on or before the Closing
Date; and at the Closing Buyer shall have delivered to the
Company a certificate dated the Closing Date to such effect.
7.2 Shareholder Approval; Further Board Approval.
7.2.1 Shareholder Approval. This Agreement
shall have been approved and adopted by the consent in
writing or by the affirmative vote of the holders of at
least the minimum number of shares of Company Capital Stock
and of each class thereof necessary to approve this
Agreement under California Law.
7.2.2 Board Approval. The Company's Board of
Directors shall have approved any amendment of this
Agreement required by Buyer's Board of Directors in
approving this Agreement pursuant to Section 6.10.
7.3 Opinion of Counsel to Buyer.The Company shall
have received the favorable opinion of Loeb & Loeb LLP,
counsel to Buyer, dated as of the Closing Date in the form
of Exhibit 7.3. Such opinion shall cover such other matters
incident to the transactions contemplated by this Agreement
as the Company may reasonably request.
7.4 Approval of Counsel to the Company. All
actions and proceedings hereunder and all documents or other
papers required to be delivered by Buyer hereunder or in
connection with the consummation of the transactions con-
templated herein; and all other related matters shall have
been approved by Skjerven, Morrill, MacPherson, Franklin &
Friel, counsel to the Company, as to their form and
substance.
7.5 Good Standing. The Buyer shall be in good
standing under the laws of Delaware and shall each have
delivered to the Company (a) a certified copy of its
Certificate of Incorporation, (b) a true and correct copy of
its bylaws and (c) a long form good standing certificate
from the Secretary of State of the State of Delaware as of a
date which is not more than seven days prior to the Closing
Date.
7.6 No Action or Proceeding. No action, suit or
proceeding shall have been instituted or threatened before
any Authority seeking to challenge or restrain the
transactions contemplated herein that presents a substantial
risk that such transactions will be restrained or that
either party hereto may suffer material damages or other
relief as a result of consummating such transactions.
7.7 Governmental Approvals. Any and all
approvals or Licenses and Permits from any Authority
required for (a) the lawful consummation of the transactions
contemplated herein and (b) the Buyer's ownership of the
Assets and operation of the Business, shall have been
obtained.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS AND WARRANTIES
8.1 Survival of Representations and Covenants of
the Company and the Key Officers. Notwithstanding any right
of Buyer fully to investigate the affairs of the Company and
notwithstanding any knowledge of facts determined or
determinable by Buyer pursuant to such investigation or
right of investigation, Buyer shall have the right to rely
fully upon the representations, warranties, covenants and
agreements of the Company and the Key Officers contained in
this Agreement, provided that Buyer shall advise the Company
of any breach of the foregoing that Buyer shall discover.
Each representation, warranty, covenant and agreement of
Company or any Key Officer contained herein shall survive
the execution and delivery of this Agreement and the Closing
and shall thereafter terminate and expire on the second
anniversary of the Closing Date, except that the representa-
tions and warranties of the Company contained in Sections
3.7, 3.8.2, and 3.19 shall terminate and expire 90 days
after the expiration of the statute of limitations
applicable to claims by third parties against Buyer or the
Company, in respect of the matter or matters which are the
subject of said representations and warranties, unless, on
or before such date, Buyer shall have delivered to any of
the Key Officers a written notice of a claim with respect to
such representation, warranty, covenant or agreement.
8.2 Survival of Representations and Covenants of
Buyer. Each representation, warranty, covenant, and
agreement of Buyer contained herein shall survive the
execution and delivery of this Agreement and shall
thereafter terminate and expire on the second anniversary of
the Closing Date, unless, on or before such date, the
Company shall have delivered to Buyer a written notice of a
claim with respect to such representation, warranty, cove-
nant, or agreement.
ARTICLE IX
INDEMNIFICATION
9.1 Indemnification of Buyer.
(a) The Key Officers and the Company, jointly and
severally, shall indemnify, defend and hold harmless Buyer,
and its stockholders, directors, officers, employees,
agents, attorneys and representatives, from and against (a)
any and all Losses that may be incurred or suffered by any
such party and arising out of or resulting from any breach
of any representation, warranty, covenant or agreement of
the Company or any Key Officer contained in this Agreement,
including, without limitation, any attempt (whether or not
successful) by any Person to cause or require Buyer or
Company, to pay, perform or discharge any debt, obligation,
deficiency, liability or commitment the existence of which
constitutes a breach of any such representation, warranty,
covenant or agreement, (b) any and all Losses that may be
incurred or suffered by any such Person from the ownership
or operations of Company, the Assets, or the Business
arising prior to the Closing Date, except to the extent (i)
reflected in the Financial Statements or (ii) incurred after
the Balance Sheet Date and prior to the Closing Date and not
related to the violation or breach of any Law or Order,
Contract or Other Agreement, or right or interest of any
third Person, whether or not such Loss or potential Loss
shall have been disclosed to or discovered by Buyer before
the Closing Date, (c) any and all Losses that may be
incurred or suffered by any such Person arising out of or
resulting from any failure of the parties hereto to comply
with the California Bulk Sales laws, and (d) any and all
Losses from any and all actions, suits, proceedings, claims,
demands, assessments, judgments, costs and expenses,
incurred in enforcing this indemnity to the extent that the
aggregate amount of Losses shall exceed $40,000. No Key
Officer shall have liability under clause (a) or (b) of the
preceding sentence respecting any matter as to which the
Company has made a representation or warranty that by its
terms is limited to the knowledge of the Company, unless
such Key Officer shall have had knowledge of facts or
circumstances constituting a breach of such representation
or warranty. Buyer may set off against any Contingent
Payment otherwise due any amounts to which it may be
entitled pursuant to this Article IX.
(b) Notwithstanding anything else contained
herein, the Key Officers and the Company, jointly and
severally, shall indemnify and hold harmless Buyer and its
stockholders, directors, officers, employees, agents,
attorneys and representatives with respect to any Losses
that may be incurred from any claims made prior to the fifth
anniversary of the date of this Agreement arising from any
alleged violation of Section 6 of an Agreement dated August
20, 1992 between Company and ASICtronics Solutions Inc. and
any corresponding improper use of the intellectual property
of ASICtronics Solutions Inc.
9.2 Indemnification of Company. If this
Agreement shall be terminated by the Company pursuant to
Section 10.2.2, Buyer shall indemnify, defend and hold
harmless Company from and against any and all Losses that
may be incurred or suffered by Company on account of the
breach by Buyer of the agreement, covenant, representation,
or warranty giving rise to such termination. Buyer shall
indemnify, defend, and hold harmless the Company and the Key
Officers from and against any and all Losses that may be
incurred or suffered by them, as officers of the Company,
arising from the Core Logic Business Unit's operations after
the Closing.
9.3 Notice of Indemnification. Any Person
entitled to indemnification hereunder will (a) give prompt
written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (b) unless in
such indemnified party's reasonable judgment a conflict of
interest may exist between such indemnified and indemnifying
parties with respect to such claim, permit such indemnifying
party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. Whether
or not such defense is assumed by the indemnifying party,
the indemnifying party will not be subject to any liability
for any settlement made without its consent (but such
consent will not be unreasonably withheld). The failure of
an indemnified party to give notice pursuant to clause (a)
above shall not relieve any indemnifying party of its
obligations hereunder except to the extent such indemnifying
party shall have been prejudiced thereby. An indemnifying
party who is not entitled to, or elects not to, assume the
defense of a claim will not be obligated to pay the fees and
expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such
claim, unless, in the reasonable judgment of any indemnified
party, a conflict of interest may exist between such
indemnified party and any other of such indemnified parties
with respect to such claim, in which event the indemnifying
party shall be obligated to pay the fees and expenses of
such additional counsel or counsels. The indemnified party
shall cooperate in any defense assumed by the indemnifying
party and may participate in the defense of any claim.
9.4 Contribution. If for any reason the
indemnification provided for in Section 9.1 or 9.2 is
unavailable to an indemnified party as contemplated by such
Sections, then the indemnifying party shall contribute to
the amount paid or payable by the indemnified party as a
result of such loss, claim, damage or liability in such
proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the
indemnifying party, but also the relative fault of the
indemnified party and the indemnifying party, as well as any
other relevant equitable considerations.
ARTICLE X
TERMINATION; REMEDIES
10.1 Termination Without Default. In the event
that, as of the Closing Date, any event or state of facts
not constituting a default by a party shall exist, which
event or state of facts constitutes a failure of the condi-
tions precedent for the benefit of Buyer on the one hand, or
the Company on the other, the side for whose benefit such
condition precedent is imposed hereby shall have the right,
at its sole option, to terminate this Agreement prior to the
Closing without liability to the other side. If Shareholder
Approval shall not have been obtained within 30 days from
the date hereof, or the Closing shall not have occurred
within 90 days of the date hereof, Buyer, on the one hand,
or the Company on the other, shall have the right to
terminate this Agreement without liability to either side.
Such right may be exercised by Buyer, on the one hand, or
the Company on the other, as the case may be, giving written
notice to the other on or before the Closing Date,
specifying the event or state of facts giving rise to such
right of termination.
10.2 Termination Upon Default.
10.2.1 Termination by Buyer. Buyer may
terminate this Agreement by giving notice to the Company on
or prior to the Closing Date, without prejudice to any
rights or obligations Buyer may have, if the Company or any
Key Officer or any Shareholder shall have materially
breached any agreement, covenant, representation, or
warranty contained herein or in any Company Document unless
such breach shall be curable and shall have been cured by
the Closing Date.
10.2.2 Termination by the Company. The
Company may terminate this Agreement by giving notice to
Buyer, without prejudice to any rights or obligations
Company may have, if Buyer shall have materially breached
any of its covenants, agreements, representations, and
warranties contained herein unless such breach shall be
curable and shall have been cured by the Closing Date.
10.2.3 Rights Reserved. In event of
termination pursuant to Section 10.2.1 or 10.2.2, the side
not guilty of the breach may pursue such remedies as are
available to it at law or equity, or as are provided
hereunder.
10.3 Arbitration.
\NYBS\ Mandatory Arbitration. Buyer, on
the one hand, and the Company and any Key Officer, on the
other, shall promptly submit any dispute, claim, or
controversy arising out of or relating to this Agreement or
any Company Document (including, without limitation, with
respect to the meaning, effect, validity, termination,
interpretation, performance, or enforcement of this
Agreement or such Company Document) or any alleged breach
(including any action in tort, contract, equity, or
otherwise), to binding arbitration before one arbitrator
("Arbitrator"). The parties agree that, except as otherwise
provided herein respecting temporary or preliminary
injunctive relief, binding arbitration shall be the sole
means of resolving any dispute, claim, or controversy
arising out of or relating to this Agreement or any Company
Document (including, without limitation, with respect to the
meaning, effect, validity, termination, interpretation,
performance or enforcement of this Agreement or such Company
Document) or any alleged breach (including any claim in
tort, contract, equity, or otherwise).
10.3.2 Arbitrator's Qualifications and
Selection. The Arbitrator shall be an active member of the
California Bar, specializing for at least 15 years in
mergers and acquisitions of high technology companies and
corporate and securities law. The Arbitrator shall be
selected by the New York chapter head of the American
Arbitration Association upon the request of either side.
The Arbitrator shall be selected within thirty 30 days of
request.
10.3.3 Governing Law; Written Decision.
In any arbitration hereunder, this Agreement and any Company
Document shall be governed by the laws of the State of
California applicable to a contract negotiated, signed, and
wholly to be performed in California, which laws the
Arbitrator shall apply in rendering his or her decision.
The Arbitrator shall issue a written decision, setting forth
findings of fact and conclusions of law, within 60 days
after he or she shall have been selected. The Arbitrator
shall have no authority to award punitive or other exemplary
damages.
10.3.4 Procedures; Evidence; Experts.
(a) Any arbitration instituted by the
Company shall be held in Los Angeles, California and any
arbitration instituted by Buyer shall be held, at the
Buyer's option, in either San Francisco or San Jose,
California, in each case in accordance with and under the
then-current provisions of the rules of the American
Arbitration Association, except as otherwise provided
herein.
(b) On application to the Arbitrator,
any party shall have rights to discovery to the same extent
as would be provided under the Federal Rules of Civil
Procedure, and the Federal Rules of Evidence shall apply to
any Arbitration under this Agreement; provided, however,
that the Arbitrator shall limit any discovery or evidence
such that his or her decision shall be rendered within the
period referred to in Section 10.3.3.
(c) The Arbitrator may, at his or her
discretion and at the expense of the party(ies) who will
bear the cost of the Arbitration, employ experts to assist
him or her in his or her determinations.
10.3.5 Costs. The costs of the
Arbitration proceeding and any proceeding in court to
confirm or to vacate any arbitration award or to obtain
temporary or preliminary injunctive relief as provided in
Section 10.3.7, as applicable (including, without
limitation, actual attorneys' fees and costs), shall be
borne by the unsuccessful party and shall be awarded as part
of the Arbitrator's decision, unless the Arbitrator shall
otherwise allocate such costs, for the reasons set forth, in
such decision.
10.3.6 Consent to Jurisdiction. Any
judgment upon any award rendered by the Arbitrator may be
entered in and enforced by any court of competent
jurisdiction. The parties expressly consent to the
jurisdiction of the courts (Federal and state) in California
to enforce any award of the Arbitrator or to render any
provisional or injunctive relief in connection with or in
aid of the Arbitration. The parties expressly consent to
the personal and subject matter jurisdiction of the
Arbitrator to arbitrate any and all matters to be submitted
to arbitration hereunder. None of the parties hereto shall
challenge any arbitration hereunder on the grounds that any
party necessary to such arbitration (including, without
limitation, the parties hereto) shall have been absent from
such arbitration for any reason, including, without
limitation, that such party shall have been the subject of
any bankruptcy, reorganization, or insolvency proceeding.
10.3.7 Injunctive Relief. This Section
10.3 shall not prevent any party from seeking or obtaining
temporary or preliminary injunctive relief in a court for
any breach or threatened breach of any provision of this
Agreement or any Company Document; provided that the
determination whether such breach or threatened breach shall
have occurred and the remedy therefor (other than with
respect to such preliminary or temporary relief) shall be
made by arbitration pursuant to this Section 10.3.
10.3.8 Indemnification. The parties shall
indemnify the Arbitrator and any experts employed by the
Arbitrator and hold them harmless from and against any claim
or demand arising out of any arbitration under this
Agreement or any Company Document, unless resulting from the
willful misconduct of the person indemnified.
10.3.9 Survival. This arbitration clause
shall survive the termination of this Agreement and any
Company Document.
10.4 WAIVER OF JURY TRIAL; EXEMPLARY DAMAGES. ALL
PARTIES HEREBY WAIVE THEIR RIGHTS TO TRIAL BY JURY WITH
RESPECT TO ANY DISPUTE ARISING UNDER THIS AGREEMENT OR ANY
COMPANY DOCUMENT. No party shall be awarded punitive or
other exemplary damages respecting any dispute arising under
this Agreement or any Company Document.
10.5 Attorneys' Fees. The unsuccessful party to
any court or other proceeding arising out of this Agreement
that is not resolved by arbitration under Section 10.3 shall
pay to the prevailing party all attorneys' fees and costs
actually incurred by the prevailing party, in addition to
any other relief to which it may be entitled. As used in
this Section 10.5 and elsewhere in this Agreement, "actual
attorneys' fees" or "attorneys' fees actually incurred"
means the full and actual cost of any legal services
actually performed in connection with the matter for which
such fees are sought, calculated on the basis of the usual
fees charged by the attorneys performing such services, and
shall not be limited to "reasonable attorneys' fees" as that
term may be defined in statutory or decisional authority.
10.6 Interest On Amounts Due. Any amount payable
by one party to another under any provision of this Article
X shall bear interest at the rate of 12% per annum from the
date due until paid.
ARTICLE XI
MISCELLANEOUS
11.1 Expenses of Transaction. The Company, on the
one hand, and Buyer on the other, shall each bear its own
direct and indirect expenses incurred in connection with the
negotiation and preparation of this Agreement and the other
Company Documents and the consummation and performance of
the transactions contemplated herein or therein (it being
understood that such expenses of the Company, to the extent
unpaid as of the Closing, shall be paid from Company cash on
hand as of the Closing).
11.2 Confidentiality. Subject to any obligation
to comply with (i) any Law (ii) any rule or regulation of
any Authority or securities exchange or (iii) any subpoena
or other legal process to make information available to the
Persons entitled thereto, whether or not the transactions
contemplated herein shall be concluded, all information
obtained by any party about any other and all of the terms
and conditions of this Agreement and the other Company
Documents shall be kept in confidence by each party, and
each party shall cause its directors, officers, employees,
agents and attorneys to hold such information confidential;
provided, however, that the foregoing shall not apply to any
information obtained by Buyer through its own independent
investigations of the Company or received by Buyer from a
third party that, to the knowledge of Buyer after due
inquiry, was not under any obligation to keep such informa-
tion confidential, or to any information obtained by Buyer
that is generally known to others engaged in the trade or
Business of the Company; and provided, further, that from
and after the Closing, Buyer shall not be under any
obligation to maintain confidential any such information
concerning the Company. If this Agreement shall be
terminated for any reason, each party shall return or cause
to be returned to the other all written data, information,
files, records and copies of documents, worksheets and other
materials obtained by such party in connection with the
transactions contemplated herein.
11.3 Publicity. No publicity release or announce-
ment concerning this Agreement or the transactions con-
templated herein shall be issued without advance written
approval of the form and substance thereof by Buyer and the
Company; provided, however, that such restrictions shall not
apply to any disclosure required by regulatory Authorities,
applicable Law or the rules of any securities exchange which
may be applicable.
11.4 Notices. All notices, requests and other
communications hereunder shall be in writing and shall be
delivered by courier or other means of personal service
(including by means of a nationally recognized courier
service or a professional messenger service), or sent by
telex or telecopy or mailed first class, postage prepaid, by
certified mail, return receipt requested, in all cases,
addressed to:
Buyer:
Standard Microsystems Corporation
80 Arkay Drive
Hauppauge, New York 11788
Telecopy: (516) 273-5550
Attention: George W. Houseweart
With copies to:
Standard Microsystems Corporation
80 Arkay Drive
Hauppauge, New York 11788
Telecopy: (516) 273-5550
Attention: Sandra Sefcsik
Standard Microsystems Corporation
80 Arkay Drive
Hauppauge, New York 11788
Telecopy: (516) 273-5550
Attention: Arthur Sidorsky
Loeb & Loeb LLP
345 Park Avenue
New York, New York 10154
Telecopy: (212) 407-4990
Attention: David C. Fischer, Esq.
Company:
EFAR Microsystems, Inc.
3211 Scott Blvd., Suite 100
Santa Clara, California 95054
Telecopy: (408) 496-1116
Attention: Mr. Peter C.R. Ju
With a copy to:
Skjerven, Morrill, MacPherson, Franklin
& Friel
25 Metro Drive, Suite 700
San Jose, California 95110
Telecopy: (408) 283-1233
Attention: Marc David Freed, Esq.
All notices, requests and other communications shall be
deemed given on the date of actual receipt or delivery as
evidenced by written receipt, acknowledgement or other
evidence of actual receipt or delivery to the addressee. In
case of service by telecopy, a confirmation copy of such
notice shall be sent, on the date notice is given, by
certified mail as set forth above. Either party hereto may
from time to time by notice in writing served as set forth
above designate a different address or a different or
additional person to which all such notices or
communications thereafter are to be sent or given.
11.5 Further Assurances. Buyer, on the one hand,
and Company and the Key Officers on the other hand, shall
each use its reasonable and diligent best efforts to proceed
promptly with the transactions contemplated herein, to
fulfill or to cause to be fulfilled the covenants made by it
or the conditions precedent to the obligations of the side
and to execute (before or after the Closing) such further
documents and other papers and perform such further acts as
may be reasonably required or desirable to carry out the
provisions hereof and the transactions contemplated herein.
11.6 Modifications and Amendments; Waivers and
Consents. At any time prior to the Closing Date or termina-
tion of this Agreement, Buyer, on the one hand, and the
Company, on the other hand, may, by written agreement:
(a) extend the time for the performance
of any of the obligations or other acts of the other side;
(b) waive any inaccuracies in the
representations and warranties made by the other side
contained in this Agreement or any other agreement or
document delivered pursuant to this Agreement; and
(c) waive compliance with any of the
covenants or agreements of the other side contained in this
Agreement. However, no such waiver shall operate as a
waiver of, or estoppel with respect to, any subsequent or
other failure. Whenever this Agreement requires or permits
a waiver or consent by or on behalf of any party hereto,
such waiver or consent shall and may only be given in
writing.
11.7 Entire Agreement. This Agreement (including
the exhibits hereto and the Company and Buyer Disclosure
Schedules), the Company Documents, agreements, documents and
instruments to be executed and delivered pursuant hereto or
thereto are the final, complete, and exclusive agreement
among the parties with respect to the transactions
contemplated hereby; supersede all prior agreements,
understandings and representations written or oral, with
respect thereto; and may not be contradicted by evidence of
any such prior or contemporaneous agreement, understanding
or representation, whether written or oral.
11.8 Governing Law and Venue. This Agreement is
to be governed by and construed in accordance with the laws
of the State of California. Subject to the provisions of
Section 10.4 requiring arbitration of disputes, any suit
brought hereon, any and all legal proceedings, to enforce
this Agreement, including any action to compel arbitration
pursuant to Section 10.4 or to enforce or vacate any
judgment or award rendered therein, whether in contract,
tort, equity or otherwise, shall be brought in the
California state courts or Federal courts sitting in
California. The parties hereto hereby waiving any claim or
defense that such forum is not convenient or proper. Each
party hereby agrees that any such court shall have in
personam jurisdiction over it, consents to service of
process in any manner prescribed in Section 11.4 or in any
other manner authorized by Federal or California law, and
agrees that a final judgment in any such action or proceed-
ing shall be conclusive and may be enforced in other juris-
dictions by suit on the judgment or in any other manner
specified by Law.
11.9 Binding Effect. This Agreement and the
rights, covenants, conditions and obligations of the
respective parties hereto and any instrument or agreement
executed pursuant hereto shall be binding upon the parties
and their respective successors, assigns, and legal
representatives. Neither this Agreement, nor any rights or
obligations of any party hereunder, may be delegated or
assigned by a party without the prior written consent of the
other parties; provided, however, that prior to or following
the Closing, this Agreement and any rights and obligations
of Buyer hereunder may, without the prior written consent of
the Company or any Key Officer or any Shareholder, be
assigned and delegated by Buyer to any Affiliate of Buyer or
pledged or hypothecated to any lender(s) of Buyer or any
such Affiliate, and, following the Closing, Buyer may assign
this Agreement and any rights and obligations of Buyer
hereunder, except that Buyer's obligations to the Company or
any Key Officer shall not be impaired by any of the
foregoing.
11.10 Counterparts. This Agreement may be
executed simultaneously in any number of counterparts, each
of which shall be deemed an original but all of which
together shall constitute one and the same instrument. In
making proof of this Agreement it shall not be necessary to
produce or account for more than one counterpart.
11.11 Section Headings. The section headings of
this Agreement are for convenience of reference only and
shall not be deemed to alter or affect any provision hereof.
11.12 Gender; Tense, Etc. Where the context or
construction requires, all words applied in the plural shall
be deemed to have been used in the singular, and vice versa;
the masculine shall include the feminine and neuter, and
vice versa; and the present tense shall include the past and
future tense, and vice versa.
11.13 No Third Party Rights. Nothing in this
Agreement, whether express or implied, is intended to confer
any rights or remedies under or by reason of this Agreement
on any Person other than the parties hereto, and their
respective successors and assigns, nor is anything in this
Agreement intended to relieve or discharge the obligation or
liability of any third Person to any party to this Agree-
ment, nor shall any provision give any third Person any
right of subrogation or action over against any party to
this Agreement.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement as of the day and year first above
written.
STANDARD MICROSYSTEMS
CORPORATION
By:___________________________
Paul Richman
Chairman and Chief
Executive Officer
_____________________________
Peter C.R. Ju
Ying Feng Chang
______________________________
Chin Hwaun Wu
EFAR MICROSYSTEMS, INC.
By:__________________________
Peter C.R. Ju
President
Company Disclosure Schedule
2.3(b) Warranties
3.2 Ownership of Company Capital Stock
3.4 No Violation
3.5 Regulatory Approvals and Other Consents
3.6.1 Financial Statements
3.6.2 Liabilities
3.6.3 Inventories
3.6.4 Accounts Receivable
3.6.5 Absence of Certain Changes
3.7 Tax Matters
3.8.1 Licenses and Permits
3.8.2 Environmental and Industrial Hygiene
3.9 Toshiba Settlement; Pending or Threatened
Litigation
3.10.1 Leases for Real Property
3.10.2 Tangible Personal Property Owned by or in the
Possession of the Company
3.10.3 Intangible Personal Property
3.10.3(f) Employee Confidentiality Agreements and Former
Employees in Possession of Trade Secrets
3.10.4 Use Restrictions
3.10.5 Necessary Properties
3.11(a) Contracts and Other Agreements
3.11(b) Enforceability of Contracts or Other Agreements
3.11(c) Agreements Under Current Discussion
3.12.1 Labor Agreements
3.12.2 Compliance with Labor Laws and Agreements
3.13 Pension and Benefit Plans
3.14 Insurance
3.15(a) Customers, Distributors and Suppliers
3.15(b) Supply, Delivery and Sales Contracts or Other
Agreements
3.15(c) Sales Agents
3.16(a) Warranties and Merchandising
3.16(b) Back Order Status
3.17.1 Pending or Threatened Claims
3.18 Potential Conflicts of Interest
3.19 Certain Transactions with Insiders Not Made on
Basis of Prevailing Market Rates and Terms
3.20 Powers of Attorney and Suretyships
3.21 Banking Facilities
6.7 Key Employees
Buyer Disclosure Schedule
4.5 Required Consents
Exhibits
Exhibit 1 Escrow Agreement
Exhibit 2.3(a) Assumed Obligations Schedule
Exhibit 2.7.2 Purchase Price Allocation
Exhibit 2.8(b) Bill of Sale
Exhibit 5.14.2 California Counties
Exhibit 6.4 Form of Opinion of Company Counsel
Exhibit 6.8 Form of Employee Agreement
Exhibit 7.3 Form of Opinion of Loeb & Loeb LLP
Exhibit 2.8(b)(1)
BILL OF SALE
WHEREAS, STANDARD MICROSYSTEMS, INC., a
Delaware corporation ("Buyer"), EFAR MICROSYSTEMS, INC., a
California corporation (the "Company"), and the Key Officers
named therein are parties to that certain Agreement for
Purchase and Sale of Assets dated as of February 6, 1996
(the "Asset Purchase Agreement"), for the purchase and sale
of the Assets, as defined in Article I of the Asset Purchase
Agreement.
KNOW ALL PERSONS BY THESE PRESENTS THAT the
Company, for good and valuable consideration paid to it,
receipt and sufficiency of which is hereby acknowledged,
does hereby grant, sell, convey, assign (to the extent
assignable), transfer and deliver to Buyer all of the
Company's right, title and interest in and to all of the
Assets, to have and to hold the same unto Buyer.
The Company covenants with Buyer as follows,
which covenants shall survive the sale, transfer and
delivery of the Assets:
On and after the date hereof and without
further consideration, the Company will, from time to time
at Buyer's reasonable request, execute and deliver such
further instruments of conveyance, assignment and transfer
and will take or cause to be taken such other action as
Buyer may reasonably request for the more effective
conveyance, assignment and transfer to Buyer of any of the
Assets.
IN WITNESS WHEREOF, the Company has caused
this Bill of Sale to be duly executed as of this ___ day of
________, 1996.
EFAR MICROSYSTEMS, INC.
By:
Name: Peter C.R. Ju
Title: President Exhibit 2.8(b)(2)
BILL OF SALE
WHEREAS, STANDARD MICROSYSTEMS, INC., a
Delaware corporation ("Buyer"), EFAR MICROSYSTEMS, INC., a
California corporation (the "Company"), and the Key Officers
named therein are parties to that certain Agreement for Purchase
and Sale of Assets dated as of February 6, 1996 (the "Asset
Purchase Agreement"), for the purchase and sale of the Assets, as
defined in Article I of the Asset Purchase Agreement.
KNOW ALL PERSONS BY THESE PRESENTS THAT the
Company, for good and valuable consideration paid to it, receipt
and sufficiency of which is hereby acknowledged, does hereby
grant, sell, convey, assign (to the extent assignable), transfer
and deliver to Standard Microsystems Corporation (Asia), a
Delaware corporation ("SMC Asia"), all of the Company's right,
title and interest in and to all of the Assets physically located
in Taiwan, to have and to hold the same unto SMC Asia.
The Company covenants with SMC Asia as
follows, which covenants shall survive the sale, transfer and
delivery of the Assets physically located in Taiwan:
On and after the date hereof and without
further consideration, the Company will, from time to time at SMC
Asia's reasonable request, execute and deliver such further
instruments of conveyance, assignment and transfer and will take
or cause to be taken such other action as SMC Asia may reasonably
request for the more effective conveyance, assignment and
transfer to SMC Asia of any of the Assets physically located in
Taiwan.
IN WITNESS WHEREOF, the Company has caused
this Bill of Sale to be duly executed as of this ___ day of
_________, 1996.
EFAR MICROSYSTEMS, INC.
By:
Name: Peter C.R. Ju
Title: President
Exhibit 5.14.2
(a) Alameda County
(b) Alpine County
(c) Amador County
(d) Butte County
(e) Calaveras County
(f) Colusa County
(g) Contra Costa County
(h) Del Norte County
(i) El Dorado County
(j) Fresno County
(k) Glenn County
(l) Humboldt County
(m) Imperial County
(n) Inyo County
(o) Kern County
(p) Kings County
(q) Lake County
(r) Lassen County
(s) Los Angeles County
(t) Madera County
(u) Marin County
(v) Mariposa County
(w) Mendocino County
(x) Merced County
(y) Modoc County
(z) Mono County
(aa) Monterey County
(ab) Napa County
(ac) Nevada County
(ad) Orange County
(ae) Placer County
(af) Plumas County
(ag) Riverside County
(ah) Sacramento County
(ai) San Benito County
(aj) San Bernardino County
(ak) San Diego County
(al) San Francisco County
(am) San Joaquin County
(an) San Luis Obispo
(ao) San Mateo County
(ap) Santa Barbara County
(aq) Santa Clara County
(ar) Santa Cruz County
(as) Shasta County
(at) Sierra County
(au) Siskiyou County
(av) Solano County
(aw) Sonoma County
(ax) Stanislaus County
(ay) Sutter County
(az) Tehama County
(ba) Trinity County
(bb) Tulare County
(bc) Tuolumne County
(bd) Ventura County
(be) Yolo County
(bf) Yuba County
Exhibit 6.4
1. The Company is a corporation duly organized,
validly existing and in good standing under the laws of the State
of California and has all requisite corporate power, authority
and approvals to enter into, execute and deliver the Agreement,
the Assignments, and the other agreements, instruments,
certificates and documents to be executed by the Company in
connection therewith (collectively, the "Company Documents"), to
fully perform its obligations thereunder and to fully carry out
the transactions contemplated thereby.
2. The Company has all requisite corporate power to
own, lease and operate the Assets and to carry on the Business as
conducted prior to the date hereof, presently conducted, and as
proposed to be conducted, and is duly qualified or licensed to do
business as a foreign corporation in each jurisdiction in which
the location of its Assets or the nature of its business requires
such qualification, except for such jurisdictions where the
failure to so qualify or be so licensed would not have any
material adverse effect upon the condition (financial or
otherwise), assets, liabilities, operations or prospects of the
Business.
3. Except as disclosed in Section 3.4 of the Company
Disclosure Schedule, neither the execution or delivery by the
Company of the Agreement or any of the other Company Documents
nor the consummation of the transactions contemplated therein:
(a) violates any provision of the Articles of Incorporation or
Bylaws of the Company; (b) violates, conflicts with or
constitutes a default under, permits the termination or
acceleration of, or causes the loss of any material right or
option under any Material Contract of which we have knowledge;
(c) to our knowledge, results in the creation or imposition of
any Lien or Other Encumbrance upon any of the Assets; or (d)
violates any Law or Order to which the Company or any of its
Assets is subject.
4. The execution and delivery of the Agreement and
each of the other Company Documents by the Company, the
performance by the Company of its obligations thereunder, and the
carrying out by the Company of the transactions contemplated
thereby, have been duly authorized by all necessary corporate
action by the Company. No other corporate or shareholder
authorization or approval with respect to the Company is or was
required for the Company to enter into the Agreement and each of
the other Company Documents, perform its obligations thereunder,
and carry out the transactions contemplated thereby. The
Agreement and each of the other Company Documents to which the
Company or any Key Officer is a party constitute valid and
binding obligations of such Person enforceable against such
Person in accordance with their respective terms, except as such
enforceability may be subject to the effect of bankruptcy,
insolvency, reorganization, moratorium or similar laws or
equitable principles relating to or limiting a creditors' rights
generally (including, without limitation, laws pertaining to
preferential or fraudulent transfers), and that equitable
remedies are subject to the discretion of the court. No opinion
is rendered hereunder with respect to Sections 10.4 or 11.8 of
the Agreement or provisions of the other Company Documents to the
same effect.
5. To our knowledge, except as set forth in Section
3.9 of the Company Disclosure Schedule, there is no pending or
threatened adverse claim, dispute, governmental investigation,
suit, action (including without limitation, nonjudicial real or
personal property foreclosure actions), arbitration, legal,
administrative or other proceeding of any nature, domestic or
foreign, criminal or civil, at law or in equity, by or against or
otherwise affecting the Company, which, if decided adversely to
the Company, could reasonably be expected to have a material
adverse effect upon the condition (financial or otherwise),
assets, liabilities, operations, business or prospects of the
Business, the Assets, the ability of the Buyer to employ the Key
Employees, or the Company's ability to perform its obligations
under and carry out the transactions contemplated in the
Agreement and the other Company Documents.
6. No consent, approval, authorization, notice,
waiver, exemption or filing which has not been obtained or made
is required (i) by the Articles of Incorporation or Bylaws of the
Company, (ii) by any Law or Order to which the Company is
subject, (iii) pursuant to the terms of any of the Material
Contract of which we are aware, or (iv) pursuant to the terms of
any of the Contracts or Other Agreements to which the Company is
a party of which we are aware, in connection with the execution
by the Company of the Agreement or any of the other Company
Documents, or the performance by the Company of its obligations
thereunder.
7. To our knowledge, the Company has in all material
respects complied with, and is now in all material respects in
compliance with, all Laws or Orders applicable to the Business,
the Key Employees and the Assets. To our knowledge, except for
the Licenses or Permits held by the Company listed in Section
3.8.1 of the Company Disclosure Schedule, and local permits or
licenses that are not unique to the computer peripheral or
electronics business, no other franchise, license, permit, order
or approval of any Authority is material to or necessary for the
conduct of the Business. To our knowledge, each License or
Permit listed in Section 3.8.1 of the Company Disclosure Schedule
is in full force and effect and the Company is in compliance
therewith in all material respects. To our knowledge, the
Company has received no notice of any asserted present failure by
the Company to comply with any such Law, Order, Permit or
License.
8. Except as disclosed in Section 3.9 of the Company
Disclosure Schedule, to our knowledge, there exists no order
enjoining the Company from taking or requiring the Company to
take any action of any kind with respect to or otherwise relating
to the Business or the Assets.
9. The Assignments are sufficient and in proper form
to convey all of the Company's right, title and interest in and
to all of the Assets and have been duly authorized and properly
executed and delivered by the Company to the Buyer.
10. To our knowledge based upon the search of, or
certificates of public officials relating to, such public records
as we have determined to be appropriate, as of ____________,
1995, except as disclosed in the Company Disclosure Schedule,
there was no Lien or Encumbrance on any of the Assets of the type
which may be perfected only by filing a financing statement under
the Uniform Commercial Code, or by a filing with the United
States Patent & Trademark Office or the United States Copyright
Office.
11. To our knowledge, all Patents, Marks, copyrights,
and mask work rights, and all state and federal registrations and
all applications therefor are valid and in full force and effect
and none thereof are subject to any refiling or renewal actions
falling due within six months after the Closing Date, and none of
the Patents is subject to any Taxes, maintenance fees or actions
falling due within six months of the Closing Date. To our
knowledge, no claim has been asserted against the Company
challenging the validity of any of the Patents.
12. The Company has the right, free and clear of any
other right or claim of any third party of which we are aware to
sell and deliver the Intangible Personal Property being sold and
delivered to the Buyer under the Agreement.
13. The Company has the right, free and clear of any
right or claim of any third party of which we are aware, to
deliver the Care Logic Package to the Buyer under the Agreement.
14. To our knowledge, no claim has been asserted
against the Company or any of its Affiliates challenging the
validity of any assignment or contract (or portion thereof) for
assignment or license of any portion of the Intangible Personal
Property, or property right therein, to the Company or any of its
Affiliates, or for maintaining confidentiality of any Trade
Secret, and we know of no basis for any such claim.
15. To our knowledge, except as set forth in section
3.9 of the Company Disclosure Schedule, there are no pending
claims, actions, judicial or other adversary proceedings,
interferences, disputes, or disagreements concerning any item of
Intangible Personal Property owned by the Company, to which the
Company or any of its Affiliates is named as a party, including,
without limitation, respecting infringement of any Patent, Mark,
mask work right, or copyright, or misappropriation or misuse of
any invention, Trade Secret, or other proprietary information,
and no such action, proceeding, dispute or disagreement is
threatened by or against Company or any of its Affiliates.
16. To our knowledge, except as set forth in Section
3.10.3 of the Company Disclosure Schedule, and subject to the
transactions contemplated by the Agreement, the Company has the
right to use each material item of Intangible Personal Property
in perpetuity in connection with the conduct of the Business;
(ii) such use does not infringe upon or violate any Patent, Mark,
mask work right, copyright, Trade Secret, or other proprietary
right of any other Person; (iii) the Company has not infringed
and is not now infringing on any proprietary right of any other
Person; and (iv) no Person has made any assertion to the
contrary.
17. To our knowledge, the Company has not entered into
any settlement regarding the breach or infringement of any United
States or foreign license, Patent, Trade Secret, mask work right,
copyright, invention or similar right directly and uniquely
related to the Business.
18. To our knowledge, the Patents identified in
Section 3.10.3 of the Company Disclosure Schedule are the only
Patents or Patent applications owned solely or jointly by the
Company or any of its Affiliates, containing claims covering the
practice of any of the Business.
This opinion is limited to the present laws of the
States of California (except for and without giving effect to the
choice of laws or conflicts of laws principles thereof) and the
federal laws of the United States, and to the present judicial
interpretations thereof and to the facts as they presently exist.
We express no opinion as to the applicability or effect of the
laws of any other jurisdiction.
Exhibit 7.3
1. The Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware and has all requisite corporate power and authority to
enter into the Agreement and the other Buyer Documents, to fully
perform its obligations thereunder and to fully carry out the
transactions contemplated thereby.
2. Neither the execution or delivery by the Buyer of
the Agreement or the other Buyer Documents nor the performance by
the either of the Buyer of its obligations thereunder: (a)
violates any provision of its Certificate of Incorporation, by-
laws or other charter documents; (b) to our knowledge, violates,
conflicts with or constitutes an event which (with or without
notice and/or lapse of time) would constitute a default under,
permit or result in the termination or acceleration of, or cause
the loss of any rights or options under any Material Agreement to
which it is a party; (c) to our knowledge, violates any Order to
which it or any of its properties is subject; or (d) to our
knowledge, violates any Law to which it is subject.
3. The execution and delivery of the Agreement and
the other Buyer Documents by the Buyer, the performance by the
Buyer of its obligations thereunder, and the carrying out by the
Buyer of the transactions contemplated thereby have been duly
authorized by all necessary corporate action by the Buyer. No
shareholder authorization or approval with respect to the Buyer
is or was required for the Buyer to enter into the Agreement and
the other Buyer Documents, perform its obligations thereunder and
carry out the transactions contemplated thereby. The Agreement
constitutes, and the other Buyer Documents constitute, valid and
binding obligations of the Buyer enforceable against the Buyer in
accordance with their respective terms, except as such validity,
binding nature and enforceability may be subject to the effect of
bankruptcy, insolvency, reorganization, moratorium or similar
laws (including, without limitation, laws pertaining to
preferential or fraudulent transfers) relating to or limiting a
creditor's rights generally, general principles of good faith,
fair dealing, materiality, reasonableness and equity (regardless
of whether considered in a proceeding in equity or at law), and
that equitable remedies are subject to the discretion of the
court, and no opinion is rendered hereunder with respect to
Sections 5.1, 5.11.4, 5.14, 9.1, 9.2, 9.3, 9.4, 10.3.7, 10.3.8 or
10.4 of the Agreement or any provision of any other Buyer
Document to the same effect or any provision contained in any of
the Buyer Documents which relate, by incorporation by reference,
reaffirmation or otherwise, to any agreements or documents other
than the Buyer Documents or any such agreement or document other
than the Buyer Documents.
4. Except for reporting requirements of the Exchange
Act, no consent, approval, authorization, notice, waiver,
exemption or filing is required (i) by the Certificate of
Incorporation, by-laws or other charter document of the Buyer,
(ii) to our knowledge, by any Law or Order to which the Buyer is
subject, or (iii) to our knowledge, pursuant to the terms of any
Material Agreement of which the Buyer is a party, in connection
with the execution by the Buyer of the Agreement or any of the
other Buyer Documents, or the performance by the Buyer of it's
obligations thereunder.
5. To our knowledge, there is no pending or
threatened adverse claim, dispute, governmental investigation,
suit, action (including, without limitation, nonjudicial real or
personal property foreclosure actions), arbitration, legal,
administrative or other proceeding of any nature, domestic or
foreign, criminal or civil, at law or in equity, by or against
the Buyer, which, if decided adversely to the Buyer, could
reasonably be expected to have a material adverse effect upon the
Buyer's ability to perform its respective obligations under the
Agreement and the other Buyer Documents, except as relating to
matters disclosed in the Buyer Disclosure Schedule and in filings
made by the Buyer with the Securities Exchange Commission.
Buyer Disclosure Schedule
Section 4.5
Required Consents
Consents of Lenders to Buyers Exhibit 2.7.2
PURCHASE PRICE ALLOCATION
Intentionally Omitted
Exhibits and Disclosure Schedule
are contained in Volume II.
TABLE OF CONTENTS
PAGE
ARTICLE I DEFINITIONS . . . . . . . . . . . . . . . . . . . 1
ARTICLE II PURCHASE AND SALE OF ASSETS; THE CLOSING. . . . . 11
2.1 Assets to be Transferred.. . . . . . . . . . . . . . . 11
2.2 Instruments of Sale. . . . . . . . . . . . . . . . . . 11
2.3 Assumed Liabilities and Obligations. . . . . . . . . . 11
2.4 No Other Liabilities or Obligations Assumed. . . . . . 12
2.5 Initial Payment. . . . . . . . . . . . . . . . . . . . 13
2.6 Closing. . . . . . . . . . . . . . . . . . . . . . . . 13
2.7 Taxes and Other Matters. . . . . . . . . . . . . . . . 14
2.7.1 Payment of Taxes . . . . . . . . . . . . . . 14
2.7.2 Allocation of Purchase Price . . . . . . . . 14
2.8 Company's Deliveries at Closing. . . . . . . . . . . . 14
2.8.1 Deliveries to Buyer. . . . . . . . . . . . . 14
2.8.2 Location for delivery. . . . . . . . . . . . 15
2.9 Buyer Deliveries at Closing. . . . . . . . . . . . . . 16
2.10 Contingent Payment.. . . . . . . . . . . . . . . . . . 16
2.10.1 Contingent Payment Obligation. . . . . . . . 16
2.10.2 Calculation of Contingent Payment. . . . . . 17
2.10.3 Adjustment Amount. . . . . . . . . . . . . . 17
2.11 No Fractional Shares; Adjustments. . . . . . . . . . . 17
2.11.1 No Fractional Shares . . . . . . . . . . . . 17
2.11.2 Adjustments. . . . . . . . . . . . . . . . . 17
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . 17
3.1 Organization; Authority; Due Authorization; Vote
Required.. . . . . . . . . . . . . . . . . . . . . . . 18
3.1.1 Organization and Good Standing. . . . . . . 18
3.1.2 Authority to Execute and Perform
Agreements.. . . . . . . . . . . . . . . . . 18
3.1.3 Due Authorization; Enforceability. . . . . . 18
3.1.4 Specific Board Action. . . . . . . . . . . . 18
3.1.5 Vote Required. . . . . . . . . . . . . . . . 19
3.2 Capitalization and Ownership of Company Capital
Stock. . . . . . . . . . . . . . . . . . . . . . . . . 19
3.3 Subsidiaries.. . . . . . . . . . . . . . . . . . . . . 20
3.4 No Violation.. . . . . . . . . . . . . . . . . . . . . 20
3.5 Regulatory Approvals and Other Consents. . . . . . . . 20
3.6 Financial Condition. . . . . . . . . . . . . . . . . . 20
3.6.1 Financial Statements.. . . . . . . . . . . . 20
3.6.2 No Undisclosed Liabilities.. . . . . . . . . 21
3.6.3 Inventories. . . . . . . . . . . . . . . . . 21
3.6.4 Accounts Receivable. . . . . . . . . . . . . 22
3.6.5 Absence of Certain Changes.. . . . . . . . . 22
3.7 Tax Matters. . . . . . . . . . . . . . . . . . . . . . 23
3.8 Compliance with Laws; Governmental Matters. . . . . . 25
3.8.1 General. . . . . . . . . . . . . . . . . . . 25
3.8.2 Environmental and Industrial Hygiene
Compliance.. . . . . . . . . . . . . . . . . 25
3.9 Litigation.. . . . . . . . . . . . . . . . . . . . . . 26
3.10 Property of the Company. . . . . . . . . . . . . . . 27
3.10.1 Real Property. . . . . . . . . . . . . . . 27
3.10.2 Tangible Personal Property. . . . . . . . . 28
3.10.3 Intangible Personal Property. . . . . . . . 28
3.10.4 Use Restrictions . . . . . . . . . . . . . . 30
3.10.5 Necessary Properties.. . . . . . . . . . . . 31
3.11 Agreements. . . . . . . . . . . . . . . . . . . . . . 31
3.12 Labor and Employment Matters.. . . . . . . . . . . . . 33
3.12.1 Labor Agreements.. . . . . . . . . . . . . . 33
3.12.2 Compliance With Labor Laws and Agreements. . 33
3.13 Pension and Benefit Plans. . . . . . . . . . . . . . . 34
3.14 Insurance. . . . . . . . . . . . . . . . . . . . . . . 36
3.15 Suppliers and Customers. . . . . . . . . . . . . . . 37
3.16 Warranties and Merchandising.. . . . . . . . . . . . . 38
3.17 Product Quality. . . . . . . . . . . . . . . . . . . . 39
3.17.1 Claims and Occurrences.. . . . . . . . . . . 39
3.17.2 Compliance With Standards. . . . . . . . . . 39
3.18 Potential Conflicts of Interest. . . . . . . . . . . . 39
3.19 Certain Transactions.. . . . . . . . . . . . . . . . . 39
3.20 Powers of Attorney and Suretyships.. . . . . . . . . . 40
3.21 Banking Facilities.. . . . . . . . . . . . . . . . . . 40
3.22 Absence of Adverse Changes.. . . . . . . . . . . . . . 40
3.23 Full Disclosure. . . . . . . . . . . . . . . . . . . . 40
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF BUYER . . . . . 41
4.1 Due Incorporation. . . . . . . . . . . . . . . . . . . 41
4.2 Authority to Execute and Perform Agreements. . . . . . 41
4.3 Due Authorization. . . . . . . . . . . . . . . . . . . 41
4.4 No Violation.. . . . . . . . . . . . . . . . . . . . . 42
4.5 Required Consents. . . . . . . . . . . . . . . . . . . 42
ARTICLE V CERTAIN COVENANTS. . . . . . . . . . . . . . . . . . . 42
5.1 Business Examinations and Physical Investigations of
Assets. . . . . . . . . . . . . . . . . . . . . . . . 42
5.2 Conduct of Business. . . . . . . . . . . . . . . . . . 43
5.3 Changes in Business. . . . . . . . . . . . . . . . . . 44
5.4 Insurance. . . . . . . . . . . . . . . . . . . . . . . 44
5.5 No Defaults. . . . . . . . . . . . . . . . . . . . . . 44
5.6 Reporting and Compliance With Law. . . . . . . . . . . 44
5.7 Litigation.. . . . . . . . . . . . . . . . . . . . . . 44
5.8 Arrangements with Employees. . . . . . . . . . . . . . 45
5.9 No Solicitation or Negotiation.. . . . . . . . . . . . 45
5.10 Agreement with Monolithic Systems Technology. . . . . 45
5.11 Registration of Buyer Common.. . . . . . . . . . . . . 46
5.11.1 Registration Procedures. . . . . . . . . . . 46
5.11.2 Obligations of the Company.. . . . . . . . . 47
5.11.3 Registration Expenses. . . . . . . . . . . . 47
5.11.4 Indemnification. . . . . . . . . . . . . . . 48
5.12 Shareholder Matters. . . . . . . . . . . . . . . . . . 49
5.12.1 Notices to Shareholders. . . . . . . . . . . 49
5.12.2 CA-GCL Section 1301. . . . . . . . . . . . . 49
5.12.3 Review by Buyer. . . . . . . . . . . . . . . 49
5.13 Records. . . . . . . . . . . . . . . . . . . . . . . . 50
5.14 Covenants Not to Compete . . . . . . . . . . . . . . . 50
5.14.1 Covenant . . . . . . . . . . . . . . . . . . 50
5.14.2 Reasonableness of Restrictions . . . . . . . 50
5.14.3 Separate Covenants . . . . . . . . . . . . . 50
5.14.4 Increased Time Limitations . . . . . . . . . 51
5.14.5 Severability of Claims . . . . . . . . . . . 51
5.14.6 Injunctive Relief. . . . . . . . . . . . . . 51
5.15 Core Logic Technology Package. . . . . . . . . . . . . 51
5.16 Remittance of Payments . . . . . . . . . . . . . . . . 52
5.17 Company Debts. . . . . . . . . . . . . . . . . . . . . 52
5.18 Core Logic Business Unit. . . . . . . . . . . . . . . 52
ARTICLE VI CONDITIONS PRECEDENT TO THE OBLIGATION OF
BUYER TO CLOSE. . . . . . . . . . . . . . . . . . 52
6.1 Representations and Warranties; Performance of
Covenants. . . . . . . . . . . . . . . . . . . . . . . 52
6.2 Shareholder Action.. . . . . . . . . . . . . . . . . . 53
6.3 Third Party Consents.. . . . . . . . . . . . . . . . . 53
6.4 Opinion of Counsel to the Company. . . . . . . . . . . 53
6.5 Approval of Counsel to Buyer.. . . . . . . . . . . . . 53
6.6 No Amendments to Resolutions; Corporate Status.. . . . 54
6.7 Employment Agreements. . . . . . . . . . . . . . . . . 54
6.8 MoSys Agreement. . . . . . . . . . . . . . . . . . . . 54
6.9 No Action or Proceeding. . . . . . . . . . . . . . . . 54
6.10 Approval of Board of Directors.. . . . . . . . . . . . 54
ARTICLE VII CONDITIONS PRECEDENT TO THE OBLIGATION
OF THE COMPANY TO CLOSE . . . . . . . . . . . . . 54
7.1 Representations and Warranties.. . . . . . . . . . . . 55
7.2 Shareholder Approval; Further Board Approval.. . . . . 55
7.2.1 Shareholder Approval . . . . . . . . . . . . . . 55
7.2.2 Board Approval. . . . . . . . . . . . . . . . . 55
7.3 Opinion of Counsel to Buyer. . . . . . . . . . . . . . 55
7.4 Approval of Counsel to the Company.. . . . . . . . . . 55
7.5 Good Standing. . . . . . . . . . . . . . . . . . . . . 55
7.6 No Action or Proceeding. . . . . . . . . . . . . . . . 56
7.7 Governmental Approvals.. . . . . . . . . . . . . . . . 56
ARTICLE VIII SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . 56
8.1 Survival of Representations and Covenants of the
Company and the Key Officers.. . . . . . . . . . . . . 56
8.2 Survival of Representations and Covenants of Buyer.. . 56
ARTICLE IX INDEMNIFICATION . . . . . . . . . . . . . . . . . 57
9.1 Indemnification of Buyer.. . . . . . . . . . . . . . . 57
9.2 Indemnification of Company.. . . . . . . . . . . . . . 58
9.3 Notice of Indemnification. . . . . . . . . . . . . . . 58
9.4 Contribution.. . . . . . . . . . . . . . . . . . . . . 59
ARTICLE X TERMINATION; REMEDIES. . . . . . . . . . . . . . . . . 59
10.1 Termination Without Default. . . . . . . . . . . . . . 59
10.2 Termination Upon Default. . . . . . . . . . . . . . . 59
10.2.1 Termination by Buyer. . . . . . . . . . . . 59
10.2.2 Termination by the Company.. . . . . . . . . 60
10.2.3 Rights Reserved. . . . . . . . . . . . . . . 60
10.3 Arbitration. . . . . . . . . . . . . . . . . . . . . . 60
10.3.1 Mandatory Arbitration. . . . . . . . . . . . 60
10.3.2 Arbitrator's Qualifications and Selection. . 60
10.3.3 Governing Law; Written Decision. . . . . . . 60
10.3.4 Procedures; Evidence; Experts. . . . . . . . 61
10.3.5 Costs. . . . . . . . . . . . . . . . . . . . 61
10.3.6 Consent to Jurisdiction. . . . . . . . . . . 61
10.3.7 Injunctive Relief. . . . . . . . . . . . . . 62
10.3.8 Indemnification. . . . . . . . . . . . . . . 62
10.3.9 Survival.. . . . . . . . . . . . . . . . . . 62
10.4 WAIVER OF JURY TRIAL; EXEMPLARY DAMAGES. . . . . . . . 62
10.5 Attorneys' Fees. . . . . . . . . . . . . . . . . . . . 62
10.6 Interest On Amounts Due. . . . . . . . . . . . . . . . 63
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . 63
11.1 Expenses of Transaction. . . . . . . . . . . . . . . . 63
11.2 Confidentiality. . . . . . . . . . . . . . . . . . . . 63
11.3 Publicity. . . . . . . . . . . . . . . . . . . . . . . 64
11.4 Notices. . . . . . . . . . . . . . . . . . . . . . . . 64
11.5 Further Assurances.. . . . . . . . . . . . . . . . . . 65
11.6 Modifications and Amendments; Waivers and Consents.. . 65
11.7 Entire Agreement.. . . . . . . . . . . . . . . . . . . 66
11.8 Governing Law and Venue. . . . . . . . . . . . . . . . 66
11.9 Binding Effect.. . . . . . . . . . . . . . . . . . . . 66
11.10 Counterparts. . . . . . . . . . . . . . . . . . . . . 67
11.11 Section Headings. . . . . . . . . . . . . . . . . . . 67
11.12 Gender; Tense, Etc. . . . . . . . . . . . . . . . . . 67
11.13 No Third Party Rights.. . . . . . . . . . . . . . . . 67
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
Among
STANDARD MICROSYSTEMS CORPORATION
EFAR MICROSYSTEMS, INC.
and
THE KEY OFFICERS
Dated:
February 6, 1996