FORMATION AND CONTRIBUTION AGREEMENT by and among SE2QUEL PARTNERS LLC, TEGAL CORPORATION and SEQUEL POWER LLC
FINAL
by
and among
SE2QUEL
PARTNERS LLC,
TEGAL
CORPORATION
and
SEQUEL
POWER LLC
This
Formation and Contribution Agreement (collectively with all schedules and
exhibits hereto, this “Agreement”), dated as
of January 14, 2011, is made and entered into by and among se2quel Partners LLC,
a California limited liability company (“se2quel LLC”), Tegal
Corporation, a Delaware corporation (“Tegal”), and sequel
Power LLC, a newly formed Delaware limited liability company (the “Company”). se2quel
LLC, Tegal and the Company are sometimes collectively referred to herein as the
“Parties.”
RECITALS:
WHEREAS, se2quel LLC has
heretofore engaged in the business of promoting solar power plant development
projects worldwide;
WHEREAS, Tegal designs,
manufactures, markets and services best-of-breed Deep Reactive Ion Etching
(DRIE) systems for the fabrication of advanced microelectromechanical systems
(MEMS), power integrated circuits (ICs) and optoelectronic devices;
WHEREAS, the Parties have
concluded that the endeavors of se2quel LLC and the related business property
should be consolidated in a new Delaware limited liability company to be
capitalized in accordance with the provisions of this Agreement;
and
WHEREAS, in connection with
the transactions contemplated by this Agreement, the Parties will enter into
certain additional agreements as described herein.
AGREEMENT:
NOW, THEREFORE, in
consideration of the mutual promises of the parties hereto, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, intending to be legally bound, the parties hereto agree as
follows:
ARTICLE
I
DEFINITIONS
1.1 Defined Terms. As used in
this Agreement:
“Action” means any
action, claim, suit, litigation, proceeding (including, without limitation, any
in front of the U.S. Patent and Trademark Office), hearing, labor dispute,
arbitral action, governmental audit, inquiry, criminal prosecution,
investigation, or unfair labor practice charge or complaint.
“Affiliate” means,
with respect to any Person, any Person directly or indirectly controlling,
controlled by or under common control with such Person. “Control”, when used
with respect to any Person, shall mean the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms “controlling” and
“controlled” have the meanings correlative to the foregoing.
“Ancillary Agreements”
mean the LLC Agreement, the Warrants, the Tegal Services Agreement, the Escrow
Agreement, the ▇▇▇▇ of Contribution, Transfer and Assignment, the Assumption
Document and the other agreements and documents required hereunder to convey the
se2quel LLC Assets to the Company.
“Assets” mean all
right, title and interest in and to the properties, assets and rights of any
kind, whether tangible or intangible, real or personal, including all of the
right, title and interest in the following:
(a) all
Contract Rights;
(b) all
Books and Records;
(c) all
Proprietary Rights;
(d) all
Permits; and
(e) all
goodwill related to the Business, as conducted prior to the
Closing.
“Books and Records”
means, with respect to any Person, (a) all records and lists pertaining
primarily to the Assets or the business of such Person (including records and
lists of customers, distributors, suppliers or), (b) all product, business and
marketing plans, sales and promotional literature and artwork pertaining
primarily to, or necessary for the operation of, the Assets or the business of
such Person, (c) all books, ledgers, financial data, files, reports, product and
design manuals, plans, drawings, technical manuals and operating records of
every kind relating primarily to, or necessary for the operation of, the Assets
or the business of such Person and (d) telephone and fax numbers used in the
business of such Person, in each case whether maintained as hard copy or stored
in computer memory.
“Business” means all
activities proposed to be conducted by the Company after the Closing Date
primarily associated with the promotion of solar power plant development
projects worldwide and the development of self-sustaining businesses from such
projects, including but not limited to activities relating to and supporting
developing, building and operating solar photovoltaic fabrication facilities and
solar farms and the consideration of other non-photovoltaic renewable energy
projects.
“Closing Date” means
the actual date that the Closing shall occur, which shall be the date of this
Agreement or such other date as the Parties shall mutually agree
upon.
“Code” means the
Internal Revenue Code of 1986, as amended.
“Contract Rights” mean
all rights and obligations under the Contracts.
“Contracts” means
those agreements, contracts, leases, purchase orders, undertakings, covenants
not to compete, employment agreements, confidentiality agreements, licenses,
instruments, obligations and commitments required to be set forth in Section 4.8
of the se2quel LLC Disclosure Schedule.
“Court Order” means
any judgment, decision, consent decree, injunction (whether preliminary,
temporary or final), ruling or order of any United States federal, state or
local or foreign court or governmental agency, department or authority that is
binding on any Person or its property under applicable law.
2
“Default” means (a) a
breach of or default under any Contract, (b) the occurrence of an event that
with the passage of time or the giving of notice or both would constitute a
breach of or default under any Contract or (c) the occurrence of an event that
with or without the passage of time or the giving of notice or both would give
rise to a right of termination, renegotiation or acceleration under any Contract
or result in a modification of the terms thereof.
“Designated Employees”
means those individuals required to be set forth in Section 4.12 of the se2quel
LLC Disclosure Schedule.
“Escrow Agreement”
means the Escrow Agreement, dated as of the date of this Agreement, among the
Company, se2quel LLC, Tegal and ▇▇▇▇▇ Fargo Bank, National Association, as
Escrow Agent in the form attached hereto as Exhibit A.
“Encumbrance” means
any claim, lien, pledge, option, charge, easement, security interest, deed of
trust, mortgage, right-of-way, encroachment, building or use restriction,
conditional sales agreement, encumbrance or other similar right, whether
voluntarily incurred or arising by operation of law, and includes any agreement
to give any of the foregoing in the future, and any contingent sale or other
title retention agreement or lease in the nature thereof.
“LLC Agreement” means
the Restated LLC Agreement of the Company dated as of the date of this
Agreement.
“Liabilities” mean any
direct or indirect liability, indebtedness, obligation, commitment, expense,
claim, deficiency, guaranty or endorsement of or by any Person of any type,
whether accrued, absolute, contingent, matured, unmatured, liquidated,
unliquidated, known or unknown.
“Material Adverse
Effect” or “Material Adverse
Change” means any effect, circumstance or change which has, or is
reasonably likely to have, a material adverse effect on the condition (financial
or other), business, results of operations, prospects, assets, liabilities or
operations of the Business.
“Nonvoting Units”
shall have the meaning set forth in the LLC Agreement.
“Permits” mean, with
respect to any Person, all licenses, permits, franchises, approvals,
authorizations, consents or orders of, or filings with, any governmental
authority, whether foreign, federal, state or local, necessary for the conduct
or operation of the business or ownership of the Assets of such
Person.
“Person” shall mean
any natural person, partnership, trust, estate, association, limited liability
company, corporation, Gesellschaft mit beschränkter Haftung, custodian, nominee,
governmental instrumentality or agency, body politic or any other entity in its
own or any representative capacity.
“Proprietary Rights”
mean any or all of, and all rights in, arising out of, or associated with, the
following: (a) U.S. and foreign patents and applications therefor and all
reissues, divisions, renewals, extensions, provisionals, continuations and
continuations-in-part thereof, (b) U.S. and foreign trademarks, service marks,
trade dress, logos, trade names and corporate names and the goodwill associated
therewith and registrations and applications for registration thereof, (c) U.S.
and foreign copyrights and registrations and applications for registration
thereof, (d) U.S. and foreign mask work rights and registrations and
applications for registration thereof, (e) trade secrets, ideas, formulas,
compositions, inventions (whether patentable or unpatentable and whether or not
reduced to practice), know-how, technical data, works of authorship and
confidential business information (including financial, marketing and business
data, pricing and cost information, business and marketing plans and customer
and supplier lists and information), (f) all computer software, including all
source code, object code, firmware, development tools, files, records and data,
all media on which any of the foregoing is recorded, all Web addresses, sites
and domain names; (g) all databases and data collections and all rights therein
throughout the world; (h) any similar, corresponding or equivalent rights to any
of the foregoing, (i) licenses granting any rights with respect to any of the
foregoing and (j) all drawings, designs, renderings, specifications and other
documentation embodying or related to any of the foregoing.
3
“Regulations” mean any
laws, statutes, ordinances, regulations, rules, notice requirements, court
decisions, agency guidelines, principles of law and orders of any United States
federal, state or local or foreign government and any other governmental
department or agency, including, without limitation, environmental laws, energy,
public utility, zoning, building and health codes, occupational safety and
health and laws respecting employment practices, employee documentation, terms
and conditions of employment and wages and hours.
“Representative” means
any officer, director, partner, member, principal, attorney, agent, accountant,
investment banker, employee or other representative.
“se2quel LLC Assets”
means all Assets of se2quel LLC and its Affiliates used primarily in, or
necessary to the operation of, the Business including, without limitation, the
Assets set forth in Exhibit
B.
“se2quel LLC Disclosure
Schedule” means a schedule delivered by se2quel LLC which sets forth the
exceptions to the representations and warranties contained in Article IV and
certain other information called for by this Agreement attached to this
Agreement as Exhibit
C.
“Securities Act” means
the Securities Act of 1933, as amended.
“Tax Return” means any
report, return, document, declaration or other information or filing required to
be supplied to any taxing authority or jurisdiction (foreign or domestic) with
respect to Taxes, including information returns, any documents with respect to
or accompanying requests for the extension of time in which to file any such
report, return, document, declaration or other information.
“Taxes” mean any and
all taxes, charges, fees, levies or other assessments, including without
limitation, those imposed with respect to income, gross receipts, real, personal
or intangible property, sales, value-added, withholding, employment, social
security, retirement, unemployment, occupation, use, payroll, franchise and
transfer, imposed by the Internal Revenue Service or any taxing authority
(whether domestic or foreign, including any federal, state, county, local or
foreign government or any subdivision or taxing agency thereof (including a U.S.
possession)), whether computed on a separate, consolidated, unitary, combined or
any other basis; and such term shall include any interest whether paid or
received, fines, penalties or additional amounts attributable to, or imposed
upon, or with respect to, any such taxes, charges, fees, levies or other
assessments.
“Tegal Common Stock”
means the common stock, par value $0.01 per share, of Tegal.
“Tegal Disclosure
Schedule” means a schedule delivered by Tegal which sets forth the
exceptions to the representations and warranties contained in Article VI and
certain other information called for by this Agreement attached to this
Agreement as Exhibit
D.
“Tegal SEC Reports”
means the quarterly, annual and other filings made by Tegal with the United
States Securities Exchange Commission (“SEC”) and available
on the SEC’s ▇▇▇▇▇ database.
4
“Tegal Services
Agreement” means the Services Agreement, dated as of the date of this
Agreement, between the Company and Tegal in the form attached hereto as Exhibit
E.
“Voting Units” shall
have the meaning set forth in the LLC Agreement.
“Units” shall have the
meaning set forth in the LLC Agreement.
“Warrant” means a
warrant to purchase shares of Tegal Common Stock in the form attached hereto as
Exhibit
F.
1.2 Other Defined Terms. The following
terms shall have the meanings defined for such terms in the Sections set forth
below:
|
Term
|
Section
|
|
|
Agreement
|
Preamble
|
|
|
Assumed
Liabilities
|
2.2
|
|
|
Assumption
Document
|
3.2(a)(iii)
|
|
|
▇▇▇▇
of Contribution, Transfer and Assignment
|
3.2(a)(ii)
|
|
|
Closing
|
3.1
|
|
|
Company
|
Preamble
|
|
|
Confidential
Information
|
13.12(b)
|
|
|
Damages
|
12.3(a)
|
|
|
Parties
|
Preamble
|
|
|
se2quel
LLC
|
Preamble
|
|
|
se2quel
LLC Proprietary Rights
|
4.16
|
|
|
se2quel
LLC Securities
|
4.4(a)
|
|
|
Tegal
|
Preamble
|
|
|
Tegal
Securities
|
5.4(a)
|
ARTICLE
II
CONTRIBUTION
OF ASSETS; CAPITALIZATION OF THE COMPANY
2.1 Contribution of Assets. Upon the terms
and subject to the conditions contained in this Agreement, at the Closing,
se2quel LLC will contribute, and effective as of the Closing, shall contribute,
assign, convey, transfer and grant, to the Company, the se2quel LLC Assets free
and clear of all Encumbrances, in exchange for the assumption of certain
liabilities by the Company as provided in Section 2.2 and
certain Units of the Company as provided in Section
2.3. Upon the terms and subject to the conditions contained in
this Agreement, at the Closing, Tegal will contribute $2,000,000 in cash to the
Company for working capital purposes in exchange for certain Units of the
Company as provided in Section
2.3.
2.2 Assumption of Liabilities. Upon the
terms and subject to the conditions contained in this Agreement, at the Closing,
the Company shall assume the following, and only the following, Liabilities of
se2quel LLC (the “Assumed
Liabilities”):
5
(a) All
Liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing under the Contracts (but not including any Liability
under any such Contract accruing, arising out of, or relating to events or
occurrences happening, at or prior to the Closing);
(b) All
Liabilities accruing, arising out of, or relating to events or occurrences
happening after the Closing with respect to the Business (but not including any
Liability with respect to the se2quel LLC Assets accruing, arising out of, or
relating to events or occurrences happening, at or prior to the Closing);
and
(c) All
employment obligations identified in Section
8.6(a).
The
Company will not assume or have any responsibility with respect to any other
obligation or Liability of se2quel LLC or Tegal, including, without limitation,
any indebtedness for borrowed money, any guaranty obligations, any professional
fees and expenses related to the transactions contemplated by this Agreement,
and any brokerage or investment banking fees.
2.3 Units. Upon the terms and subject to
the conditions contained in this Agreement, at the Closing the Company shall
issue:
(a) to
se2quel LLC, (i) 25,000 Voting Units and (ii) 49,990 Nonvoting Units;
and
(b) to
Tegal, 25,010 Voting Units.
Upon the
issuance of such Units, the holders thereof shall be entitled to the rights,
privileges and preferences set forth in the LLC Agreement. At Closing, the
capitalization of the Company shall be as set forth in Schedule A to the LLC
Agreement.
2.4 Closing Costs; Transfer Taxes and Fees;
Pro-ration. se2quel LLC shall be responsible for (i) any
documentary and transfer taxes and any sales, use or other taxes (including
withholding taxes) imposed by reason of the transfers of the se2quel LLC Assets
provided hereunder and any deficiency, interest or penalty asserted with respect
thereto, and (ii) the fees and costs of recording or filing all applicable
conveyancing instruments described in Section 3.2. Except
as expressly provided herein to the contrary, the Parties shall otherwise bear
their own expenses as specified in Section 13.7. No
filing regarding documentary, transfer, sales, use or other taxes imposed by
reason of transfer of se2quel LLC Assets shall be made by the Company or any
other Party without the prior review of the other Parties. The Company, on the
one hand, and each of the Parties, on the other, shall negotiate in good faith
to mutually agree on the basis of any allocations of basis or deemed purchase
price required to arrive at any valuations upon which such taxes are
based.
ARTICLE
III
CLOSING
3.1 Closing. The Closing of the
transactions contemplated herein (the “Closing”) shall be
held at 10:00 a.m. on the Closing Date at the offices of ▇▇▇▇▇▇▇ Procter LLP
located at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
3.2 Conveyances at
Closing.
6
(a) se2quel LLC
Deliveries. To effect the contribution of the se2quel LLC
Assets referred to in Section 2.1, se2quel
LLC will, at the Closing, execute and deliver to the ther Parties:
(i) the
LLC Agreement;
(ii) a
▇▇▇▇ of contribution, transfer and assignment, substantially in the form
attached as Exhibit
G (“▇▇▇▇ of
Contribution, Transfer and Assignment”), conveying the se2quel LLC
Assets;
(iii) an
assumption document, substantially in the form attached as Exhibit H, evidencing
the Company’s assumption, pursuant to Section 2.2 of the
Assumed Liabilities of se2quel LLC (the “Assumption
Document”):
(iv) subject
to Section
11.1, copies of all third party consents required for the valid
contribution and transfer of the se2quel LLC Assets as contemplated by this
Agreement;
(v) the
Escrow Agreement; and
(vi) such
other instruments as shall be reasonably required to vest in the Company title
in and to the se2quel LLC Assets contributed and transferred to the Company in
accordance with the provisions hereof.
(b) Tegal
Deliveries. At the Closing, Tegal will execute and deliver to
the other Parties:
(i) the
LLC Agreement;
(ii) the
Escrow Agreement; and
(iii) the
Tegal Services Agreement.
In
addition, at the Closing, Tegal will deliver (x) to the Company $2,000,000 in
cash and (y) to each of se2quel LLC and se2quel Management GmbH a
Warrant.
(c) The Company
Deliveries. At the Closing, the Company shall execute and
deliver to the other Parties:
(i) the
LLC Agreement;
(ii) the
Escrow Agreement;
(iii) the
Tegal Services Agreement;
(iv) counterpart
Assumption Document as described above;
(v) counterpart
▇▇▇▇ of Contribution, Transfer and Assignment as described above;
and
(vi) such
other instruments as shall be reasonably required by this
Agreement.
7
(d) Form of
Instruments. To the extent that a form of any document to be
delivered hereunder is not attached as an exhibit, such documents shall be in
form and substance, and shall be executed and delivered in a manner, mutually
satisfactory to the Parties.
(e) Affiliated
Parties. To the extent a counterparty of any agreement
required by this Agreement is an Affiliate of any party hereto, such party shall
use its reasonable best efforts to cause its Affiliate to make the deliveries
required by this Agreement.
ARTICLE
IV
REPRESENTATIONS
AND WARRANTIES OF SE2QUEL LLC
se2quel
LLC hereby represents and warrants to the Company and Tegal as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct, except as set forth in the se2quel LLC
Disclosure Schedule:
4.1
Organization
of se2quel LLC. se2quel LLC is a California limited liability
company duly organized, validly existing and in good standing under the laws of
California and has full power and authority to conduct its business as it is
presently being conducted and to own and lease its properties and assets.
se2quel LLC is duly qualified to do business as a foreign company and is in good
standing in each jurisdiction where the character of its properties owned or
leased or the nature of its activities make such qualification necessary, except
where the failure to be so qualified or in good standing would not have a
Material Adverse Effect.
4.2 Authorization. se2quel
LLC has all requisite power and authority, and has taken all action necessary,
to execute and deliver this Agreement and the Ancillary Agreements to which
se2quel LLC is a party, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The execution
and delivery of this Agreement and the Ancillary Agreements to which it is a
party by se2quel LLC and the consummation by se2quel LLC of the transactions
contemplated hereby and thereby have been duly approved in accordance with its
charter documents. No other proceedings on the part of se2quel LLC are necessary
to authorize this Agreement and the Ancillary Agreements to which se2quel LLC is
a party and the transactions contemplated hereby and thereby. This Agreement has
been duly executed and delivered by se2quel LLC and is, and upon execution and
delivery of the Ancillary Agreements to which se2quel LLC is a party each will
be, legal, valid and binding obligations of se2quel LLC enforceable against
se2quel LLC in accordance with its terms, as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally.
4.3 No Conflict or Violation;
Consents. None of the execution, delivery or performance of
this Agreement or any Ancillary Agreement to which se2quel LLC is a party, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by se2quel LLC with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the charter documents of se2quel LLC, (b)
violate, conflict with, result in a breach of or constitute a default (with or
without notice of passage of time) under, or result in the termination of, or
accelerate the performance required by, or result in a right to terminate,
accelerate or modify under, or require a notice under, or result in the creation
of any Encumbrance upon any of the se2quel LLC Assets under, any contract,
lease, sublease, license, sublicense, franchise, patent, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest or other arrangement to which se2quel LLC is a party or by which it is
bound or to which any of its assets are subject, (c) violate any Regulation or
Court Order or (d) impose any Encumbrance on any se2quel LLC Assets or the
Business. No notices to, declaration, filing or registration with,
approvals or consents of, or assignments by, any Persons (including any United
States federal, state or local or foreign governmental or administrative
authorities) are necessary to be made or obtained by se2quel LLC in connection
with the execution, delivery or performance of this Agreement or any Ancillary
Agreement to which se2quel LLC is a party.
8
4.4 Securities Law Matters.
(a) se2quel
LLC represents that it has satisfied itself as to the full observance of all
applicable laws in connection with the acquisition of Units, the Warrant and the
Tegal Common Stock issuable upon exercise of the Warrant by it in accordance
with this Agreement (collectively, the “se2quel LLC
Securities”), including (i) the legal requirements for the purchase
thereof, (ii) any governmental or other consents that may need to be obtained
and (iii) the income tax and other tax consequences, if any, that may be
relevant to the purchase thereof.
(b) se2quel
LLC is acquiring the se2quel LLC Securities for investment for its own account
and not with a view to, or for resale in connection with, the distribution
thereof in contravention of any legal requirement.
(c) se2quel
LLC’s knowledge and experience in financial and business matters, are such that
it is capable of evaluating the merits and risks of its acquisition of the
se2quel LLC Securities. se2quel LLC is a sophisticated Person and is relying
upon its due diligence investigation.
(d) se2quel
LLC’s financial condition is such that it can afford to bear the economic risk
of holding the se2quel LLC Securities for an indefinite period of time and has
adequate means for providing for its current needs and contingencies and to
suffer a complete loss of its investment in the se2quel LLC
Securities.
(e) se2quel
LLC is an “accredited investor” as defined in Rule 501 under the Securities
Act.
(f) se2quel
LLC has been advised that (i) the se2quel LLC Securities have not been
registered under the Securities Act, (ii) the se2quel LLC Securities may need to
be held indefinitely, and se2quel LLC must continue to bear the economic risk of
the investment in the se2quel LLC Securities unless they are subsequently
registered under the Securities Act or an exemption from such
registration is available, (iii) there is no a public market for the se2quel LLC
Securities and no assurance can be provided that such a market will develop,
(iv) when and if the se2quel LLC Securities may be disposed of without
registration in reliance on Rule 144 promulgated under the Securities Act, such
disposition can be made only in limited amounts in accordance with the terms and
conditions of such Rule and (v) if the Rule 144 exemption is not available,
public sale without registration will require compliance with an exemption under
the Securities Act.
4.5 Absence of Certain Changes or
Events. Since January 1, 2010, there has not been
any:
(a) Material
Adverse Change with respect to any se2quel LLC Assets;
(b) contribution,
sale, assignment or transfer of any se2quel LLC Asset;
(c) destruction,
damage to, or loss of any se2quel LLC Asset (whether or not covered by
insurance) that materially and adversely affects such se2quel LLC Asset;
or
9
(d) agreement
by se2quel LLC to do, or that would result in, any of the things described in
the preceding clauses (a) through (c) other than as expressly provided for in
this Agreement.
4.6 Assets. se2quel LLC has,
and will contribute and transfer to the Company, good and marketable title to
the se2quel LLC Assets and upon the consummation of the transactions
contemplated hereby, the Company will acquire good and marketable title to all
of the se2quel LLC Assets, free and clear of any Encumbrances. No other Person
has any interest in the se2quel LLC Assets. The se2quel LLC Assets include all
property, rights and assets necessary for, and primarily used in, the normal
conduct of the Business. All tangible assets and properties which are
part of the se2quel LLC Assets are in good operating condition and
repair.
4.7 Undisclosed
Liabilities. There are no Liabilities relating to the se2quel
LLC Assets that have not been disclosed to the Company in the se2quel LLC
Disclosure Schedule.
4.8 Contracts and
Commitments. se2quel LLC has delivered to the Company and
Tegal true, correct and complete copies of all of the Contracts included in the
se2quel LLC Assets, including all amendments and supplements
thereto. Each such Contract has either been validly assigned to the
Company or the Company has been granted a sublicense of sufficient scope under
such Contract to operate the Business following the Closing. All of
such Contracts are valid, binding and enforceable in accordance with their
terms, as limited by applicable bankruptcy, insolvency, reorganization,
moratorium and other laws of general application affecting enforcement of
creditors’ rights generally. To se2quel LLC’s knowledge, no existing or
threatened Default or dispute exists with respect to any such Contract. se2quel
LLC has fulfilled, or taken all action necessary to enable it to fulfill when
due, all of its obligations under each of such Contracts to be performed prior
to the Closing Date. To se2quel LLC’s knowledge, all parties to such Contracts
have complied with the provisions thereof, no party is in Default thereunder and
no notice of any claim of Default has been given to se2quel
LLC. se2quel LLC has no reason to believe that the products and
services called for by any unfinished Contract cannot be supplied in accordance
with the terms of such Contract, including time specifications. No consent of
any third party is required for the assignment of any such Contract to the
Company.
4.9 Permits. se2quel LLC
possesses all Permits required under any Regulation in its operation of the
Business or ownership of the se2quel LLC Assets prior to the Closing, free and
clear of all Encumbrances. se2quel LLC is not in Default, nor has se2quel LLC
received any notice of any claim of Default, with respect to any such
Permit. All such Permits are renewable by their terms or in the
ordinary course of business without the need to comply with any special
qualification procedures or to pay any amounts other than routine filing fees
and will not be adversely affected by the completion of the transactions
contemplated by this Agreement or the Ancillary Agreements.
4.10 Books and Records. se2quel
LLC has made and kept (and given and will continue to give the Company access
to) Books and Records and accounts, which, in reasonable detail, accurately
reflect in all material respects the activities of se2quel LLC in connection
with the se2quel LLC Assets and the Business.
4.11 Litigation. There are no
Actions pending, threatened or anticipated against, related to or affecting the
Business or the se2quel LLC Assets or seeking to delay, limit or enjoin the
transactions contemplated by this Agreement or any Ancillary Agreement. se2quel
LLC is not in Default with respect to or subject to any Court Order, and there
are no unsatisfied judgments against se2quel LLC with respect to the Business or
the se2quel LLC Assets.
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4.12 Labor Matters. Section 4.12
of the se2quel LLC Disclosure Schedule sets forth the names of all present
employees of se2quel LLC who will become employees of the Company and their
current salary or hourly wages and other compensation from se2quel LLC and all
material terms, conditions and other requirements related to the employment or
retention of each such person, whether written or oral, including, without
limitation, any and all obligations of se2quel LLC with respect to compensation,
benefits, term of employment, compensation upon termination, geographical
limitations on place of employment and employment policies of general or
specific application.
4.13 Compliance with
Law. se2quel LLC has conducted the Business in compliance with
all applicable Regulations and Court Orders. se2quel LLC has not received any
notice to the effect that, or has otherwise been advised that, it is not in
compliance with any such Regulations or Court Orders.
4.14 No Brokers. Except for
GrowthPoint Technology Partners, neither se2quel LLC nor any of its Affiliates,
representatives or employees has employed or made any agreement with any broker,
finder or similar agent or any Person in connection with the transactions
contemplated hereby.
4.15 No Other Agreements to Contribute, Transfer
or Sell the Se2quel LLC Assets. Neither se2quel LLC nor
any of its Affiliates, representatives or employees has any commitment or legal
obligation, absolute or contingent, to any other Person other than the Company
to contribute, sell, assign, transfer or effect a sale of any of the se2quel LLC
Assets. se2quel LLC is under no commitment or legal obligation to
contribute, sell, assign, transfer or effect a sale or other disposition of any
of the se2quel LLC Securities to be received by it pursuant to Section 2.3 of
this Agreement to any other Person.
4.16 Proprietary Rights.
(a) General. Section
4.16 of the se2quel LLC Disclosure Schedule lists all Proprietary Rights
included in the se2quel LLC Assets (the “se2quel LLC Proprietary
Rights”). True and correct copies of all registrations, issued
patents, pending applications, file histories, invention disclosures,
prototypes, drawings and other documentation and tangible embodiments of works
of authorship pertaining to or embodying the se2quel LLC Proprietary Rights have
been delivered to the Company and Tegal.
(b) Adequacy. The
se2quel LLC Proprietary Rights constitute (i) all those Proprietary Rights used
primarily in connection with the Business and (ii) all those Proprietary Rights
necessary for the normal conduct of the Business.
(c) Royalties and
Licenses; Non-Infringement. There exists no contractual
obligation to compensate any Person for the use of any se2quel LLC Proprietary
Rights nor has there been granted to any Person any license, option or other
rights to use in any manner any of such Proprietary Rights, whether requiring
the payment of royalties or not. There exists no contractual obligation,
including any covenant not to compete or exclusive license, that would restrict
the Company’s operation of the Business. To the knowledge of se2quel LLC, the
contemplated conduct of the Business from and after the Closing (including,
without limitation, exploitation of the se2quel LLC Assets by the Company as
presently contemplated) will not infringe, the Proprietary Rights of any third
party.
(d) Ownership. se2quel
LLC owns or has a valid right to use the se2quel LLC Proprietary Rights and to
contribute, transfer or license, as the case may be, such Proprietary Rights to
the Company at the Closing, and such Proprietary Rights will not cease to be
valid rights of se2quel LLC (or upon the Closing, of the Company) by reason of
the execution, delivery and performance of this Agreement or the Ancillary
Agreements or the consummation of the transactions contemplated hereby or
thereby.
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(e) Absence of
Claims. se2quel LLC has not received any notice of (A) alleged
invalidity with respect to any se2quel LLC Proprietary Rights or (B) alleged
infringement of any rights of others due to any activity by se2quel LLC. To
se2quel LLC’s knowledge, se2quel LLC’s use, and the Company’s use after the
Closing in the conduct of the Business as currently contemplated, of the se2quel
LLC Proprietary Rights do not and will not infringe upon or otherwise violate
the valid rights of any third party anywhere in the world. No Person (i) has
notified se2quel LLC that it is claiming any ownership of or right to use any
se2quel LLC Proprietary Rights or (ii) to se2quel LLC’s knowledge, is infringing
upon any such Proprietary Rights in any way.
(f) Protection of Proprietary
Rights. se2quel LLC has taken commercially reasonable and
prudent steps to protect the se2quel LLC Proprietary Rights from infringement by
any other Person. All of the pending applications for the se2quel LLC
Proprietary Rights have been duly filed. se2quel LLC has taken commercially
reasonable steps necessary or appropriate to safeguard and maintain the secrecy
and confidentiality of, and the proprietary rights in, all se2quel LLC
Proprietary Rights. Upon Closing, the Company will succeed to all of se2quel
LLC’s right, title and interest in the se2quel LLC Proprietary
Rights.
4.17 Material Misstatements or
Omissions. No representations or warranties by se2quel LLC in
this Agreement, nor any Ancillary Agreement, document, written information,
exhibit, statement, certificate or schedule heretofore or hereinafter furnished
by se2quel LLC or any of its Representatives to Tegal or any of its
Representatives pursuant hereto, or in connection with the transactions
contemplated hereby or by the Ancillary Agreements, including the se2quel LLC
Disclosure Schedule, contains or will contain any untrue statement of a material
fact, or omits or will omit to state any material fact necessary to make the
statements or facts contained therein not misleading.
ARTICLE
V
REPRESENTATIONS
AND WARRANTIES OF TEGAL
Tegal
hereby represents and warrants to se2quel LLC and the Company as follows, which
representations and warranties are, as of the date hereof, and will be, as of
the Closing Date, true and correct, except as set forth in the Tegal Disclosure
Schedule or the Tegal SEC Reports:
5.1 Organization of
Tegal. Tegal is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full power
and authority to conduct its business as it is presently being conducted and to
own and lease its properties and assets. Tegal is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where the
character of its properties owned or leased or the nature of its activities make
such qualification necessary, except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect.
5.2 Authorization. Tegal has
all requisite power and authority, and has taken all action necessary, to
execute and deliver this Agreement and the Ancillary Agreements to which Tegal
is a party, to consummate the transactions contemplated hereby and thereby and
to perform its obligations hereunder and thereunder. The execution and delivery
of this Agreement and the Ancillary Agreements to which Tegal is a party by
Tegal and the consummation by Tegal of the transactions contemplated hereby and
thereby have been duly approved in accordance with its certificate of
incorporation and bylaws. No other proceedings on the part of Tegal are
necessary to authorize this Agreement and the Ancillary Agreements to which
Tegal is a party and the transactions contemplated hereby and thereby. This
Agreement has been duly executed and delivered by Tegal and is, and upon
execution and delivery of the Ancillary Agreements to which Tegal is a party
each will be, legal, valid and binding obligations of Tegal enforceable against
Tegal in accordance with its terms, as limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other laws of general application
affecting enforcement of creditors’ rights generally.
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5.3 No Conflict or Violation:
Consents. None of the execution, delivery or performance of
this Agreement or any Ancillary Agreement to which Tegal is a party, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by Tegal with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the certificate of incorporation or bylaws of
Tegal, (b) violate, conflict with, result in a breach of or constitute a default
(with or without notice of passage of time) under, or result in the termination
of, or accelerate the performance required by, or result in a right to
terminate, accelerate or modify under, or require a notice under, any contract,
lease, sublease, license, sublicense, franchise, patent, permit, indenture,
agreement or mortgage for borrowed money, instrument of indebtedness, security
interest or other arrangement to which Tegal is a party or by which it is bound
or to which any of its assets are subject, (c) violate any Regulation or Court
Order or (d) impose any Encumbrance on the Business. No notices to, declaration,
filing or registration with, approvals or consents of, or assignments by, any
Persons (including any United States federal, state or local or foreign
governmental or administrative authorities) are necessary to be made or obtained
by Tegal in connection with the execution, delivery or performance of this
Agreement or any Ancillary Agreement to which Tegal is a party.
5.4 Securities Law Matters.
(a) Tegal
represents that it has satisfied itself as to the full observance of the laws of
its jurisdiction in connection with the acquisition of Units (the “Tegal Securities”),
including (i) the legal requirements within its jurisdiction for the purchase
thereof, (ii) any governmental or other consents that may need to be obtained
and (iii) the income tax and other tax consequences, if any, that may be
relevant to the purchase thereof.
(b) Tegal
is acquiring the Tegal Securities for investment for its own account and not
with a view to, or for resale in connection with, the distribution thereof in
contravention of any legal requirement.
(c) Tegal’s
knowledge and experience in financial and business matters are such that it is
capable of evaluating the merits and risks of its acquisition of the Tegal
Securities. Tegal is a sophisticated Person and is relying upon its due
diligence investigation.
(d) Tegal’s
financial condition is such that it can afford to bear the economic risk of
holding the Tegal Securities for an indefinite period of time and has adequate
means for providing for its current needs and contingencies and to suffer a
complete loss of its investment in the Tegal Securities.
(e) Tegal
is an “accredited investor” as defined in Rule 501 under the Securities
Act.
(f) Tegal
has been advised that (i) the Tegal Securities have not been registered under
the Securities Act, (ii) the Tegal Securities may need to be held indefinitely,
and Tegal must continue to bear the economic risk of the investment in the Tegal
Securities unless they are subsequently registered under the Securities Act or
an exemption from such registration is available, (iii) there is no a public
market for the Tegal Securities and no assurance can be provided that such a
market will develop, (iv) when and if the Tegal Securities may be disposed of
without registration in reliance on Rule 144 promulgated under the Securities
Act, such disposition can be made only in limited amounts in accordance with the
terms and conditions of such Rule and (v) if the Rule 144 exemption is not
available, public sale without registration will require compliance with an
exemption under the Securities Act.
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5.5 Absence of Material Adverse Change Changes or
Events. Since January 1, 2010, there has not been any Material
Adverse Change with respect to Tegal.
5.6 Litigation. There are no
Actions pending, threatened or anticipated against Tegal seeking to delay, limit
or enjoin the transactions contemplated by this Agreement or any Ancillary
Agreement. Tegal is not in Default with respect to or subject to any Court
Order.
5.7 No Brokers. Neither Tegal
nor any of its officers, directors, employees or Affiliates has employed or made
any agreement with any broker, finder or similar agent or any Person in
connection with the transactions contemplated hereby.
5.8
Material
Misstatements or Omissions. ARTICLE VI No
representations or warranties by Tegal in this Agreement, nor
any Ancillary Agreement, document, written information, exhibit, statement,
certificate or schedule heretofore or hereinafter furnished by Tegal or any of
its Representatives to se2quel LLC, and/or the Company pursuant hereto, or in
connection with the transactions contemplated hereby or by the Ancillary
Agreements, including the Tegal Disclosure Schedule, contains or will contain
any untrue statement of a material fact, or omits or will omit to state any
material fact necessary to make the statements or facts contained therein not
misleading.
ARTICLE
VII
REPRESENTATIONS
AND WARRANTIES OF THE COMPANY
The
Company hereby represents and warrants to Tegal as follows, which
representations and warranties will be, as of the Closing Date, true and
correct:
7.1 Organization of the
Company. The Company is a limited liability company duly
organized, validly existing and in good standing under the laws of the State of
Delaware. The Company has full power and authority to conduct its business as
presently conducted by it and to own and lease its properties and assets. The
Company is duly qualified to do business as a foreign limited liability company
and is in good standing in each jurisdiction where the character of its
properties owned or leased or the nature of its activities make such
qualification necessary, except where the failure to be so qualified or in good
standing would not have a Material Adverse Effect. Prior to the execution of
this Agreement, the Company has not engaged in any substantive business
activities.
7.2 Authorization. The Company
has all requisite power and authority, and has taken all action necessary, to
execute and deliver this Agreement and the Ancillary Agreements to which the
Company is a party, to consummate the transactions contemplated hereby and
thereby and to perform its obligations hereunder and thereunder. The
execution and delivery of this Agreement and the Ancillary Agreements to which
the Company is a party by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly approved in
accordance with its operating agreement. No other proceedings on the part of the
Company are necessary to authorize this Agreement and the Ancillary Agreements
to which the Company is a party and the transactions contemplated hereby and
thereby. This Agreement has been duly executed and delivered by the
Company and is, and upon execution and delivery the Ancillary Agreements to
which the Company is a Party each will be, legal, valid and binding obligations
of the Company, enforceable against the Company in accordance with its terms, as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally.
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7.3 No Conflict or Violation;
Consents. None of the execution, delivery or performance of
this Agreement or any Ancillary Agreement to which the Company is a party, the
consummation of the transactions contemplated hereby or thereby, nor compliance
by the Company with any of the provisions hereof or thereof, will (a) violate or
conflict with any provision of the certificate of formation or operating
agreement of the Company, (b) violate, conflict with, or result in a breach of
or constitute a default (with or without notice of passage of time) under, or
result in the termination of, or accelerate the performance required by, or
result in a right to terminate, accelerate or modify under, or require a notice
under, or result in the creation of any Encumbrance upon any of the Company’s
assets under, any contract, lease, sublease, license, sublicense, franchise,
permit, indenture, agreement or mortgage for borrowed money, instrument of
indebtedness, security interest or other arrangement to which the Company is a
party or by which it is bound or to which any of its assets are subject or (c)
violate any Regulation or Court Order. No notices to, declaration, filing or
registration with, approvals or consents of, or assignments by, any Persons
(including any United States federal, state or local or foreign governmental or
administrative authorities) are necessary to be made or obtained by the Company
in connection with the execution, delivery or performance of this Agreement or
any Ancillary Agreement to which the Company is a party.
7.4 Litigation. There are no
Actions pending, threatened or anticipated against, related to or affecting the
Company seeking to delay, limit or enjoin the transactions contemplated by this
Agreement or any Ancillary Agreement.
7.5 No Brokers. Neither the
Company nor any of its officers, directors, employees or Affiliates has employed
or made any agreement with any broker, finder or similar agent or any in
connection with the transactions contemplated hereby.
7.6 Material Misstatements or
Omissions. No representations or warranties by the
Company in this Agreement, nor any Ancillary Agreement, document, written
information, exhibit, statement, certificate or schedule heretofore or
hereinafter furnished by the Company or any of its Representatives to Tegal or
any of its Representatives pursuant hereto, or in connection with the
transactions contemplated hereby or by the Ancillary Agreements, contains or
will contain any untrue statement of a material fact, or omits or will omit to
state any material fact necessary to make the statements or facts contained
therein not misleading.
ARTICLE
VIII
COVENANTS
OF THE PARTIES
se2quel
LLC, Tegal and the Company covenant with each other Party as
follows:
8.1 Further Assurances. Upon
the terms and subject to the conditions contained herein, the Parties agree, in
each case both before and after the Closing, (i) to use all reasonable efforts
to take, or cause to be taken, all actions and to do, or cause to be done, all
things necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and the Ancillary Agreements, (ii)
as promptly as practicable to negotiate in good faith, document, and execute any
documents, instruments or conveyances of any kind (including, without
limitation, the Ancillary Agreements) which may be reasonably necessary or
advisable to carry out any of the transactions contemplated hereunder and
thereunder, and (iii) to reasonably cooperate with each other in connection with
the foregoing. Without limiting the foregoing, the Parties agree to (A) obtain
all necessary waivers, consents and approvals from other parties to the
Contracts to be assumed by, or transferred to, the Company, (B) obtain all
necessary Permits as are required to be obtained under any Regulations, (C) give
all notices to, and make all registrations and filings with third parties,
including submissions of information requested by governmental authorities, and
(D) fulfill all conditions to this Agreement. The undertakings made in this
Section 8.1 are
a material element of this contract and also constitute the agreement by each
Party to cause its controlled Affiliates to comply herewith.
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8.2 No Solicitation. From the
date hereof through the Closing or the earlier termination of this Agreement,
none of the Parties nor any of their respective Representatives shall, and each
Party shall cause its Representatives not to, directly or indirectly, enter
into, solicit, initiate or continue any discussions or negotiations with, or
encourage any inquiries or proposals by, or participate in any negotiations
with, or provide any information to, or otherwise cooperate in any other way
with, any Person or group, other than the Company and its Representatives,
concerning any sale of all or any portion of the se2quel LLC Assets or the
Business.
8.3 Notification of Certain
Matters. From the date hereof through the Closing, each Party
shall give prompt notice to all other Parties of (a) the occurrence, or failure
to occur, of any event which occurrence or failure would be likely to cause any
representation or warranty of such Party contained in this Agreement or in any
Ancillary Agreement, exhibit or schedule to be untrue or inaccurate and (b) any
failure of any Party or of any of its respective Affiliates or Representatives
to comply with or satisfy any covenant, condition or agreement to be complied
with or satisfied by it under this Agreement or any Ancillary Agreement, exhibit
or schedule; provided,
however, that such disclosure shall not be deemed to cure any breach of a
representation, warranty, covenant or agreement or to satisfy any condition.
Each Party shall promptly notify each other Party of any Default, the threat or
commencement of any Action, or any development that occurs before the Closing
that could reasonably be expected to result in a Material Adverse
Effect.
8.4 Investigation by The Company.
From the date hereof through the Closing Date the Parties shall, and shall cause
their respective officers, employees and agents to, afford the Representatives
of the Company and each other Party and its Affiliates and its and their
Representatives complete access at all reasonable times to the Business, the
se2quel LLC Assets and Assumed Liabilities for the purpose of inspecting the
same, and to the officers, employees, agents, attorneys, accountants,
properties, Books and Records and Contracts of each Party pertaining thereto,
and shall furnish the Company and each other Party and its Affiliates and its
and their Representatives all financial, operating and other data and
information (including with respect to Proprietary Rights) as such may
reasonably request.
8.5 Conduct of Business by se2quel
LLC. From the date hereof through the Closing, se2quel LLC
shall operate the Business, except as contemplated by this Agreement or as
consented to by the other Parties in writing, in the ordinary course of business
and in accordance with past practice and will not take any action inconsistent
with this Agreement, the Ancillary Agreements or the consummation of the
Closing.
8.6 Employee Matters.
(a) The
Company agrees to make an offer of employment to each Designated Employee on
terms no less favorable than presently applicable to such Designated Employee.
se2quel LLC shall terminate the employment of all Designated Employees
immediately prior to the Closing and shall cooperate with and use their
commercially reasonable efforts to assist the Company in its efforts to secure
satisfactory employment arrangements with the Designated Employees. In the event
any Designated Employee does not accept employment with the Company as provided
above, se2quel LLC will be responsible for any related severance obligation or
to retain the employment of such person.
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(b) Nothing
contained in this Agreement shall confer upon any Designated Employee any right
with respect to employment, or continuance thereof, with the Company, nor shall
anything herein interfere with the right of the Company to terminate the
employment of any Designated Employee at any time, with or without cause, or
restrict the Company in the exercise of its independent business judgment in
modifying any of the terms and conditions of the employment of any Designated
Employee.
8.7 Tax Reporting Cooperation. Each Party
agrees that it shall treat the transactions contemplated under Article II of
this Agreement as a contribution of cash or property, as applicable, to the
Company in exchange for Units under Code § 721(a) followed by an exchange of a
portion of the Voting Units received by se2quel LLC for the Warrants. No Party
shall take a position inconsistent with such treatment except as otherwise
required to the contrary by a final determination of a relevant taxing
authority. The Parties agree that the fair market value of each
Warrant is $115,000, and no Party shall take any position to the
contrary.
8.8 Financial Statements.
In the event that the Company concludes that it is necessary or advisable to
prepare financial statements regarding the Business for any periods prior to
Closing, se2quel LLC agrees to cooperate with the Company, provide it with
reasonable access to appropriate financial records and personnel in a manner not
disruptive to ordinary business activities and direct its independent
accountants to assist the Company. Any fees and expenses of the outside
independent accountants shall be paid by the Company.
ARTICLE
IX
CONDITIONS
TO THE OBLIGATIONS OF SE2QUEL LLC
The
obligations of se2quel LLC to consummate the transactions provided for hereby
are subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived in its discretion:
9.1 Representations. Warranties and
Covenants. All representations and warranties of Tegal
contained in this Agreement and the Ancillary Agreements shall be true and
correct at and as of the date of this Agreement and at and as of the Closing as
though made on and as of such date. Tegal shall have performed and satisfied in
all material respects all agreements and covenants required hereby to be
performed by it prior to or on the Closing.
9.2 Consents; Regulatory Compliance and
Approval. All consents, approvals and waivers from
governmental authorities necessary to permit se2quel LLC to contribute the
se2quel LLC Assets to the Company as contemplated hereby shall have been
obtained, all approvals required under any Regulations to carry out the
transactions contemplated by this Agreement and the Ancillary Agreements shall
have been obtained and the Parties shall have complied with all Regulations
applicable to the transactions contemplated hereby and thereby.
9.3 No Court Orders. There
shall not be any Regulation or Court Order that makes the transactions
contemplated hereby and by the Ancillary Agreements illegal or otherwise
prohibited.
9.4 Ancillary Agreements. Tegal
shall have executed and delivered to se2quel LLC this Agreement and the
Ancillary Agreements to which Tegal is a party.
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9.5 Other Actions. All actions
to be taken by Tegal in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to se2quel LLC.
ARTICLE
X
CONDITIONS
TO THE OBLIGATIONS OF TEGAL
The
obligations of Tegal to consummate the transactions provided for hereby are
subject to the satisfaction, on or prior to the Closing Date, of each of the
following conditions, any of which may be waived in its discretion:
10.1 Representations. Warranties and
Covenants. All representations and warranties of se2quel LLC
and the Company contained in this Agreement and the Ancillary Agreements shall
be true and correct at and as of the date of this Agreement and at and as of the
Closing as though made on and as of such date. Each of se2quel LLC and the
Company shall have performed and satisfied in all material respects all
agreements and covenants required hereby to be performed by it prior to or on
the Closing.
10.2 Consents; Regulatory Compliance and
Approval. All consents, approvals and waivers from
governmental authorities necessary to permit Tegal to perform its obligations
under this Agreement shall have been obtained, all approvals required under any
Regulations to carry out the transactions contemplated by this Agreement and the
Ancillary Agreements shall have been obtained and the Parties shall have
complied with all Regulations applicable to the transactions contemplated hereby
and thereby,
10.3 No Court Orders. There
shall not be any Regulation or Court Order that makes the transactions
contemplated hereby and by the Ancillary Agreements illegal or otherwise
prohibited.
10.4 Ancillary Agreements. Each
of se2quel LLC and the Company shall have executed and delivered to Tegal the
Ancillary Agreements to which it is a party.
10.5 Other
Actions. All actions to be taken by each of se2quel LLC and
the Company in connection with the consummation of the transactions
contemplated hereby and all certificates, instruments and other documents
required to effect the transactions contemplated hereby will be reasonably
satisfactory in form and substance to Tegal.
ARTICLE
XI
CONSENTS
TO ASSIGNMENT
11.1 Consents to
Assignment. Anything in this Agreement to the contrary
notwithstanding, this Agreement shall not constitute an agreement to assign any
Contract, Permit or any claim or right or any benefit arising thereunder or
resulting therefrom if an attempted assignment thereof, without the consent of a
party thereto, would constitute a Default thereof or in any way adversely affect
the rights of the Company thereunder. If such consent is not obtained, or if an
attempted assignment thereof would be ineffective or would affect the rights
thereunder so the Company would not receive all such rights, the Parties will
cooperate, in all reasonable respects, to provide to the Company the benefits
under any such Contract, Permit or any claim or right, including enforcement for
the benefit of the Company of any and all rights of se2quel LLC against a third
party thereto arising out of the Default or cancellation by such third party or
otherwise.
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ARTICLE
XII
ACTIONS
BY THE PARTIES AFTER THE CLOSING
12.1 Books and Records; Tax
Matters.
(a) Books and
Records. Each Party agrees that it will cooperate with and
make available to the Company, during normal business hours, all books and
records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing which are
necessary or useful in connection with any tax inquiry, employee matter, audit,
investigation or dispute or any other investigation or litigation or for any
other appropriate administrative purpose.
(b) Cooperation and Records
Retention. The Parties shall (i) each provide the Company with
such assistance as may reasonably be requested by any of them in connection with
the preparation of any return, audit, or other examination by any taxing
authority or judicial or administrative proceedings relating to Liability for
Taxes, (ii) each retain and provide the Company with any records or other
information that may be relevant to such return, audit or examination,
proceeding or determination, and (iii) each provide the Company with any final
determination of any such audit or examination, proceeding, or determination
that affects any amount required to be shown on any Tax Return of the Company
for any period. Without limiting the generality of the foregoing, each Party
shall each retain, until the applicable statutes of limitations (including any
extensions) have expired, copies of all Tax Returns, supporting work schedules,
and other records or information that may be relevant to such returns for all
tax periods or portions thereof ending on or before the Closing Date and shall
not destroy or otherwise dispose of any such records.
12.2 Survival of
Representations. All of the representations and warranties
made by the Parties in this Agreement or in any exhibit, schedule, disclosure
schedule or certificate delivered by any such Party pursuant hereto shall
survive the Closing until (and claims based upon or arising out of such
representations and warranties may be asserted at any time before) the one-year
anniversary of the Closing, except with respect to (A) the representations and
warranties set forth in Sections 4.2 and
5.2
(Authorization) and Section 4.6 (Assets),
which shall survive in perpetuity. The termination of the representations and
warranties provided herein shall not affect any claim made in reasonable detail
prior to the expiration of the applicable survival period provided
herein.
12.3 Indemnification.
(a) By se2quel
LLC. se2quel LLC shall indemnify, save and hold harmless Tegal
and its Affiliates and Representatives from and against any and all costs,
losses (including diminution in value), Taxes, Liabilities, obligations,
damages, lawsuits, deficiencies, claims, demands, and expenses (whether or not
arising out of third-party claims), including interest, penalties, reasonable
attorneys’ fees and all amounts paid in investigation, defense or settlement of
any of the foregoing, in each case after taking into account any insurance
proceeds actually received by any such indemnified Person (herein, “Damages”), incurred
in connection with, arising out of, resulting from or incident
to:
19
(i) any
breach of any representation or warranty or the inaccuracy of any representation
or warranty, made by se2quel LLC or the Company in this Agreement or in any
Ancillary Agreement;
(ii) any
breach of any covenant or agreement made by se2quel LLC or the Company in this
Agreement or in any Ancillary Agreement; and
(iii) any
Liability of se2quel LLC, other than Assumed Liabilities.
(b) By Tegal. Tegal shall
indemnify, save and hold harmless se2quel LLC and its respective Affiliates and
Representatives from and against any and all Damages incurred in connection
with, arising out of, resulting from or incident to:
(i) any
breach of any representation or warranty or the inaccuracy of any representation
or warranty, made by Tegal in this Agreement or in any Ancillary
Agreement;
(ii)
any breach of any covenant or agreement made by Tegal in this Agreement or
in any Ancillary Agreement; and
(iii) any
Liability of Tegal.
(c) The
term “Damages” as used in this Section 12.3 is not
limited to matters asserted by third parties against an indemnified Person, but
includes Damages incurred or sustained by the indemnified Person in the absence
of third party claims. The indemnification provisions hereof shall be in
addition to any other remedy available to any indemnified Person.
(d) Procedure for Claims between
Parties. If a claim for Damages is to be made by a Party
entitled to indemnification hereunder, the Party claiming such indemnification
shall give written notice to the indemnifying Person as soon as practicable
after the indemnified Person becomes aware of any fact, condition or event which
may give rise to Damages for which indemnification may be sought under this
Section 12.3.
Any failure to submit any such notice of claim to the indemnifying Person shall
not relieve the indemnifying Person of any liability hereunder, except to the
extent the indemnifying Person is actually prejudiced by such failure. The
indemnifying Person shall be deemed to have accepted the notice of claim and to
have agreed to pay the Damages at issue if the indemnifying Person does not send
a notice of disagreement to the indemnified Person within 15 days after
receiving the notice of claim. In the case of a disputed claim, the Parties
shall use commercially reasonable efforts to resolve the matter internally on an
expeditious basis and in any event within 45 days after the notice is received
by the indemnifying Person.
20
(e) Defense of Third Party
Claims. If any lawsuit or enforcement action is filed against
any indemnified Person, written notice thereof shall be given to the
indemnifying Person as promptly as practicable (and in any event within 15 days
after the service of the citation or summons). The failure of any indemnified
Person to give timely notice hereunder shall not affect rights to
indemnification hereunder, except to the extent that the indemnifying Person
demonstrates that it was actually prejudiced by such failure. After such notice,
if the indemnifying Person acknowledges in writing to the indemnified Person
that the indemnifying Person shall be obligated under the terms of its indemnity
hereunder in connection with such lawsuit or action and demonstrates to the
reasonable satisfaction of the indemnified Person the financial capacity to
defend and resolve such lawsuit or action, then the indemnifying Person shall be
entitled, if it so elects at its own cost, risk and expense, (i) to take control
of the defense and investigation of such lawsuit or action, (ii) to employ and
engage attorneys of its own choice to handle and defend the same unless the
named parties to such action or proceeding include both an indemnifying Person
and the indemnified Person and the indemnified Person has been advised by
counsel that there may be one or more legal defenses available to such
indemnified Person that are different from or additional to those available to
the indemnifying Person, in which event the indemnified Person shall be
entitled, at the indemnifying Person’s cost, risk and expense, to separate
counsel of its own choosing, and (iii) to compromise or settle such claim, which
compromise or settlement shall be made only with the written consent of the
indemnified Person, such consent not to be unreasonably withheld. The
indemnified Person shall cooperate in all reasonable respects with the
indemnifying Person and its attorneys in the investigation, trial and defense of
such lawsuit or action and any appeal arising therefrom; provided, however,
that the indemnified Person may, at its own cost, participate in the
investigation, trial and defense of such lawsuit or action and any appeal
arising therefrom. The Parties shall cooperate with each other in any
notifications to insurers. If the indemnifying Person fails to assume the
defense of such claim within 15 days after receipt of the notice of claim, the
indemnified Person against which such claim has been asserted will (upon
delivering notice to such effect to the indemnifying Person) have the right to
undertake, at the indemnifying Person’s cost, risk and expense, the defense,
compromise or settlement of such claim on behalf of and for the account and risk
of the indemnifying Person; provided, however, that such
claim shall not be compromised or settled without the written consent of the
indemnifying Person, which consent shall not be unreasonably withheld. If the
indemnified Person assumes the defense of the claim, the indemnified Person will
keep the indemnifying Person reasonably informed of the progress of any such
defense, compromise or settlement. The indemnifying Person shall be liable for
any settlement of any action effected pursuant to and in accordance with this
Section 12.3
and for any final judgment (subject to any right of appeal), and the
indemnifying Person agrees to indemnify and hold harmless an indemnified Person
from and against any Damages by reason of such settlement or
judgment.
(f) Brokers and
Finders. Pursuant to the provisions of this Section 12.3, each
Party shall indemnify, hold harmless and defend each other Party from the
payment of any and all brokers’ and finders’ expenses, commissions, fees or
other forms of compensation which may be due or payable from or by the
indemnifying Party, or may have been earned by any third party acting on behalf
of the indemnifying Party in connection with the negotiation and execution
hereof and the consummation of the transactions contemplated hereby. Without
limiting the generality of the foregoing, se2quel LLC shall be solely
responsible for any Liability to Growth Point Technology Partners.
(g) Certain
Limitations. No claim for Damages may be brought against any Party until the
claims for Damages asserted against such Person made in accordance with this
Article XV exceed $25,000 in the aggregate, in which event, however, any and all
such claims for Damages may be asserted without regard to such $25,000
limitation basket.
12.4 Taxes. Except as otherwise
provided in Section
2.5, each Party shall pay, or cause to be paid, when due all Taxes with
respect to the transactions contemplated hereby for which such Party is liable
(including pursuant to Section 2.5). The
Company and the other Parties shall prorate personal property taxes for the
applicable tax period that includes the Closing Date.
21
ARTICLE
XIII
MISCELLANEOUS
13.1 Termination.
(a) Termination.
This Agreement may be terminated at any time prior to Closing:
(i) By
mutual written consent of se2quel LLC and Tegal;
(ii) By
se2quel LLC or Tegal, in each case if the Closing shall not have occurred on or
before January 31, 2011 provided the terminating Party is not then in breach of
this Agreement;
(iii) By
se2quel LLC if there is a material breach of any representation or warranty or
any covenant or agreement to be complied with or performed by Tegal pursuant to
the terms of this Agreement, which breach is not cured within 7 days after
written notice thereof is delivered to all Parties; or
(iv) By
Tegal if there is a material breach of any representation or warranty or any
covenant or agreement to be complied with or performed by se2quel LLC or the
Company pursuant to the terms of this Agreement, which breach is not cured
within 7 days after written notice thereof is delivered to all
Parties.
(b) Consequences of
Termination. In the event of termination of this Agreement, no Party
hereto shall have any liability to any other Party to this Agreement, except for
any willful breach of, or knowing misrepresentation made in, this Agreement
occurring prior to the termination of this Agreement.
13.2 Assignment. Prior to the
Closing, neither this Agreement nor any of the rights or obligations hereunder
may be assigned by any Party without the prior written consent of the other
Parties. Subject to the foregoing, this Agreement shall be binding upon and
inure to the benefit of the Parties and their respective successors and
permitted assigns, and no other Person shall have any right, benefit or
obligation under this Agreement as a third party beneficiary or
otherwise.
13.3 Notices. All notices,
requests, demands and other communications which are required or may be given
under this Agreement shall be in writing and shall be deemed to have been duly
given when received if personally delivered; when transmitted if transmitted by
confirmed telecopy; when delivery
is confirmed if transmitted via electronic mail; the day after it is
sent, if sent for next day delivery to a domestic address by recognized
overnight delivery service (e.g., FedEx); and upon receipt, if sent by certified
or registered mail, return receipt requested. In each case notice shall be
sent:
If to
se2quel Partners LLC, addressed to:
se2quel
Partners LLC
▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇., #▇▇▇
▇▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
e-mail:
▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
22
With a
copy to:
SNR
▇▇▇▇▇▇ US LLP
▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
e-mail:
▇▇▇▇▇▇.▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇
If to
Tegal, addressed to:
Tegal
Corporation
▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
e-mail:
▇▇▇▇▇@▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇
▇. ▇▇▇▇
With a
copy to:
▇▇▇▇▇▇▇
Procter LLP
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
e-mail:
▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
Attention: ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇
or to
such other place and with such other copies as either party may designate as to
itself by written notice to the others.
13.4 Governing Law; Consent to Exclusive
Jurisdiction; Dispute Resolution. The laws of the State of
Delaware shall govern the validity of this Agreement and the construction and
interpretation of its terms. Any legal action or proceeding with
respect to this Agreement shall be brought in the Court of Chancery of the State
of Delaware. By execution and delivery of this Agreement, each of the
Parties accepts for itself and in respect of its property, generally and
unconditionally, the jurisdiction of the aforesaid court. Each of the
Parties irrevocably consents to the service of process of the aforementioned
court in any such action or proceeding by the mailing of copies thereof by
certified mail, postage prepaid, to the Party pursuant to Section
13.3.
13.5 Entire Agreement: Amendments and
Waivers. This Agreement, the Ancillary Agreements, together with all
exhibits and schedules hereto and thereto, constitute the entire agreement among
the parties pertaining to the subject matter hereof and supersedes all prior
agreements, understandings, negotiations and discussions, whether oral or
written, of the parties (including the Memorandum of Understanding dated
December 17, 2010). This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the Parties. No amendment, supplement,
modification or waiver of this Agreement shall be binding unless executed in
writing by the Party to be bound thereby. No waiver of any of the provisions of
this Agreement shall be deemed or shall constitute a waiver of any other
provision hereof (whether or not similar), nor shall such waiver constitute a
continuing waiver unless otherwise expressly provided.
13.6 Multiple Counterparts. This
Agreement may be executed in one or more counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and the same
instrument. Counterparts may be delivered by telecopy
transmission.
23
13.7 Expenses. Except as
otherwise specified in this Agreement, each Party shall pay its own legal,
accounting, out-of-pocket and other expenses incident to this Agreement and the
Ancillary Agreements and to any action taken by such Party in preparation for
carrying this Agreement and the Ancillary Agreements into effect; provided, however,
that the Company shall reimburse each, Tegal and se2quel LLC for the reasonable
fees and expenses of their respective legal counsel, incurred by such parties in
connection with the negotiation and consummation of this Agreement and the
Ancillary Agreements and the transactions contemplated hereby, not to exceed
$75,000 for each Tegal and se2quel LLC.
13.8 Invalidity. If any one or
more of the provisions contained in this Agreement or in any other instrument
referred to herein, shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then to the maximum extent permitted by law, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement or any other such instrument.
13.9 Publicity. No Party shall
issue any press release or make any public statement regarding the transactions
contemplated hereby or by the Ancillary Agreements, without prior written
approval of the other Parties, other than any such disclosure which the counsel
to a Party believes is legally required to be made (including, with respect to
Tegal, all filings required to be made with the SEC in compliance with
applicable securities laws).
13.10 Cumulative Remedies. All
rights and remedies of each Party are cumulative of each other and of every
other right or remedy such Party may otherwise have at law or in equity, and the
exercise of one or more rights or remedies shall not prejudice or impair the
concurrent or subsequent exercise of other rights or remedies.
13.11 Attorneys’ Fees. If any
Party brings an action to enforce its rights under this Agreement, the
prevailing Party shall be entitled to recover its costs and expenses, including,
without limitation, reasonable attorneys’ fees, incurred in connection with such
action, including any appeal of such action.
13.12 Confidential Information.
(a) No
Disclosure. Each Party agrees that the terms and conditions,
but not the existence, of this Agreement and the related agreements contemplated
by this Agreement shall be treated as Confidential Information (as defined
below); provided,
however, either Party may disclose the terms and conditions of this
Agreement: (i) as required by any court or other governmental body; (ii) as
otherwise required by law; (iii) to legal counsel of, or advisors to, a Party;
(iv) in connection with the requirements of applicable securities law; (v) in
confidence, to accountants, banks, and financing sources and their advisors;
(vi) in connection with the enforcement of this Agreement or rights under this
Agreement; or (vii) in confidence, in connection with a merger or acquisition or
proposed merger or acquisition, or the like, of a Party.
(b) Preservation of
Confidentiality. se2quel LLC acknowledges that in connection with its
historical ownership of the se2quel LLC Assets, it has had access to
confidential proprietary information regarding the Business, including
technical, manufacturing or marketing information, ideas, methods, developments,
inventions, improvements, business plans, trade secrets, scientific or
statistical data, diagrams, drawings, specifications, customer and supplier
lists, know-how or other proprietary information relating thereto, together with
all analyses, compilations, studies or other documents, records or data, as the
case may be, or its respective Representatives which contain or otherwise
reflect or are generated from such information (“Confidential
Information”). The term “Confidential Information” does not include
information which is or becomes generally available to the public other than as
a result of a disclosure by a Party or its Representatives or becomes available
to such Party on a non-confidential basis from a source other than the other
Party or any of their respective Representatives. All Confidential Information
shall be maintained in confidence by the Parties and not used for any purpose
adverse to the interests of the Company.
24
13.13 Construction. No provision
of this Agreement is to be interpreted as a penalty upon, or a forfeiture by,
any party to this Agreement. The parties acknowledge that each Party,
together with such Party’s legal counsel, has shared equally in the drafting and
construction of this Agreement and, accordingly, no court construing this
Agreement shall construe it more strictly against one Party hereto than any
other.
(Signature
Page Follows)
25
IN
WITNESS WHEREOF, the Parties hereto have executed this Formation and
Contribution Agreement as of the day and year first written above.
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SE2QUEL
PARTNERS LLC
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By:
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/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
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Name: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title: President
and Chief Executive Officer
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TEGAL
CORPORATION
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By:
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇ | ||
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Name: ▇▇▇▇▇▇
▇. ▇▇▇▇
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Title: Chairman,
President and CEO
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SEQUEL
POWER LLC
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By:
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/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ | ||
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Name: ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇
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Title: Chief
Executive Officer
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